Telangana High Court: In an appeal filed against the order dated 11-6-2012 passed by a Single Judge, wherein it was held that Regulation 5(2) of the Handling of Cargo in Customs Areas Regulations, 2009 (‘the 2009 Regulations’) had no legal substratum to survive and held that consequential levy made on Respondent 1, GMR Hyderabad International Airport Ltd. towards cost recovery charges was wholly unsustainable, the Division Bench of Alok Aradhe, CJ.*, and Anil Kumar Jukanti, J., opined that in the absence of any special authorization to levy cost recovery charges under Sections 141 and 157 of the Customs Act, 1962 (‘the Act’), appellants had no authority to impose cost recovery charges by means of a Regulation. Thus, the Court dismissed the appeal and agreed with the Single Judge’s conclusion that the 2009 Regulations were ultra vires the Act.
Background
In 1999, the Government of India (‘GoI’), Airports Authority of India (‘AAI’) and the erstwhile Government of Andhra Pradesh (‘GoAP’) agreed to set up a new Greenfield International Airport at Hyderabad on Public Private Participation basis. On 26-6-2002, guidelines were issued vide Circular No. 34/2002 by Appellant 1, Central Board of Excise and Customs for appointment of Custodian of Sea Ports and Air Cargo Complexes. A tender was issued in which Respondent 1 was declared as a preferred bidder and a Concession Agreement on 20-12-2004 was executed between the Ministry of Civil Aviation, GoI and Respondent 1 for development, construction, operation, and maintenance of Greenfield Airport at Shamshabad near Hyderabad.
Under the Concession Agreement, Respondent 1 had to operate, maintain, and perform airport activities and non-airport activities. Article 3.2.1(b) of the Concession Agreement recognised the right of Respondent 1 to carry on any activity or business in connection with or related to the arrival, departure and/or handling of aircraft, passengers, baggage, cargo and/or mail at the Airport. Under Article 8.4 of the Concession Agreement, GoI was under an obligation to establish the customs immigration and quarantine procedures at its own cost.
On 7-12-2006, Respondent 1 applied for appointment as Custodian under Section 45 of the Customs Act, 1962. Thereafter, on 16-5-2007, Respondent 1 submitted a representation to Appellant 1 requesting GoI to waive condition Nos. 10 to 13 of Circular No.34/2002 dated 26-6-2002 and to issue necessary instructions to GoI to grant Custodianship without imposing any onerous conditions. The Commissioner of Customs and Central Excise, Hyderabad vide Notification No. 2/2008, dated 11-3-2008 granted Custodianship to Respondent 1 which provided for payment of cost of customs department by Respondent 1. The Assistant Commissioner of Customs, Air Cargo Complex, Hyderabad (‘Assistant Commissioner’) by a communication dated 1-3-2008 requested Respondent 1 to bear the cost of Customs Staff posted at Air Cargo Complex from the date of operation at the Airport premises.
Respondent 1 filed a petition challenging the action of appellants in seeking to recover customs cost recovery. The Single Judge of this Court by an interim order dated 21-11-2008 stayed all further proceedings in pursuance of the letter dated 9-4-2008. Thereafter, a Notification No. 26/2009, dated 17-3-2009 was issued by Appellant 1 by which in exercise of powers under Sections 141(2) and 157 of the Act, the 2009 Regulations were framed with retrospective effect i.e., from 17-3-2009.
Respondent 1 withdrew the earlier petition and filed another petition challenging the validity of the Notification No. 26/2009, dated 17-3-2009 and Notification No. 96/2010, dated 22-11-2010 issued by Appellant 1 in respect of cost recovery. The Single Judge of this Court by an order dated 11-6-2012 allowed the writ petition and held that Regulation 5(2) of the 2009 Regulations had no legal substratum to survive and held that consequential levy made on Respondent 1 towards cost recovery charges was unsustainable. Thus, the present intra court appeal was filed.
Analysis, Law, and Decision
The issue for consideration was “whether the 2009 Regulations were ultra vires the Act?”.
The Court relied on Commissioner of Sales Tax, U.P. v. Modi Sugar Mills Ltd., (1961) 12 STC 182, wherein the Supreme Court held that with regard to taxing statutes, the construction had to be made on express language used in the statute and there was no room for equitable consideration and presumption could not apply. The Court also relied on Bimal Chandra Banerjee v. State of M.P., (1970) 2 SCC 467, wherein the Supreme Court held that the State Government could not impose tax when there was no special authorization to do the same by the taxing statute.
Further, the Court relied on Ahmedabad Urban Development Authority v. Sharadkumar Jayantikumar Pasawalla, (1992) 3 SCC 285, wherein it was held that no tax could be imposed by any rules or regulations unless the statute under which such subordinate legislation was made specifically authorized imposition of such tax. In the Regulations framed under the statute, levy of any tax or fee must be based on a specific statutory provision and not on any implied, incidental, or ancillary authority.
The Court observed that Section 157 of the Act did not enumerate any specific provision under which cost recovery charges i.e., the amount of salary payable to the officials of the Customs Department, who were deployed at the Airport who performed their statutory duties, could be recovered. The 2009 Regulations were framed in exercise of the powers conferred under Sections 141 and 157 of the Act. The Court opined that it was evident that there was no express statutory provision conferring authority on appellants to levy cost recovery charges. In the absence of any special authorization to levy cost recovery charges under Sections 141 and 157, appellants had no authority to impose cost recovery charges by means of a Regulation. Thus, The Court concluded that the 2009 Regulations were ultra vires the Act.
The Court opined that the Customs Department officers employed at the Airport between 2008 and 2013, were deployed to perform their statutory duties. The levy of cost recovery charges, which was salaries payable to the customs staff deployed at the Airport, was an administrative charge and was a tax. It could not be exacted from Respondent 1 without any statutory provision. Therefore, the same was also violative of Article 265 of the Constitution. Even assuming the said levy is a fee, it could not be recovered from Respondent 1, as no services were provided to it by deploying additional staff at the Airport between 2008 and 2013.
Further, the Court opined that as far as the contention that Respondent 1 at the time of application seeking appointment as Custodian had furnished an undertaking that it shall abide by the 2009 Regulations was concerned, Respondent 1 subsequently on 6-5-2007 and 22-11-2007 had submitted applications seeking to waive the condition Nos. 10 to 13 of Circular No. 34/2002 dated 26-6-2002. Therefore, the undertaking furnished by the Company did not bind it in the facts of the case. Thus, the Court dismissed the appeal and agreed with the Single Judge’s conclusion that the 2009 Regulations were ultra vires the Act.
[CBEC v. GMR Hyderabad International Airport Ltd., Writ Appeal No. 1321 of 2012, decided on 27-3-2024]
*Judgment authored by: Chief Justice Alok Aradhe
Advocates who appeared in this case:
For the Appellants: B. Narasimha Sarma, Additional Solicitor General of India, rep. by Swaroop Oorilla, Senior Standing Counsel for CBIT and Customs
For the Respondents: S. Niranjan Reddy, Senior Counsel for S. Vivek Chandra Sekhar, Counsel for Respondent 1
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