TaxTMI 
TaxTMI 
2013 (8) TMI 420
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....(1) (c) of the Indian Forest Act, 1927; as amended by the 4th Amendment to the Rules in 1978 notified on 13.12.2010, increasing levy of transit fee from Rs.38 per metric tonne, to Rs.75; Rs.100 and Rs.200 per cubic meter of capacity per lorry load of different quality of timber and other forest produce; and the 5th Amendment to the Rules of 1978, notified on 4.6.2011 enhancing transit fee and changing the basis of levy from cubic feat to advalorum between 5% to 15%, on variety of forest produce including timber, firewood, and other forest produce coming from mines e.g., coal, limestone, sand, bajari and other minerals, as unconstitutional, beyond legislative competence of State Government so far as mines and minerals, and, as violative of Art.14, 19 (1) (g), and 301 of the Constitution of India, as well as ultra vires the provisions of Section 41, 42, 51 and 76, of the Indian Forest Act, 1927. 2. The State Government issued a Notification dated 14.8.1997 under clause (c) of proviso to Rule 3 of the Rules of 1978 in supersession to the Notification dated 25.10.1991 to exempt all timbers and barks of the species given in Column-I including 20 trees, not situated in any forest from....
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.... over transit under Section 41 (2) of the Act. 5. In Sitapur Packing Wood Suppliers (supra), the Supreme Court, following State of Tripura vs. Sudhir Ranjan Nath (1997) 3 SCC 665, in which the application fees for transit of timber was upheld, and the judgments in Corporation of Calcutta vs. Liberty Cinema AIR 1965 SC 1107; Secunderabad Hyderabad Hotel Onwers' Association vs. Hyderabad Municipal Corporation (1999) 2 SCC 274 and P. Kannadasan vs. State of T.N. (1996) 5 SCC 670, held that transit fee under Rule 5 is clearly regulatory and, thus it was not necessary for the State to establish quid pro quo. The Supreme Court held in paragraphs 8 to 11 as follows:- "8. The distinction between tax and fee is well settled and need not be restated herein. It is clear from the afore-noticed provisions of the Act and the Rules that the transitory fee is regulatory in nature. The question of quid pro quo is necessary when a fee is compensatory. It is well established that for every fee quid pro quo is not necessary. The transit fee being regulatory, it is not necessary to establish the factum of rendering of service. Thus, there is no question of a levy of transit fee being invalidated ....
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.... was increased from Rs. 5/- to Rs. 38/-, per tonne of weight and came to be challenged again both on the ground of legislative competence of the State Government to make Rules to levy transit fee on stone chips, stone grit, stone balast, sand, morrum, coal, limestone, dolomite etc., and also on the ground that the mines and minerals are not 'forest produce' as defined under sub-section (4) of Section 2 of the Indian Forest Act, 1927 as these are not found in or brought from a forest. In Kumar Stone Works and others vs. State of UP and others 2005 (3) AWC 2177 this Court held that the phrase 'that is to say' occurring in clause (b) is exhaustive and indicates the intention of the Parliament to limit the restriction to those goods alone as are specifically mentioned therein. The only items mentioned in various sub-clauses of clause (b) of sub-section (4) of Section 2 would be forest produce when found in or brought from forest. It was further held in paragraph-24 of the judgment that there is no reference to any reserved forest area. Any of the items mentioned in clause (a) of the aforesaid provision would constitute a forest produce whether found in or brought from a reserved forest....
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...., stone grits and balast from the mine sites to different destination. The Division Bench dismissed the writ petition but left it open to the petitioners to move an application before the authority concerned to prove that the goods, which were being transported by the petitioners, did not pass through forest land to make it not liable for payment of transit fee in that regard. The representation was rejected in the light of the judgment in Kumar Stone Works (supra). A Division Bench of this Court, after noticing the judgments in M/s Yashwant Stone Works vs. State of UP and others AIR 1988 All. 121 (UP); Gandhi Smarak Nidhi Vyasthapak and others vs. State of UP and others 1988 ALJ 149; Smt. Pyari Devi vs. State of UP and others 2004 (96) RD 27 and Kumar Stone Works and others (supra), held that the question, whether the goods taken out by the mining operation are being carried through the land of forest reserved or not, hinges upon the point as to whether any land, which has not been declared under Section 20 of the Indian Forest Act as forest reserved, should be legally treated as forest reserved or not. The transit fee is permissible under the Rules with regard to transportation o....
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....ctions of Indian Forest Act, 1927 such as Sections 3, 4, 5, 11, 12, 14, 15 and 26 of Chapter II, which relates to reserved forest; Sections 28 (2) of Chapter III, which relates to village forest, Section 29, 30, 32, 33 of Chapter IV, which relates to protected forest, Section 38 in Chapter-V, which relates to claimants forest, Section 39 in Chapter VI, which relates to duty and other Sections. In none of these provisions the expression has been used to cover a produce as forest produce only because it passes through a forest. In all the Sections the context indicates that the produce being referred to as forest produce is that which has its origin in the forest and not merely items mentioned in sub-clauses (i) to (iv) of sub-section (4) of Section 2 (b) which though were produced in non-forest areas and were not forest produce originally but pass through a forest. The minerals excavated from mines, which do not fall in a forest area would not be forest produce and would not become so merely because a portion of the route through which they pass in transit is through a forest. The presumption would have drastic consequence namely under Section 69 of the Act a presumption has been dr....
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....preme Court has directed the status quo to be maintained as on that day is also pending. The Special Leave to Appeal (Civil)...../2005 (CC 8893/2005) M/s Bhagyashree Trading Company vs. State of UP and others, and many other petitions have been tagged with SLP (C) No. 11261/2005. 15. In Kanhaiya Singh and another vs. State of UP and others in Special Leave to Appeal (C) No. 11367 of 2007 from the judgment of the High Court dated 5.4.2007 in Writ Petition No.16408 of 2007, Hon'ble Supreme Court was pleased to pass an order on 23.7.2008:- "ORDER I.A. Nos. 2 & 3 of 2008 in SLP (C) No.11367 of 2007 and I.A. No. 4/2008 in C.A. No. 279/2008 Having heard learned counsel for the respective parties and having considered the order passed by us on 16th April, 2008 in SLP (C) Nos. 9093-9094 of 2008, we modify the interim order passed on 23rd July, 2007 and direct that there will be stay of realisation of any demand by way of transit fee in the meantime. IA Nos. 2 and 3 of 2008 are allowed. I.A. No. 4/08 in C.A. No. 2787/2008 is also allowed. In view of the submissions made on behalf of the petitioners in SLP(C) No. 11367/2007, let all these matters stand adjourned for final d....
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...., as they were published, which also gives comparison of the change brought about from the 4th Amendment to the 5th Amendment, is quoted as follows:- "Uttar Pradesh Shasan Van Anubhag-2 In pursuance of provisions of clause (3) of Article 348 of the Constitution, the Governor is pleased to order the publication of the following English translation of notification no.312/XIV-2-2011-343(L)/2001, dated June 04, 2011: Notification No.312/XIV-2-2011-343 (L)/2001 Lucknow, Dated June 04, 2011 In exercise of the powers under sections 41, 42, 51 and 76 of the Indian Forest Act, 1927 (Act no.16 of 1927), read with section 21 of the General Clauses Act, 1897 (Act no.X of 1897), the Governor is pleased to make the following rules with a view to amending the Uttar Pradesh Transit of Timber and other Forest Produce Rules, 1978. The Uttar Pradesh Transit of Timber and Other Forest Produce (Fifth Amendment) Rules, 2011 Short title and commencement 1. (1) These rules may be called the Uttar Pradesh Transit of Timber and other Forest Produce (Fifth Amendment) Rules, 2011 (2) They shall come into force with effect from the date of their publication in the Gazette. A....
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....c Meter of capacity Rs.40.00 per cubic Meter capacity Rs.40.00 per cubic Meter capacity (ii) (a) per cart load of timber of Khair, Sal and Sagaun (Teak), Shisham, Sandal Wood and Red Sanders. (b) per cart load of timber other than of Khair, Sal and Sagaun (Teak), Shisham, Sandal Wood and Red Sanders or other forest produce except as mentioned in (ii) (c). (c) per lorry load of other forest produce coming from mines, e.g., coal, lime, stone, sand, Bajari and other minerals. Advalorem at the rate of 5% or minimum Rs.400/. Advalorem at the rate of 5% or minimum Rs.200/Advalorem at the rate of 15% or minimum Rs.200/( ( iii) per camel load of timber or other forest produce Rs.9.00 (iii) per camel load of timber or other forest produce Rs.9.00 (iv) per pony load of timber or other forest produce Rs.4.00 (iv) per pony load of timber or other forest produce Rs.4.00 (v) per head load of timber or other forest produce Rs.2.00 (v) per head load of timber or other forest produce Rs.2.00 Note:In respect of resin and resin products, the provisions of the Uttar Pradesh Resin and other Forest Produce (Regulation of Trade) Act, 1976 and the rules framed ....
