High court refuses waiver of penalty to foreign airlines

Granting no relief to four foreign airlines, the Bombay high court on Monday dismissed their petition seeking a waiver of the penalty levied on them by the Centre for delaying payment of foreign travel tax (FTT).

Foreign carriers Malaysian Airlines, Saudi Arabian Airlines, North West Airlines and Kenya Airways in separate petitions before the court had challenged the penalty levied under section 38(3) of the Finance Act, 1979 for delay in paying foreign travel tax collected by the airlines from their passengers.

Malaysian Airlines was asked to pay Rs4.19 lakh as penalty in May 2002 by the commissioner of customs while Saudi Arabian Airlines had delayed the payment of Rs1.95 crore in FTT. Kenya Airways was imposed with Rs11.17 lakh and North West Airlines that paid its FTT, two days after the due date in August 2002, was imposed with a penalty of Rs9.62 lakh.

According to the Finance Act, 1979, if the carrier or any other person fails to pay FTT to the credit of the central government within fifteen days as specified, the penalty must follow, which shall not be less than one fifth of the amount of the FTT, the court’s order states.

The counsels for the airlines had also argued that failure to pay, as stated in the legislation, would mean non-payment of the FTT and not delayed payment. The penalty for delay should therefore be waived off. The court, however, noted: “Non-payment is nothing but failure to pay when due.”  

Without granting any of the prayers made by the airlines, the judges took the view that “if any person fails to pay within the statutory period of fifteen days, then such person is well within
the sweep of the words ‘failure to pay’.”