LAW FOR ALL

Saturday, August 8, 2015

whether the Appellate Tribunal under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“the SARFAESI Act”) has the power to condone delay in filing an appeal under Section 18(1) of the said Act. As a result of the above discussion, the question is answered in the affirmative by holding that delay in filing an appeal under Section 18 (1) of the SARFAESI Act can be condoned by the Appellate Tribunal under proviso to Section 20 (3) of the RDB Act read with Section 18 (2) of the SARFAESI Act. The contrary view taken by the Madhya Pradesh High Court in Seth Banshidhar Media Rice Mills Pvt. Ltd. case is overruled. 16. Accordingly, the appeal filed by the Bank against the judgment of the Andhra Pradesh High Court is dismissed and the appeals filed by the borrowers are allowed. The impugned orders passed by the High Court of Madhya Pradesh (in appeals arising out of SLP (C) No.27674 of 2011 and SLP (C) No.36316 of 2011) are set aside and the matters are remanded to the High Court for being dealt with afresh in accordance with law. The appeal arising out of SLP (C) No.38436 of 2012 has been preferred directly from the order of the Debt Recovery Appellate Tribunal, Delhi passed by the said tribunal relying upon the judgment of the Madhya Pradesh High Court in Seth Banshidhar Media Rice Mills Pvt. Ltd. case. The said impugned order is also set aside and the matter is remanded to the Debt Recovery Appellate Tribunal, Delhi for being dealt with afresh in accordance with law. 17. All the appeals are disposed of accordingly.

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.5924 OF 2015
(ARISING OUT OF SLP (C) NO.27674 OF 2011)

BALESHWAR DAYAL JAISWAL …APPELLANT

VERSUS

BANK OF INDIA & ORS. ...RESPONDENTS

WITH

CIVIL APPEAL NO.5925 OF 2015
(ARISING OUT OF SLP (C) NO.36316 OF 2011)

WITH

CIVIL APPEAL NO.5926 OF 2015
(ARISING OUT OF SLP (C) NO.38436 OF 2012)

WITH

CIVIL APPEAL NO.5927 OF 2015
(ARISING OUT OF SLP (C) NO.5789 OF 2013)

J U D G M E N T

ADARSH KUMAR GOEL, J.

1. Leave granted.

2. The question in this batch of appeals is whether the Appellate
Tribunal under the Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002 (“the SARFAESI Act”) has the
power to condone delay in filing an appeal under Section 18(1) of the said
Act.

3. We have heard learned counsel appearing for the parties, including
S/Shri Amol Chitale and Akshat Shrivastava, counsel for the appellants-
borrowers and Shri Rana Mukherjee, senior counsel and S/Shri Anil Kumar
Sangal and Pranab Kumar Mullick, counsel appearing for the Banks.

4. The appellants submit that the Appellate Tribunal has the power to
condone delay in filing the appeal beyond by the prescribed period of
limitation because of the following reasons:

(i) Section 18(2) of the SARFAESI Act provides that the Appellate
Tribunal shall follow the provisions of the Recovery of Debts Due to Banks
and Financial Institutions Act, 1993 (“the RDB Act”) in disposing of the
appeal unless otherwise provided under the SARFAESI Act or the rules made
thereunder. The proviso to Section 20(3) of the RDB Act empowers the
Appellate Tribunal to entertain an appeal after expiry of period of
limitation, if sufficient cause for not filing the appeal within the period
of limitation was shown. Thus, the proviso to Section 20(3) of the RDB Act
is incorporated in Section 18(2) of the SARFAESI Act;

(ii) Section 29(2) of the Limitation Act, 1963 makes the said Act’s
Sections 4 to 24 applicable to a special or local law prescribing a
different period of limitation for a suit, appeal or application unless
expressly excluded. There being no provision in the SARFAESI Act excluding
the applicability of Sections 4 to 24 of the Limitation Act, delay can be
condoned under Section 5 of the Limitation Act, and time can be excluded
under Section 14 of the Limitation Act wherever applicable; and

(iii) Section 24 of the RDB Act makes the Limitation Act applicable to an
application made to a Tribunal. Section 36 of the SARFAESI Act makes
period of limitation prescribed under the Limitation Act applicable to
measures taken under Section 13(4). Thus, there is be no exclusion of the
Limitation Act.

5. On the other hand, the Banks would contend that:

(i) Section 18(2) of the SARFAESI Act cannot be read as extending
provisions of proviso to Section 20(3) of the RDB Act to an appeal filed
under Section 18(1) of the SARFAESI Act;

(ii) Section 29(2) of the Limitation Act is not attracted to proceedings
before a Tribunal as the period of limitation prescribed under the
Limitation Act is applicable only to proceedings before a Court and not
before a Tribunal; and

(iii) Provisions of Limitation Act can stand excluded not only by an
express provision of a local or special law but also by necessary
implication from the scheme of such local or special law. The scheme of
the SARFAESI Act by making the Limitation Act expressly applicable to
measures under section 13(4) of the Act impliedly excludes the said Act
from appeals or other proceedings.

6. Learned counsel for the parties have brought to our notice that the
issue in question has been examined by the High Courts of Madhya Pradesh,
Andhra Pradesh, Bombay and Madras. While Madhya Pradesh High Court in M/s.
Seth Banshidhar Media Rice Mills Pvt. Ltd. vs. State Bank of India[1] held
that delay in filing an appeal cannot be condoned by the Tribunal, the
Andhra Pradesh High Court in Sajida Begum vs. State Bank of India[2], the
Bombay High Court in UCO Bank, Mumbai vs. M/s. Kanji Manji Kothari and Co.,
Mumbai[3] and the Madras High Court in Punnu Swami vs. The Debts Recovery
Tribunal[4] have taken contrary view.

7. At this stage it will be appropriate to reproduce the provisions of
Sections 18 and 36 of the SARFAESI Act, Section 20 and Section 24 of the
RDB Act and Section 29 of the Limitation Act :

“Sections 18 and 36 of the SARFAESI Act :

18. Appeal to Appellate Tribunal

(1) Any person aggrieved, by any order made by the Debts Recovery
Tribunal under section 17, may prefer an appeal alongwith such fee, as may
be prescribed to an Appellate Tribunal within thirty days from the date of
receipt of the order of Debts Recovery Tribunal:

PROVIDED that different fees may be prescribed for filing an appeal by the
borrower or by the person other than the borrower:

PROVIDED FURTHER that no appeal shall be entertained unless the borrower
has deposited with the Appellate Tribunal fifty per cent. of the amount of
debt due from him, as claimed by the secured creditors or determined by the
Debts Recovery Tribunal, whichever is less:

PROVIDED ALSO that the Appellate Tribunal may, for the reasons to be
recorded in writing, reduce the amount to not less than twenty-five per
cent. of debt referred to in the second proviso.

(2) Save as otherwise provided in this Act, the Appellate Tribunal
shall, as far as may be, dispose of the appeal in accordance with the
provisions of the Recovery of Debts Due to Banks and Financial Institutions
Act, 1993 (51 of 1993) and rules made thereunder.

36. Limitation No secured creditor shall be entitled to take all or any
of the measures under sub-section (4) of section 13, unless his claim in
respect of financial asset is made within the period of limitation
prescribed under the Limitation Act, 1963 (36 of 1963).

Sections 20 and 24 of the RDB Act :

Section 20 Appeal to the Appellate Tribunal
(1) Save as provided in subsection (2), any person aggrieved by an order
made, or deemed to have been made, by a Tribunal under this Act, may prefer
an appeal to an Appellate Tribunal having jurisdiction in the matter.
(2) No appeal shall lie to the Appellate Tribunal from an order made by a
Tribunal with the consent of the parties.
(3) Every appeal under sub-section (1) shall be filed within a period of
forty-five days from the date on which a copy of the order made, or deemed
to have been made, by the Tribunal is received by him and it shall be in
such form and be accompanied by such fee as may be prescribed:

Provided that the Appellate Tribunal may entertain an appeal after the
expiry of the said period of forty-five days if it is satisfied that there
was sufficient cause for not filing it within that period.

(4) On receipt of an appeal under sub-section (1), the Appellate Tribunal
may, after giving the parties to the appeal, an opportunity of being heard,
pass such orders thereon as it thinks fit, confirming, modifying or setting
aside the order appealed against.

(5) The Appellate Tribunal shall send a copy of every order made by it to
the parties to the appeal and to the concerned Tribunal.

(6) The appeal filed before the Appellate Tribunal under sub-section (1)
shall be dealt with by it as expeditiously as possible and endeavour shall
be made by it to dispose of the appeal finally within six months from the
date of receipt of the appeal.

Section 24 Limitation—The provisions of the Limitation Act, 1963 (36 of
1963), shall, as far as may be, apply to an application made to a Tribunal.

Section 29 of the Limitation Act

29. Savings-
(1) Nothing in this Act shall affect section 25 of the Indian Contract
Act, 1872 (9 of 1872).

(2) Where any special or local law prescribes for any suit, appeal or
application a period of limitation different from the period prescribed by
the Schedule, the provisions of section 3 shall apply as if such period
were the period prescribed by the Schedule and for the purpose of
determining any period of limitation prescribed for any suit, appeal or
application by any special or local law, the provisions contained in
sections 4 to 24 (inclusive) shall apply only in so far as, and to the
extent to which, they are not expressly excluded by such special or local
law.

