TMI Blog2011 (4) TMI 1275X X X X Extracts X X X X X X X X Extracts X X X X ..... ory Authority under Section 22A of the 1994 Act as amended by the 2008 Act. 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. 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 prescribed by the rules which may be made as early as possible. Nothing stated herein shall come in the way of any aggrieved person challenging the public notice dated 23.04.2010 issued by the Airports Economic Regulatory Authority in accordance with law. The impugned judgment of the High Court is set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... major airports under clause (b) of sub-section (1) of Section 13 of the 2008 Act by the Airports Economic Regulatory Authority (for short the Regulatory Authority ). The amended Section 22A was to take effect on and from the date of the establishment of the Regulatory Authority. The Government of India, Ministry of Civil Aviation, sent a letter dated 09.02.2009 to DIAL conveying the approval of the Central Government under Section 22A of the 1994 Act for levy of development fees by DIAL at the Delhi Airport at the rate of ₹ 200/- per departing domestic passenger and at the rate of ₹ 1300/- per departing international passenger inclusive of all applicable taxes, purely on ad hoc basis, for a period of 36 months with effect from 01.03.2009. Similarly, the Government of India, Ministry of Civil Aviation, sent another letter dated 27.02.2009 to MIAL conveying the approval of the Central Government under Section 22A of the 1994 Act for levy of development fees by MIAL at the Mumbai Airport at the rate of ₹ 100/- per departing domestic passenger and at the rate of ₹ 600/- per departing international passenger inclusive of all applicable taxes, purely on ad hoc b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onclusion that the exercise of the power to levy and collect development fees under Section 22A was not dependent on the existence of the rules and, therefore, this power can be exercised even if the rules have not framed prescribing the rate of development fees under Section 22A (before its amendment by the 2008 Act). In coming to this conclusion, the High Court relied on the decisions of this Court in U.P. State Electricity Board, Lucknow v. City Board, Mussorie Ors. [(1985) 2 SCC 16], Mysore Road Transport Corporation v. Gopinath Gundachar Char [AIR 1968 SC 464] and Sudhir Chandra Nawn v. Wealth- Tax Officer, Calcutta Ors. [1969 (1) SCR 108]. Contentions on behalf of the appellants: 6. Mr. Fali S. Nariman, learned senior counsel, leading the arguments on behalf of the appellants, made these submissions: (i) The conclusion of the High Court that the power under Section 22A to levy and collect the development fees from the embarking passengers can be exercised without the rules is erroneous because the language of Section 22A of the 1994 Act prior to its amendment by the 2008 Act makes it clear that development fees could be levied and collected from the embarking pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onclusion of the High Court in the impugned judgment and order, that under sub-section (4) of Section 12A of the 1994 Act, the lessee having been assigned some of the functions of the Airports Authority has all the powers of the Airports Authority necessary for the performance of such functions in terms of the lease including the power to levy development fees under Section 22A of the 1994 Act, is therefore not correct. He referred to the various provisions of the Operation, Management and Development Agreement (for short OMDA ) and the State Support Agreement executed between the Airports Authority and DIAL/MIAL to show that the power to levy development fees from the embarking passengers have in fact not been assigned by the Airports Authority to DIAL/MIAL. Reply on behalf of the Union of India: 7. Mr. Gopal Subramanium, learned Solicitor General appearing for the Union of India, made these submissions: (i) Section 12A of the 1994 Act begins with a nonobstante clause and it empowers the Airports Authority to lease the premises of an airport to a third party to carry out some of its functions under Section 12 of the 1994 Act and in exercise of this power the Airports Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of which the lease is executed and fees are collected, as it would be clear from the expression in lieu of the airport referred to in clause (a) . It is significant that Section 12A and Section 22A of the 1994 Act were both introduced by the same Amendment Act of 2003. (iv) Though Section 22A of the 1994 Act, before its amendment by the 2008 Act provided that for levy of development fees at the rate as may be prescribed and for regulation and utilization of the development fees in the prescribed manner , the absence of the rules prescribing the rate of development fees or the manner of regulation and utilization of development fees will not render Section 22A ineffective. The legal proposition that absence of rules and regulations cannot negate the power conferred on an authority by the legislature is settled by decisions of this Court in Orissa State (Prevention Control of Pollution) Board v. Orient Paperdd Mills Anr. [(2003) 10 SCC 421], U.P. State Electricity