2017 (12) TMI 1448 - HC - Indian Laws

Refund of license fee paid - Termination of licenses granted - cancellation of entry permits - termination on the ground of failure of the petitioners to supply information demanded from them and for non payment of licence fee which was claimed with retrospective effect from 1979 - Held that - the petitioners paid the amount at the rate of 2% without any demur from 4th October 1995. Moreover, there is no challenge to the demand made at the rate of 2% from the aforesaid date. However, for a period prior to the said date, no such demand can be validly made. The demand of licence fee at the rate of 10% from 3rd September 1984 is lawful. However, there is no legal basis for increasing the same to 11% till 26th December 2001. The second respondent is justified in demanding the licence fee at the rate of 15% from 1st July 2007. If there is any subsequent increase, there is no specific challenge to the same in the petition. Thus, the first respondent was entitled to recover licence fee at the rate of 10% of the annual turnover from 3rd September 1984 till 26th December 2001 - The second respondent is justified in demanding the licence fee at the rate of 15% from 1st July 2007. The first respondent was not competent to demand licence fee at the rate of 2% for the period prior to 4th October 1995. The first respondent was entitled to recover licence fee at the rate of 10% of the annual turnover from 3rd September 1984 till 26th December 2001. From 26th December 2001, the recovery at the rate of 11% was lawful. From 1st July 2007, the levy at the rate of 15% is justified. We, therefore, propose to direct the Director of Civil Aviation to appoint a competent officer to make an adjudication on the question whether the petitioners have recovered the aforesaid amounts paid to the first or second respondents, from the companies or airlines which employed the third petitioner. Only if the petitioners satisfy the competent officer that the amounts have not been recovered from third parties, the petitioners will be entitled to refund. Even, the computation of the amount of refund with interest will have to be made by the said officer. The refund will carry interest at the rate of 6% per annum from the respective dates of payment.

Issues Involved:
1. Legality of the demand for license fees at varying rates (2%, 10%, 11%, and 15%) for ground handling services.
2. Authority of the first and second respondents to levy and collect license fees.
3. Discrimination in charging license fees among different ground handling service providers.
4. Whether the license fee constitutes a tax or a fee.
5. Entitlement of the petitioners to a refund of the license fees paid.

Issue-wise Detailed Analysis:

1. Legality of the Demand for License Fees:
The petitioners challenged the demand for license fees at different rates for ground handling services at Mumbai Airport. The first respondent initially demanded a fee of 2% from 1979 to January 1985, 10% from February 1985 to March 1991, and 11% from April 1991 onwards. The court found that the demand for a 2% fee prior to October 4, 1995, was illegal, as there was no Board resolution authorizing this rate. However, the demand for a 10% fee from September 3, 1984, was lawful based on a Board resolution. The demand for an 11% fee was only justified from December 26, 2001, when a Board resolution was passed. The second respondent's increase of the fee to 15% from July 1, 2007, was also found to be lawful.

2. Authority to Levy and Collect License Fees:
The court examined the authority of the first and second respondents to levy and collect license fees under the Airports Authority of India Act, 1994. It was determined that the power to levy fees is derived from Section 22(ii) of the Act, which allows charging fees or rent from persons given facilities to carry on trade or business at the airport. The second respondent, managing the airport under a lease agreement, was also found to have the authority to levy fees under the same statutory provisions.

3. Discrimination in Charging License Fees:
The petitioners alleged discrimination as they were charged higher fees compared to other ground handling service providers. The court found that the respondents were entitled to charge fees as per the decisions taken on September 3, 1984, December 26, 2001, and June 21, 2007. The argument of discrimination was not upheld as the respondents were acting within their legal authority.

4. License Fee as a Tax or Fee:
The court distinguished between a tax and a fee, noting that a fee is for specific benefits or privileges, whereas a tax is a general revenue burden. The court held that the license fee was not a tax but a fee, as it was a payment for the specific benefit of conducting business at the airport and using its facilities.

5. Entitlement to Refund:
The petitioners sought a refund of the license fees paid. The court directed the Director of Civil Aviation to appoint a competent officer to adjudicate whether the petitioners had recovered the fees from third parties. If the petitioners had not passed on the burden of the fees, they would be entitled to a refund with interest. The court emphasized that refunds would be granted only if the petitioners could prove they had borne the burden of the fees themselves.

Conclusion:
The court partly allowed the petition, declaring the demand for a 2% fee prior to October 4, 1995, illegal and upholding the demands for 10% from September 3, 1984, 11% from December 26, 2001, and 15% from July 1, 2007. The court directed an adjudication on the refund issue, contingent on whether the petitioners had passed on the fees to third parties.

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