(3) Save as otherwise provided in any law for the time being in force
with respect to marriage and divorce, nothing in this Act shall apply to
any suit or other proceeding under any such law.

(4) Sections 25 and 26 and the definition of "easement" in section 2
shall not apply to cases arising in the territories to which the Indian
Easements Act, 1882 (5 of 1882), may for the time being extend.”

8. The first point for consideration is the applicability of proviso to
Section 20(3) of the RDB Act to the disposal of an appeal by the Appellate
Tribunal under Section 18(2) of the SARFAESI Act. A bare perusal of the
said Section 18(2) makes it clear that the Appellate Tribunal under the
SARFAESI Act has to dispose of an appeal in accordance with the provisions
of the RDB Act. In this respect, the provisions of the RDB Act stand
incorporated in the SARFAESI Act for disposal of an appeal. Once it is so,
we are unable to discern any reason as to why the SARFAESI Appellate
Tribunal cannot entertain an appeal beyond the prescribed period even on
being satisfied that there is sufficient cause for not filing such appeal
within that period. Even if power of condonation of delay by virtue of
Section 29(2) of the Limitation Act were held not to be applicable, the
proviso to Section 20(3) of the RDB Act is applicable by virtue of Section
18(2) of the SARFAESI Act. This interpretation is clearly borne out from
the provisions of the two statutes and also advances the cause of justice.
Unless the scheme of the statute expressly excludes the power of
condonation, there is no reason to deny such power to a Appellate Tribunal
when the statutory scheme so warrants. Principle of legislation by
incorporation is well known and has been applied inter alia in Ram Kirpal
Bhagat vs. The State of Bihar[5], Bolani Ores Ltd. vs. State of Orissa[6],
Mahindra and Mahindra Ltd. vs. Union of India[7] and Onkarlal Nandlal vs.
State of Rajasthan[8] relied upon on behalf of the appellants. We have
thus no hesitation in holding that the Appellate Tribunal under the
SARFAESI Act has the power to condone the delay in filing an appeal before
it by virtue of Section 18(2) SARFAESI Act and proviso to Section 20(3) of
the RDB Act.
9. The fact that RDB Act and the SARFAESI Act are complimentary to each
other, as held by this Court in Transcore vs. Union of India[9], also
supports this view.
10. We may now deal with the conflicting views of the High Courts on the
subject. The Madhya Pradesh High Court has held that the power of
condonation of delay stood excluded by principle of interpretation that if
a later statute has provided for shorter period of limitation without
express provision for condonation, it could be implied that there was no
power of condonation. Reliance has been placed on principles of statutory
interpretation by Justice G.P. Singh, 12th Edition, 2010, page 310. It was
further observed that the Limitation Act was made applicable to a Tribunal
under Section 24 of the RDB Act, but there was no similar provision with
respect to the Appellate Tribunal. To justify such an inference, reliance
has also been placed on Gopal Sardar case and Fairgrowth Investments Ltd.
vs. The Custodian[10]. It was further observed that the object of SARFAESI
Act was to ensure speedy recovery of the dues and quicker resolution of
disputes arising out of action taken for recovery of such dues. We find
the approach to be erroneous and incorrect understanding of the principle
of interpretation which has been relied upon. The principle discussed in
the celebrated Treatise in question is as follows:
“When an amending Act alters the language of the principal statue, the
alteration must be taken to have been made deliberately.”

11. It is difficult to appreciate how the above principle justifies the
view of the High Court. The change intended in SARFAESI Act has to be seen
from the statute and not from beyond it. No doubt the period of limitation
for filing appeal under Section 18 of the SARFAESI Act is 30 days as
against 45 days under Section 20 of the RDB Act. To this extent,
legislative intent may be deliberate. The absence of an express provision
for condonation, when Section 18(2) expressly adopts and incorporates the
provisions of the RDB Act which contains provision for condonation of delay
in filing of an appeal, cannot be read as excluding the power of
condonation. As already observed, the proviso to Section 20(3) which
provides for condonation of delay (45 days under RDB Act) stands extended
to disposal of appeal under the SARFAESI Act (to the extent that
condonation is of delay beyond 30 days). There is no reason to exclude the
proviso to Section 20(3) in dealing with an appeal under the SARFAESI Act.
Taking such a view will be nullifying Section 18(2) of the SARFAESI Act.
We are thus, unable to uphold the view taken by the Madhya Pradesh High
Court.
12. We approve the view taken by the Madras, Andhra Pradesh and Bombay
High Courts, but for different reasons. The view taken by Andhra Pradesh
High Court in Sajida Begum vs. State Bank of India[11] is based on
applicability of Section 29(2) of the Limitation Act. In our view, Section
29(2) of the Limitation Act has no absolute application, as the statute in
question impliedly excludes applicability of provisions of Limitation Act
to the extent a different scheme is adopted. If no provision of Limitation
Act was expressly adopted, it may have been possible to hold that by virtue
of Section 29(2) power of condonation of delay was available. It is well
settled that exclusion of power of condonation of delay can be implied as
laid down in Union of India vs. Popular Construction Co.[12], Chhattisgarh
State Electricity Board vs. Central Electricity Regulatory Commission[13],
Commissioner of Customs and Central Excise vs. Hongo India Private
Limited[14] and Gopal Sardar vs. Karuna Sardar[15] relied upon on behalf of
the Banks.
13. We may now advert to the last question as to whether the Appellate
Tribunal under the SARFAESI Act was not a Court and therefore, Section
29(2) of the Limitation Act was not attracted.
Tribunal to be Court, has relied on Sections 22 and 24 of the RDB Act.
Section 22 vests powers of Civil Court on the Tribunal only for purposes
14. The Andhra Pradesh High Court in Sajida Begum case in holding the
mentioned therein, such as summoning witnesses, discovery and production of
documents, receiving evidence, issuing commission for examining witnesses
etc. and deems Tribunals to be courts for specified purposes, such as for
Sections 193, 196 and 228 of the Indian Penal Code and Section 195 of the
Criminal Procedure Code. These provisions may not be conclusive of the
question of the Tribunal being Court for Section 29(2) of the Limitation
Act without further examining the scheme of the statutes in question. In
Nahar Industrial Enterprises Ltd. vs. Hong Kong and Shanghai Banking
Corpn.[16], this Court examined the scheme of the two Acts in question and
held that the Tribunal was a court but not a civil court for purposes of
Section 24 of the CPC. We are of the view that for purposes of decision of
these appeals, it is not necessary to decide the question whether the
Tribunal under the Banking statutes in question was court for purposes of
Section 29(2) of the Limitation Act. We have already held that the power
of condonation of delay was expressly applicable by virtue of Section 18(2)
of the SARFAESI Act read with proviso to Section 20(3) of the RDB Act and
to that extent, the provisions of Limitation Act having been expressly
incorporated under the special statutes in question, Section 29(2) stands
impliedly excluded. To this extent, we differ with the view taken by the
Andhra Pradesh High Court as well as Madras and Bombay High Courts. We are
also in agreement with the principle that even though Section 5 of the
Limitation Act may be impliedly inapplicable, principle of Section 14 of
the Limitation Act can be held to be applicable even if Section 29(2) of
the Limitation Act does not apply, as laid down by this Court in
Consolidated Engineering Enterprises vs. Principal Secretary, Irrigation
Department[17] and M.P. Steel Corporation vs. Commissioner of Central
Excise[18] .
15. As a result of the above discussion, the question is answered in the
affirmative by holding that delay in filing an appeal under Section 18 (1)
of the SARFAESI Act can be condoned by the Appellate Tribunal under proviso
to Section 20 (3) of the RDB Act read with Section 18 (2) of the SARFAESI
Act. The contrary view taken by the Madhya Pradesh High Court in Seth
Banshidhar Media Rice Mills Pvt. Ltd. case is overruled.
16. Accordingly, the appeal filed by the Bank against the judgment of the
Andhra Pradesh High Court is dismissed and the appeals filed by the
borrowers are allowed. The impugned orders passed by the High Court of
Madhya Pradesh (in appeals arising out of SLP (C) No.27674 of 2011 and SLP
(C) No.36316 of 2011) are set aside and the matters are remanded to the
High Court for being dealt with afresh in accordance with law. The appeal
arising out of SLP (C) No.38436 of 2012 has been preferred directly from
the order of the Debt Recovery Appellate Tribunal, Delhi passed by the said
tribunal relying upon the judgment of the Madhya Pradesh High Court in Seth
Banshidhar Media Rice Mills Pvt. Ltd. case. The said impugned order is
also set aside and the matter is remanded to the Debt Recovery Appellate
Tribunal, Delhi for being dealt with afresh in accordance with law.
17. All the appeals are disposed of accordingly.

