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TMI Blog2011 (4) TMI 1275X X X X Extracts X X X X X X X X Extracts X X X X ..... y'). Section 12 of the 1994 Act enumerates the various functions of the Airports Authority. By the Airports Authority of India (Amendment) Act, 2003 (for short 'the Amendment Act of 2003'), Sections 12A and 22A were inserted in the 1994 Act with effect from 01.07.2004. The newly inserted Section 12A provides that the Airports Authority may make a lease of the premises of an airport to carry out some of its functions under Section 12 as the Airports Authority may deem fit. The newly inserted Section 22A of the 1994 Act provides that with the approval of the Central Government, the Airports Authority may levy on, and collect from, the embarking passengers at an airport, the development fees at the rate as may be prescribed. On 04.04.2006, the Airports Authority leased out the Indira Gandhi International Airport, New Delhi (for short 'the Delhi Airport') to the Delhi International Airport Private Limited (for short 'DIAL') and also leased out the Chhatrapati Shivaji International Airport, Mumbai (for short 'the Mumbai Airport') to Mumbai International Airport Private Limited (for short 'MIAL'). Section 22A of the 1994 Act was amended by the Airports Economic Regulatory Authority of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the prior approval of the Central Government and dismissed the writ petitions by the impugned judgment and order. Conclusions of the High Court: 5. In the impugned judgment and order, the High Court held that under sub-section (1) of Section 12A of the 1994 Act, the Airports Authority is empowered to lease an airport for the performance of its functions under Section 12 and such a lease is a statutory lease which enables the lessee to perform the functions of the Airports Authority enumerated in Section 12. The High Court further held that sub-section (4) of Section 12A provides that the lessee who has been assigned some functions of the Airports Authority under sub-section (1) shall have "all" the powers of the Airports Authority necessary for the performance of such functions in terms of the lease and use of the word "all" indicates that the lessee would have each and every power of the Airports Authority for the purpose of discharging such functions including the power under Section 22A to levy and collect development fees from the embarking passengers. The High Court took the view that development fee though described as fee in Section 22A is more akin to a charge or tariff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmination of the rate of development fees to be levied at the two major airports under Clause (b) of sub-section (1) of Section 13 of the 2008 Act by the Regulatory Authority of India is still pending and the impugned levy of development fees by DIAL and MIAL are, therefore, ultra vires. (ii) The purposes for which the development fees are to be levied and collected are indicated in clauses (a), (b) and (c) of Section 22A of the 1994 Act and these are: (a) funding or financing the costs of upgradation, expansion or development of the airports at which the fees is collected, or (b) establishment or development of a new airport in lieu of the existing airport, or (c) investment in the equity in respect of shares to be subscribed by the Airports Authority in companies engaged in establishing, owning, developing, operating or maintaining a private airport in lieu of the existing airport or advancement of loans to such companies or other persons engaged in such activities. Under the 1994 Act, it is only the Airports Authority which can carry out these three purposes and not the lessee of the Airports Authority under Section 12A of the 1994 Act and, therefore, the lessee can have no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Central Government has conveyed its approval in the two letters dated 09.02.2009 and 27.02.2009 to DIAL and MIAL for levy of development fees by DIAL and MIAL respectively from the two airports. Such approval conveyed by the Central Government is entirely in accordance with Section 12A of the 1994 Act. In view of sub-section (4) of Section 12A of the 1994 Act providing that a lessee who has been assigned any of the functions of the Airports Authority would have all the powers of the Airports Authority necessary for the performance of such function in terms of the lease, the power of the Airports Authority to levy the development fees has also been rightly assigned to DIAL and MIAL. A reading of the two approval letters would show that various conditions and safeguards have been incorporated in the approval letters to protect the interest of the public and to provide rigorous checks with regard to the manner in which DIAL and MIAL can deal with the fees collected by them and it will be clear from the approval letters that the fees can be utilized only for the purpose mentioned in Section 22A of the 1994 Act. (iii) The purposes mentioned in clauses (b) and (c), namely, "develo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [(1992) 1 SCC 428] support this contention. (vi) Section 2 (n) of the 2008 Act defines "service provider" as any person who provides aeronautical services "and is eligible to levy and charge user development fees from the embarking passengers at any airport and includes the authority which manages the airport". This provision expressly indicates that under the 2008 Act also the entity managing the airport is eligible to levy and collect the development fees. The 1994 Act and the 2008 Act provide a statutory framework for the