Archana Airways Ltd. & Anr. vs Union Of India
1999 Latest Caselaw 648 Del

ORDER

Arun Kumar, J.

1. By this petition under Article 226 of the Constitution of India the petitioner has challenged an order of the Central Government allowing the revision petition filed by the respondent Commissioner of Customs against the order of Commissioner (Appeals). The Commissioner (Appeals) had set aside the order of the Assistant Commissioner of Customs imposing penalties upon the petitioner on account of delay in deposit of tax collected by the petitioner from passengers as per the provisions of Section 48 of the Finance Act, 1989 and the Indian Air Travel Tax Rules, 1989 (hereinafter referred to as IAIT Rules) framed by the Central Government in pursuance of the Act.

2. Briefly the facts are that the Finance Act, 1989 introduced a tax on domestic travel by air called the Indian Air Travel Tax. The petitioner being a domestic air carrier was obliged to collect the tax and pay it to the credit of the Central Government. The Central Government also framed Rules in this behalf called the Indian Air Travel Tax Rules. As per Rule 6 the tax collected by the carrier in any month is to be deposited by the carrier in the account of the Central Government within thirty days from the end of the month in which the tax was collected. For the month of June 1995 the petitioner deposited the tax amounting to Rs. 26,99,018/- on 31st August, 1995 whereas the due date of the said deposit as per Rules was 30th July 1995. Thus there was a delay of 32 days. The return for the month of June 1995 was also filed belatedly, the delay being nine days. According to the petitioner the delay in deposit of the tax was wholly nintentional, bona fide and without any mens rea. It is further submitted that the petitioner of their own volition deposited interest amounting to Rs. 47,325/- on 7th September, 1995 on account of delayed deposit of tax.

3. The petitioner was served with two show cause notices dated 28th August, 1995 by the Assistant Collector of Customs for the delayed deposit of the tax as well as on account of delay in filing the return for the month of June, 1995. The show cause notices, amongst other things, called upon the petitioner to show cause why penalty under the ovisions of the Act and the Rules be not imposed on account of the delay in deposit of tax collected by the petitioner on behalf of the Government and the delay in filing return with respect thereto. The petitioner was provided with an opportunity of personal hearing on 5th September, 1995 which the petitioner duly availed of. The Assistant Collector of Customs i.e. respondent No. 3 vide order dated 5th February, 1996 imposed a penalty of Rs. 2,000/- and a further penalty of Rs. 4,500/- under Rule 8A of the Rules for contravention of Rule 7 for delay of nine days in submitting the return for the month of June 1995. The petitioner was further directed to deposit Rs. 47,325/- by way of interest @ 20% per annum under section 43A(1) of the Act and imposed a further penalty of Rs. 5,50,000/- under section 46(3) of the Act for contravention of Rule 6 of the rules read with Section 42(2) of the Act for delay of 32 days in depositing the tax for the month of June 1995.

4. The petitioner went in appeal against the said order. The Commissioner of Customs (Appeals) accepted the appeal vide his order dated 23rd April, 1997. The department preferred a revision under Rule 13 against the order of the Commissioner of Customs (Appeals) which was heard by the Joint Secretary to the Govt. of India and was disposed of vide order dated 18th November, 1997. The revision petition was allowed and the order of the Commissioner of Customs (Appeals) was set aside and that of the Assistant Commissioner of Customs was restored.

5. The relevant provisions of the Act and the Rules are reproduced here under:-

"Section 42. Inland air travel tax:

(1) With effect from the date of commencement of this Chapter, there shall be levied on all passengers embarking on every inland journey, where the fare for such journey is paid in Indian cur rency, a tax (hereafter in this chapter referred to as the inland air travel tax) at the rate of 15% fare paid by such passengers for every such journey.

6. Section 43A. Interest for default in payment of inland air travel tax:

(1) Where any carrier or other person fails to pay the inland air travel tax to the credit of the Central Government under sub section (2) of section 42, in accordance with the rules made under this Chapter, he shall pay an interest on the amount of tax not so paid for the entire period for which payment of such tax has been delayed, at such rate, not below twenty per cent and not exceeding thirty per cent per annum, as the Central Government may, by notification in the Official Gazette, specify in this behalf.

