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Regional cess on domestic flights levied to fund connectivity plan, govt tells Delhi HC

LiveMint logoLiveMint 24-04-2017 Priyanka Mittal

New Delhi: The Centre on Monday told the Delhi high court that the levy of a regional cess on domestic flights was essential to create a corpus to finance the regional connectivity plan.

Additional solicitor general Sanjay Jain told a bench headed by acting chief justice Gita Mittal that the fund would be used to finance small airports over the country which nobody wants to operate out of.

“This fund is sui generis (unique/its own kind) in nature has to be seen as a fee and not a tax. It will allow airlines to use small airports as junctions,” Jain added.

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Levy of the tax was opposed by airline lobby Federation of Indian Airlines (FIA) which claimed the Centre could not amend rules and impose the fee at such a short notice.

FIA, which includes IndiGo, Jet Airways, SpiceJet and GoAir, moved the court in November challenging the cess.

The FIA petition, a copy of which Mint has reviewed, contended that the aviation ministry did not have the authority to introduce the levy in this manner. It said the levy made up for the government’s share of the Regional Connectivity Fund (RCF) towards the public purpose of enhancing regional connectivity.

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Under the 29 November notification issued by the Directorate General of Civil Aviation (DGCA), airlines would have to pay Rs7,500 for every flight up to 1,000 km, Rs8,000 for those between 1,000 and 1,500 km and Rs8,500 above 1,500 km.

The Airports Authority of India has been designated as the nodal agency to monitor the collection of funds from airline operators. The funds will also be open to audit by the Comptroller and Auditor General of India (CAG).

The case will be heard next on 15 September.

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