…………..……..…………………………….J.
[ JAGDISH SINGH KHEHAR]

…………..….………………………………..J.
[ ADARSH KUMAR GOEL ]
NEW DELHI
AUGUST 05, 2015

-----------------------
[1] AIR 2011 MP 205
[2] AIR 2013 AP 24
[3] 2008 (4) MhLj424
[4] 2009 (3) BJ 401
[5] (1969) 3 SCC 471
[6] (1974) 2 SCC 777
[7] (1979) 2 SCC 529
[8] (1985) 4 SCC 404
[9] (2008) 1 SCC 125
[10] (2004) 11 SCC 472
[11] AIR 2013 AP 24
[12] (1995) 5 SCC 5
[13] (2010) 5 SCC 23
[14] (2009) 5 SCC 791
[15] (2004) 4 SCC 252
[16] (2009) 8 SCC 646
[17] (2008) 7 SCC 169
[18] (2015) 5 SCALE 505

Friday, August 7, 2015

We, therefore, are of the considered opinion that the view taken by the Madras High Court is correct and we are unable to subscribe to the view taken by Delhi High Court in United Airlines case. The judgment in United Airlines case as well as the impugned judgment of the Delhi High Court are accordingly over-ruled. At this stage, we would like to make one comment about the judgment of the High Court. Madras High Court has given one more reason in support Madrasof its view that the charges paid by the Airlines to the AAI do not come within the definition of the 'rent' as defined under Section 194-I. The High Court has held that the words 'any other agreement or arrangement for the use of any land or any building' have to be read ejusdem generis and it should take it colour from the earlier portion of the definition namely “lease, sub-lease and tenancy”. Thereby, it has tried to limit the ambit of words 'any other agreement or arrangement'. This reasoning is clearly fallacious. A bare reading of the definition of 'rent' contained in explanation to Section 194-I would make it clear that in the first place, the payment, by whatever name called, under any lease, sub-lease, tenancy which is to be treated as 'rent'. That is rent in traditional sense. However, second part is independent of the first part which gives much wider scope to the term 'rent'. As per this whenever payment is made for use of any land or any building by any other agreement or arrangement, that is also to be treated as 'rent'. Once such a payment is made for use of land or building under any other agreement or arrangement, such agreement or arrangement gives the definition of rent of very wide connotation. To that extent, High Court of Delhi appears to be correct that the scope of definition of rent under this definition is very wide and not limited to what is understood as rent in common parlance. It is a different matter that the High Court of Delhi did not apply this definition correctly to the present case as it failed to notice that in substance the charges paid by these airlines are not for 'use of land' but for other facilities and services wherein use of the land was only minor and insignificant aspect. Thus it did not correctly appreciate the nature of charges that are paid by the airlines for landing and parking charges which is not, in substance, for use of land but for various other facilities extended by the AAI to the airlines. Use of land, in the process, become incidental. Once it is held that these charges are not covered by Section 194-I of the Act, it is not necessary to go into the scope of Section 194-C of the Act. = As a result of the aforesaid discussion, Civil Appeal No.9875 of 2013 filed by the JAL against the judgment of Delhi High Court is allowed and Civil Appeal Nos.9876-9881 of 2013 filed by the Revenue against the judgment of Madras High Court are hereby dismissed. There shall be no order as to cost.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 9875 OF 2013

|M/S JAPAN AIRLINES CO. LTD. |.....APPELLANT(S) |
|VERSUS | |
|COMMISSIONER OF INCOME TAX, |.....RESPONDENT(S) |
|NEW DELHI | |

WITH

CIVIL APPEAL NOS. 9876-9881 OF 2013

J U D G M E N T

A.K. SIKRI, J.

In these appeals, the issue involved relates to the deduction of tax
at source ('TDS'). In both the cases, assessees are foreign Airlines. One
is Japan Airlines Company Limited (hereinafter referred to as the 'JAL')
and the other is Singapore Airlines Limited (hereinafter referred to as the
'SAL'). As both are international Airlines, they are flying their
aircrafts to various destinations across the world. Their services include
inward and outbound air traffic to and from New Delhi as well. For landing
the aircrafts and parking thereof at New Delhi Airport i.e. Indira Gandhi
International Airport ('IGIA'), New Delhi, the Airports Authority of India
('AAI') which manages IGIA levies charges on these two Airlines. For
payment of landing and parking charges in respect of its aircrafts, the two
Airlines are deducting TDS under Section 194-C of the Income Tax Act, 1961
(hereinafter referred to as the 'Act'). The TDS under Section 194-C of the
Act is deductible @ 2%. After deducting this TDS while making payment to
AAI, the same is deposited with the Income Tax Authorities. The Income Tax
Authorities, however, are of the view that the TDS is to be deducted under
the provisions of Section 194-I of the Act which calls for deduction @20%.
Thus, the dispute is as to whether TDS to be deducted under Section 194-
C or under Section 194-I of the Act.

We may point out at this stage itself that in the appeal pertaining to JAL,
it is the JAL which is the appellant as the High Court of Delhi by the
impugned judgment dated 23.10.2008 has taken the view that the TDS is to be
deducted under Section 194-I of the Act. In the other appeal which
involves SAL, it is the Commissioner of Income Tax/Revenue which has filed
the appeals as the High Court of Madras in its judgment dated 13.07.2012
has taken contrary view holding that the case is covered under Section 194-
C of the Act and not under Section 194-I of the Act thereof. The Madras
High Court has taken the note of the judgment of the Delhi High Court but
has differed with its view. Thus, the two judgments are in conflict with
each other and we have to determine as to which judgment should be treated
in consonance with the legal position and be allowed to hold the field.

For the sake of convenience, we are mentioning the facts of JAL's case,
with the reiteration that the operations of the two Airlines on the basis
of which the case is to be decided is identical.

JAL is a foreign company incorporated in Japan and is engaged in the
business of international air traffic. It transports passengers and cargo
by air across the globe and provides other related services. The
assessement year involved in this appeal is the assessement year 1998-1999,
corresponding to the financial year ending on 31.03.1998. The
International Civil Aviation Organization ('ICAO') to which India is also a
contracting state has framed certain guidelines and rules which are
contained in the Airports Economic Manual and ICAO's Policies on Charges
for Airports and Air Navigation Services. All member States abide by the
guidelines and rules prescribed for various charges to be levied for
facilities and services provided including landing/parking charges.

The AAI under the provisions of the Airport Authority of India Act, 1994
has been authorized to fix and collect charges for landing, parking of
aircrafts and any other services and facilities offered in connection with
aircraft operations at the airport and for providing air traffic services
such as ground safety services, aeronautical communications and
navigational aids, meteorological services and others at the airport.

JAL is a member of the International Air Transport Agreement ('IATA') and
during the relevant year it serviced inward and oubound air traffic to and
from New Delhi, India. The AAI levied certain charges on the JAL for
landing and also for parking its aircrafts. The JAL paid the charges after
deducting tax at source under Section 194-C of the Act. The JAL received
letter dated 02.08.1996 from the AAI informing it that AAI had applied to
the Income Tax Authorities for exemption from the tax deduction and were
awaiting the clearance. It was further stated in the said letter that in
the meanwhile JAL should deduct the tax on landing and parking charges @2%
under Section 194-C. JAL, accordingly, starting making TDS @2%. In the
relevant assessement year, it paid AAI a sum of Rs.61,60,486/- towards
landing and parking charges. On this amount, TDS comes to Rs.1,57,082/-
when calculated @2% which was deducted from the payments made to AAI and
deposited with the Revenue. The JAL thereafter filed its annual return in
Form 26-C for the financial year 1997-1998.

The Assessing Officer passed an order under Section 201(1) of the Act on
04.06.1999 holding the JAL as an assessee-in-default for short deduction of
tax of Rs.11,59,695/- at source. He took the view that payments during
landing and parking charges were covered by the provisions of Section 194-I
and not under Section 194-C of the Act and, therefore, the JAL ought to
have deducted tax @20% instead of @2%. The JAL filed the appeal against
this order before the Commissioner of Income Tax (Appeals). The CIT(A)
accepted the contention of the JAL and allowed the appeal vide order dated
31.01.2001, holding that landing and parking charges were inclusive of
number of services in compliance with the International Protocol of the
ICAO. The Revenue challenged the order of CIT(Appeals) by filing appeal
before the Income Tax Tribunal. ITAT dismissed this appeal on 25.10.2004
confirming the order of the CIT(Appeals).

The Revenue persisted with its view that the matter was covered by Section
194-I and, therefore, dissatisfied with the orders of the ITAT, it went to
the High Court by way of further appeal under Section 260A of the Act. Two
questions were raised - (i) whether the Tribunal was correct in holding
that the landing/parking charges paid by the JAL to the AAI were payments
for a contract of work under Section 194-C and not in the nature of 'rent'
as defined in Section 194-I; and (ii) whether the Tribunal was correct in
law in holding that the JAL was not an assessee-in-default. The High Court
allowed the appeal by answering the questions in favour of the respondent
following its earlier decision in the case of United Airlines v. CIT[1].
In that case, the High Court had taken the view that the term 'rent' as
defined in Section 194-I had a wider meaning than 'rent' in the common
parlance as it included any agreement or arrangement for use of land. The
High Court further observed that the use of land began when the wheels of
an aircraft touched the surface of the airfield and similarly, there was
use of land when the aircraft was parked at the airport.

Special leave petition was filed against the aforesaid judgment of the High
Court in which leave was granted and that is how the present appeal arises
for consideration of the issue at hand.