(2) Where on or before the date of commencement of Section 98 of the Finance Act, 1994, the inland air travel tax had not been paid by any carrier or other person to the credit of the Central Government, in accordance with the rules made under this Chapter the carrier or other person shall pay the amount of such tax within a period of thirty days of such commencement, failing which he shall be liable to pay the interest in accordance with the provisions of sub-sections (1);

7. Section 46. Penalties:-

(1) Every passenger who embarks or attempts to embark on an inland journey without paying the inland air travel tax shall, in addition to his liability to pay the inland air travel tax, be liable to a penalty not exceeding twice the amount of the inland air travel tax.

(2) Every carrier or other person in charge of an aircraft, who, in contravention of the provisions of section 45, allows any passenger or passenger to board the aircraft, shall be liable to a penalty not exceeding three times the amount or the aggregate amount of the inland air travel tax payable by the passenger or passengers so allowed to board the aircraft.

(3) Every carrier or other person who fails to pay the inland air travel tax to the credit of the Central Government under subsection (2) of section 42 shall, in addition to the payment of such tax and the interest leviable thereon, be liable to pay penalty which shall not be less than one-fifth but which may extend to three times of the amount of the tax not so paid to the credit of the Central Government.

8. Rule 6. Tax to be paid into the treasury:-

The tax collected in any month by any carrier shall be paid by such carrier before the expiry of thirty days from the end of that month into the treasury.

9. Rule 7. Return regarding tax collected, etc:-

Every carrier required under rule 6 to pay the tax into the reasury shall file, in respect of every month before the expiry of thirty days from the end of that month, before the Collector of Customs, a return in the Form annexed to these rules, showing the amount of tax collected, amount refunded and the amount paid into the treasury.

10. Rule 10. Issue of show cause notice before levy of penalty-

No order imposing any penalty on any person shall be made unless such person-

(a) Is given a notice in writing informing him of the grounds on which it is proposed to impose a penalty;

(b) is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice, against the grounds for imposition of the penalty mentioned therein; and

(c) is given a reasonable opportunity of being heard in the matter.

11. The learned counsel for the petitioner urged before us that Rule 6 contains a proviso which required the Collector of Customs to extend the time for deposit of the amount on sufficient cause being shown in this behalf by the carrier. He relied on a letter dated 31st, July 1995 purported to have been written by the petitioner to respondent No. 3 stating that delay had occurred due to unavoidable circumstances. In this letter neither the unavoidable circumstances have been spelled out nor condensation of delay has been sought. On the basis of this material it is submitted that the petitioner had made out a case for condensation of delay and it is within the power of the respondents to condone the same. The impugned action of levy penalty was uncalled for. We find no merit in this contention raised on behalf of the petitioner. Firstly, it has been pointed out by learned counsel for the respondent that the proviso to Rule 6 stood deleted at the relevant time and, therefore on reliance can be placed on it. As a matter of fact while quoting the relevant provisions of the Act and the Rules in the writ petition, the petitioner has itself not mentioned the proviso alongwith Rule 6 which has been quoted by the petitioner. At the time of hearing the counsel for the petitioner, passed on a copy of Rule 6 for our perusal in order to facilitate the hearing. In the main Rule the period for deposit is shown as sixty days and the proviso is also given but this is not so when we refer to Rule 6 quoted by the petitioner in the main body of the writ petition. The period for deposit is mentioned as thirty days in Rule 6 quoted by the petitioner in the writ petition and there is no proviso. It appears that earlier Rule 6 contained a provision of sixty days for deposit of the amount and also contained the proviso relied upon by the counsel for the petitioner. Rule 6 appears to have been amended subsequently. By way of amendment the period of sixty days has been reduced to thirty days and the proviso has been deleted. In fact learned counsel for the respondent has drawn our attention to a Gazette Notification dated 12th August, 1994 containing the amendment to Rule. 6 According to this the period of sixty days stands reduced to thirty days and the proviso to Rule 6 has been omitted. That is why the petitioner has rightly quoted in the writ petition the amended Rules 6. The amendment of Rule 6 reducing the period of deposit to thirty days and omitting the proviso was simultaneous. The petitioner is accepting that the period of deposit of tax is thirty days otherwise this case would not have arisen because the petitioner had made deposit within 32 days. When the correct period of deposit is admitted as thirty days, the omission of the proviso has also to be accepted side by side. Thus there is no merit in the contention of the counsel for the petitioner based on proviso to Rule 6.

