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Judgment
Sanjiv Khanna, J.—Petitioner, Skyline N.E.P.C. by the present writ petition has impugned Order dated 3rd June, 1994 imposing penalty of Rs. 7 lacs u/s 46(2) of the Finance Act, 1989 (hereinafter referred to as the Act, for short)
The facts are undisputed. It is admitted that the petitioner was liable to deposit Inland Air Travel Tax (hereinafter referred to as IATT, for short) for the month of November, 1993 into the Central Government treasury and submit his return on or before 29th January, 1994. However, the petitioner deposited the aforesaid tax on 2nd June, 1994 after delay of 123 days from the due date and submitted the monthly return on 16th May, 1994 i.e. after delay of 106 days from the due date. It is also undisputed that by the impugned Order, the Assistant Collector of Customs has imposed penalty of Rs. 7 lacs on the petitioner u/s 46(2) of the Act read with Rules 6 and 7 of the Inland Air Travel Tax Rules, 1989 (hereinafter referred to as the Rules, for short).
The only contention urged before me by the learned Counsel for the petitioner is that Section 46(2) of the Act does not provide for imposition of penalty for violation of Rules 6 and 7 and therefore the impugned Order is bad for want of jurisdiction and is illegal.
Section 42 of the Act and Rules 6 and 7 at the relevant time read as under:
Section 42 Inland 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, a tax (hereafter in this Chapter referred to as the inland air travel tax) at the rate of fifteen per cent of the fare paid by such passengers for every such journey. Explanation:- When a passenger performs an inland journey at a concessional rate or without being charged any fare, the fare ordinarily payable for the journey shall, for the purposes of this section, be deemed to have been paid by such passenger.
(2) In accordance with the rules made under this Chapter, the inland air travel tax shall be collected by the officers of customs appointed under the Customs Act, 1962, or the Central Excise Officers appointed under the Central Excises and Salt Act, 1944, or such officers of the Central Government or the State Government or the International Airports Authority of India constituted under the International Airports Authority Act, 1971, or the National Airports Authority constituted under the National Airports Authority Act, 1985, or such carriers, as may be authorized in this behalf by the Central Government by notification in the Official Gazette and paid to the credit of the Central Government.
Rules
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 sixty days from the end of that month into the treasury.
Return regarding tax collected, etc.- Every carrier required under Rule 6 to pay the tax into the treasury shall file, in respect of every month before the expiry of sixty days from the end of that month, before the Collector of Customs, a return in that Form annexed to these rules, showing the amount of tax collected, amount refunded and the amount paid into the treasury.
Thus, Section 42 imposes an obligation on the petitioner-carrier to collect IATT from passengers embarking on every inland journey and deposit the same with the Central Government as stipulated in Rule 6 and file return as stipulated in Rule 7.
Rule 6 stipulates that a carrier is required to deposit IATT collected from the passengers within 60 days from the end of the month in which the collection is made. Under Rule 7, every carrier is required to file return as per the prescribed format showing the amount collected, amount refunded and the amount paid to the treasury. The said return is to be filed within 60 days from the end of the relevant month. As stated above, there was violation of Rules 6 and 7 by the petitioner in depositing and filing of return for the month of November, 1993.
Section 46 of the Act deals with the power of the respondent-authorities to impose penalties. The respondents have relied upon Section 46(2) of the Act to impose penalty in the present case. The said Section reads as under:
Penalties
(1) xxxxxxxx
(2) Every carrier or other person in charge of an aircraft, who in contravention of the provisions of Section 45, allows any passenger or passengers 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.
A bare reading of Section 46(2) indicates that the said Section applies when there is violation of Section 45 of the Act by any carrier or person in charge of any aircraft. Section 45 of the Act reads as under:
Passengers not be permitted to board aircraft without payment of inland travel tax- No carrier or other person in charge of an aircraft shall allow any passenger to board the aircraft unless such passenger has paid the inland air travel tax.
