Delhi High Court
S.K. Modi vs Union Of India And Ors. on 21 December, 2001
Equivalent citations: 2002IVAD(DELHI)484, 96(2002)DLT206, 2002(144)ELT59(DEL)
Author: S.B. Sinha
Bench: S.B. Sinha, A.K. Sikri
JUDGMENT S.B. Sinha, C.J.
1. Whether the Chairman of a Company incorporated under the Companies Act is personally liable to pay Inland Air Travel Tax (in short, the 'IATT') is the question involved in this writ petition?
The basic of the matter is not in dispute.
2. The petitioner herein was the Chairman of ModiLuft. ModiLuft is a 'carrier' within the meaning of Section 41(c) of the Finance Act, 1989 (M/F). It paid IATT till February 1996. Thereafter no tax, however, was paid or paid within the specified period. Six show-cause notices have been issued to the Company by the Assistant Commissioner of Customs relating to the period March, 1996 to August, 1996. On or about 14.11.1996, a detention memo in respect of a Boeing 737 aircraft was issued for not depositing a sum of Rs. 10,40,90,255/- on the ground that the carrier has failed to observe Inland Air Travel Tax Rules (hereinafter referred to as the 'IATT Rules'). The aircraft was detained in terms of Rule 14(4) of the IATT Rules as "belonging to or under control of M/L". The said aircraft belonged to Air UK Leasing Ltd. (in short, 'AUKL'), which had been leased out to the ModiLuft.
AUKL filed a writ petition in this Court, which was marked as CWP No. 110 of 1997 for quashing the aforementioned detention memo dated 14.11.1996. This Court by an order dated 20.01.1997 directed release of the aircraft stating:-
"Having heard learned counsel for the parties and balancing the equities. We think that release of the Aircraft without any condition would not be just and fair. Thus, having regard the facts and circumstances of the case, we direct that the Aircraft in question be released to the petitioner subject to the petitioner depositing, without prejudice to the rights and contentions to the parties, a sum of Rs. 8 crores and furnishing a Bank Guarantee in the sum of Rs. 4.50 crores, to the satisfaction of Commissioner of Customs, Air Cargo Unit, New Delhi undertaking to pay the same in case the petition is ultimately dismissed. The petitioners can have benefits of this order for a period of four weeks from today."
An application for grant of special relief was also filed by the AUKL before the Apex Court, but the same dismissed by order dated 10.02.1997. The Additional Chief Commissioner thereafter by a letter dated 15.04.1997 addressed to the Director General of Civil Aviation stated that the amount deposited by AUKL could be appropriated towards the outstanding dues pending against ModiLuft. The said CWP No. 110 of 1997 was ultimately dismissed. The said letter appears to have been issued with the approval of the Chief Commissioner. The aforementioned writ petition was dismissed by this Court on 13.02.1998. In the aforementioned judgment, this Court noted the submission raised on behalf of AUKL to the effect that they had no obligation to pay the IATT and that ModiLuft is the carrier.
A personal hearing was given by the Assistant Commissioner in the proceedings where after by order dated 13.01.1999, it was directed as under:-
"(i) The IATT dues for the period March, 1996 to August, 1996 amounting to Rs. 8,56,06,850/- (Rupees Eight Crores, Sixty Five Lacs, Six Thousand, Eight Hundred and Fifty Only) along with interest @ 20% as prescribed in Section 43A(1) of Finance Act, 1989 read with notification No. 4/94-IATT dated 12.08.1994, should be deposited immediately by the Party.
(ii) The Penalty of Rs. 25,00,00,000/- (Rupees Twenty Five Crores Only) as adjudged above should also be deposited immediately by the Party."
As against the said order, ModiLuft preferred appeal before the Chief Commissioner (Appeals). On or about 20.10.1999, the Deputy Commissioner (IATT) by a letter addressed to the petitioner herein informed that as the IATT dues have not been paid, they would proceed against ModiLuft under Section 46(A) of the Act read with 14(4) of the IATT Rules including seizure of any properties belonging to or under the control of ModiLuft, until the dues were paid. An application was filed by ModiLuft to stay the payment of the aforesaid amount pending disposal of the appeal on 13.12.1999 whereupon no order was passed. By a letter dated 24.04.2000, The Deputy Commissioner of Customs informed the District Collector (Revenue) that the tax along with interest and penalty was recoverable from the petitioner as it could not be recovered in terms of the IATT Rules. With the said letter, a certificate purported to have been issued under Section 46A of the Act read with Rule 14(4) of the Rules issued by the Deputy Commissioner had been annexed. By a letter dated 26.04.2000, it was, however, clarified that the tax was recoverable from ModiLuft alone and not from the petitioner, as was earlier indicated in the letter dated 24.04.2000.
