The Supreme Courtroom on Tuesday (01.09.2026) has reiterated the precept {that a} litigant can’t be positioned in a worse place merely for having availed a treatment supplied beneath legislation. It additionally held that the penalty enhanced towards an appellant on remand, after the appellant’s personal attraction led to the remand, couldn’t be sustained.
The bench of Justice JB Pardiwala and Justice Ujjal Bhuyan dominated so whereas coping with an attraction by Saudi Arabian Airways, which had challenged a penalty imposed beneath Part 38(3) of the Finance Act, 1979 for delayed deposit of International Journey Tax (FTT). Whereas permitting the attraction totally on the interpretation of Part 38(3), the Courtroom additionally mentioned the doctrine towards reformatio in peius (a change for the more severe) after noting how the penalty was enhanced manifold as soon as the appellant selected to pursue statutory treatments.
The airline (appellant) was authorised to gather FTT from passengers on worldwide journeys, beneath Part 35 of the Finance Act, 1979. It had delayed depositing the tax into the federal government treasury six occasions between 1994 and 1997. In 5 of those instances, demand drafts had already been bought earlier than the due dates, however couldn’t be deposited on time; which the airline attributed to safety restrictions. The opposite delay was attributed to the involved worker being on emergency depart.
Within the unique order-in-original, the adjudicating authority had imposed a penalty of Rs. 12,000 on the airline for the six situations of delayed deposit of FTT. Aggrieved by this, the appellant filed an attraction, which resulted within the matter being remanded for recent adjudication. On remand, the adjudicating authority handed a de novo order enhancing the penalty to Rs. 71,29,140.
The appellant approached each discussion board, together with the appellate authority, the revisional authority beneath the Ministry of Finance, and the Bombay Excessive Courtroom contending that the enhancement positioned it able far worse than if it had by no means appealed in any respect. Had the airline merely accepted the unique order, its legal responsibility would have remained at Rs. 12,000. By exercising its statutory proper of attraction, it ended up dealing with a penalty over 590 occasions larger.
This competition was rejected at each stage. The appellate authority held that the unique penalty of Rs. 12,000 had been faulty, being lower than the statutory minimal prescribed beneath the Part 38(3), and that this “inadvertent” error had merely been corrected on remand. The revisional authority and the Excessive Courtroom concurred, holding that for the reason that remand was not a restricted one, the adjudicating authority was free to re-examine and improve the penalty in accordance with the statute.
Nonetheless, the Supreme Courtroom disagreed, holding that every one three boards had erred on this side. The bench posed the difficulty that whether or not a litigant might be worse off by approaching the appellate discussion board as supplied beneath the legislation or by approaching a court docket of legislation.
Answering this within the adverse, the Courtroom relied closely on the Bombay Excessive Courtroom’s earlier resolution in Jyoti Plastic Works Pvt. Ltd. v. Union of India, ( authored by Justice Ujjal Bhuyan himself). Referring to it, the bench famous that the maxim reformatio in peius means a change in direction of the more severe, and that in lots of jurisdictions the apply of a better discussion board making a decrease order worse for the very occasion who appealed it’s forbidden. The Courtroom noticed that the precept, when learn as “no reformatio in peius” of “ prohibition of reformatio in peius”, denotes a rule of honest process beneath which utilizing a authorized treatment shouldn’t worsen the scenario of the individual availing it, and that this may be seen as a part of pure justice in addition to a precept of equality.
The bench additionally famous that the Bombay Excessive Courtroom in Jyoti Plastic Works had relied on the ruling in Jawal Neco Ltd. v. Commissioner of Customs, affirming that an appellant can’t be worse off by cause of submitting an attraction.
The Courtroom additionally invoked its current resolution in Nagarajan v. State of Tamil Nadu, whereby the precept had been endorsed and utilized, holding that no appellant, by submitting an attraction, might be positioned able worse than what existed previous to the submitting of the attraction.
Making use of the precept, the bench held that the enhancement of penalty from Rs. 12,000 to Rs. 71,29,140 ensued solely as a result of the appellant had exercised its proper to attraction, couldn’t be countenanced, no matter whether or not the unique penalty computation was technically faulty.
Within the mild of above, the Courtroom put aside the penalty imposed on the appellant in its entirety, whereas additionally setting apart the orders of the Bombay Excessive Courtroom, the revisional authority, the primary appellate authority, and the de novo order-in-original, insofar as they associated to the six situations of delayed FTT deposit. It additionally directed a refund of any quantity already paid in direction of the penalty, with curiosity at 9% each year, inside three months.
The attraction was, thus, allowed.
Case: M/s Saudi Arabian Airways v Union of India & Ors
Quotation : 2026 LiveLaw (SC) 880
Look:
For the Appellant(s), Mr. P.V. Dinesh, Senior Advocate, appeared together with Mr. Shankh Sengupta, Mr. Samsuddha Majumdar, Mr. Kartikey Kulshrestha, Mr. Sujoy Sur, Mr. Soham Banerjee, Mr. Shreyash Sharma and Ms. Anna Oommen, Advocates. Mr. Syed Jafar Alam,Advocate-on-File, additionally appeared for the Appellant(s).
For the Respondent(s), Mr. Arijit Prasad, Sr Adv, Mr. Udai Khanna, Mr. Sarthak Karol and Ms. Neelakshi Bhaduria, Advocates together with Mr. Gurmeet Singh Makker, Advocate-on-File, and Mr. B. Sunita Rao,