Section 45 stipulates that no carrier or any person in charge of the aircraft could allow any passenger to board an aircraft unless such passenger had paid IATT. The said Section imposed an obligation to ensure that the passenger had paid the IATT and unless the passenger had paid the said tax, the passenger should not be allowed to board the aircraft. The reason is obvious. IATT was an indirect tax which every carrier was obliged to collect from passengers and then deposit it with the Government as per Rules 6 and 7 read with Section 42 of the Act. A carrier or a person in charge of the aircraft would violate Section 45 of the Act, and could be subjected to levy of penalty u/s 46(2) of the Act, if a passenger was allowed to board the aircraft without paying IATT to the carrier. Penalty u/s 46(2) of the Act, was imposed for failure to collect IATT from the passengers. In the present case, there is no such allegation. The allegation in the present case is that the petitioner being a carrier had collected the tax from the passengers but after collection of tax there was belated deposit of tax and late filing of return as per the time prescribed in Rules 6 and 7. Late deposit of tax or late filing of return under Rules 6 and 7 read with Section 42 cannot be made subject matter of penalty u/s 46(2) of the Act. Late deposit of tax collected from the passengers by carrier or late filing of the return as prescribed in Rule 7 read with Section 42 of the Act is distinct and separate from failure to collect tax from passengers as stipulated in Section 45 for which penalty can be imposed u/s 46(2). It is, therefore, clear that the respondents have erred in relying upon and passing a penalty order u/s 46(2) of the Act as the said Section is not applicable to the alleged violations of Rules 6 and 7 read with Section 42. There is no allegation that the petitioner did not collect the tax from the passengers and therefore Section 46(2) of the Act is applicable. I am not concerned in the present case whether the petitioner is liable to pay interest for the late deposit of tax with the Government as the said question has not been raised before me or even mentioned in the impugned Order. The petitioner may be liable to pay interest but this aspect has not been urged before me.
Section 46(2) of the Act is a penal provision and for the said provision to be invoked the requirements mentioned in the said Section have to be satisfied. Penalty for violation of a provision of an Act, cannot be imposed unless there is a specific stipulation. A penalty provision should be clear, unambiguous and express. The Supreme Court in the case of Khemka and Co. (Agencies) Pvt. Ltd. Vs. State of Maharashtra, has observed that penalty is not a mere adjunct to assessment or consequence of an assessment. It is not merely a machinery. Penalty is not continuation of assessment proceedings and partakes the character of additional tax. Penalty being a statutory liability, there should be a specific provision for levy of penalty for the type of default. In the said case, Ray, C.J. in his judgment has observed that the Central Sales Tax Act, 1956 is a self contained Code which by charging provisions creates liability for tax, liability for penalty and authorizes imposition of penalty. Unless the Central Sales Tax Act authorizes imposition and levy of penalty the same cannot be imposed. Similar view has been expressed by Beg, J. in his concurring judgment by making the following observations:
On a consideration of the provisions mentioned above, it seems to me to be clear that whatever may be the objects of levying a penalty, its imposition gives rise to a substantive liability which can be viewed either as an additional tax or as a fine for the infringement of the law. The machinery or procedure for its realization comes into operation after its imposition. In any case, it is an imposition of a pecuniary liability which is comparable to a punishment for the commission of an offence. It is a well settled canon of construction of statutes that neither a pecuniary liability can be imposed nor an offence created by mere implication. It may be debatable whether a particular procedural provision creates a substantive right or liability. But, I do not think that the imposition of a pecuniary liability, which takes the form of a penalty or fine for a breach of a legal obligation, can be relegated to the region of mere procedure and machinery for the realization of tax. It is more than that. Such liabilities must be created by clear, unambiguous, and express enactment. The language used should leave no serious doubts about its effect so that the persons who are to be subjected to such a liability for the infringement of law are not left in a state of uncertainty as to what their duties or liabilities are. This is an essential requirement of a good Government of laws. It is implied in the constitutional mandate found in Article 265 of our Constitution: "No tax shall be levied or collected except by authority of law."
The aforesaid ratio was reiterated by the Supreme Court in the case of Collector of Central Excise, Ahmedabad Vs. Orient Fabrics Pvt. Ltd., .
Section 46(2) of the Act does not address the situation in which tax has been collected by the carrier and has not been paid to the Government treasury within time stipulated by Rule 6.
Faced with the above legal position, learned Counsel for the respondents has relied upon Rule 11 of the Rules and submitted that the impugned Order dated 3rd June, 1994 was appealable before the Collector of Customs (Appeal) within three months and the Collector of Customs (Appeal) under the Rules could condone delay for a further period of three months. It is submitted that the petitioner did not file any Appeal and the limitation period for filing of the Appeal has expired. It is alleged that the petitioner has accepted the penalty order u/s 46(2) of the Act and therefore the present writ petition should not be entertained and the same should be dismissed on the ground of alternative remedy and failure of the petitioner to avail the same.
I do not agree with the contention raised by the respondents. Section 46(2) has already been interpreted above. The said Section is clearly not applicable for the violation of Rules 6 and 7. The present case is one of lack of jurisdiction of the authority to impose penalty u/s 46(2) of the Act. During the relevant period of default there was no provision under which penalty for late deposit of tax or late filing of the return could be imposed under the Act. In view of the lacuna Section 46 relating to penalties was amended and Sub Sections 3 to 5 were incorporated by Finance Act, 1994 but w.e.f. 01.09.1994. The said Sub Sections read as under:
Penalties
(1) xxxxxxxx
(2) xxxxxxxx
(3) Every carrier or other person who fails to pay the inland air travel tax to the credit of the Central Government under Sub-section (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.