The Deputy Commissioner Customs, IATT curiously by a letter dated 25.07.2000 addressed to the District Collector (Revenue) stated as under:-
"This is with reference to the aforesaid subject and my earlier letter C. No. VIII(PLM)/IATT/Recovery/215/96/ PT/8146 dated 24.04.2000 and subsequent corrigendum of the same number issued on the same subject. You are hereby requested to discontinue the recovery of IATT dues against M/s. ModiLuft Ltd. and my earlier authorization issued to you for the recovery of arrears stands cancelled."
Thereafter on 09.05.2000, an order was issued against ModiLuft by the Assistant Collector (Revenue) to the effect that Rs. 40.5 crores was recoverable from it. Despite the same, on 03.08.2000, the Assistant Commissioner of Customs vide letter addressed to the petitioner herein directed not to transfer or charge his personal properties mentioned therein in any way and prohibiting all persons from taking any benefit under such transfer or charge.
3. ModiLuft prayed for stay of the operation of the said order before the Chief Commissioner (Appeals) stating that no duty or penalty is payable by the petitioner, but no order was passed thereupon, despite the fact that the personal hearing was given in their behalf on 11.08.2000. Thereafter the impugned order of attachment dated 03.08.2000 was served upon the petitioner, the relevant portion of which reads as follows:-
"It is ordered that you, Shri Satish Kumar Modi, Chairman of M/s. ModiLuft Ltd. be and are hereby prohibited and restrained until the further orders of the undersigned, from transferring or charging the under mentioned property in any way and that all persons be and that they are hereby prohibited from taking any benefit under such transfer or charge. ... ... ..."
4. Mr. Hari Shankar, the learned counsel appearing on behalf of the petitioner, submitted that keeping in view the provisions of Section 41(c) of the Finance Act, 1989, the petitioner cannot be held to be a carrier and thus the impugned order must be held to be illegal.
5. Mr. K.K. Sud, the learned Additional Solicitor General appearing on behalf of the respondent, on the other hand, submitted that the petitioner being the representative of ModiLuft would also come within the purview of the definition of 'carrier' as contained in Section 41(c) of the Act.
6. Admittedly, ModiLuft is a 'carrier' within the meaning of aforementioned provision. Section 41(c) reads as follows:-
"41. Definitions. - ... ... ... ...
... ... ... ... ... ... ...
(c) 'carrier' means the person or authority undertaking the carriage of a passenger on an inland journey and includes any agent, representative or other person acting on behalf of such person or authority;
... ... ... ... ... ... ..."
7. IATT is payable by the carrier. Section 46A(4) and Rule 14(4), which are applicable in the instant case are as under:-
"Section 46-A. Modes of recovery-
... ... ... ... ... ... ...
(4) The authority may distrain or arrest any aircraft and any other property belonging to, or under the control of, the carrier or other person, as the case may be, and detain the same until the tax, interest or penalty so determined is paid;
and in case any part of the tax, interest or penalty or of the cost of the distress or arrest or of the keeping of the aircraft or other property distrained or arrested, remains unpaid for the space of thirty days next after any such distress or arrest, may cause the said aircraft or other property to be sold and with the proceeds of such sale may satisfy the tax, interest or penalty and the costs including the cost of sale remaining unpaid, and shall render the surplus, if any, to the carrier or other person."
"Rule 14. Recovery of sums due to Government-
(4) On a specified authorization being granted by the Collector of Customs, the Assistant Collector Customs may distrain or arrest any aircraft and any other property belonging to, or under the control of, the carrier and detain the same until the tax, interest or penalty to determined is paid; and in case any part of the tax, interest or penalty or of the cost of the distress on arrest or of the keeping of the aircraft or other property distrained or arrested, remains unpaid for the space of thirty days next after any such distress or arrest, may cause the said aircraft or other property to be sold and with the proceeds of such sale may satisfy the tax, interest or penalty and the costs including the cost of sale remaining unpaid, and shall render the surplus, if any, to the carrier."
8. It is not in dispute that the said Act does not provide for a vicarious liability upon the Chairman or any of the Director(s) of a Company, which comes within the purview of the definition of 'carrier'. The interpretation clause as is well-known must be applied having regard to the object of the legislation.