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....e areas of about 500 acres. The soil is excavated from the Rihand reservoir from those acres of land at 880 feet level falling in the Village Kohroul for which no objection certificate has been issued by the Executive Engineer, Rihand Dam and the mining permit has been given by the District Mining Officer, Sonebhadra. The Divisional Forest Officer, Renukoot Forest Division has given no objection certificate on 8.1.2008 for excavation of soil. The mining permits have been issued. The soil is excavated from non-forest areas and is transported by the route, which does not fall within the forest area or pass through the forest area. The Divisional Forest Officer, Renukoot has written a letter on 8.10.2007 to Forest Range Officer, Anpara Range, for charging transit fee on transportation of soil, which at that time was at the rate of Rs. 38.00 per tonne capacity. 22. Shri V.K. Upadhyay has relied upon a judgment of Uttrakhand High Court in M/s Gupta Builders vs. State of Uttrakhand decided on 26.6.2007 that the term 'forest' used in the Act of 1927 is limited to the forests, which are intended to be controlled and regulated under the Act of 1927. Until there is declaration of a land a....
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.... as to exceed the field of regulation covered exclusively and subscribe by Section 15 of the MMDR Act. He has relied upon Government of West Bengal and another vs. Kesoram Industries Limited and another, JT 2004 (1) SC 375 (para 148), in which, while considering the power of the State to levy tax or fee on minerals in view of provision of Entry 54 of List-I of the Seventh Schedule, it was held that a tax or fee levied by State with the object of augmenting its finances and in reasonable limits does not ipso facto trench upon regulation, development or control of the subject. It is different if the tax or fee sought to be levied, by State can itself be called regulatory, the primary purpose whereof is to regulate or control and augmentation of revenue or rendering service is only secondary or incidental. It is submitted that as it has been held in Sitapur Packing Wood Suppliers (supra) that the transit fee is regulatory in nature in view of Kesoram Industries Limited, the transit fee under the Rules of 1978 on transportation of minerals being a regulatory fee and not a fee for service rendered is within the exclusive legislative domain of the Union. The levy and collection of forest....
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.... (2000) 8 SCC 655; State of Tamil Nadu Vs. M/s Hind Stone, AIR 1981 SC 711; State of West Bengal Vs. Kesoram Industries, (2004) 10 SCC 201 and State of Orissa Vs. M.A. Tulloch, AIR 1964 SC 1284. 2. Under Section 23-C of 1957 Act, the State of Uttar Pradesh has itself framed comprehensive Rules titled "U.P. Minerals (Prevention of Illegal Mining, Transportation and Storage) Rules, 2002" whereunder the dispatches of minerals and ores are mandatorily to be accompanied by transit passes issued under the said Rules and strictly in accordance with the terms and conditions thereof. The aforesaid Rules are still in force and the transportation of coal is carried on in accordance with the terms of the Rules. 3. The provisions of the pre Constitution Indian Forest Act, 1927 specifically, Section 2 (4) (b) (iv) are deemed to have been repealed in so far as they purport to relate to minerals in view of the special later Parliamentary enactment namely, MMDR Act, 1957, inasmuch as it fully occupies the filed of transit/ transportation of minerals. 4. The MMDR Act is a later (and special) Parliamentary enactment enacted on 1.6.1958 whereas the Indian Forest Act, is an earlier (and genera....
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....ion as the same suffer from uncanalised and arbitrary power on the various authorities for taking different prices of coal for the purpose of collecting/ realizing transit fee and the fee is exorbitant, excessive and extortionary particularly keeping in view the nature of the levy being regulatory only for issuing transit passes. Reliance has been placed on Calcutta Municipal Corporation Vs. Shrey Mercantile (P) Ltd., (2005) 4 SCC 245; Vam Organic Chemicals Ltd. & Anr. Vs. State of U.P. & Ors., (1997) 2 SCC 715; and A.P. Paper Mills Ltd. Vs. Govt. of AP, (2000) 8 SCC 167. 11. The levy and collection of transit fee on coal originating from the collieries of NCL and being transported through the PWD road to the Thermal Power Generating Unit of the petitioner at Anpara is wholly illegal, arbitrary and without jurisdiction." 26. Shri V.K. Upadhyay further submits that the petitioners have not been given sufficient opportunity to file rejoinder affidavit as the counter affidavit was received a few days before the hearing began. The Court should thus accept the averments made in the petition to be correct vide State of Assam Vs. Union of India, (2010) 10 SCC 408. He submits that th....
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.... State of UP and others), challenging the 5th Amendment, submits that the coal has been included specifically for the first time in the Notification dated 4.6.2011. The levy of transit fee payable under the 4th Amendment at the rate of Rs. 5936/- per Truck has been arbitrarily and exorbitantly increased by the 5th Amendment to Rs. 60, 000/- per Truck. Shri Gupta submits that by 42nd Amendment, to the Constitution w.e.f. 03.1.1977 Entry-23 in List-II was deleted with a corresponding Entry 17-A 'Forests', was inserted in List-III. The State Government is competent to make Rules to regulate the forest produce. This power to regulate, however, would not include power to regulate the mines and minerals, the field of which is exclusively covered under Entry 54 of List-I 'regulation on mines & minerals development to the extent to which such regulation and development under the control of union is declared by law to be expedient in the, public interest, and on which the Central Government has enacted M.M.D.R. Act, also regulating the transportation and movement of coal under the Rules of 2002. 29. Fine tuning the arguments Shri S.P. Gupta submits that by the 5th Amendment to the Rules ....
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....ommon burden. 43. On the other hand, a fee is based on the "principle of equivalence". This principle is the converse of the "principle of ability" to pay. In the case of a fee or compensatory tax, the "principle of equivalence" applies. The basis of a fee or a compensatory tax is the same. The main basis of a fee or a compensatory tax is the quantifiable and measurable benefit. In the case of a tax, even if there is any benefit, the same is incidental to the government action and even if such benefit results from the government action, the same is not measurable. Under the principle of equivalence, as applicable to a fee or a compensatory tax, there is an indication of a quantifiable data, namely, a benefit which is measurable. 44. A tax can be progressive. However, a fee or a compensatory tax has to be broadly proportional and not progressive. In the principle of equivalence, which is the foundation of a compensatory tax as well as a fee, the value of the quantifiable benefit is represented by the costs incurred in procuring the facility/services which costs in turn become the basis of reimbursement/recompense for the provider of the services/facilities. Compensatory tax is....
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....nsatory tax is a judicially evolved concept, understanding of the concept, as discussed above, indicates its parameters. 48. To sum up, the basis of every levy is the controlling factor. In the case of "a tax", the levy is a part of common burden based on the principle of ability or capacity to pay. In the case of "a fee", the basis is the special benefit to the payer (individual as such) based on the principle of equivalence. When the tax is imposed as a part of regulation or as a part of regulatory measure, its basis shifts from the concept of "burden" to the concept of measurable/quantifiable benefit and then it becomes "a compensatory tax" and its payment is then not for revenue but as reimbursement/ recompense to the service/facility provider. It is then a tax on recompense. Compensatory tax is by nature hybrid but it is more closer to fees than to tax as both fees and compensatory taxes are based on the principle of equivalence and on the basis of reimbursement/recompense. If the impugned law chooses an activity like trade and commerce as the criterion of its operation and if the effect of the operation of the enactment is to impede trade and commerce then Article 301 is v....
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....e State has not given the details of the actual expenditure on regulating industrial alcohol for the purposes that it may not be renatured for the purpose of consumption as potable alcohol. Shri Bharat Ji Agarwal has also relied upon the judgments in Indian Glycols vs. State of UP 2004 UPTC 474, Ram Surat Tiwari vs. State of UP 1991 ALJ 644, Synthetics and Chemicals Ltd vs. State of UP AIR 1990 SC 1927, Indian Mica and Micanite Industries Ltd v. State of Bihar, AIR 1971 SC 1182, in submitting that the burden of proof that the services are being rendered by the Forest Department lies on the respondents. 36. Shri Rahul Agarwal, appearing in Writ Petition No. 925 of 2011 (Star Paper Mills Ltd. vs. State of UP and others), submits that the petitioner is manufacturing paper and uses timber as the basic raw material. Additionally, in the chemical process used for manufacturing paper, the petitioner requires coal and lime/lime stone. The petitioner has also a captive power plant at Saharanpur consisting of two units of 6.2 MW and 5 MW capacity running on coal. The petitioner has been granted a long term linkage with Eastern Coal Fields Ltd. for supply of coal to one of these power gene....
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....ed within the State of UP passes through the forest in Sonebhadra, is subject matter of Special Leave to Appeal (C) No. 11261 of 2005 (converted into Civil Appeal No. 2797 of 2008) filed by Star Paper Mill (the petitioner). The Supreme Court has by an interim order dated 7.4.2008 directed status quo as on that day to be maintained. Shri Rahul Agarwal submits that where the movement of raw material does not originate in any forest or any place which is in the forest or its movement is minimal in any forest area in which practically no forest road is used, the respondents have no right to demand the petitioner to take out transit pass and to pay transit fee. He submits that the imposition of transit fee is a restrictive on the business of the petitioner as well as violates Article 301 of the Constitution of India which gives freedom of trade, commerce and intercourse throughout the territory of India. The increase of fees at advalorem basis has made it confiscatory in nature. The fee is no longer regulatory and since no material has been produced to justify its levy on the basis of quid pro quo, in view of the law declared by the Supreme Court in Jindal Stainless Ltd vs. State of Har....