Board, Lucknow v. City Board, Mussorie Ors. (supra), Kerala State Electricity Board v. M / s S . N. Govinda Prabhu Bros. Ors. [(1986) 4 SCC 198], Surinder Singh v. Central Government Ors. [(1986 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IAL and DIAL: 8. Mr. Harish N. Salve, learned senior counsel, and Dr. Abhishek Singhvi, learned senior counsel, appeared for MIAL and DIAL and made these submissions: (i) The challenge of the appellant to the levy and collection of airport development fees by the lessees of the two airports is based on a misconception that development fees is in the nature of a tax and can be levied strictly in accordance with Section 22A of the 1994 Act, only by the Airports Authority and not by the lessee. Development fees is not really a tax but charges levied and collected by the lessee for development of facilities for the use of the airport. The lessees, which are non-government companies, have established the utility in a public-private partnership, and do not require a statutory authorization or permission to recover such charges by way of development fee, from the passengers using the airport and the lessees do not require the support of the statutory provision of Section 22A for levy and collection of development fees. Section 11 of the 1994 Act mandates that the Airports Authority would discharge its functions on business principles and Section 12 of the 1994 Act enumerates the fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (4) of Section 12A of the Act, the lessee who has been assigned some functions of the Airports Authority under Section 12 of the 1994 Act has the power of the Airports Authority necessary for the performance of such functions . The power to recover charges for the facilities at the airport in respect of which a lease is made, whether they be the charges under Section 22 or the charges under Section 22A are necessary for discharging of the functions of maintaining and upgrading the airports. Since sub-section (4) of Section 12A itself states that the lessee shall have all the powers of the Airports Authority, there is no warrant to take the view that the lessee shall not have the power of the Airports Authority under Section 22A to levy and collect development fees. (iv) The functions which have been entrusted to the two lessees, DIAL and MIAL, include the up-gradation and modernization of the airport including construction of new terminals and this will be clear from clause 2.1 titled Grant of Function and clause 8.3 titled Master plan of the OMDA. The relevant provisions of the State Support Agreement between the Airports Authority and the two lessees and in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2009 and 27.02.2009 of the Central Government conveying the approval to the lessees of the two airports. The contention of the appellant that the development fees cannot be recovered till such time as the Regulatory Authority determines the rate of development fees is misconceived. The contention of the appellant that the development fees can be utilized only for the purposes mentioned in Section 22A of the 1994 Act is also misconceived. The approval letters of the Central Government show that the development fees can be utilized for the development of Aeronautical Assets which are Transfer Assets in terms of OMDA; and under the OMDA, these Transfer Assets shall revert to the Airports Authority on the expiry or early termination of OMDA. On a perusal of the three clauses enumerated in Section 22A of the 1994 Act, it is clear that depending on the functions assigned to the lessee, the corresponding powers to collect development fees for discharging the function also is passed on to the lessee under sub-section (4) of Section 12A of the 1994 Act. In other words, there is a clear nexus established between the function so assigned and the power to collect the development fees. Rejo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of law. This Court has also held in Ahmedabad Urban Development Authority v. Sharadkumar Jayantikumar Pasawalla Ors. [(1992) 3 SCC 285] that the power of imposition of tax and/or fee must be very specific and there is no scope of implied authority for imposition of such tax or fee. This position of law has been reiterated by this Court in State of West Bengal v. K esoram Industries Ltd. Ors. [(2004) 10 SCC 201]. Section 22A of the 1994 Act was, therefore, enacted by the Amendment Act of 2003 to specifically empower the Development Authority to impose levy and collect development fees which is to be used for the specific purposes indicated in clauses (a), (b) and (c) of Section 22A of the 1994 Act and this power cannot be usurped by the lessee of the airport by treating it as charges for facilities. (iii) The judgments relied on by the respondents in support of their contention that non-framing of rules do not negate the power to levy development fees under Section 22A of the 1994 Act have been rendered by this Court in the context of enactments which are not pari materia with Section 22A of the 1994 Act. In Bangalore Water Supply Sewerage B oard v. A. Rajappa Ors. [(19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rate of development fees in respect of major airports after following the procedure laid down in Section 