The Delhi High Court on Wednesday issued notices to the Centre, the Airports Authority of India and the Directorate General of Civil Aviation as the Federation of Indian Airlines (FAI) sought a stay on the government’s notification on levy of Rs.7,5000 to Rs.8,500 per flight operated by Indian airlines to create a regional connectivity fund (RCF).
UDAN scheme
The fund will be used to develop regional airports and enhance regional connectivity under its Ude Desh Ka Aam Naagrik (UDAN) scheme.
A Bench of Chief Justice G. Rohini sought the Centre’s response on the prayer of FAI, comprising IndiGo, GoAir, SpiceJet and Jet Airways, challenging the levy of tax and the scheme, which is set to come into effect from Thursday.
The FAI has sought quashing of the October 21 notification, by which a rule for such a levy was brought into the Aircraft Rules, 1934.
Appearing for the FAI, senior advocate Gaurav Sarin said such a levy is not contemplated in the aircraft rules and cannot be brought in as an obligation.
“A tax and not a fee”
“The subject levy [RCF] is a tax and not a fee. The chief purpose of this levy is to raise funds for the RCF to fulfil a public purpose, i.e., to enhance regional connectivity. Secondly, the levy is an amount that is payable to the government. Thirdly, it is not in the nature of a charge for any privilege or benefit or service rendered by the government,” Mr. Sarin explained.
Statutory sanction
He said since this levy of tax is also not an amount payable by passengers for provision of any service of facility to them, this levy is nothing but a tax, and therefore cannot be levied without statutory sanction.
The UDAN scheme is aimed at connecting under-served airports and regions. As per the government, a participating carrier — which would be extended Viability Gap Funding — has to bid for at least nine seats and a maximum of 40 seats. In the case of a helicopter, the operator has to bid for a minimum of five seats and a maximum of 13 seats.