modernization and improvement of the aviation infrastructure of the country and should be interpreted in a harmonious manner so that they complement each other rather than conflict with each other. The Regulatory Authority constituted under the 2008 Act has already issued a public notice dated 23.04.2010 which would show that it has permitted DIAL to continue to levy the development fees at the rate of Rs. 200/- per departing domestic passenger and at the rate of Rs. 1,300/- per departing international passenger with effect from 01.03.2009 on an ad hoc basis pending final determination. The Court should not therefore interfere with the levy and collection of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, the right to recover charges is not based on Sections 22 and 22A but flows from the ownership of the facilities. What is determined, therefore, is the charges that would be contractually recovered from the users of the facilities as was held in M/s Aminchand Pyarelal & Ors. (supra). (ii) Section 22 of the 1994 Act identified the heads on which charges could be recovered. Section 22A, therefore, merely adds three more heads for which funds could be raised and this is akin to adding components of a tariff. Section 22A does not change the quality and character of the recovery of charges by the owners of the facilities from the users thereof. Section 22A does not also change the nature and character of what is recovered by an airport operator from its customers. The High Court was, therefore, right in coming to the conclusion in the impugned judgment that development fees under Section 22A of the 1994 Act was in the nature of a tariff. (iii) Section 12A of the 1994 Act (a) recognizes statutorily the power of the Airports Authority to make a lease of the premises of an airport for the purpose of carrying out some of its functions under Section 12 and (b) transfers as it were to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h v. Central Government & Ors. (supra), Meghalaya State Electricity Board & Anr. v. Jagadindra Arjun [(2001) 6 SCC 446] and U.P. State Electricity Board, Lucknow v. City Board, Mussorie & Ors. (supra). Since the power to collect the development fee is already available to the Airports Authority or its lessees as part of its power to collect charges for the facilities, absence of a rule does not negate the power. The rule under Section 22A was to be made not for purposes of conferring the power but to regulate the rate of development fees and manner of utilization of development fee as a check on such power. (vi) After the 2008 Act and after the notification dated 31.08.2009 bringing the provisions of 2008 Act in Chapters III and VI into force w.e.f. 01.09.2009, the Regulatory Authority has jurisdiction under Section 13(1)(b) of the 2008 Act to determine the amount of development fees in respect of major airports, such as, Delhi and Mumbai Airports. The Regulatory Authority has already commenced its functions and has undertaken the process of final determination of development fee. Till the Regulatory Authority modifies the levy of development fees, the two lessees are entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e private lessee under Section 12A of the 1994 Act to undertake some of the functions of the Airports Authority enumerated in Clause 2.1.1 of the OMDA read with Schedule 5 and Schedule 6 which enumerate the aeronautical services and nonaeronautical services respectively. (ii) The levy under Section 22A of the 1994 Act is for the specific purposes mentioned in Clauses (a), (b) or (c) thereof and though termed as fees, it is really in the nature of a cess and therefore there need not be any direct co-relation between the levy of fees and the services rendered as has been held by the High Court in the impugned judgment. In Vijayalashmi Rice Mills & Ors. v. Commercial Tax Officers, Palakot & Ors. [(2006) 6 SCC 763], this Court has also held that ordinarily a cess means a tax which raises revenue which is applied to a specific purpose. This Court has held in Commissioner of Income Tax, Udaipur, Rajasthan v. Mcdowell and Company Ltd. [(2009)10 SCC 755] that the power to levy tax, duty, cess or fee can be exercised only under law authorizing the levy. Thus, cess is ultimately a compulsory exaction of money and must satisfy the test of Article 265 of the Constitution which declares that n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned by Section 60(a)(ii) of the Bombay Municipalities Act, 1901 before imposing a tax by a resolution passed at a general meeting. (iv) The two letters dated 09.02.2009 and 27.02.2009 of the Government of India, Ministry of Civil Aviation, to DIAL and MIAL respectively can convey only the approvals of the Central Government under Section 22A of the 1994 Act for levy of development fees by DIAL and MIAL respectively but cannot authorize DIAL and MIAL to levy and collect development fees under Section 22A of the 1994 Act because under this provision the Airports Authority only has the power to levy and collect development fees and DIAL and MIAL have no such authority. The two letters dated 09.02.2009 and 27.02.2009 are not saved by Section 6 of the General Clauses Act, 1897 because this provision does not protect any action taken under the authority of the letter. (v) The public notice dated 23.04.2010 issued by the Regulatory Authority pertaining to levy of development fees by DIAL regarding the fees of Rs. 200/- per departing domestic passenger and Rs. 1300/- per departing international passenger on ad hoc basis is without jurisdiction as under the 2008 Act, the