13 of the 2008 Act. There is no public notice issued by the Regulatory Authority so far in respect of the Mumbai Airport. The levy and collection of development fees by DIAL and MIAL at the two airports are, therefore ultra vires and may be restrained by the Court. Relevant Provisions of Law: 10. Section 12 of the 1994 Act as amended by the Amendment Act of 2003, Section 22 of the 1994 Act, Sections 12A and 22A inserted by the Amendment Act of 2003 with effect from 01.07.2004 and Section 22A as amended by the 2008 Act, which are relevant for deciding the questions raised before us by the parties, are extracted hereinbelow:- 12. Functions of the Authority. (1) Subject to the rules, if any, made by the Central Government in this behalf, it shall be the function of the Authority to manage the airports, the civil enclaves and the aeronautical communication stations efficiently. (2) It shall be the duty of the Authority to provide air traffic service and air transport service at any airport and civil enclaves. (3) Without prejudice to the generality of the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ischarge of any function conferred or imposed on it by this Act; (p) perform any other function considered necessary or desirable by the Central Government for ensuring the safe and efficient operation of aircraft to, from and across the air space of India; (q) establish training institutes and workshops; (r) any other activity at the airports and the civil enclaves in the best commercial interests of the Authority including cargo handling, setting up of joint ventures for the discharge of any function assigned to the Authority. (4) In the discharge of its functions under this section, the Authority shall have due regard to the development of air transport service and to the efficiency, economy and safety of such service. (5) Nothing contained in this section shall be construed as- (a) authorizing the disregard by the Authority of any law for the time being in force; or (b) authorizing any person to institute any proceeding in respect of duty or liability to which the Authority or its officers or other employees would not otherwise be subject. 22. Power of the Authority to charge fees, rent, etc.- The Authority may,- (i) With the previous approval of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Authority to levy development fees at airports.-- The Authority may, after the previous approval of the Central Government in this behalf, levy on, and collect from, the embarking passengers at an airport, the development fees at the rate as may be prescribed and such fees shall be credited to the Authority and shall be regulated and utilized in the prescribed manner, for the purposes of- (a) funding or financing the costs of upgradation, expansion or development of the airport 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 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. As amended by the 2008 Act 22A. Power of Authority to levy development fees at airports.-- The Authority may,-- (i) after the previous approval of the Central Government in this behalf, levy on, and collect from, the embarking passenger ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch activities. Though Airports Authority can utilize the fees levied by it, for all or any of these purposes mentioned in clauses (a), (b) and (c) of Section 22A, what can be assigned by the Airports Authority to a lessee under a lease entered into under Section 12A of the 1994 Act is the power to levy fees for the purposes mentioned in clause (a) of Section 22 A of the 1994 Act. 12. The functions of the Airports Authority under clause (aa) of sub-section (3) of Section 12 also inserted by the Amendment Act of 2003 to establish airports, or assist in the establishment of private airports by rendering such technical, financial or other assistance which the Central Government may consider necessary for such purposes cannot be assigned to the lessee under Section 12A of the 1994 Act. The Amendment Act of 2003 which also inserted Section 12A therefore provides in sub-section (1) of Section 12A that the Airports Authority can 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 Airports Authority may, in the public interest or in the interest of better manageme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity under lease to a lessee under Section 12A of the Act, the lease agreements, namely, the OMDA and the State Support agreement could not make a provision conferring the right on the lessee to levy and collect development fees for the purpose of discharging these statutory functions of the Airports Authority. We, therefore, do not think it necessary to refer to the clauses of the OMDA and the State Support Agreements executed in favour of the two lessees to find out whether the right of levying and collecting the development fees has been assigned to the lessees or not. 14. The High Court was not correct in coming to the conclusion in the impugned judgment that the development fees to be levied and collected under Section 22A of the 1994 Act is in the nature of tariff or charges collected by the Airports Authority for the facilities provided to the passengers and the airlines. It will be clear from a bare reading of Sections 22 and 22A that there is