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.... engaged in the business of manufacture and sale of Katechu and Kutch from Khairwood extract, Gambiar and Cashew Husk. All the three writ petitions were filed on 11.7.2011. In Writ Petition No. 941 of 2011 the reliefs have been sought against the Conservator of Forest, Bareilly and the Divisional Forest Officer, Bareilly; in Writ Petition No. 942 of 2011 the reliefs have been sought against the Divisional Forest Officer, Mughalsarai Range, Varanasi and in Writ Petition No. 943 of 2011 the reliefs have been sought against the Conservator of Forest, Agra, Meerut, Kanpur and Bareilly. Shri Navin Sinha assisted by Shri Vipin Sinha also appears in Writ Petition No. 1230 of 2011 (M/s Vibhu Essential Oils vs. State of UP and others) challenging the levy of transit fee on Sandal wood oil imported from outside the country. The petitioner imports the Sandal wood oil either directly or through other traders, who import the same from abroad. No part of the Sandal Wood Oil, it is alleged, is extracted from any forest produce in any forest in the State of UP. The Sandal wood oil is distinct from the red Sandal wood oil which is an extract of forest produce within the State of UP. In the Writ Pet....
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....illimeter thick plates. These plates are pressed by Hydraulic press to remove further water contents. Thereafter these plates are cut into 2" 2" cakes. These cakes are dried in dehumidified for about 15 days. Again these cakes are put in room through which normal air is passed for about 5 days. 12. That the mill Kattha so obtained by the above process is eatable and marketable item and not a forest produce within the meaning of Section 2 (4) of the Indian Forest Act. Thus for its transit no pass is required. The petitioners sells its mills Kattha to whole salers and retailers all over India and if at each stage a transit pass is required from the forest authorities then it will cause immense difficulty and in fact bring the business of the petitioners unworkable and to a halt. 13. That there is vast difference between cottage industry Kattha and mill Kattha. The cottage industry Kattha is made generally by the boiling of Khair wood in Bhattis peaces of Khairwood in the forest. Whereas mill Kattha is manufactured by a very complex mechanical process in a factory situated in town and not forest. Their contents are also very different the cottage industry Kattha contains mostly ....
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....t the consequent impact of the enhancement is that in ordinary course, a truck load of white sandal wood oil may be carrying about 0.320 cubic meter of the value in the realm of Rs. 91, 44, 800/- on which under the 4th Amendment the liability would be about Rs. 128/- per cubic meter. Now on advelorum basis at 5% of the value, the transit fee would amount to approximate Rs. 45, 000/- on the same quantity. In one of the Invoice No. 002, Book No. 01 despatching Sandal Wood Oil Rectified (High Santanol) dated 7.4.2011 by Ultra Aromatics, Plot No. 237, Village Budhpur, Delhi valued at Rs. 91, 44, 800/-, the transit fee at 5% advalorem is shown at Rs. 5 lacs as against Rs. 128/-for 0.320 cubic meter paid earlier. 46. Shri Navin Sinha has relied upon object clause of Indian Forest Act, which does not admit any such regulatory fee within its ambit. He has challenged the 5th Amendment on the ground that by increase of fees exorbitantly the regulatory fee has virtually become a compensatory tax for which no justification has been given of the services provided by the Forest Department. The burden of justification is entirely on the respondents. The high increase has made it excessive, exo....
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.... good of the society. By exercising the control on the activities of the licensees, the State makes the activities subject to reasonable restrictions, which is not a service rendered to them. By granting a licence the State does not confer any privilege or benefit on any one and that it does is to regulate a trade, business or profession in public interest. After citing Indian Mica and Nicanite Industries Ltd v. State of Bihar, AIR 1971 SC 1182 and Corporation of Calcutta v. Liberty Cinema AIR 1965 SC 1107 this Court held: when the State makes the law for regulation of any trade or business by means of licensing, it is open to it to charge licence fee to defray the cost of administering the regulation. In these cases although the principles of quid pro quo do not apply; but the fee so charged should have broad co-relationship with the cost of administering the regulation. What is essential is that fee should not be excessive or exorbitant. The Court thereafter relied upon Synthetics and Chemical Ltd. v. State of UP AIR 1990 SC 1927 where the fee imposed by the State which was found to have no connection with the cost of administering the regulation was not held to be part of regula....
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.... erred in taking the abovesaid view by referring to the definition of 'timber' inasmuch as we agree with Shri Bhatia that the second part of the definition does not take within its fold fashioned bamboo as that part is relatable to wood, and not tree. We have said so because the definition of tree includes even canes, and a cane cannot be taken as a wood, even if a tree could be. But then, the High Court has also referred to sub-clause (i) (supra) which speaks of produce of tree as well. As to this, submission of the appellant's counsel has been that when sub-clause (i) is read as a whole the same would clearly indicate that such produce of tree alone is contemplated which is a natural growth or product like flowers and fruits. This submission has force when the definition of forest-produce is read in its entirety which would show that the definition either includes nature's gifts like charcoal, mahua flowers or minerals. Wild animals of which sub-clause (iii) speaks of is also a God's gift and not man-made. Wherever the legislature wanted to include article produced with the aid of human labour, it has said so specifically as would appear from sub-clause (iv), as it speaks, apart ....
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....nd that the power, which the State Government may exercise under the proviso to Rule 2 to regulate the transport of forest produce including the power to prohibit or restrict transport. The power to restrict movement of forest produce between sunset and sunrise was found to be prohibitory and restrictive of the right to transport forest produce. Relying upon Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan (supra) it was held that the restrictions obstruct the freedom, where regulations promote it. Police regulations, though they may superficially appear to restrict the freedom of movement, in fact provide the necessary conditions for the free movement. Regulations such as provision for lighting, speed good conditions of vehicles, timings, rule of the road and similar others, really facilitate the freedom of movement rather than retard it. The licensing system with compensatory fees would not be restrictions but regulatory provisions: for without it, the necessary lines of communications, such as roads, waterways and air-ways cannot effectively be maintained. The regulations providing for necessary services to enable the free movement of traffic, whether charged or not, ....
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...., 1579 of 2010, 476 of 2010 and 284 of 2010 the petitioners are dealing in transport of Iron-ore; in Writ Petition No. 495 of 2010 the petitioners are dealing in transport of Iron-ore and Coal; in Writ Petition No. 779 of 2010 the petitioners are dealing in transport of Marble Stone; in Writ Petition No. 1628 of 2010 the petitioners are dealing in transport of Quartz, Bauxite, Feldspar etc.; in Writ Petition No. 276 of 2010 the petitioners are dealing in transport of rejected Coke & Ash Burn Coke; in Writ Petition No. 55 of 2009 the petitioner is dealing in transport of Soil (Mitti); in Writ Petition Nos. 1020 of 2008, 1021 of 2008; 1717 of 2010 and 668 of 2011 the petitioners are dealing in transport of Sponge Iron; in Writ Petition Nos. 498 of 2009; 827 of 2010; 1424 of 2010; 225 of 2011 and 670 of 2011 the petitioners are dealing in transport of Sand; in Writ Petition Nos. 1108 and 1109 of 2011 the petitioners are dealing in Tendu Leaf and in Writ Petition No. 1078 of 2011 the petitioner is dealing with transport of Coal/Limestone. 54. Shri Alok Kumar has provided the down-loaded extract from Wikipedia (the free encyclopedia) giving the contents, properties, method of prepara....
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....d distinct article such as bamboo mat was not held to be forest produce. 57. Shri Aloke Kumar submits that the Flyash is given free of cost by NTPC to the Cement Industry as industrial waste. It has no commercial value and is not a forest produce. 58. It is submitted by Shri Aloke Kumar, that Hard Coke is manufactured out of crust coal heated in chambers. After the impunities are removed and the oxygen is released, the residue is subjected to sprinkling by water in a controlled manner producing Hard Coke. He submits that Hard Coke, rejected Coke, Ash Burn Coke are industrial waste, and are bye-products of Hard Coke. These are not forest produce and are district than the Coal. These commodities are commercially different commodities, which cannot be treated as Coal in commercial parlance and cannot be thus subjected to transit fee. 59. Shri N.C. Gupta appearing in Writ Petition No. 2124 of 2008 submits that the petitioners import coal from outside the State of UP on Form-38 of U.P. Value Added Tax Act, 2008. The coal imported from outside the State is not a forest produce. He has also adopted the argument of Shri V.K. Upadhyay in submitting that the coal is a mineral on whi....
