Jagson Airlines Challenges Govt Over Penalty

The private sector Jagson Airlines Ltd (Jal) has challenged in the Delhi high court the imposition of penalty of over Rs 11 lakh for non-payment of inland air travel tax (IATT).

Acting on a petition filed by Jal, the division bench comprising Justice Devinder Gupta and Justice Dalveer Bhandari adjourned the hearing and posted the case for October 28.

Jal counsel, Geeta Luthra, challenged the Rs 8 lakh penalty for non-payment of IATT and Rs 3.4 lakh interest saying "the interest and penalty is unconstitutional and illegal" and it cannot be imposed retrospectively as per amended Finance Act.

Under the 1989 Finance Act, which was subsequently amended in 1994, the finance ministry had introduced IATT at the rate of 15 per cent of the airfare.

 

The company was slapped penalty for alleged default in payment of IATT dues in 1993 and 1994.

Luthra said "it is well settled proposition of law that the penal clause in a legislation cannot have retrospective effect and is ultra vires the provisions of Article 265 of the Constitution of India.

She said the Finance Act, 1989 were totally silent about the charging of interest and levying of penalty.

Alleged default was committed prior to August 1, 1994, when amended act, under which penalty has been imposed, came into being, Luthra said.

Accordingly, assistant commissioner of customs and other respondents acted without jurisdiction and have interpreted the law in incorrect perspective, she said.

Besides, levy of penalty which is harsh and unreasonable under section 43-a of the Finance Act, 1994, is violative of Article 14 and 19 (1) (g) of the Constitution of India, Jal counsel said.