Compensatory toll levy principles: recoverable bridge costs may include interest and maintenance, but not unsupported ancillary charges.

The toll power under the Indian Tolls Act is compensatory and must remain linked to the public benefit from the road or bridge. The Court stated that toll may recover the total construction cost, interest on actual construction expenditure, expenditure incurred in realisation of toll, and maintenance costs, and it rejected the view that interest can be charged only where construction was financed by borrowing. It also held that stationery expenditure is not includible unless incurred in toll realisation, and that interest on stationery cost or interest on interest cannot be added to the toll base.

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Issues: Whether the State could levy toll under Section 2 of the Indian Tolls Act, 1851 so as to recover the construction cost of a bridge together with interest and maintenance expenses, and whether stationery cost, interest on stationery cost, and interest on interest could also be included in the toll base.

Analysis: The power to levy toll is conditioned by the compensatory character of the impost and the public benefit arising from the construction or repair of the road or bridge. The notification governing levy contemplated recovery of the total cost of construction, including interest on the actual expenditure, expenditure in realisation of toll, and maintenance, but it did not authorise recovery of stationery expenditure unless incurred in realisation of toll, nor did it authorise charging interest on stationery cost or interest on interest. The Court also rejected the restrictive view that interest could be recovered only where construction was financed by borrowing, and held that the State's power to levy toll was not confined in that manner.

Conclusion: The State was entitled to levy toll to recover the permissible construction-related expenditure, including interest on actual construction expenditure and maintenance, but not stationery cost except where incurred in realisation of toll, nor interest on stationery cost or interest on interest.

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