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....al sustainable development. The increase in transit fees cannot minimise the use of forest produce. Its optimization may help in sustaining a balance. The increase is thus wholly unreasonable with no object to achieve to justify it. 63. Shri Siddhartha Srivastava, appearing in Writ Petition Nos. 714 of 2011 and 1087 of 2011 filed by the petitioners dealing in transport of Marble, Kota Stone, Granite from Rajasthan, submits that Section 41 (2) (c) does not provide for levy of transit fee on forest produce. He submits that there is no legislation for imposing transit fee. The word 'fees' under the provision of Section 41 (2) (c) of the Act has to be read 'noscitur a sociis' i.e. fees for issue, production and return of transit pass alone and not beyond tht purpose. Section 41 (2) (c) of the Forest Act 1927, may not be read down and interpreted as delegation of power to the State Government to legislate, the provision for transit fees. Such an excessive delegation is not permissible in law. He has relied upon Ahmedabad Urban Development Authority v. Sharadkumar Jayantikumar Pasawalla and others (1992) 3 SCC 285, in which it was held that the imposition of development fees by framin....
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....les the State Government to enact laws for regulating activities connected with forest. 68. Shri V.K. Singh submits that the tendu leaves are grown in a special area in Uttar Pradesh bordering Madhya Pradesh, Chhatisgarh, and Bihar. Tendu shrubs are naturally grown, and are of the average height of 3 ft. In the third week of May and first week of June for a period of 20 days only, the tendu leaves grown in these shrubs, used for manufacture of 'biri', are traditionally collected by the tribals of the area. In order to protect the tribals from exploitation and to take over the entire purchase and distribution of tendu leaves, the Tendu Patta Adhiniyam of 1972 provides in Section 4 for appointment of agents in respect of different units or in respect of more than one unit on terms and conditions of, and the procedure respecting such appointment as may be prescribed. The entire trade of collection, storage and transportation is monopolised by the State Government. No person under Section 5 (1) (a) can sell tendu leaves to any person, other than the State Government, or the officers of the State Government authorised by it in that behalf or an agent. Sub-section (1) (b) prohibits an....
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....icers and/or person mentioned against each of them: Type of transport permit Authority to issue permit (i) For transport from collection depot to storage godown: (a) Main permit, form T.P.I (Main) Divisional Forest Officer or an officer authorised by him in writing (b) Subsidiary permit Form T.P.I (Subsidiary) up to the extent of quantity mentioned in the main Divisional Forest Officer or any Officer and/or person authorised by the Divisional Forest Officer in writing (ii) For Transport from one Storage godown to another or to distribution centre, Form T.P.2 Divisional Forest Officer or any Officer and/or person authorised by the Divisional Forest Officer in writing up to a specified quantity and period (iii) For transport from distribution centre to Sattadars or Mazdoors, Form T.P.3 Divisional Forest Officer or any person authorised by the Divisional Forest Officer in writing specifying the maximum quantity to be transported in each consignment. (iv) For transport outside the State or transport to any area in the State to which the Act does not apply from any area in the State to which the Act applies Form T.P.4. D....
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.... and transported to godowns, from where they are taken out for commercial sale. The entire movement of tendu leaves is covered by the transit passes under Rule 4 namely T.P.-1 to T.P.-6. A tax under Section 5 (3) is paid on transport of tendu leaves. The entire trade operates under strict control of the State Government and thus no object is sought to be achieved in obtaining transit pass under the Rules of 1978 which virtually amounts to duplication of passes for payment of transit fee over and above the transit fee paid under the Tendu Patta Adhiniyam. He submits that in Mohanlal Hargundas v. State of UP 1986 (1) ALJ (All) 585 this Court declared Section 5 (3) imposing tax as beyond the legislative competence of the State Government and consequently ultra vires. The Supreme Court allowed the Special Appeal and upheld the tax. 71. Shri V.K. Singh submits relying upon J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. State of Uttar Pradesh and others AIR 1961 SC 1170; Patna Improvement Trust v. Shrimati Lakshmi Devi and others AIR 1963 SC 1077 (para 12); Jogendra Lal Saha v. The State of Bihar and others AIR 1991 SC 1148; State of Orissa and others vs. Commissioner of Land Reco....
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....ter of capacity of the lorry. By the 5th Amendment the transit fee has been prescribed at the advalorem rate of 5% or minimum of Rs. 750/- per lorry load. By this amendment one truck of tendu leaves with capacity of 10 tonnes will attract transit fee to the tune of Rs. 30,000/- as the current value of 1 kg of tendu leave is about Rs. 60/-, and 10 tonnes will mean 10,000 kg. The increase is highly excessive and does not serve any object. It will seriously affect the trade, providing employment to thousands of poor persons engaged in wrapping and sale of biris. The transit fee has been held to be regulatory in nature. By quantum jump in the fee it has lost its character as regulatory fee and has become compensatory fee for which the levy has to be justified on the principles of quid pro quo. In the present case the petitioners are not provided any service or facility. Unlike licence fee a compensatory fee must be justified on rendering of services. 76. Shri Rajeev Misra further submits that the classification of the 5th Amendment by providing transit fee on various rates on various forest produce does not serve any purpose. If the object is to regulate the movement and to ensure t....
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....e transit fee prescribed under Rule 5 only on those transit passes which have been issued by the person under Rule 6 (4). On payment of such fee a receipt is issued as prescribed under Schedule 'C' and therefore, the transit fee which is to be paid or in other words Rule 5 will only apply in those cases in which the transit is made on the transit pass issued under Rule 6 (4) and not in any other cases. The express mention of one thing implies the exclusion of the other. Once Rule 5 contemplates the charging of transit fee only with reference to passes issued under Rule 6 (4), then the fee cannot be charged in any other case. He submits that Rule 3 under the Rules of 1978, has independent entity and is to be read with Schedule 'A'. It has no co-relation with Rule 5 which prescribes the payment of fees. Rule 3 in Schedule-A- does not contemplate charging of transit fees. Therefore, the transit pass has to be issued free of cost under Rule-3. 79. Shri Udit Chandra further submits that in Jindal Stainless (supra) the concept of regulatory fee and compensatory tax has been explained. The test of principle of equivalence shifts the burden on the authority imposing the levy not only to....
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....produce of mines or quarries. The 'mines' and 'quarry', have different meaning. In Webster's new world dictionary of American language by David B. Gural Nik (Editor-in-Chief) at page 904 and 1162, these words are defined as follows:- "Quarry: A place where building stone, marble or slate is excavated as by cutting or blasting -Vt. - ried, ry.ing 1. to excavate from a quarry 2. to make a quarry in (land). Mine:- 1. a) a large excavation made in the earth, from which to extract mettalic ores, coal, precious stones, salt or certain other minerals: distinguished from QUARRY. 81. Shri Susheel Gupta submits that in D.K. Trivedi & sons vs. State of Gujarat AIR 1986 SC 1323 at page 1351, the Supreme Court observed:- "To quarry is defined as Extract Stone from quarry, quarrying mineral is, therefore, a mining operation inasmuch as it consists of an operation undertaken for the purpose of winning particular classes of minerals." 82. Shri Susheel Gupta submits that quarries are for mining operations situated in the allotted/leased area after making royalty and dead rent to the Government under MMRD Act. The transportation of the quarried minerals are not taken by the petitioner....
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.... with higher paying capacity. Hence, the agency involved in transportation should pay more as a transit fee in comparison to timber of low grade. It was, therefore, based on empirical data. In the light of the above, categories were formed as below: i) Valuable timber: Khair, Sal and Sagaun (Teak), Shisham, Sandal wood and Red Sanders. ii) Less valuable timber: other than Khair, Sal and Sagaun (Teak), Shisham, Sandal wood and Red Sanders." 84. It is then stated in paragraphs 10, 11 and 12 as follows:- "10. That the transit fee determined in different years, i.e. 1978, 2004 and 2010, it was felt that hike in prices of forest produce is reflected in the transit fee at a span of uneven intervals, reflecting that the pace of increase of price of forest produce is not corresponding with the rates of transit fee, which remains static for a longer time. There was always a gap between increase of price of the forest produce and change in transit fee. At times, the time lag was 26 years and at other times it was 6 years. 11. That in order to rationalize the fee structure with co-relation to the change in the price of timber, the only way left was resorting to adoption of a....
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....t fees. One of the most significant challenges in addressing climate change and global warming is reducing greenhouse gas emissions resulting from the use of coal. Coal is inherently higher polluting and more carbon intensive than other energy alternatives. Climate change and global warming if it is permitted to happen by carbon dioxide emissions will impose a heavy burden on future generations in all states, and in all countries. The Kyoto Protocol is an amendment to the United Nations Framework Convention on Climate Change (UNFCCC), an international treaty intended to bring countries together to reduce global warming and to cope with the effects of temperature increases that are unavoidable after 150 years of industrialization. The provisions of the Kyoto Protocol are legally binding on the ratifying nations. India is also a signatory to the Kyoto Protocol that went into effect on February 16, 2005. The three major impacts are those on increase in frequency of extreme events (drought/rainfall), rising sea level and effects on agriculture (which is even more important for an agricultural state like Uttar Pradesh). With learning threat of global warming, the immediate concern....