12. We would like to add that the argument advanced by the counsel for the petitioner based on proviso to Rule 6 even otherwise appears to be an afterthought because the petitioner never set up a case based on proviso to Rule 6 nor it ever prayed for condensation of delay in making the deposit. Reliance placed by learned counsel for the petitioner on its letter dated 31st July 1995 in this behalf is misconceived. The said letter does not bring the case within proviso to Rule 6.

13. Next learned counsel for the petitioner while relying on Rule 10 urged that the show cause notice served on the petitioner did not contain the entire case set up by the department against the petitioner and, therefore, there was non-compliance of Rule 10. It was submitted that the onus was on the department to set up and clearly state the case against the petitioner which the petitioner was required to meet. We find no merit in this contention of the learned counsel for the petitioner. The show cause notice clearly mentions the case against the petitioner. i.e. delay in deposit the amount of tax collected by it from the passengers on account of inland air travel. To illustrate his point the counsel articularly referred to the observation in the impugned order about the petitioner being a habitual defaulter. It was urged that this was never stated in the show cause notice. In our view the statutory provision leaves no scope for the argument that petitioner being a habitual defaulter should have been mentioned in the show cause notice. The provision shows that delay in deposit is taken as a strict liability offence which is subjected to penalty, parameters whereof are contained in the statute itself. Sub-section (3) of Section 46 clearly lays down that the liability to pay the penalty is in addition to levy of interest and the penalty shall not be less than one fifth of the amount of tax involved and it could extend to three times the amount of tax involved. The authority can exercise its discretion only within these two parameters. In the present case the penalty levied is almost one fifth of the amount involved. Thus already the discretion has been xercised in favour of the petitioner inasmuch as lowest amount of penalty permissible under the law has been levied.

14. Lastly, the learned counsel for the petitioner relied on certain decisions, namely, Hindustan Steels Limited Vs. State of Orissa, AIR 1990 SC 253 and Akbar Badruddin Vs. Commissioner of Customs, These judgments were considered by this Court on an earlier occasion in Sahara India Airlines Vs. Union of India, 1998 1 AD (Delhi) 876. The said case had arisen in similar circumstances where there was delay in deposit of inland air travel tax by the carrier. Similar arguments were considered by this Court including the aforesaid judgments and some other judgments. This Court refused to interfere in the decision of the authorities imposing penalty on the petitioner in the said case. For the same reasons we are of the view that the aforesaid decisions are of no help to the petitioner.

15. In C.W. 3940/99, Combatta Aviation Ltd. Vs. Union of India & Ors., decided on 8th July 1999. in somewhat similar circumstances this Court had taken the view that such provisions as are subject matter of this petition required strict adherence and mens rea has no place in such matters. In the said case the petitioner had collected foreign travel tax from the passengers travelling abroad on behalf of the Government which it was liable to deposit in the Government treasury before the expiry of thirty days from the end of the month to which the tax was collected. The petitioner had defaulted in deposit of the amount of tax collected by it within time and similar penalty was imposed. We reiterate the view taken earlier in the said case.

16. As noted above the facts on record and the legal provisions referred to herein above leave no scope for interference with the impugned decision of the Central Government we are of the firm view that offence on the part of the petitioner is in the nature of a strict liability offence. The statute clearly makes it to be a strict liability offence and eaves no scope for consideration of any explanation for delay in deposit. There is no scope for delay being condoned on account of sufficient cause or otherwise. The only scope is when the authority wants to take a lenient view the amount of penalty can be towards the lower limit. But once there is delay, penalty has to be imposed as per the statutory provision. The nature of offence is such that no explanation can be accepted. The petitioner or the carrier collects the air travel tax from the passengers on behalf of the Government and there is no reason or justification for the carrier to use that money for its own purposes. The amount must go to the Government Treasury forthwith. Rules have already provided a period of thirty days in this behalf, which in our view is sufficient. There is no scope for the plea of absence of mens rea in such matters. These are strict liability offences where mens rea has no place. For all these reasons we find no merit in this petition. The same is dismissed. No costs.