India’s Directorate of Revenue Intelligence has slapped a $3.3 million penalty and fine on New Delhi-based Bharat Hotels for not paying customs duty on the Embraer Legacy 600 it imported for charter services in 2009. Customs duty in India is 18 percent for private use of aircraft and 2.5 percent for charter operations.

The Reserve Bank of India gives six months from the time money is sent out of the country for payment for proof of import. Bharat Hotels allegedly violated this rule with the foreign-registered Legacy, which was imported and continued to fly around India.

“This gives general aviation a bad name,” a government official told AIN. However, he acknowledged that there are too many rules with loopholes bordering on gray areas. “Unfortunately, violations bring in more stringent checks and knee-jerk reactions by the government.”

For example, new regulations announced in the budget two weeks ago reduce the time a foreign-registered aircraft may be used in India before it has be registered locally after the operator pays the appropriate taxes. The new rule shortens the time limit from six months to two. “This rule flouts the Chicago Convention,” the official said, “which permits a business aircraft to operate in a country where it has not been registered originally for six months at a stretch.”