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....nt to a forest produce as held in Kumar Stone's case. The word 'forest' has not been defined in Forest Act. The Supreme Court, in T.N. Godavarman Thirumulpad's case, has given an expansive meaning to the word 'forest'. 87. It is further stated in the counter affidavit, that scope and jurisdiction of MMRD Act 1957, and Indian Forest Act, 1927 is entirely different. Both the Acts have no relation with each other nor their provisions overlap in any way upon the other. The MMRD Act provides for regulation of mines and minerals, grant of mining lease, fixation of royalty etc. whereas the Forest Act deals with preservation, development and conservation of forest. It is stated in paragraph-22 of the counter affidavit, that any minor mineral, which is transported from outside the State of UP, as soon as it comes in the territory of State of UP, the Rules of 1978 will apply and the transporters have to obtain transit passes. So far as payment of royalty and other dues to the concerned State is concerned, the petitioners are not the lease holders. Where a person transports minor minerals in the territory of Uttar Pradesh, the transit fee will have to be paid by him under the Rules of 1978....
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....d vide notification dated 10th August, 1982 including Varanasi-Shakti Nagar; the Obra Forest Range and Markundi Forest Range included in Kaimur Wild Life Sanctuary. The current Obra Forest Range including Markundi Forest Division was notified in 1970. The working scheme of Obra Forest Division of the year 1980-81 to 1989-90 (Survey of India) indicate Markundi Forest Division; the Kaimur Wild Life Sanctuary includes Varanasi Shakti Nagar Road Km.73 to 76.2 (3.2 kms.) through the Markundi Forest Division of the Kaimur Wild Life Sanctuary. Since the Wild Life Sanctuary is spread out in the entire length on the sides of the road, the road passes through the sanctuary from north to south. 89. Paper Nos.5 and 6 are the notifications under Section 4 of the Indian Forest Act, 1927 and the regarding Markundi Forest Block dated 1.5.1970; notification under Section 20 of the Indian Forest Act dated 17.9.1969; paper no.7 and 9 are the transfers of land for coal excavation of the Forest Department to NCL on 30.7.1990 and 4.1.1991 and letter dated 18.10.2010 by Van Mandal Adhikari, Van Mandal Singrauli, M.P. Shows the use of the transferred land for coal excavation. Paper no.12 is a Governmen....
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....n supersession of Government Notification dated September 30th, 1915, and all other orders and notifications on the subject to regulate the transit of timber and other forest produce. The prefatory note to the Rules of 1978 reads as follows:- "In exercise of the power under Section 41, 42, 51 and 76 of the Indian Forest Act (Act No.16 of 1927), and in suppression of Government Notification No.672/XIV-42, dated September 30, 1915, and all other orders and notification on the subject, the Governor is pleased to make the following rules to regulate the transit of timber and other forest produce." 91. According to sub-section 41 (1) of the Indian Forest Act, 1927 the State Government may make rules to regulate the transit of timber and other forest produce. Section 76 (d) empowers the State Government to make rules to carry out the purposes of the Act. It is stated that the coal mines of National Coalfields Ltd. (NCL) are situate both in the States of U.P. and M.P. The NCL has been given these lands by the State Government on lease. One of such order dated 4th January, 1991 issued by the Government of U.P. granting lease of 1305 hects. of forest land to NCL Ltd. in Duddhi Chuna a....
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....trate, Sonebhadra on 01.2.2008 for a period of three months, is not a forest land, but the road, from which the petitioner is transporting the ordinary earth to his dykes lagoon, is a National Highway No. 76-E, Varanasi-Shaktinagar marg, which falls on forest land. The Ministry of Environment and Forest, Government of India issued a letter on 28.6.1990 for transfer of the forest land on which the National Highway was constructed by PWD on certain terms and conditions. The first condition of this letter is that the legal status of the forest land will remain unchanged. The other conditions include plantation of trees to be undertaken on both sides of road; and compensatory afforestation to be raised on 47.28 hec. of non-forest land identified by the State Government. The State of UP has, in compliance with Government of India's order dated 28.6.1990, directed the PWD for widening of the National Highway No. 76-E and for this purpose an area measuring 42.587 hectares of non-forest land was transferred on the same condition. 95. Shri Ravi Kant, Sr. Advocate appearing for the State of U.P. along with Shri Alok Kumar Singh, Standing Counsel submits that wide and sweeping arguments ha....
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....s. Union of India, (1997) 2 SCC 267, the Supreme Court held that the word 'forest' must be understood according to its dictionary meaning. The description covers all statutorily recognised forests whether designated as reserved, protected or otherwise for the purposes of Section 2 (1) of the Forest Conservation Act, 1980. The Rules of 1978 were made in exercise of powers under Section 41, 42, 51 and 76 of the Indian Forest Act to regulate the transit of timber and other forest produce. The object of the Rules of 1978 for taking out transit pass and payment of transit fees as regulatory fees to cover the expenses of the regulation, is to check the illicit movement of forest produce. The transit fee is a regulatory fees. India is also signatory to Kyoto Protocol and is committed to reduce emission of greenhouse gases by providing for measures including the check on deforestation. 98. Shri Ravi Kant submits that in case illegal movement of forest produce and poaching continues, the resultant degradation of the environment will harm everyone. 99. Shri Ravi Kant submits that charging of fees on transit of forest produce is not to regulate the forest produce but to regulate its mov....
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.... in the State of U.P. have been included as protected forests by notifications issued under Section 80A of the Act. 101. Shri Ravi Kant submits that the Court has to give a very expansive meaning to the forest produce. The intention of the law maker has to be found by giving the purposive meaning to the words 'forest produce'. The legal process theory invites a dynamic statutory interpretation to the laws enacted in public welfare. The meaning of the words keep changing from time to time. The environmental concerns shown by the statutes and the treaties signed by the Central Government require the Court to give wider meaning to the words 'forest' and 'forest produce'. He relies upon MCD Vs. Mohd. Yaseen, (1983) 3 SCC 229; the meaning of the words 'that is to say' in Royal Hatcheries Pvt. Ltd. Vs. State of A.P., (1994) 1 SCC 429; State of Karnataka & others vs. Balaji Computers & others, (2007) 2 SCC 743; and in State of A.P. vs. A.B. Malhotra, (1976) 1 SCC 834. He submits that even manufactured form and processed form of forest produce is included within the definition of the words 'forest produce. For 'kathha' and 'catechu', he relied upon the Supreme Court judgment in State of....
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....a compensatory tax, in as much as the quid pro quo is lacking, Shri Ravi Kant submits that the difference between tax and fee is waning. It is not necessary to render service to specify individual group or association. The services rendered to the society is sufficient. The co-relation between fee and service has to be broad and not exact. It is not necessary that the amount collected may be deposited in a separate account. It could like tax be brought into consolidated fund of the State. The expenditure incurred has also to be seen. The court will not minutely examine the details. He relies upon the judgments in the matters of court fees and submits that even ad valorem court fees can be charges. In State of Himachal Pradesh Vs. Shivalik Agro Poly Products & Ors., (2004) 8 SCC 556 the fee charged on graduated scale was upheld. He submits that existence of the liability is no ground for challenge. In Secundrabad Hyderabad Hotel Owners' Association & others vs. Hyderabad Municipal Corporation Hyderabad and another (1999) 2 SCC 274 the hike of fees by 30 times was also upheld. 104. So far as argument that Clinker, Fly-ash, Calcium Hydroxide, Calcium Oxide, Quick Lime, Hydraded Lim....
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....ny area recorded as forest in the Government records irrespective of its ownership." 107. The dictionary meaning of forest suggests that forest is a large tract covered with trees and undergrowth, sometimes mixed with pasture (Oxford Dictionary, 7th Edition). The forest is also defined as 'a tract of land covered with trees and one usually of considerable extent' (Black's Law Dictionary). With these definitions it can be clearly said that the forests as defined by the Supreme Court are those which include all statutorily recognised forests, and forests as understood commonly in the dictionary sense, whereas forest land includes not only forest as understood commonly in the dictionary sense, but also any area recorded as forest irrespective of ownership. Even in the absence of any precise definition of forest under the Indian Forest Act, 1927, the principles or criteria of defining forest are to be based on sound ecological and scientific bases. The term 'forest' also needs to be clearly distinguished from the 'forest land'. In order to understand forest, the criteria or principles to designate forest lands needs to be developed not only on scientific basis, but should also neces....