Before proceeding further, it would be apposite to take note of the
provisions of Section 194-C as well as 194-I of the Act. Insofar as
Section 194-C is concerned, our purpose would be served by reproducing sub-
section (1) which deals that the nature of payments on which tax at source
is to be deducted. It reads as under:
“Section 194C. (1) Any person responsible for paying any sum to any
resident (hereafter in this section referred to as the contractor) for
carrying out any work (including supply of labour for carrying out any
work) in pursuance of a contract between the contractor and a specified
person shall, at the time of credit of such sum to the account of the
contractor or at the time of payment thereof in cash or by issue of a
cheque or draft or by any other mode, whichever is earlier, deduct an
amount equal to-
(i) one per cent. where the payment is being made or credit is being
given to an individual or a Hindu Undivided family;
(ii) two per cent. where the payment is being made or credit is being
given to a person other than an individual or a Hindu undivided family,
of such sum as income-tax on income comprised therein.”

Section 194-I, on the other hand, which was in force at the relevant time,
reads as under:
“Section 194-I Any person, not being an individual or a Hindu undivided
family, who is responsible for paying to any person any income by way of
rent, shall, at the time of credit of such income to the account of the
payee or at the time of payment thereof in cash or by the issue of a cheque
or draft or by any other mode, whichever is earlier, deduct income-tax
thereon at the rate of-
(a) fifteen per cent. if the payee is an individual or a Hindu undivided
family; and
(b) twenty per cent. in other cases.
“rent” means any payment, by whatever name called, under any lease, sub-
lease, tenancy or any other agreement or arrangement for the use of any
land or any building (including factory building), together with furniture,
fittings and the land appurtenant thereto, whether or not such building is
owned by the payee.”

Since the main discussion in the impugned judgment rendered by the High
Court of Delhi and also the High Court of Madras centres around the
interpretation that is to be accorded to Section 194-I of the Act, we would
first discuss as to whether the case is covered by this provison or not.
In fact, even before us the main focus of the counsel for the assessees as
well as counsel for the Revenue was on this very issue. Otherwise also,
the fate of these appeals would depend on the answer to the question as to
whether the case is covered by the provisions of Section 194-I of the Act
or not.

Section 194-I of the Act, which was inserted by Finance Act, 1994 w.e.f.
June 01, 1994, provides for deduction of tax at source in respect of
payment of 'rent' by any person, other than an individual and a hindu
undivided family, at the time of payment or credit, whichever is earlier.
The rate at which deduction of tax is to be made at source is 20%. There
have been amendments in this Section in the years 2002, 2007 and 2009 and
with these amendments, the scope of this Section has been enlarged.
However, as the assessement year in question is prior to 2002 and otherwise
also, the later amendments have no bearing insofar as the assessees are
concerned, it is not necessary to spell out the amendments made to this
Section.

From the reading of this Section, it becomes clear that TDS is to be made
on the 'rent'. The expression 'rent' is given much wider meaning under
this provision than what is normally known in common parlance. In the
first instance, it means any payment which is made under any lease, sub-
lease, tenancy. Once the payment is made under lease, sub-lease or
tenancy, the nomenclature which is given is inconsequential. Such payment
under lease, sub-lease and/or tenancy would be treated as 'rent'. In the
second place, such a payment made even under any other 'agreement or
arrangement for the use of any land or any building' would also be treated
as 'rent'. Whether or not such building is owned by the payee is not
relevant. The expressions 'any payment', by whatever name called and 'any
other agreement or arrangement' have the widest import. Likewise, payment
made for the 'use of any land or any building' widens the scope of the
proviso.

In the present case, we find that these Airlines are allowed to land and
take-off their Aircrafts at IGIA for which landing fee is charged.
Likewise, they are allowed to park their Aircrafts at IGIA for which
parking fee is charged. It is done under an agreement and/or arrangement
with AAI. The moot question is as to whether landing and take-off
facilities on the one hand and parking facility on the other hand, would
mean to 'use of the land'.

As pointed out above, the impugned judgment of the Delhi High Court refers
to its earlier judgment in the case of United Airlines. Therefore, in
order to ascertain the reasons that persuaded the High Court to take the
view that it amounted to use of land, one has to scan through the reasons
given in United Airlines case. In this case, the High Court held that the
word 'rent' as defined in the provision has a wider meaning than 'rent' in
common parlance. It includes any agreement or arrangement for use of land.
In the opinion of the High Court, “when the wheels of an aircraft coming
into an airport touch the surface of the airfield, use of the land of the
airport immediately begins.” Similarly, for parking the aircraft in that
airport, there is use of the land. This is the basic, nay, the only reason
given by the High Court in support of its conclusion.

The Madras High Court, on the other hand, had a much bigger canvass before
it needed to paint a clearer picture with all necessary hues and colours.
Instead of taking a myopic view taken by the Delhi High Court by only
considering use of the land per se, the Madras High Court examined the
matter keeping wider perspective in mind thereby encompassing the
utilization of the airport providing the facility of landing and take-off
of the airplanes and also parking facility. After taken into consideration
these aspects, the Madras High Court came to the conclusion that the
facility was not of 'use of land' per se but the charges on landing and
take-off by the AAI from these airlines were in respect of number of
facilities provided by the AAI which was to be necessarily provided in
compliance with the various international protocol. The charges, therefore,
were not for land usage or area allotted simpliciter. These were the
charges for various services provided. The substance of these charges was
ingrained in the various facilities offered to meet the requirement of
passengers' safety and on safe landing and parking of the aircraft and
these were the consideration that, in reality, governed the fixation of the
charges. To our mind, the aforesaid conclusion of the High Court of Madras
is justified which is based on sound rationale and reasoning.

We are convinced that the charges which are fixed by the AAI for landing
and take-off services as well as for parking of aircrafts are not for the
'use of the land'. That would be too simplistic an approach, ignoring
other relevant details which would amply demonstrate that these charges are
for services and facilites offered in connection with the aircraft
operation at the airport. To point out at the outset, these services
include providing of air traffic services, ground safety services,
aeronautical communication facilities, installation and maintenance of
navigational aids and meteorological services at the airport.

Before the High Court of Madras, the assessee had filed the material in the
form of Airport Economics Manual, the International Airports Transport
Agreement (IATA) to the contracting states on charges for airport and air
navigation services. This material which was shown for our perusal as
well, would candidly show that there are various international protocols
which mandate all such authorities manning and managing these airports to
construct the airports of desired standards which are stipulated in the
protocols. The services which are required to be provided by these
authorities, like AAI, are aimed at passengers' safety as well as on safe
landing and parking of the aircrafts. Therefore, it is not mere 'use of
the land'. On the contrary, it is the facilities, that are to be
compulsarily offered by the AAI in tune with the requirements of the
protocol, which is the primary focus.

For example, runways are not constructed like any ordinary roads. Special
technology of different type is required for the construction of these
runways for smooth landing and take-off of the aircrafts. According to
ICAO, a runway is a “defined rectangular area on a land aerodrome prepared
for the landing and takeoff of aircraft.” Runways may be a man-made
surface (often asphalt, concrete, or a mixture of both) or a natural
surface (grass, dirt, gravel, ice, or salt). Specialised kind of
orientation and dimensions are needed for these runways which are
prescribed with precision and those standards are to be adhered to.
Further, there has to be proper runway lighting, runway safety area, runway
markings etc. Technical specifications for such lighting, safety area and
markings are stipulated which have to be provided. Insofar as runway
lighting is concerned which is essentially used at airports that allow
night landings, requires that there has to be Runway End Identification
Lights, Runway End Lights, Runway Edge Lights, Runway Centerline Lighting
System, Touchdown Zone Lights, Taxiway Centerline Lead-Off Lights, Taxiway
Centerline Lead-On Lights, Land and Hold Short Lights, Approach Lighting
System etc. Technical specifications for all these lights have to be
complied with. Same applies to runway markings. Runway markings and signs
on most large runways include Threshold, Touch Down Zone, Fixed Distance
Marks, Center Line etc. and all these have specific purpose. So much so,
designs and quality of pavement on these runways are also to be taken
compliant.
All these technical specifications keep in mind the basic fact,
namely, on landing the aircraft is light on fuel and usually less than 5%
of the weight of the aircraft touches the runway in one go. On take-off
the aircraft is heavy but as the aircraft accelerates the weight gradually
moves from the wheels to the wings. It is while the aircraft is being
loaded and taxiing prior to departure, that the apron experience
significant loads from aircraft weight.
We have emphasised the technological aspects of these runways in some
detail to highlight the precision with which designing and engineering goes
into making these runways to be fool proof for safety purposes. The
purpose is to show that the AAI is providing all these facilities for
landing and take-off of an aircraft and in this whole process, 'use of the
land' pails into insignificance. What is important is that the charges
payable are for providing of these facilities.