Regulatory Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing of goods; (h) arrange for postal, money exchange, insurance and telephone facilities for the use of passengers and other persons at the airports and civil enclaves; (i) make appropriate arrangements for watch and ward at the airports and civil enclaves; (j) regulate and control the plying of vehicles, and the entry and exit of passengers and visitors, in the airports and civil enclaves with due regard to the security and protocol functions of the Government of India; (k) develop and provide consultancy, construction or management services, and undertake operations in India and abroad in relation to airports, air-navigation services, ground aids and safety services or any facilities thereat; (l) establish and manage heliports and airstrips; (m) provide such transport facility as are, in the opinion of the Authority, necessary to the passengers traveling by air; (n) form one or more companies under the Companies Act, 1956 or under any other law relating to companies to further the efficient discharge of the functions imposed on it by this Act; (o) take all such steps as may be necessary or convenient for, or may be incidental to, the exercise of any power or the discha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se by the authority.-(1) Notwithstanding anything contained in this Act, the Authority may, in the public interest or in the interest of better management of airports, make a lease of the premises of an airport (including buildings and structures thereon and appertaining thereto) to carry out some of its functions under section 12 as the Authority may deem fit: Provided that such lease shall not affect the functions of the Authority under section 12 which relates to air traffic service or watch and ward at airports and civil enclaves. (2) No lease under sub-section (1) shall be made without the previous approval of the Central Government. (3) Any money, payable by the lessee in terms of the lease made under sub- section (1), shall form part of the fund of the Authority and shall be credited thereto as if such money is the receipt of the Authority for all purposes of section 24. (4) The lessee, who has been assigned any function of the Authority under sub-section (1), shall have all the powers of the Authority necessary for the performance of such function in terms of the lease. Inserted by the Amendment Act of 2003 22A. Power of Authority to levy development fees at airports. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons: 11. The conclusion of the High Court in the impugned judgment that the lessee of the airport has the power of the Airports Authority under Section 22A to levy and collect development fees from the embarking passengers by virtue of sub-section (4) of Section 12A of the Act is contrary to the legislative intent of the Amendment Act of 2003. On a perusal of Section 22A of the 1994 Act inserted by the Amendment Act of 2003, we find that the purposes for which the development fees are to be levied and collected from the embarking passengers at an airport are: (a) funding or financing the costs of up-gradation, expansion or development of the airports at which the fees is collected, or (b) establishment or development of a new airport in lieu of the airport referred to in clause (a), or (c) investment in the equity in respect of shares to be subscribed by the Airports Authority in companies engaged in establishing, owning, developing, operating or maintaining a private airport in lieu of the airport referred to in clause (a) or advancement of loans to such companies or other persons engaged in such activities. Though Airports Authority can utilize the fees levied by it, for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n airport because Section 22A says that the development fees are to be regulated and utilized in the manner prescribed by the Rules. Since the lessee of an airport cannot be assigned the function of the Airports Authority to establish airports or assist in establishing private airports in lieu of the existing airports at which the development fees is being collected, the lessee cannot under sub-section (4) of Section 12A have the power of the Airports Authority under Section 22A of the 1994 Act to levy and collect development fees. This is because sub-section (4) of Section 12A provides that the lessee can have all those powers of the Airports Authority which are necessary for performance of such functions as assigned to it under sub-section (1) of Section 12A in terms of the lease. Moreover, since we have held that the function of establishment and development of a new airport in lieu of an existing airport and the function of establishing a private airport are exclusive functions of the Airports Authority under the 2004 Act, and these statutory functions cannot be assigned by the Airports Authority under lease to a lessee under Section 12A of the Act, the lease agreements, namely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the airport is upgraded, expanded or developed will only avail the facilities and services of the upgraded, expanded and developed airport. Similarly, there can be no contractual relationship between the Airports Authority and passengers embarking at an airport for establishment of a new airport in lieu of the existing airport or establishment of a private airport in lieu of the existing airport as mentioned in Clauses (b) and (c) of Section 22A of the 1994 Act. In the absence of such contractual relationship, the liability of the embarking passengers to pay development fees has to be based on a statutory provision and for