Airlines challenge levy of Rs 8,500 per flight in HC

The proposal to levy Rs 7500 to Rs 8500 per flight operated by Indian airlines to create a fund to develop regional airports under its UDAN scheme was today challenged in Delhi High Court which sought to know the government's stand on the matter.
A bench of Chief Justice G Rohini and Justice Sangita Dhingra Sehgal issued notice to Ministry of Civil Aviation, Airports Authority of India (AAI) and Director General of Civil Aviation (DGCA) and sought their replies by December 21 regarding the challenge to the levy, which comes into effect from tomorrow.
The order came on the petition by Federation of Indian Airlines (FIA) which has said that while the scheme allows it to pass on the levy to the passengers, it cannot do so as it is not a fee for which the carriers are rendering any service to the flyers.

The FIA, which represents scheduled carriers like Indigo, GoAir, Spicejet and Jet Airways, has sought quashing of the October 21 notification inserting the rule for imposing the levy as well as the November 9 order declaring rates of levy and the categories of the scheduled flights on which they would be imposed.
FIA, represented by senior advocate Arvind P Datar, said the levy would put an "immense financial burden", estimated between Rs 388 crore to Rs 532 crore or more per annum, and sought orders prohibiting the AAI from collecting the levy.
It said that if the financial burden was passed on to the flyers, it would lead to an increase in tariff which would run counter to objectives of the National Civil Aviation Policy and the Ude Desh ka Aam Naagrik (UDAN) scheme under it to bring airfares down to affordable rates.

For UDAN, the government has created the Regional

Connectivity Fund (RCF) -- which will be 80 per cent financed by the Centre and the rest by the respective states.
To provide funding for the flights operated under the regional connectivity scheme, the Ministry decided to impose a levy on every departure on major air routes such as the national capital, Mumbai, Chennai, Hyderabad, Bengaluru and Kolkata.
FIA said it has not challenged the creation of the fund, but only the imposition of the levy, as it was allegedly "beyond the executive competence and required Parliamentary enactment" as the levy was in the nature of a tax.

It has said that insertion of the rule for imposing the levy was illegal as it allows imposition of a tax by delegated legislation without there being any authority in the Aircraft Act to do so.
It has alleged that in order to evade the law, the Centre has kept the notification "deliberately vague" without specifying the nature of the levy.
As per FIA, flights under category II or II A routes, those operated on regional connectivity scheme routes and those having a max certified take-off mass not exceeding 40,000 kilograms (or small aircraft) have been exempted from the levy.