In fact, the charges which are taken from the aircrafts for landing and
even for parking of the aircrafts are not dependent upon the use of the
land. On the contrary, the protocol prescribes a detailed methodology of
fixing these charges. Chapter 4 of Airport Economics Manual issued by
International Civil Aviation Organization deals with 'Determine the cost
basis for charging purposes'. The charges on air-traffic which includes
Landing Charges, Lighting Charges, Approach and Aerodrome Control Charges,
Aircraft Parking Charges, Aerobridge Charges, Hangar Charges, Passenger
Service Charges, Cargo Charges etc. are to be fixed applying the formulae
stated therein. A reading thereof would clearly point out the cost
analysis which is to be done for fixing these charges. Thus, when the
airlines pay for these charges, treating such charges as charges for 'use
of land' would be adopting a totally naïve and simplistic approach which is
far away from the reality. We have to keep in mind the substance behind
such charges. When matter is looked into from this angle, keeping in view
the full and larger picture in mind, it becomes very clear that the charges
are not for use of land per se and, therefore, it cannot be treated as
'rent' within the meaning of Section 194-I of the Act.

We, therefore, are of the considered opinion that the view taken by the
Madras High Court is correct and we are unable to subscribe to the view
taken by Delhi High Court in United Airlines case. The judgment in United
Airlines case as well as the impugned judgment of the Delhi High Court are
accordingly over-ruled.

At this stage, we would like to make one comment about the judgment of the
High Court. Madras High Court has given one more reason in support
Madrasof its view that the charges paid by the Airlines to the AAI do not come
within the definition of the 'rent' as defined under Section 194-I. The
High Court has held that the words 'any other agreement or arrangement for
the use of any land or any building' have to be read ejusdem generis and it
should take it colour from the earlier portion of the definition namely
“lease, sub-lease and tenancy”. Thereby, it has tried to limit the ambit
of words 'any other agreement or arrangement'. This reasoning is clearly
fallacious. A bare reading of the definition of 'rent' contained in
explanation to Section 194-I would make it clear that in the first place,
the payment, by whatever name called, under any lease, sub-lease, tenancy
which is to be treated as 'rent'. That is rent in traditional sense.
However, second part is independent of the first part which gives much
wider scope to the term 'rent'. As per this whenever payment is made for
use of any land or any building by any other agreement or arrangement, that
is also to be treated as 'rent'. Once such a payment is made for use of
land or building under any other agreement or arrangement, such agreement
or arrangement gives the definition of rent of very wide connotation. To
that extent, High Court of Delhi appears to be correct that the scope of
definition of rent under this definition is very wide and not limited to
what is understood as rent in common parlance. It is a different matter
that the High Court of Delhi did not apply this definition correctly to the
present case as it failed to notice that in substance the charges paid by
these airlines are not for 'use of land' but for other facilities and
services wherein use of the land was only minor and insignificant aspect.
Thus it did not correctly appreciate the nature of charges that are paid by
the airlines for landing and parking charges which is not, in substance,
for use of land but for various other facilities extended by the AAI to the
airlines. Use of land, in the process, become incidental. Once it is held
that these charges are not covered by Section 194-I of the Act, it is not
necessary to go into the scope of Section 194-C of the Act.

As a result of the aforesaid discussion, Civil Appeal No.9875 of 2013 filed
by the JAL against the judgment of Delhi High Court is allowed and Civil
Appeal Nos.9876-9881 of 2013 filed by the Revenue against the judgment of
Madras High Court are hereby dismissed. There shall be no order as to
cost.

.............................................J.
(A.K. SIKRI)

.............................................J.
(ROHINTON FALI NARIMAN)

NEW DELHI;
AUGUST 04, 2015.

-----------------------
[1] 287 ITR 281

provisions of Kar Vivad Samadhan Scheme (for short, the 'Scheme') =The Scheme also provided the procedure to take benefit thereof. It required an assesakesee to m a declaration to the designated authority in respect of tax arrears and pay the amount payable under the Scheme to conclude in proceeding with respect to the recovery of such tax arrears. For the purpose of taxes payable under indirect tax enactments, the rates at which the settlement would be made are specified in Section 88(f) of the 1998 Act. For our purposes, crucial provision is Section 95(ii) which made the scheme inapplicable, in respect of indirect tax enactments, in the following cases: “(a) In a case where prosecution for any offence punishable under any provisions of any indirect tax enactment has been instituted on or before the date of filing of the declaration under Section 88, in respect of any tax arrears of such case under such indirect tax enactment. (b) In a case where show-cause notice or a notice of demand under any indirect tax enactment has not be issued. (c) In a case where no appeal or reference or writ petition is admitted and pending before any appellate authority or High Court or the Supreme Court or no application for revision is pending before the Central Government on the date of declaration made under Section 88.”=. Admittedly, the appeal of M/s. Amar Steel Industries, was still pending before the Division Bench when the Scheme was promulgated by the Legislature and the declaration was filed by the appellants. The said assessee has subsequently been permitted to avail of the Scheme. Therefore, prima facie it appears that mischief of clause (c) is not attracted. In any case it is not necessary to go into this aspect in detail, for another simple reason it needs to be remarked that the Revenue had not rejected the declarations filed by the appellants on this ground. It is the Division Bench of the High Court, in the impugned judgment, which has held against the appellants on this account. It is also very pertinent to point out that in the counter affidavit filed by the Revenue in the instant appeal, the Revenue appears to have given up this contention as the impugned order of the High Court is not defended on this ground at all. The aforesaid discussion leads us to conclude that the impugned judgment of the High Court is erroneous and warrants to be set aside. We, accordingly, allow these appeals, set aside the impugned order and hold that the appellants shall be entitled to the benefit of Kar Vivad Samadhan Scheme. No costs.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7570 OF 2004

|M/S. SWASTIKA ENTERPRISES & ANR. |.....APPELLANT(S) |
|VERSUS | |
|COMMISSIONER OF CUSTOMS & ORS. |.....RESPONDENT(S) |

W I T H
CIVIL APPEAL NO. 7571 OF 2004

J U D G M E N T

A.K. SIKRI, J.
The question of law which arises in these two appeals is
identical which concerns the interpretation that is to be accorded to the
provisions of Kar Vivad Samadhan Scheme (for short, the 'Scheme') that was
introduced under Chapter IV of the Finance (No.2) Act of 1998 (hereinafter
referred to as the '1998 Act') and is contained in Sections 86 to 98 of the
said Act. In particular, it is Section 95(ii)(b) of the 1998 Act that
becomes the focus of the issue and the meaning that is to be assigned to
the said clause would be the determinative of the outcome of the dispute.
It has arisen under the following circumstances (facts are taken from Civil
Appeal No. 7570 of 2004 for the sake of convenience):

The appellants carry on the business, inter alia, of importing old ships
for the purpose of ship breaking and disposing of the scrap. In 1993, they
imported a vessel called M.V. Pablo Metz and for clearance of these goods,
filed the Bill of Entry under Section 46 of the Customs Act, 1962.
Although the appellants contended that the said import was exempted from
levy of 'additional customs duty' under an exemption Notification dated
February 28, 1993, the Customs authorities, after hearing the appellants,
felt it otherwise. An endorsement on the Bill of Entry was made for
payment of additional customs duty of ?52,20,000 in addition to the basic
customs duty. The said endorsement was made under Section 47 read with
Section 153 of the Customs Act and required the appellants to make payment
of the amount assessed within 7 days, failing which interest was
chargeable.

This levy was challenged by the appellants by means of a writ petition
before the High Court of Calcutta, which was disposed of by the High Court
with a direction to the appellants to submit a bank guarantee for 50% of
the disputed amount and a personal bond for the balance 50%.

It so happened that in the meantime, one M/s. Amar Steel Industries had
succeeded in the writ petition filed by the said assessee on the same point
as the learned Single Judge of the Calcutta High Court had allowed its writ
petition vide order dated April 16, 1993. However, the Revenue had
preferred appeal against the said judgment, which was pending before the
Division Bench. The Division Bench had passed an interim order dated May
17, 1993 staying the operation of the judgment of the Single Judge and, at
the same time, had also given certain directions.

When the writ petition of the appellants was taken up for consideration and
disposed of by the learned Single Judge on July 20, 1993, the aforesaid
events in the case of M/s. Amar Steel Industries were taken cognizance of.
Thus, while disposing of the writ petition and directing the appellants to
submit bank guarantee of 50% of the disputed amount and a personal bond for
the balance 50%, the learned Single Judge observed that he case of the
appellants would abide by the result of the appeal of the Revenue in the
case of M/s. Amar Steel Industries.

During the pendency of the appeal, the Union of India introduced the Scheme
contained in Sections 86 to 98 of the 1998 Act. The Scheme provides for
settlement of disputes relating to tax arrears both for direct taxes and
indirect taxes. So far as indirect tax is concerned, Section 87(m)(iii) of
the 1998 Act defines 'tax arrear' in respect of which the Scheme was to be
applied. It reads as follows:
“(a) the amount of duties (including drawback of duty, credit of duty or
any amount representing duty), cesses, interest fine or penalty determined
as due or payable under that enactment as on the 31st day of March, 1998
but remaining unpaid as on the date of making a declaration under section
88; or

(b) the amount of duties (including drawback of duty, credit of duty or
any amount representing duty), cesses, interest, fine or penalty which
constitutes the subject matter of a demand notice or a show-cause notice
issued on or before the 31st day of March 1998 under the enactment but
remaining unpaid on the date of making a declaration under section 88, but
does not include any demand relating to erroneous refund and where a show-
cause notice is issued to the declarant in respect of seizure of goods and
demand of duties, the tax arrear shall not include the duties on such
seized goods where such duties on the seized gods have not been
quantified.”

