2001 (12) TMI 442 - HC - Customs

Summary

Issues Involved:
1. Personal liability of the Chairman of a Company to pay Inland Air Travel Tax (IATT).
2. Definition and scope of the term 'carrier' under Section 41(c) of the Finance Act, 1989.
3. Applicability of Section 46A and Rule 14(4) of the IATT Rules regarding the recovery of tax dues.
4. Compliance with principles of natural justice in the attachment of personal property.

Detailed Analysis:

1. Personal Liability of the Chairman to Pay IATT
The primary issue in this writ petition is whether the Chairman of a Company incorporated under the Companies Act is personally liable to pay Inland Air Travel Tax (IATT). The petitioner was the Chairman of ModiLuft, which is a 'carrier' under Section 41(c) of the Finance Act, 1989. Despite the company's failure to pay IATT from March 1996 to August 1996, the authorities issued show cause notices and detained an aircraft leased by ModiLuft. The Assistant Commissioner later issued an order for the recovery of tax dues and penalties, and a subsequent letter indicated that the tax was recoverable from ModiLuft alone, not the petitioner.

2. Definition and Scope of 'Carrier' under Section 41(c)
Section 41(c) defines 'carrier' as the person or authority undertaking the carriage of a passenger on an inland journey, including any agent, representative, or other person acting on behalf of such person or authority. The petitioner argued that he could not be held as a carrier under this definition. The respondent contended that the petitioner, as the representative of ModiLuft, fell within the definition of 'carrier'. However, the court noted that the Act does not impose vicarious liability on the Chairman or Directors of a company defined as a 'carrier'.

3. Applicability of Section 46A and Rule 14(4)
Section 46A(4) and Rule 14(4) empower authorities to distrain or arrest any aircraft or property belonging to or under the control of the carrier for unpaid tax, interest, or penalty. The court observed that these provisions apply to the carrier's properties, not personal properties of individuals associated with the carrier. The court emphasized that the interpretation of these provisions must consider the legislation's object and context, as highlighted in precedents like Jagir Singh v. State of Bihar and Central Bank of India v. Ravindra.

4. Compliance with Principles of Natural Justice
The court found that the order of attachment of the petitioner's personal property was issued without granting an opportunity for a hearing, violating principles of natural justice. The authorities had previously stated that no IATT was recoverable from the petitioner. The court concluded that there was no evidence to show that the petitioner acted as an agent or representative of the carrier, ModiLuft, thus failing to satisfy the conditions for proceeding against him as a carrier.

Conclusion
The court held that the impugned order of attachment against the petitioner's personal property could not be sustained due to non-compliance with natural justice and lack of evidence showing the petitioner acted on behalf of the carrier. Consequently, the order of attachment was quashed, and the writ petition was allowed to the extent mentioned, with no order as to costs.