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.... balance. In Ambica Quarries Works (supra) the Supreme Court held that the Forest Conservation Act, 1980 was in recognition of the awareness that the ecological imbalances as a result of deforestation have become social menaces and that further deforestation and ecological imbalance should be prevented. THE 'FOREST PRODUCE' 110. The 'Forest produce', is defined under Section 2 (4) of the Indian Forest Act, 1927. It is an inclusive definition and is thus not confined only to the forest produce, which is to be read and found in the definition. In the definition, the 'forest produce' is divided into broad categories, namely (a) the following, whether found in, or brought from, a forest or not, that is to say:- timber, charcoal, caoutchouc, catechu, wood-oil, resin, natural varnish, bark lac, mahua flowers, mahua seeds, (kuth) and myrabolams; and (b) the following, when found in, or brought from a forest, that is to say:- (i) trees and leaves, flowers and fruits, and all other parts or produce not hereinbefore mentioned, of trees; (ii) plants not being trees (including grass, creepers, reeds and moss), and all parts or produce of such plants, (iii) wild animals and skins, tusks, ....
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....t-produce, i.e., furniture made from timber or paper produced from bamboo-pulp. Therefore, bamboo being a tree would certainly fall within Clause (b) of the definition of 'forest-produce', but toplas, supdas and palas made out of bamboo chips would not fall within the definition of forest-produce." 113. In Suresh Lohiya v. State of Maharashtra (1996) 10 SCC 397 the Supreme Court relied upon the test that where an article or thing which is totally different from forest produce having a distinct character, known to the business community as totally different is brought into existence by human labour, such an article and product would cease to be a forest produce. The Supreme Court held that bamboo mat is a new and distinct product and though made from bamboo it will not be treated as forest produce within the meaning of Forest Act for confiscation in violation of the forest laws. 114. In State of M.P. vs. S.P. Sales Agencies and others (2004) 4 SCC 448 the Supreme Court held, following the H.P. Marketing Board v. Shankar Trading Co. (P) Ltd. (1997) 2 SCC 496 where the question had arisen as to whether kattha is a forest produce within the meaning of the Himachal Pradesh Agricul....
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.... known to the business community, with the aid of human skill, it ceases to be forest produce. The interpretation clause under Section 2 of the Indian Forest Act, 1927 also defines 'timber' and 'tree' in sub-section (6) and (7). The timber includes in sub-section (6) trees when they have fallen or have been felled, and all wood whether cut up or fashioned or hollowed out for any purpose or not; and the word 'tree' under sub-section (7) includes palms, bamboos, skumps, brush-wood and canes. The timber is included under sub-section (4) (a) whereas tree is included in sub-section (4) (b). This means the timber whether found in, or brought from, a forest or not, is a forest produce, whereas a tree only when found in, or brought from a forest, only be included in the definition of forest produce. To put it more precisely the forest produce being an inclusive definition and sub-categorised in sub-section (4) (a) and sub-section (4) (b), in its natural form and also in the processed form until it is changed into commercially new and distinct article has to be treated as forest produce for the purpose of the Indian Forest Act, 1927, read with Forest Conservation Act, 1980. 117. We respe....
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....cent for the 2008 to 2012 commitment period whereas non-industrialized countries are not legally bound to any reductions. This division between industrialized and non-industrialized countries was made as it was felt that as non-industrialized countries generally produce lower levels of emissions than industrialized countries they should not be bound to the same reductions. Pursuant to the Kyoto Protocol each country has its own target levels, based on a percentage of base year emissions, resulting in some countries not having to reduce levels at all, while others have to reduce emissions by a tremendous amount. Generally the base year is 1990. Countries must show "demonstrable progress" prior to the 2012 deadline. Parties may offset their emissions by increasing the amount of greenhouse gases removed from the atmosphere by so-called carbon "sinks" in the land use, land-use change and forestry sector. However, only certain activities in this sector are eligible. These are afforestation, reforestation and deforestation (defined as eligible by the Kyoto Protocol) and forest management, cropland management, grazing land management and revegetation (added to the list of eligible a....
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....ure on 16 March 1998 following ratification by consensus by the Conference of the Parties (COP3) in Kyoto, Japan in December 1997. Due to a provision in the agreement providing that the Kyoto Protocol shall become legally binding only upon the ratification of at least 55 countries composing at least 55 percent of the world's emissions addressed by the Protocol as of the year 1990, the Kyoto Protocol did not come into effect until 16 February 2004, following Russia's 18 November 2004 ratification. As of August 2005, 153 countries have ratified the Kyoto Protocol. Israel was the fifteenth signatory, signing in March 2004. The United States withdrew from the Kyoto Protocol in 2001. President Bush's partly explained his country's decision to withdraw from the Kyoto Protocol by claiming that emission reduction changes would be too costly for the United States introduce, that they would cause harm to the US economy, and that the Kyoto Protocol is flawed. Australia, also a non-signatory, asserts that without the United States the Kyoto Protocol will not be effective, and that there is no "clear pathway for action by developing countries." As of 2010, 172 countries have ratified the ....
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....bsequent developments in the evolution of the environmental law prove that the phobia was unfounded. The Rio Declaration is of key importance in international law relating to the environment and other international instruments having environmental implications. The Rio Declaration is impartial, providing against the misuse of environmentalism in respect of trade. Principle 12 accords the concern of free trade advocates, that environmental restrictions should not constitute disguised or arbitrary interference with the free trade. Similarly, in its chapter 2, Agenda 21 calls for a supportive international climate for achieving environment and development goals by promoting sustainable development through trade liberalization and making trade and environment mutually supportive. It is not untenable that the principle behind the concept of sustainable development is of a fundamentally norm-creating character which is capable of forming the basis of a general rule of law. Sustainable development does not mean that economic development should come to a standstill. A myopic vision may consider sustainable development as a hurdle to the growth, but that is not correct. The principle of ....
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....an inbuilt inclination on the parts of the courts to be liberal in assigning a wide meaning to the scope of the said provisions, the boundaries of limitation are there and the expanse of these provisions cannot be stretched as to strike at the State legislations which are adequately accommodated within the field of an Entry in List II. 121. The power of regulation and control is separate and distinct from the power of taxation for the purposes of legislation. The heads of taxation are clearly enumerated in Entries 82 to 92-C in List-I and Entries 45 to 63 in List-II. The Concurrent List does not provide for any head of taxation. Entry 96 in List-I, Entry 66 in List-II and Entry 47 in List-III deals with fees. The residuary power of legislation in the field of taxation is spelled out of Article 248 (2) and Entry 97 in List-I can be applied only to such subjects which are not included in Entries 45 to 63 of List-II. 122. Taxes on mineral rights on subject in Entry 50 of List II can also not be levied by the Union, though as stated in Entry 50, the union may impose limitation on the powers of the State and such limitations imposed by Parliament by law relating to mineral develop....
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....dia, will not in any way affect the decision of this case. The Supreme Court has essentially referred the question as to whether the royalty determined under Section 9/15 (3) of the MMRD Act, 1957 is in the nature of tax and whether the State legislature while levying a tax on land under Entry 49 in List II of the 7th Schedule adopt a measure of tax based on the value of the produce of land. In such case, would the constitutional position be any different in so far as the tax on land is imposed on mining land on account of Entry 50 in List II and its inter-relation with Entry 54 List I. The Supreme Court has also referred the question to the meaning of the expression taxes on mineral rights subject to any limitations imposed by Parliament by law relating to mineral development under Entry 50 of List II and the true nature of royalty/dead rent payable on minerals produced/mined/extracted from mines. 126. The Supreme Court has also referred the questions as to whether the majority decision in Kesoram Industries Ltd has departed from the law laid down in Seven-Judges' bench decision in India Cement Ltd and ors vs. State of Tamilnadu and others (1990) 1 SCC 12. The remaining six que....
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....od Suppliers (supra), do not suffer from any constitutional infirmity. EXTRA-TERRITORIAL OPERATION OF LAWS 129. Part XI of the Constitution of India in Chapter-1-Legislative Relations, provides for distribution of legislative powers. Art.245 provides for the extent of laws made by Parliament and by legislatures of States subject to the provisions of the Constitution. The Parliament makes laws for the whole or any part of the territory of India, and the legislature of a State may make laws for the whole or any part of State. Clause 2 of Art.245 provides that no law made by Parliament shall be deemed to be invalid on the ground that it would have extra territorial operation. Rules of 1978 have been made in exercise of powers under Section 41 (1) (c) of the Forest Act. The Rules provide for taking out passes and payment of transit fee for movement of forest produce within the State of U.P. The forest produce may have been imported in the country and brought from other States or may be brought within the State of U.P. from outside the State, or if the goods are moving from within the State of U.P., to outside State of U.P., transit fee is payable on the movement of such forest pr....
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....nsidered the question to re-examine the rigidity of the view expressed in Electronics Corporation of India Ltd. Vs. CIT (CIL), 1989 Supp (2) SCC 642, in which it was held that the Parliament's power to legislate, incorporate only competence to enact laws with respect to aspects or causes, that occur, arise or exist, or may be expected to do so, solely within India. The Supreme Court considering the arguments of the Attorney General that the Parliament has inherent power to legislate for any territory including territories beyond India and that no Court in India may question or invalidate such laws on the ground that they have extra-territorial laws, which in other words views that Parliament may enact legislation even to extra-territorial expects or cause that have no impact, effect in or consequence for India, on considering the scope of Art.245, the principles of constitutional interpretation, analysis of constitutional topological space and the cases decided by the Privy Council, Australian High Court and the International Law on the concept of sovereignty, and also taking into account the scientific and technological development, which have the magnitude of cross-border travel ....