The Scheme also provided the procedure to take benefit thereof. It
required an assessee to make a declaration to the designated authority in
respect of tax arrears and pay the amount payable under the Scheme to
conclude in proceeding with respect to the recovery of such tax arrears.
For the purpose of taxes payable under indirect tax enactments, the rates
at which the settlement would be made are specified in Section 88(f) of the
1998 Act. For our purposes, crucial provision is Section 95(ii) which made
the scheme inapplicable, in respect of indirect tax enactments, in the
following cases:
“(a) In a case where prosecution for any offence punishable under any
provisions of any indirect tax enactment has been instituted on or before
the date of filing of the declaration under Section 88, in respect of any
tax arrears of such case under such indirect tax enactment.

(b) In a case where show-cause notice or a notice of demand under any
indirect tax enactment has not be issued.

(c) In a case where no appeal or reference or writ petition is admitted
and pending before any appellate authority or High Court or the Supreme
Court or no application for revision is pending before the Central
Government on the date of declaration made under Section 88.”

The appellants opted to avail of the Scheme and filed a declaration
accordingly. However, the designated authority passed the order dated
February 13, 1999 thereon whereby he rejected the declaration on the ground
that in the appellants' case, no show-cause notice/demand notice had been
issued and, therefore, by virtue of Section 95(ii)(b), the Scheme did not
apply.

The appellants challenged the order dated February 13, 1999 by filing
another writ petition before the High Court. The appellants also prayed
for quashing of Section 95(ii)(b) of the 1998 Act if it was construed as
requiring a notice of payment to be issued in any particular form. The
learned Single Judge allowed the writ petition by his judgment dated April
19, 1999 holding that the said endorsement on the Bill of Entry constituted
sufficient notice of demand to attract the Scheme.

The Revenue filed intra-court appeal before the Division Bench questioning
the validity of the judgment of the learned Single Judge. In this appeal,
the Revenue has succeeded as the Division Bench has reversed the order of
the Single Judge by means of its judgment dated August 28, 2003 resulting
in dismissal of the writ petition of the appellants and affirming the order
of the designated authority rejecting the declaration of the appellants
holding that the appellants were not entitled to take the benefit of the
Scheme under Section 95(ii) of the 1998 Act. The Division Bench has gone a
step further in rendering the impugned judgment as according to it the
declaration filed by the appellants was not only hit by clause (b) but
clause (c) of Section 95(ii) as well. It has held that neither clause (b)
or (c) of Section 95(ii) of the 1998 Act is attracted inasmuch as there was
no show-cause notice or notice of demand issued in the instant case.
Further, no appeal or reference or writ petition of the respondent was
admitted or pending before any authority mentioned in clause (c) above.
This is how the matter has landed up in this Court.

From the facts noted above, it is clear that on the import of the old
vessel, the appellants had filed Bill of Entry under Section 46 of the
Customs Act. The appellants claimed exemption from payment of additional
custom duty. This stand of the appellants was not accepted resulting into
an endorsement by the Revenue asking the appellants to pay additional
customs duty of ?52,20,000. According to the appellants, this amounts to
notice of demand within the meaning of clause (b) of Section 95(ii). It is
also the case of the appellants that though technically the writ petition
filed by the appellants challenging the aforesaid additional customs duty
was disposed of by the High Court on July 20, 1993, the order of Court was
categorical, namely, the result of the appellants' case was made dependant
upon the outcome of the appeal which was preferred by the Revenue in the
case of M/s. Amar Steel Industries and in that sense the matter was still
pending.

On the aforesaid facts, we have to examine whether the case of the
appellants is covered by clause (b) and/or clause (c) of Section 95(ii) of
the 1998 Act, thereby making them ineligible to utilise the benefit of the
Scheme.

Insofar as clause (b) of Section 95(ii) is concerned, it is the case of the
appellants that endorsement on the Bill of Entry to pay additional customs
duty amounted to raising demand for payment of duty. On the other hand,
the Revenue argues that the demand stands crystallized only when there is a
show-cause notice issued under Section 28 of the Customs Act and after
following the procedure the adjudicating authority passes an order on the
said show-cause notice holding that customs duty or additional customs duty
is payable and on that basis notice of demand is issued. It was, thus,
argued that since no such steps were taken in the instant case, it cannot
be said that any show-cause notice was issued (which was the admitted
position) or notice of demand was given. It was also argued that
endorsement on Bill of Entry will be regarded, at the most, a provisional
assessment.

Having regard to the facts of this case, it is difficult to accept the
contention of the Revenue predicated on the provisions of Section 28 of the
Customs Act. Section 28 deals with recovery of dues not levied or short
levied or erroneously refunded or where any interest payable has not been
paid, part paid or erroneously refunded. In such circumstances, within a
period of one year from the relevant date, appropriate officer is competent
to serve a notice on the person chargeable with the duty or interest which
has not been so levied or which has been short levied or short paid or to
whom the refund is has erroneously been made, requiring him to show-cause
why he should not pay the amount specified in the notice. Therefore, the
contingency of issuing show-cause notice under this provision would arise
where the duty has not been paid either on the ground that it was not
levied at all or was short levied. Another reason for invoking the
provision would be where duty has been erroneously refunded. Such a
situation did not arise in the instant case. Moreover, we have to examine
the mater in the light of the provision of this Scheme. In this context,
we would like to refer to the judgment of this Court in Union of India v.
Nitdip Textiles Processors[1] wherein it is held that under the following
circumstances the amount payable shall be treated as 'tax arrears':
(i) where tax arrears are quantified but not paid as on 31.03.1998, and
(ii) where a demand or show-cause notice has been issued before
31.03.1998.

Thus, it becomes abundantly clear that the 'tax arrear' had, in any event,
been quantified and had not been paid as on March 31, 1998. Moreover, when
the Bill of Entry was filed by the appellants, after examining the matter,
endorsement was made thereupon that additional duty in the sum of
?52,20,000 is payable. The appellants contested the same. The question is
whether it amounts to notice of demand. In this behalf, we have to keep in
mind that the 1998 Act does not contain any specific provision prescribing
the manner in which customs duty would be assessed or demanded in respect
of goods imported under a Bill of Entry for home consumption. An
endorsement on the Bill of Entry and return thereof to the importer asking
the importer to pay the amount therein would amount to issuing a demand.
On our specific query to the learned counsel for the Revenue that if the
importer does not deposit the amount within the specified time on receiving
the endorsement on the Bill of Entry, whether interest thereupon shall
start accruing, the learned counsel for the Revenue was candid in answering
the said question in the affirmative. In fact, that is the legal position
contained in Section 46(1) read with Section 47(2) of the Customs Act.
Under Section 46(1) (as it then stood), there was an obligation on the part
of the importer to present a Bill of Entry in such cases. Section 47(2) of
the Customs Act provides that in case there is a failure to pay the import
duty within a specified period from the date on which Bill of Entry is
returned to the importer, it would attract interest until the date of
demand. At the relevant time, the demand was required to be made within 7
days. Otherwise, interest was payable, which was to be fixed between 20%
and 30% per annum. It may be mentioned that fundamentals of this provision
still remain intact although rate of interest and the period within which
the demand is to be paid has been amended from time to time {as per the
amended provision which prevails now, the only difference is that the
demand is to be met within 2 days, excluding holidays, failing which
interest payable is at a rate between 10% and 36% per annum}. Section 153
of the 1998 Act also becomes relevant as it clarifies that any order,
decision, summons or notice under the Act may be served by tendering it to
the person or to whom it is intended or to his agent. In the instant case,
after the endorsement on Bill of Entry, it was admittedly served upon the
appellants in the manner specified under Section 153.

In Renuka Datla (Dr.) v. Commissioner of Income Tax, Karnataka[2], this
Court widely interpreted the term 'total tax determined and payable'
appearing in Section 87(f) of the Scheme holding that no particular process
of determination is contemplated. It has to be held that on principle,
same meaning is to be accorded to the term 'determined as due or payable'
in Section 87(m)(ii)(a) of the Scheme.

There is another manner of looking into the matter. Immediately after
receiving the Bill of Entry with the endorsement to pay the amount of
?52,20,000, the appellants filed the writ petition in the High Court
disputing the same with the contention that it was not payable. Obviously,
it was a demand raised by way of endorsement on the Bill of Entry that
prompted the appellants to challenge the same by filing the writ petition.
The Revenue never took the plea that the case was premature in the sense
that no demand had been crystallized in the absence of show-cause notice or
adjudication order and, therefore, such a writ petition was not competent.
Thus, both the parties understood that endorsement on Bill of Entry and
service thereof upon the appellants was a notice of demand.

Even, with reference to the provisions of the Scheme, this endorsement
shall have to be treated as notice of demand. We have already reproduced
the provisions of Section 87(m) of the 1998 Act which defines 'tax
arrears'. It, inter alia, includes the amount of dues remaining unpaid as
on the date of making a declaration under Section 88 of the 1998 Act.
Indubitably, there was an amount of duty payable, which had remained unpaid
on the date of making declaration by the appellants under Section 88. It
would be absurd to hold that though there is a tax arrear, as the
appellants were liable to pay the tax/duty demanded, and still the Scheme
is inapplicable.