In Jagir Singh and Ors. v. State of Bihar and Anr. , it has been held:-
"The general rule of construction is not only to look at the words but to look at the context, the collocation and the object of such words relating to such matter and interpret the meaning according to what would appear to be the meaning intended to be conveyed by the use of the words under the circumstances. Sometimes definition clauses create qualification by expressions like "unless the context otherwise requires"; or "unless the contrary intention appears"; or "if not inconsistent with the context or subject-matter".
"Parliament would legislate to little purpose", said Lord Macnaghten in Netherseal Co. v. Bourne, (1889) 14 AC 228, "if the objects of its care might supplement or undo the work of legislation by making a definition clause of their own. People cannot escape from the obligation of a statute by putting a private interpretation on its language." The courts will always examine the real nature of the transaction by which it is sought to evade the tax."
However, recently in Central Bank of India v. Ravinder and Ors. , the law has been laid down in the following lines:-
"It was submitted by the learned amices and other counsel for the borrowers, that the expression "on such principal sum" as occurring twice in the latter part of Section 34 (1), which refers to interest pendente lite and post-decree, should be interpreted to mean principal sum arrived at by excluding the interest even if it has stood capitalized. This would be consistent with the legislative intent as reflected in the report of joint committee and sought to be fulfillled by 1956 amendment. For two reasons, this contention has to be rejected. Firstly, entertaining such a plea amounts to begging the question. As we have already held that the interest once capitalized ceases to be interest and becomes a part of principal sum or capital. That being so the interest forming amalgam with the principal, in view of having been capitalized, is principal sum and therefore the question of awarding interest on interest does not arise at all. Secondly, well-settled principles of interpretation of statutes would frown upon such a plea being entertained. A construction, which leads to repugnancy or inconsistently, has to be avoided. Ordinarily, a word or expression used at several places in one enactment should be assigned the same meaning so as to avoid "a head-on clash" between two meanings assigned to the same word or expression occurring at two places in the same enactment. it should not be lightly assumed that "Parliament had given with one hand what it took away with the other" [See- Principles of Statutory Interpretation, Justice G.P. Singh, 7th Edition 1999, p. 113]. That construction is to be rejected which will introduce uncertainty, friction or confusion into the working of the system (ibid, p. 119). While embarking upon interpretation of words and expressions used in a statute it is possible to find a situation when the same word or expression may have somewhat different meaning at different places depending on the subject or context. This is however an exception which can be resorted to only in the event of repugnancy in the subject or context being spelled out. It has been the consistent view of Supreme Court that when the Legislature used same word or expression in different parts of the same section or statute, there is a presumption that the word is used in the same sense throughout. (ibid, p. 263). More correct statement of the rule is, as held by House of Lords in Farrell v. Alexander, [(1976) 2 All E.R. 721, 736], "Where the draftsman uses the same word or phrase in similar contexts, he must be presumed to intend it in each place to bear the same meaning". The court having accepted invitation to embark upon interpretative expedition shall identify on its radar the contextual use of the word or expression and then determine its direction avoiding collision with icebergs of inconsistency and repugnancy.
9. In the aforementioned situation, there cannot be any doubt whatsoever that the properties of carrier can ordinarily be the subject matter of attachment. An order of attachment of property entails civil consequences. Thus, before an order of attachment of personal property of the petitioner could be passed, the principles of natural justice were required to be complied with. Admittedly, not only no opportunity of being heard had been granted to the petitioner, but also, as noticed, the authorities in terms of their letter dated 26.04.2000 categorically stated that no IATT was recoverable from the petitioner herein. No reason far less any cogent or sufficient reason had been assigned for issuing the impugned order of attachment dated 04.08.2000.
10. There is also nothing on records to show that the petitioner herein had been an agent, representative or other person acting on behalf of such person or authority. The expression 'such person or authority' refers to the person or authority, who undertakes the carriage of a passenger on an inland journey and includes any agent, representative or other person acting on behalf of such person or authority must be one who would be a carrier within the meaning of the provisions thereof, the petitioner herein comes within the purview of the aforementioned definition. He could be proceeded with as being a carrier in terms of the definition, but for the said purview, it was obligatory on behalf of the respondents to show that he had been acting on behalf of the person or authority undertaking the carriage of a passenger on an inland journey.
11. The conditions precedent for proceeding against the petitioner on the ground that he is also a carrier having not been satisfied, we are of the opinion that the impugned order of attachment cannot be sustained. It is quashed accordingly.
12. This writ petition is allowed to the extent mentioned hereinabove, but there shall be no order as to costs.