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....(1) (c) of the Forest Act, 1927, with the object of preventing deforestation, over exploitation of the natural wealth for maintaining ecological balance, address environmental concerns, which have direct impact, on the lives of the people including people living in India, has an impact or nexus with India. The operations of the Rules of 1978, therefore, on the forest product including timber, mines and minerals, even if they are brought from or excavated from outside State of UP. or even outside territories of India, for obtaining passes or payment of transit fees within the State of U.P. cannot be invalidated on the ground that the rules have extra territorial operation. FREEDOM OF TRADE, COMMERCE, AND INTERCOURSE 134. Art.301 of the Constitution of India declares that subject to other provisions of this Part (i.e. Part XIII) the trade, commerce and intercourse throughout territory of India shall be free. The freedom is from all the laws, which restricts or affect activities of trade and commerce amongst the States. Art.301 refers to freedom from laws, which go beyond regulations, which burden, restrict or prevent the trade between one State and another and also within the S....
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....freedom of trade and intercourse guaranteed by Art.301. 137. In Jindal stainless Ltd. (2) & Anr. Vs. State of Haryana & Ors., (2006) 7 SCC 241 the Supreme Court held that taxing laws are not excluded from the operation of Art.301, which means that the tax laws can and do amount to restrictions on freedom guaranteed under Part XIII of the Constitution. In Atiabari Tea Company (Supra) the Supreme Court propounded the doctrine of direct and immediate effect. In Automobile Transport (Supra) an exception was judicially crafted and the concept of compensatory tax was propounded. The tax which otherwise interfere with the unfettered freedom under Art.301 will be protected from the vice of unconstitutionality, if they are compensatory. To determine whether the tax is compensatory is to be inquired whether the trade is having certain facilities, for the better conduct of business and is not paying a penalty which is much more than what is required for providing the facilities. This working test is valid even today. 138. In was next stated in Jindal Stainless Ltd. (2) (Supra) that the test of same connection laid down in Bhagat Ram's case, 1995 Supp (1) SCC 673, saying that even if the....
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....ernment that the requirement of taking out the passes, and the transit fee, held to be regulatory in Sitapur Packing Wood Suppliers and others (Supra), when it was imposed at the rate of Rs.5 per tonne and thereafter amended in the year 2004 at Rs.38 per tonne, was reasonable, and was in realm of regulation. It was, as held by Supreme Court, not necessary for the regulation of transit, to justify the fees on quid pro quo. The increase of the transit fees by the 4th Amendment on cubic feet basis and thereafter by impugned 5th Amendment on ad valorem basis on movement of forest produce on the ground that the value of the forest produce has increased, has made it unconstitutional on both the counts namely that the cost of forest produce has no co-relation with the objects sought to be achieved by regulation of transit, and secondly the State has not justified the increase on any empirical data based on scientific evaluation of the cost of regulation. The fee has thus changed its character from regulatory fee, and in the absence of any defence on quid pro quo, to a compensatory tax, which has the effect of augmenting the revenue of the State. 142. In our opinion, considering the arg....
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.... distributed between the Union and the State legislatures by various Entries in List I and II. The residuary power to levy a tax belongs to Entry 97 of List I to the Parliament. The power to levy fee is given at the end of each of the three Lists. The legislature has power to levy a tax which is co-extensive with the power to legislate with respect to substantive matters. Either of the legislature may while making a law within its competence levy a fee. 146. A tax is an imposition made for public purpose by way of common burden, for common benefit without reference to any services rendered by the State or any specific benefit to be conferred upon the tax payer and may be progressive, vide Hingir Rampur Coal Co. Ltd v. State of Orissa AIR 1961 SC 459. A fee on the other hand, is a payment levied by the State in respect of services performed by it either for licensing under police powers of the State; or for the benefits of the individual. A regulatory fee is paid for some special benefits, enjoyed by the payer and the payment is usually proportional to the special benefit vide Kewal Krishna Puri v. State of Punjab AIR 1980 SC 1008; State of UP v. Malti Kaul (1996) 10 SCC 425. ....
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....; absence of a provision for the constitution of a separate fund and the benefit, to be derived is not simultaneous, but is deferred; or the fee is reserved for future services, will not invalidate the fees vide Krishi Upaj Mandi Samiti vs. Orient Paper & Industries Limited (1995) 1 SCC 655. 153. On the above principles of law, on the validity of levy of fee laid down by Supreme Court, we find that the distinction between a tax and a fee primarily lies in the fact that a tax is levied as a part of the common burden based on the principle of capacity and ability to pay and may be progressive, the fee is a payment of a special benefit or privilege. The fee is levied in a special capacity although the special advantage is secondary to the primary motive of regulation in public interest, which is the basis of all imposition. There is some special benefit, a sort of return or consideration for services rendered and hence it is primarily necessary that the levy of fee should on the face of the legislative provision be co-related to the expenses incurred by the Government. The cost incurred by the Government for granting permission or privilege may be very small. The amount of impositi....
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....sed on the principle of equivalence, unlike taxes whose basis is the concept of "burden" based on the principle of ability to pay. The main basis of a fee or a compensatory tax is the quantifiable and measurable benefit. Under the principle of equivalence, as applicable to a fee or compensatory tax, there is an indication of a quantifiable data, namely, a benefit, which is measurable. 156. The Supreme Court held that the basis of every levy is the controlling factor. In the case of "a tax", the levy is a part of common burden based on the principle of ability or capacity to pay. In the case of "a fee", the basis is the special benefit to the payer (individual as such) based on the principle of equivalence. When the tax is imposed as a part of regulation or as a part of regulatory measures, its basis shifts from the concept of "burden" to the concept of measurable/quantifiable benefit and then it becomes "a compensatory tax", and its payment is then not for revenue but as reimbursement/recompense to the service/facility provider. It is then a tax on recompense. Compensatory tax is by nature hybrid but it is closer to fees than to tax as both fees and compensatory taxes are based ....
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.... in the dictionary sense, but also any area recorded as forest in the Government records irrespective of its ownership. It also includes the land covered by forest like areas. 159. The State Government has placed on record the notifications, declaring both the sides of the road in almost all the major districts of the State of UP, qua the 55 classes of trees in such notified areas as protected forests. The entire land, in Kaimur Wild Life Sanctuary, Forest Range Halia, Forest Range Ghorawal, Gurma bounded by the rivers and hills notified under the notification under Section 18 of the Wild Life (Protection) Act, 1972, the Kaimur Black Buck Sanctuary, Varanasi Shakti Nagar, the Obra Forest Range and the Markundi Forest Division included in the Kaimur Wild Life Sanctuary, the current Obra Forest Range including Markundi Forest Division and the Varanasi Shakti Nagar road, have all been notified and are included within the meaning of forest under the Indian Forest Act, 1927 read with the Forest Conservation Act, 1980. The State Government has also identified in pursuance to the orders passed by the Supreme Court in T.N. Godavarman Thirumulkpad vs. Union of India (supra) the forest li....
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.... both in the State of U.P. and M.P. The State Government has produced orders issued by the Government of UP granting lease of various land to NCL in Duddhi, Chunar and Kharia Coal Projects in District Mirzapur, and the letter of the State Government dated 18.10.2010, issued by the Divisional Forest Officer, Renukoot Forest in respect of areas of land in Jhigurdih-Gorvi extension on lease to NCL with the condition that even after the constructions, the land will continue to be protected/reserved forest and lease will not change its current legal character. These leases given by the State Government on forest land clearly demonstrate that the coal bearing mines in the State of U.P. and in the bordering States, have been allocated on the forest land as well and thus it is not correct to say that the coal mines of National Coalfields Limited are not situated and may be excluded from the definition of the words 'forest' and 'forest land'. 163. The argument, that the MMDR Act is a special primary enactment, whereas Indian Forest Act is a general pre-constitutional enactment and thus MMDR Act will impliedly repeal the Indian Forest Act, and the charging provisions of the Indian Forest ....
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....gnant to each other and care should be taken to see whether the two really operate in different fields without encroachment. The Supreme Court has clarified in State of Rajasthan vs. Vatan Medical & General Store (2001) 4 SCC 642 relying on State of AP v. McDowell & Co. (1996) 3 SCC 709 that the doctrine of covered/occupied field can be applied only to the Entries of List III and further that there can be no question of repugnancy unless the two Acts are wholly incompatible with each other or the two standing together would lead to absurd result. It was held in Krishi Utpadan Mandi Samiti vs. Pilibhit Pantnagar Beej Ltd (2004) 1 SCC 391 that even if there is some overlapping, the same should be ignored. 165. For the aforesaid reasons, we do not find any force in the argument, that the MMDR Act and the Rules made thereunder namely the U.P. Minerals (Prevention of Illegal Mining, Transportation and Storage) Rules, 2002 under which transit passes are issued in respect of despatches of minerals and ores including coal occupy the entire field of regulation and development of mines and minerals. The reliance upon the decision in State of Orissa vs. M.A. Tulloch (supra) and State of We....