(4) Any rule made under this chapter may provide that in case of breach thereof by the carrier or other person, he shall be liable to a penalty which shall not be less than five hundred rupees but which may extend to fifty thousand rupees, and where the breach is a continuing one, with further penalty which may extend to five hundred rupees for every day after the first during which such breach continues.
(5) Any penalty under this section may be adjudged, collected and paid to the credit of the Central Government by such authority and in such manner as may be specified in the rules made under this chapter:
Provided that no order for imposing a penalty shall be passed by such authority unless the carrier or other person on whom the penalty is proposed to be imposed is given an opportunity of being heard in the matter by such authority.
Under the newly enacted Section 46(3) every carrier or person who fails to pay IATT to the credit of the Central Government was liable to pay penalty which shall not be less than 1/5th but may extend to three times the amount of tax not so paid to the credit of the Central Government. Section 46(4) specifically deals with cases of violation of any Rule and adumbrates that a carrier or other person shall be liable to pay penalty which shall not be less than Rs. 500/- and which may extend to Rs. 50,000/-, and in case of a continuous breach, it may extend to Rs. 500/- for each day during the period the default continues.
In this connection it will be appropriate to reproduce below the averments made in the counter affidavit filed by the respondent on the question of imposition of penalty u/s 46(2) prior to incorporation of Section 46(4) by the Finance Act, 1994. In the counter affidavit it is stated as under:
Para 16 of the writ petition, as stated, is wrong and denied. It is submitted that the Commissioner of Customs (Appeals), New Delhi, vide Order-in-Appeal No. 91/C/DL/94 dated 31.10.1994, has given relief to the petitioner whereas the Order-in-Original No. 23/94 and 24/94 dated 3.6.1994 were passed on 3.6.1994. Thus the appropriate action was to file appeal before the Commissioner of Customs (Appeals), New Delhi. The outstanding demands could have been withdrawn, if the orders of Appellate authority had preceded the passing of Orders-in-Original. However, the petitioners have taken recourse of filing the subject Civil Writ Petition in October, 1996 as the period of appeal before the Commission of Customs (Appeals) has already lapsed and the petitioners have filed writ petition to bypass the forum to avoid period of limitation clause.
The petitioner has filed on record orders passed by the Assistant Collector (Customs) dated 2nd September, 1996 wherein no penalty was imposed u/s 46(2) for the period prior to 01.09.1994 and it was observed as under:
As regard the penalty provision, I have reconsidered the case. All these cases pertain to the period prior to 1.9.94. the penalty provision u/s 46 of IATT was introduced by Section 98 of the finance Act 32 of 1994 and brought into effect from 1.9.1994. Before the introduction of Section, there was no provision for imposing penalty for delayed payments.
It is well settled that existence of alternative remedy is not a bar to maintainability of a writ petition but a matter of discretion depending upon the facts and circumstances of each case. In cases (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged the High Court may exercise its writ jurisdiction in spite of availability of the alternative remedy. (Refer Harbanslal Sahnia and Another Vs. Indian Oil Corpn. Ltd. and Others, ). It cannot be said that statutory right of appeal u/s 11 of the Rules bars or prohibits the petitioner from approaching this Court under Article 226 of the Constitution of India. This Court however may choose not to exercise its discretionary powers when statutory right to appeal is provided. Such discretion has to be exercised keeping in mind several aspects including the question whether the action per se is bad for want of or lack of jurisdiction.
In L.K. Verma Vs. H.M.T. Ltd. and Another, the Supreme Court observed:
The High Court in exercise of its jurisdiction under Article 226 of the Constitution, in a given case although may not entertain a writ petition inter alia on the ground of availability of an alternative remedy, but the said rule cannot be said to be of universal application. Despite existence of an alternative remedy, a writ court may exercise its discretionary jurisdiction of judicial review inter alia in cases where the court or the tribunal lacks inherent jurisdiction or for enforcement of a fundamental right or if there has been a violation of a principle of natural justice or where vires of the Act is in question. In the aforementioned circumstances, the alternative remedy has been held not to operate as a bar. (See Whirlpool Corpn. v. Registrar of Trade Marks, Sanjana M. Wig v. Hindustan Petroleum Corpn. Ltd. and State of H.P. v. Gujarat Ambuja Cement Ltd.)
As observed above, there is no dispute that the action of the respondent in imposing penalty u/s 46(2) of the Act is bad for want of jurisdiction as has been held by the respondents themselves in their own orders and as admitted in the counter affidavit. In these circumstances, I do not think that the writ petition should be dismissed on the ground of alternative remedy.
Accordingly, Rule is made absolute and the Interim order is confirmed. Impugned Order dated 3rd June, 1994 is quashed.
Writ Petition is disposed of. No costs.