Saudi Arabian Airlines Vs Union of India & Ors. (Supreme Court of India)
Summary: The Supreme Court allowed the appeal filed by M/s. Saudi Arabian Airlines and set aside the penalty imposed for delayed deposit of Foreign Travel Tax (FTT), holding that delayed payment of FTT cannot be equated with failure or non-payment of tax for the purposes of Section 38(3) of the Finance Act, 1979. The Court held that while Section 38(3) deals with non-payment of FTT, delayed deposit falls within Section 38(4) read with the Foreign Travel Tax Rules, 1979. It further held that imposition of penalty under Section 38 is not automatic merely because a statutory timeline has been breached.
The dispute arose from six instances of delayed deposit of FTT collected by the appellant airline. In five instances, the delay ranged from one day to eleven days, though the demand drafts had been purchased before the respective due dates. The appellant explained that the drafts could not be deposited because of security restrictions. In the sixth instance, involving December 1995, there was a delay of 63 days, which was attributed to the concerned employee being on emergency leave. The initial adjudication order had imposed a penalty of Rs.12,000 for the six cases of late payment, but after remand the penalty was enhanced drastically to Rs.71,29,140.