a distinction between the charges, fees and rent collected under Section 22 and the development fees levied and collected under Section 22A of the 1994 Act. The charges, fees and rent collected by the Airports Authority under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king passengers get at the existing airports. The nature of the levy under Section 22A of the 2004 Act, in our considered opinion, is not charges or any other consideration for services for the facilities provided by the Airports Authority. This Court has held in Vijayalashmi Rice Mills Ors. v. Commercial Tax Officers, Palakot Ors. (supra) that a cess is a tax which generates revenue which is utilized for a specific purpose. The levy under Section 22A though described as fees is really in the nature of a cess or a tax for generating revenue for the specific purposes mentioned in clauses (a), (b) and (c) of Section 22A. 15. Once we hold that the development fees levied under Section 22A is really a cess or a tax for a special purpose, Article 265 of the Constitution which provides that no tax can be levied or collected except by authority of law gets attracted and the decisions of this Court starting from The Trustees of the Port of Madras v. M/s Aminchand Pyarelal O rs . (supra), cited on behalf of the Union of India and DIAL and MIAL on the charges or tariff levied by a service or facility provided are of no assistance in interpreting Section 22A. It is a settled principl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate at which the tax is to be levied is an essential component of a taxing provision and no tax can be levied until the rate is fixed in accordance with the taxing provision. We have, therefore, no doubt in our mind that until the rate of development fees was prescribed by the Rules, as provided in Section 22A of the 1994 Act, development fees could not be levied on the embarking passengers at the two major airports. 16. The High Court, in our considered opinion, was not correct in coming to the conclusion in the impugned judgment that the exercise of the power to levy and collect development fees under Section 22A was not dependent on the existence of the rules and, therefore, this power could be exercised even if the rules have not been framed prescribing the rate of development fees under Section 22A of the 1994 Act. The High Court has relied upon the decision of this Court in U.P. State Electricity Board, Lucknow v. City Board, Mussorie Ors. (supra). In that case, the High Court was called upon to interpret Section 46(1) of the Electricity (Supply) Act, 1948, which provided that a tariff to be known as the Grid Tariff shall, in accordance with any regulations made in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings and this Court repelled the challenge and held that Section 7 only directs that the valuation of any asset other than cash has to be made subject to the rules and does not contemplate that there shall be rules before an asset can be valued and failure to make rules for valuation of a type of asset cannot therefore affect the vires of Section 7. In Section 22A of the 1994 Act, on the other hand, the levy or development fees was to be at the rate as prescribed by the Rules and hence could not be made without the rules. All other decisions starting from T. Cajee v. U. Jormanik Siem Anr. cited on behalf of the Union of India, DIAL and MIAL on this point are cases where the statutory power could be exercised without the rules or the regulations, whereas the power under Section 22A of the 1994 Act to levy development fees could not be exercised without the rules prescribing the rate at which development fees was to be levied. 19. Section 22A of the 1994 Act before its amendment by the 2008 Act specifically provided that the development fees may be levied and collected at the rate as may be prescribed by the rules. Hence, the rate of development fees could not be determined by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent in the two letters dated 09.02.2009 and 27.02.2009 are ultra vires the 1994 Act and that MIAL could not continue to levy and collect of development fees at the major airport at Mumbai without an appropriate order passed by the Regulatory Authority, the question is whether there is need to pass any consequential direction for refund of the development fees collected by DIAL and MIAL pursuant to the two letters dated 09.02.2009 and 27.02.2009 of the Central Government and the development fees levied and collected by MIAL after the amendment of Section 22A by the 2008 Act. 22. This Court has held in M/s Orissa Cement Ltd. v. State of Orissa (AIR 1991 SC 1676) that a finding regarding the invalidity of a levy need not automatically result in a direction for a refund of all collections thereof made earlier and that the Court has, and must be held to have, a certain amount of discretion to grant, mould or restrict the relief in a manner most appropriate to the situation before it in such a way as to advance the interests of justice. In the facts of this case, the development fees have been collected by DIAL and MIAL on the basis of the two letters dated 09.02.2009 and 27.02.2009 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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