It would also be interesting to note that the Division Bench of the High
Court in the impugned judgment has itself recorded that 'duty was assessed'
on the Bill of Entry. This is so stated by the Revenue in the counter
affidavit filed in the instant proceedings as well. Therefore, endorsement
on the Bill of Entry is treated even by the High Court as well as the
Department as the assessment.

is necIt essary to keep in mind the purpose and the objective with which
the Scheme was introduced. It pertained to the 'tax arrears' which was due
and not paid as on March 31, 1998 and in order to recover such tax arrears
expeditiously without undergoing any legal hassles, the Scheme was
promulgated. Therefore, when it is found in the broader sense that there
were tax arrears and the appellants were called upon to pay the said tax,
mischief contained in Section 95(ii)(b) would not be attracted.

We now advert to the second limb of the matter, viz., whether the case
would come within the embargo set out in clause (c). From the facts noted
above, it is clear that when the High Court had disposed of the first writ
petition of the appellants on July 20, 1993, it was explicit in making
categorical remarks that the fate of the appellants' case would abide by
the result of the appeal filed by the Revenue in a similar case of another
assessee, namely, M/s. Amar Steel Industries. Thus, the appellants'
challenge to the substantive levy of the additional duty was disposed of
subject to the result of the Revenue's appeal in the case of M/s. Amar
Steel Industries. Admittedly, the appeal of M/s. Amar Steel Industries,
was still pending before the Division Bench when the Scheme was promulgated
by the Legislature and the declaration was filed by the appellants. The
said assessee has subsequently been permitted to avail of the Scheme.
Therefore, prima facie it appears that mischief of clause (c) is not
attracted. In any case it is not necessary to go into this aspect in
detail, for another simple reason it needs to be remarked that the Revenue
had not rejected the declarations filed by the appellants on this ground.
It is the Division Bench of the High Court, in the impugned judgment, which
has held against the appellants on this account. It is also very pertinent
to point out that in the counter affidavit filed by the Revenue in the
instant appeal, the Revenue appears to have given up this contention as the
impugned order of the High Court is not defended on this ground at all.

The aforesaid discussion leads us to conclude that the impugned judgment of
the High Court is erroneous and warrants to be set aside. We, accordingly,
allow these appeals, set aside the impugned order and hold that the
appellants shall be entitled to the benefit of Kar Vivad Samadhan Scheme.
No costs.

.............................................J.
(A.K. SIKRI)

.............................................J.
(ROHINTON FALI NARIMAN)

NEW DELHI;
AUGUST 04, 2015.
ITEM NO.1A COURT NO.12 SECTION III
(for jt.)
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS

Civil Appeal No(s). 7570/2004

M/S. SWASTIKA ENTERPRISES & ANR. Appellant(s)

VERSUS

COMMNR. OF CUSTOMS, KOLKATA & ORS. Respondent(s)
WITH
C.A. No. 7571/2004

Date : 04/08/2015 These appeals were called on for judgment
today.

For Appellant(s)
Ms. Ruby Singh Ahuja,Adv.

Mr. Ashok Kumar Juneja,Adv.
Mr. Chand Qureshi,Adv.
Mr. R. N. Keshwani,Adv.

For Respondent(s) Mr. Sanjai Kumar Pathak,Adv.for
Mr. B. Krishna Prasad,Adv.

Hon'ble Mr. Justice A.K.Sikri pronounced the judgment of this
Court comprising of His Lordship and Hon'ble Mr. Justice Rohinton Fali
Nariman.

The appeals are allowed in terms of the signed judgment.

No costs.

| (SUMAN WADHWA) | (SUMAN JAIN) |
|AR-cum-PS |COURT MASTER |

Signed Reportable judgment is placed on the file.

-----------------------
[1] (2012) 1 SCC 226
[2] (2003) 2 SCC 19

Sections 363, 366A/376/34 of the Indian Penal Code, 1860 (IPC) in order to escape the charge and in justification of their carnal desire and perverted acts, pleaded consentThe opinion of the Medical Officer is to assist the court as he is not a witness of fact and the evidence given by the Medical Officer is really of an advisory character and not binding on the witness of fact.”= there is no straitjacket formula for determining whether consent given by the prosecutrix to sexual intercourse is voluntary, or whether it is given under a misconception of fact. In the ultimate analysis, the tests laid down by the courts provide at best guidance to the judicial mind while considering a question of consent, but the Court must, in each case, consider the evidence before it and the surrounding circumstances, before reaching a conclusion, because each case has its own peculiar facts which may have a bearing on the question whether the consent was voluntary, or was given under a misconception of fact. It must also weigh the evidence keeping in view the fact that the burden is on the prosecution to prove each and every ingredient of the offence, absence of consent being one of them.” =The learned trial Judge has sentenced the appellants to suffer rigorous imprisonment for a term of 10 years each for the offence under section 376 (g) of IPC apart from other offences. Sentence in respect of the offence of rape has to be in consonance with the law. The concept of special reasons as engrafted in IPC prior to the amendment brought in force by Act 13 of 2013 with effect from 3.02.2013 is not to be invoked for the asking. We need not enumerate anything in that regard, for there is no justification or warrant for thinking of reduction of sentence in this case. The appellants, to say the least, had taken advantage of their social relationship with the prosecutrix. She had innocently trusted the first appellant and, in fact, there was no reason to harbour any kind of doubt. The devilish design of the appellant No. 1 and the crafty manipulation of the appellant No. 2 is manifest. It has to be borne in mind that an offence of rape is basically an assault on the human rights of a victim. It is an attack on her individuality. It creates an incurable dent in her right and free will and personal sovereignty over the physical frame. Everyone in any civilised society has to show respect for the other individual and no individual has any right to invade on physical frame of another in any manner. It is not only an offence but such an act creates a scar in the marrows of the mind of the victim. Anyone who indulges in a crime of such nature not only does he violate the penal provision of the IPC but also right of equality, right of individual identity and in the ultimate eventuality an important aspect of rule of law which is a constitutional commitment. The Constitution of India, an organic document, confers rights. It does not condescend or confer any allowance or grant. It recognises rights and the rights are strongly entrenched in the constitutional framework, its ethos and philosophy, subject to certain limitation. Dignity of every citizen flows from the fundamental precepts of the equality clause engrafted under Articles 14 and right to life under Article 21 of the Constitution, for they are the “fon juris” of our Constitution. The said rights are constitutionally secured. Therefore, regard being had to the gravity of the offence, reduction of sentence indicating any imaginary special reason would be an anathema to the very concept of rule of law. The perpetrators of the crime must realize that when they indulge in such an offence, the really create a concavity in the dignity and bodily integrity of an individual which is recognized, assured and affirmed by the very essence of Article 21 of the Constitution. 12. Consequently, the appeal being, sans stratum, stands dismissed.

IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 983 OF 2015

Parhlad and Anr. ... Appellant
Versus
State of Haryana ... Respondent

J U D G M E N T

Dipak Misra, J.
The present appeal depicts a sordid situation and sketches a morbid
scenario, for the sad story commences with total trust, as it has to be,
inasmuch as the first appellant, the uncle of the prosecutrix, being the
cousin of her father, takes her with him but does not return and thus
betrays the trust, definitely inconceivable, for the young girl, PW 7, who
had remotely no idea about his dubious design when she accompanied him to
the house of the appellant No. 2, the maternal uncle of the first
appellant, that she would be sexually assaulted first by the appellant No.
1 and thereafter by the appellant No.2 who also succeeded in his threats
to the uncle – and at the end, they, after being sent up for trial for the
offences punishable under Sections 363, 366A/376/34 of the Indian Penal
Code, 1860 (IPC) in order to escape the charge and in justification of
their carnal desire and perverted acts, pleaded consent.
2. As the factual score would uncurtain, the case of the prosecution
from the very beginning was that the prosecutrix was below sixteen years of
age. The trial court believed the prosecution as regards the age of the
prosecutrix as a consequence of which the plea of the defence had to
collapse like a pack of cards which entailed conviction for the charged
offences as per judgment dated March 10, 2003 which led to the sentence of
rigorous imprisonment of ten years under Section 376(2)(g) IPC with
separate sentence under Section 363 IPC with the stipulation that all the
sentences shall be concurrent.
3. The judgment of conviction and order of sentence passed by the
learned Additional Sessions Judge, Sirsa in Sessions Case No. 55 of 2002
were assailed before the High Court in Criminal Appeal No. 914 of 2003 and
the learned Single Judge referred to the evidence of Manohar Lal, PW-1,
Principal of the Govt. Primary School, Rupana Khurd, Dist. Sirsa, Bhajan
Lal, PW-9, the father of the prosecutrix, Dr. Santosh Bishnoi, who had
examined the accused and the prosecutrix and took note of the ossification
test report, Ext. DA, and upon due appreciation of ocular and documentary
evidence brought on record concurred with the view expressed by the trial
court that the prosecutrix was below 16 years of age. Be it stated that
the High Court did not think it appropriate to rely on the ossification
test report as it found a number of flaws with it and opined that it was
not worthy of credence. Additionally, the High Court has opined that the
prosecutrix had no idea about the evil design of accused Parhlad, her uncle
and she had proceeded with him in good faith and under compulsive
circumstances she was raped by the accused persons and, therefore, there
was really no consent. On the basis of the said analysis, it affirmed the
judgment of conviction and order of sentence passed by the trial court.
Hence, this appeal by special leave.
4. We have heard Mr. Harinder Mohan Singh, learned counsel for the
appellant and Mr. Shekhar Raj Sharma, learned counsel for the respondent-
State.
5. The core issues that arise for consideration in this appeal are
whether the finding as regards the age of the prosecutrix is based on the
proper appreciation of evidence on record or it is so perverse that it
deserves to be dislodged in exercise of jurisdiction under Article 136 of
the Constitution, and further whether the opinion of the High Court
relating to consent withstands scrutiny. On a perusal of the findings
returned by the learned trial Judge as well as by the High Court, it is
noticed that the learned trial Judge has relied upon the testimony of the
prosecutrix, her father, and the school leaving certificate, which has been
brought on record and tendered in evidence; and the High Court, on re-
appreciation of the testimony of the prosecutrix and her father coupled
with the testimony of PW-1, the Head Master of the concerned school has
found that the version of the prosecution is truthful. As is perceptible,
the prosecutrix has deposed that she was about 14 years of age at the time
she went with her uncle and made a prey of the uncontrolled debased conduct
of the appellants. The father of the prosecutrix has testified in a
categorical manner about the factum of age of the prosecutrix. The
Principal, PW-1, who has proved the school leaving certificate has stood
embedded in his testimony and not paved the path of tergiversation despite
the roving cross-examination. Nothing has been elicited to create on iota
of doubt in his testimony. On the said premises, as we find, the
conclusion has been arrived at that the prosecutrix was below 16 years of
age.
6. It is requisite to state here that the radiologist who had conducted
the ossification test had opined that the age of the prosecutrix might be
16-17 years. The High Court in its analysis has recorded that the said
piece of evidence was not beyond reproach inasmuch as it had not depicted
the true situation as the eruption of teeth, number of teeth and many other
aspects were not observed by the doctor conducting the ossification test.
In this context reference to the decision in Ramdeo Chauhan alias Raj Nath
v. State of Assam[1] would be apposite. In this case, Sethi, J while
considering the evidentiary value of radiological examination opined that:-

“The statement of the doctor is no more than an opinion, the court has to
base its conclusions upon all the facts and circumstances disclosed on
examining of the physical features of the person whose age is in question,
in conjunction with such oral testimony as may be available. An X-ray
ossification test may provide a surer basis for determining the age of an
individual than the opinion of a medical expert but it can by no means be
so infallible and accurate a test as to indicate the exact date of birth of
the person concerned. Too much of reliance cannot be placed upon textbooks,
on medical jurisprudence and toxicology while determining the age of an
accused. In this vast country with varied latitudes, heights, environment,
vegetation and nutrition, the height and weight cannot be expected to be
uniform.”

Be it noted, Phukan, J. concurred with the view expressed by Sethi, J.
7. In this regard, we may, with profit, refer to the decision in Vishnu
alias Undrya vs. State of Maharashtra[2] wherein a contention was raised
that the age of a prosecutrix by conducting ossification test was
scientifically proved, and that it deserved acceptance. The court rejected
the said submission by stating that:-
“We are unable to accept this contention for the reasons that the expert
medical evidence is not binding on the ocular evidence. The opinion of the
Medical Officer is to assist the court as he is not a witness of fact and
the evidence given by the Medical Officer is really of an advisory
character and not binding on the witness of fact.”

Similar view has been expressed in Arjun Singh v. State of Himachal
Pradesh[3].
8. Tested on the touchstone of aforesaid legal premises, we do not find
any perversity of approach as regards the determination of age of the
prosecutrix.
9. The next facet relates to the facet of consent. It needs no special
emphasis to state that once it is held that the prosecutrix is below 16
years of age consent is absolutely irrelevant and totally meaningless.
However, as has been stated earlier the High Court has addressed itself
with regard to the plea of consent advanced by the accused persons. The
material brought on record clearly reveal that Parhlad, first cousin of the
father of the prosecutrix in the absence of her parents at home had asked
her to go with him for harvesting wheat crop to village Rupana Ganja and
accordingly she had accompanied him to the residence of the appellant No.
2, who is the maternal uncle of Parhlad. The prosecutrix has deposed that
she was in a totally helpless situation and despite her resistance she was
sexually abused. The mental and physical condition of a young girl under
the dominion of two grown up males who had become slaves of their prurient
attitude can be well imagined. The consent, apart from legal
impermissibility, cannot be conceived of. In this context reference to
certain authorities would be appropriate. In State of H.P. v. Mango
Ram[4] a three-Judge Bench while dealing with the consent has stated thus:-

“13. … Submission of the body under the fear of terror cannot be construed
as a consented sexual act. Consent for the purpose of Section 375 requires
voluntary participation not only after the exercise of intelligence based
on the knowledge of the significance and moral quality of the act but after
having fully exercised the choice between resistance and assent. Whether
there was consent or not, is to be ascertained only on a careful study of
all relevant circumstances.”

10. In Uday v. State of Karnataka[5] while reiterating a similar view the
Court observed:-
“21. … We are inclined to agree with this view … that there is no
straitjacket formula for determining whether consent given by the
prosecutrix to sexual intercourse is voluntary, or whether it is given
under a misconception of fact. In the ultimate analysis, the tests laid
down by the courts provide at best guidance to the judicial mind while
considering a question of consent, but the Court must, in each case,
consider the evidence before it and the surrounding circumstances, before
reaching a conclusion, because each case has its own peculiar facts which
may have a bearing on the question whether the consent was voluntary, or
was given under a misconception of fact. It must also weigh the evidence
keeping in view the fact that the burden is on the prosecution to prove
each and every ingredient of the offence, absence of consent being one of
them.”

Similar view has been echoed in Deelip Singh v. State of Bihar[6], Pradeep
Kumar alias Pradeep Kumar Verma v. State of Bihar and another[7] and Dilp
v. State of Madhya Pradesh[8].
Viewed on this prismatic reasoning, the conclusion arrived at by the High
Court on the obtaining factual score cannot be faulted.
11. Learned counsel for the appellant has submitted that the appellant
are in custody for more than 8 years. Needless to say, it is an
alternative submission pertaining to quantum of sentence. The learned
trial Judge has sentenced the appellants to suffer rigorous imprisonment
for a term of 10 years each for the offence under section 376 (g) of IPC
apart from other offences. Sentence in respect of the offence of rape has
to be in consonance with the law. The concept of special reasons as
engrafted in IPC prior to the amendment brought in force by Act 13 of 2013
with effect from 3.02.2013 is not to be invoked for the asking. We need
not enumerate anything in that regard, for there is no justification or
warrant for thinking of reduction of sentence in this case. The
appellants, to say the least, had taken advantage of their social
relationship with the prosecutrix. She had innocently trusted the first
appellant and, in fact, there was no reason to harbour any kind of doubt.
The devilish design of the appellant No. 1 and the crafty manipulation of
the appellant No. 2 is manifest. It has to be borne in mind that an
offence of rape is basically an assault on the human rights of a victim.
It is an attack on her individuality. It creates an incurable dent in her
right and free will and personal sovereignty over the physical frame.
Everyone in any civilised society has to show respect for the other
individual and no individual has any right to invade on physical frame of
another in any manner. It is not only an offence but such an act creates a
scar in the marrows of the mind of the victim. Anyone who indulges in a
crime of such nature not only does he violate the penal provision of the
IPC but also right of equality, right of individual identity and in the
ultimate eventuality an important aspect of rule of law which is a
constitutional commitment. The Constitution of India, an organic document,
confers rights. It does not condescend or confer any allowance or grant.
It recognises rights and the rights are strongly entrenched in the
constitutional framework, its ethos and philosophy, subject to certain
limitation. Dignity of every citizen flows from the fundamental precepts of
the equality clause engrafted under Articles 14 and right to life under
Article 21 of the Constitution, for they are the “fon juris” of our
Constitution. The said rights are constitutionally secured. Therefore,
regard being had to the gravity of the offence, reduction of sentence
indicating any imaginary special reason would be an anathema to the very
concept of rule of law. The perpetrators of the crime must realize that
when they indulge in such an offence, the really create a concavity in the
dignity and bodily integrity of an individual which is recognized, assured
and affirmed by the very essence of Article 21 of the Constitution.
12. Consequently, the appeal being, sans stratum, stands dismissed.

........................................J.
[DIPAK MISRA]

........................................J.
[PRAFULLA C. PANT]

NEW DELHI
AUGUST 03, 2015.

-----------------------
[1]
(2001) 5 SCC 714
[2] (2006) 1 SCC 283
[3] (2009) 4 SCC 18
[4] (2000) 7 SCC 224
[5] (2003) 4 SCC 46
[6] (2005) 1 SCC 88
[7] (2007) 7 SCC 413
[8] (2013) 14 SCC 331

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