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....here is a declaration of land as a forest of specified category of minerals, which are products of mines and quarries cannot be presumed as forest produce. On the discussion of the meaning of the words 'forest', 'forest land' and 'forest produce' given by us in this judgment, we find it difficult to agree with such limited meaning given to these words and with respect to the Uttrakhand High Courts, we are unable to subscribe the same view. 169. The word 'forest produce' came up for consideration in Suresh Lohiya v. State of Maharashtra & anr (1996) 10 SCC 397 and State of M.P. vs. S.P. Sales Agencies and others (2004) 4 SCC 448. In our opinion the argument advanced by Shri Navin Sinha, that Cutch and Kattha as types of Catechu having undergone to the process of manufacture are not Khair wood to be treated as forest produce and further the argument advanced by Shri Aloke Kumar, that Clinker and Flyash, Calcium Hydroxide, Calcium Oxide, Quick Lime, Hydrated Lime, Hard Coke, Gypsum, rejected Coke and Ash Burn Coke, Soil (Mitti) and Sponge Iron are not forest produce, is fully covered by these two decisions. As held in Suresh Lohiya unless a commercially new and distinct article is ....
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....er or agent shall transport tendu leaves except in the following cases, namely:- (i) where he being a grower of tendu leaves transports chem from any place within the unit wherein such leaves have grown to any other place in that unit; or (ii) where he transports them on behalf of such Government, officer or agent; or (iii) where he purchases the leaves from such Government, officer or agent either for the manufacture of bidis within Uttar Pradesh or for sale of the leaves outside Uttar Pradesh. Sub-section (2) of Section 5 provides for permission to sell and transport within the State of UP or to take such leaves outside the State of UP. Sub-section (1) of Section 5A provides for authorisation to collect the tendu leaves on behalf of the State Government directly from the grower of tendu leaves, on the payment of price thereof to such growers. Sub-section (2) provides that permit referred to in sub-section (1) shall specify the estimated quantity sold, the name of the grower of tendu leaves, the amount required to be paid to such grower and such other particulars. Sub-section (3) provides that a person authorised under sub-section (1) shall be deemed to be an agent for all or any ....
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....Belsund Sugar Co. Ltd. vs. State of Bihar and others (1999) 9 SCC 620 it was held that where the entire trade of sugarcane was regulated, there was no object to be achieved by invoking the provisions of the Bihar Agricultural Produce Markets Act, 1960 on sugarcane and molasses. In paragraph-104 of this judgment it was held that where sale and purchase of sugarcane and mollases was regulated by the detailed statutory scheme of control of sale and purchase the general provisions of the Market Act, therefore, will give way to the special provisions. The State Government was fully conscious of this legal position, in providing in the note at the bottom of the notification dated 4.6.2011, notify the 5th Amendment to the Rules of 1978, as follows:- "In respect of resin and resin products,- the provisions of the U.P. Resin and other Forest Produce (Regulation and Trade) Act, 1976, and the Rules framed thereunder will apply. 175. Following the same reasons we hold that so far as the movement of tendu patta within the State of UP either in respect of the tendu leaves collected in UP, or for tendu leaves collected outside U.P. and brought within the State of UP, shall not attract the prov....
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....e of ability to pay. A fee has to be broadly proportional and not progressive. In the principle of equivalence, which is the foundation of a compensatory tax as well as a fee, the value of the quantifiable benefit is represented by the costs incurred in procuring the facility/service, which costs in turn become the basis of re-measurement/recompense for the provider of the service/facility. 178. In State of UP and others vs. Sitapur Packing Wood Suppliers (supra) it was held by the Supreme Court that the transit fee under the Rules of 1978 is regulatory in nature, and that the question of quid pro quo is necessary when a fee is compensatory. For every fee quid pro quo is not necessary. The Supreme Court had observed that the transit fee being regulatory, it is not necessary to establish the factum of rendering of service. With the increase of fees by the 4th Amendment to the Rules by Notification dated 13.12.2010, the imposition was changed from per tonne basis to per cubic basis, and thereafter by the 5th Amendment to the Rules by Notification dated 4.6.2011, the imposition has been changed on advalorem basis. The classification of the trees in respect of timber and forest prod....
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....ot, District Sonebhadra, the details of the collections of transit fee in the years 2004-05, 2009-10, 2010-11 and 2011-12 upto July 2011. The 4th Amendment and the 5th Amendment to the Rules of 1978, came into force by notifications dated 20.10.2010 and 4.6.2011 respectively. The imposition on cubic meter basis and thereafter advalorem basis was stayed by the Supreme Court and this Court, and thus the collections upto July, 2011, were limited to 3848.33 lacs. On advalorem basis, on the cost of forest produce, between 5% to 15%, including coal imported in the State and transported in millions of tonnes, will increase the collections by not less than ten times. The collections in 2010-11, before the 4th and 5th Amendments to the Rules of 1978 was 11288.2 lacs, whereas the expenditure of the establishment and other administrative expenses on the enforcement for the entire year 2010-11 on the collection of transit fees by the department was 32205.16 lacs. It is likely to increase, as admitted by only 10-20% every year. The revenue to be generated by the transit fee, would thus be at least 10 times more than the cost in collection of fees. By any conservative estimate the increase of fe....
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....ant date has been placed before us to demonstrate the purpose and the object sought to be achieved and the manner in which the increase of transit fee on advalorum basis will check the environmental degradation. 184. Coal is an important raw material for generation of electricity and manufacture of materials used in infrastructure for development of the State. The Union Government through its agencies including Coal India Limited is keeping strict control over the exploitation of coal bearing areas, and a constant vigil on the over exploitation of non-renewal sources of energy for maintaining inter-generational equity. If the State Government has been assigned any role and has been given the goals to minimise the exploitation of minerals, it should have placed the material before us in support of the argument of raising the transit fee as a dis-incentive to such over- exploitation. The averments in the counter affidavit are by way of an essay on protection of environment. The State appears to have raised only its concerns, with which no one can have any doubts without placing the actual date and the object which the State Government seeks to achieve by raising the transit fee on....
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.... be based on sound ecological and scientific basis. The 'forest land' would also include the forest like areas, whether notified or not, for which the Government has taken decision in Government Order dated 20.12.2007 quoted in paragraph 89 of the judgment. (ii) The definition of 'forest produce' is inclusive and not exhaustive. Only those articles and goods, which are defined in Section 2 (4), (a) & (b) of the Indian Forest Act, 1927 are included within the meaning of the words 'forest produce'. Where a forest produce so defined, changes its essential character either by processing or by manufacturing process into a commercially new article, which is totally different from the forest produce, having a distinct character, known to the business community, with the aid of human skill, it ceases to be forest produce. (iii) The expression catechu comes within the sweep of cutch and kattha and is included within the meaning of word as forest produce. Sawed timber, fire wood, wood oil, fish, rubber sheets, bamboo mats, furniture, paper and like articles having a distinct character, known to the business community as totally different articles and goods, would cease to be forest pro....
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....ransitory and regulatory in nature. The transit fee is payable on movement of the forest produce within the State of U.P., with the object of protecting environment from deforestation and overexploitation of natural resources including mines and minerals when found in or brought from forest and which not only include notified, protected reserved and village forest but also the forest lands, and forest like areas, whether notified by the State Government or not. (vii) The levy of transit fee at the rate of Rs.38 per metric tonne per truck, etc. by notification dated 14.6.2004, was declared to be valid in Kumar Stones Works' case (Supra). The levy on such rates is subject to the decision of the Supreme Court in the matters in which judgment in Kumar Stone Works' case has been challenged. (viii) The increase of transit fee under the Rules of 1978 as notified by the 4th Amendment of the Rules notified on 20.12.2010, on cubic meter of capacity and thereafter by the 5th Amendment to the Rules notified on 4.6.2011 increasing it on ad valorem on the price of forest produce at 5% on the timber of specified trees with minimum of Rs.2000/-; at 15% on the timber of specified trees on ad ....
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....entific study in this regard has been conducted by the State Government, nor any reports placed before the Court to justify the increase of fees, taking into consideration the right to development, which is a fundamental right of the citizens of the State under Art.21 of the Constitution of India. (xii) The State Government has failed to justify the increase of transit fees on advelorum basis by linking it only with the increased cost of enforcement for collections. The collections will be far and above the cost of enforcement, raising revenue for the State. The imposition will increase the cost of generation of power, and the manufacture of essential goods necessary for creating infrastructure affecting the development of the State. 188. All the writ petitions are consequently allowed. The Notifications dated 20.10.2010, by which the 'U.P. Transport of Timber and Other Forest Produce Rules, 1978', was amended by the 4th Amendment; and the Notification dated 4.6.2011, by which the 'U.P. Transport of Timber and Other Forest Produce Rules, 1978' was amended by the 5th Amendment, are quashed. It will be open to the respondents to impose and collect the transit fees on such fores....