this reason Section 22A has been enacted empowering the Airports Authority to levy and collect from the embarking passengers the development fees for the purposes mentioned in clauses (a), (b) and (c) of Section 22A of the Act. In other words, the object of Parliament in inserting Section 22A in the 2004 Act by the Amendment Act of 2003 is to authorize by law the levy and collection of development fees from every embarking passenger de hors the facilities that the embarking passengers get at the existing airports. The nature of the levy under Section 22A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat Section 11 of the Bombay Agricultural Produce Markets Act, 1939 provided that the market committee may levy market fees subject to the maxima as prescribed and the Court held that unless the State Government fixes the maxima by rule, it is not open to the committee to fix any fees at all. We are also supported by the decision of a three judges Bench of this Court which held in Dhrangadhra Chemical Works Ltd. v. State of Gujarat & Ors. (supra) that the mandatory provision in Section 60(a)(ii) of the Bombay Municipalities Act, 1901 requiring framing of rule for imposition of tax not having been complied with, the imposition of tax was illegal. In Principles of Statutory Interpretation, 12th Edition, at Page 813, Justice G.P. Singh states: "There are three components of a taxing statute, viz., subject of the tax, person liable to pay the tax and the rate at which the tax is levied. If there be any real ambiguity in respect of any of these components which is not removable by reasonable construction, there would be no tax in law till the defect is removed by the legislature." Thus, the rate at which the tax is to be levied is an essential component of a taxing provision and no ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g for the conditions of appointment and service. The Court has held that in the absence of regulations framed under Section 45 laying down the conditions of service, the Corporation can still appoint officers or servants as may be necessary for the efficient performance of its duties on such terms and conditions as it thinks fit and it cannot be held that unless such regulations are framed under Section 45, the Corporation would have no power to appoint officers and servants and fix the conditions of service of its officers and servants. From the language of Section 22A of the 1994 Act, on the other hand, we find that there is no room whatsoever for the Airports Authority to levy and collect any development fees except at the rate prescribed by the Rules. 18. The High Court has also relied on the decision of this Court in Sudhir Chandra Nawn v. Wealth-Tax Officer, Calcutta & Ors. (supra). In that case, Section 7(1) of the Wealth Tax Act, 1957 was challenged as ultra vires the Parliament on inter alia the ground that no rules were framed in respect of the valuation of lands and buildings and this Court repelled the challenge and held that Section 7 only directs that the valuation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parting international passenger with effect from 01.03.2009 on an ad hoc basis pending final determination under Section 13 of the 2008 Act. This public notice dated 23.04.2010 has been issued by the Regulatory Authority under the 2008 Act long after the impugned decision of the High Court upholding the levy and it has not been challenged by the appellants. Hence, the question of examining the validity of the said public notice dated 23.04.2010 issued by the Regulatory Authority pertaining to levy and collection of development fees by DIAL does not arise. But no such public notice has been issued by the Regulatory Authority under the 2008 Act pertaining to levy and collection of development fees by MIAL. Hence, MIAL could not continue to levy and collect development fees at the major airport at Mumbai and cannot do so in future until the Regulatory Authority passes an appropriate order under Section 22A of the 1994 Act as amended by the 2008 Act. 21. Having held that the levy and collection of development fees by DIAL and MIAL at the rates fixed by the Central Government in the two letters dated 09.02.2009 and 27.02.2009 are ultra vires the 1994 Act and that MIAL could not continu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 22A of the 1994 Act, unless the Airports Economic Regulatory Authority determines the rates of such development fee. (iii) We direct that MIAL will henceforth not levy and collect any development fee at the major airport at Mumbai until an appropriate order is passed by the Airports Economic Regulatory Authority under Section 22A of the 1994 Act as amended by the 2008 Act. (iv) We direct that DIAL and MIAL will account to the Airports Authority the development fees collected pursuant to the two letters dated 09.02.2009 and 27.02.2009 of the Central Government and the Airports Authority will ensure that the development fees levied and collected by DIAL and MIAL have been utilized for the purposes mentioned in clause (a) of Section 22A of the 1994 Act. (v) We further direct that henceforth, any development fees that may be levied and collected by DIAL and MIAL under the authority of the orders passed by the Airports Economic Regulatory Authority under Section 22A of the 1994 Act as amended by the 2008 Act shall be credited to the Airports Authority and will be utilized for the purposes mentioned in clauses (a), (b) or (c) of Section 22A of the 1994 Act in the manner to be pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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