TaxTMI 
TaxTMI 
2013 (8) TMI 420
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....27; 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 the operation of the Rules within the....
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....t. 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 on the ground that quid pro quo has not been est....
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....ight 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 area or not. Clause (b), however, refers to a forest pr....
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....ination. 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 of such goods; forest produce can definitely be realised but th....
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...., 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 drawn that all forest produce shall be deemed to belong to the State....
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.... 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 disposal till the week commencing 10th August, 2008." 16. By Notification No. 2108/XIV-3-95-74 dated Sep....
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....t, 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. Amendment of rule5 2. In the Uttar Pradesh Transit of Timber and other Forest Produce Rules, 1978 for the existing rule 5 set out in column1 below t....
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....d 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 thereunder, shall apply. 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 thereunder, shall....
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....neer, 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 as forest of specified category the minerals, which are products of mines and quarries cannot be termed as forest produce. He submits in the alternative that the soil (Mitti) which, is ordinary earth, is a mineral contemplate....
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....ra 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 transit fee on soil (Mitti) being transported from the approved site to the ash dyke is absolutely without jurisdiction and illegal. 24. In Lanco Anpara Power Ltd. Vs. State of U.P. & Ors., Writ (Tax) No.91 of 2011, the peti....
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....he 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 general) pre-Constitution enactment enacted on 21.9.1927. The MMDR Act is also a special enactment dealing exclusively with the regulation and development of mines and minerals whereas the Indian Forest Act is a general enactment dealing, inter....
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.... 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 the notification dated 17th September, 1969 declaring some areas of tehsil Duddhi Distt. Mirzapur, now in District Sonbhadra as reserve forest under Section 20 of the Forest Act, 1927 does not relate to any area in the coal area or on the coal route culmin....
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....as 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 of 1978, made in exercise of powers under Section 41 of the Indian Forest Act, 1927, which provides in sub-section (2) (c) the powers to make Rules for the issue, production and return of such passes and for the payment of fees therefor the State Government ca....
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....ompensatory 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 based on the principle of "pay for the value". 45. It is a sub-class of "a fee". From the point of view of the Government, a compensatory tax is a charge for offering trading facilities. It adds to the value of trade and commerce which does not happen in the case of....
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....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 violated." 31. Shri S.P. Gupta submits that by imposing transit fee on advolarem basis, which is in the nature of a tax, the State of U.P has violated Article 301. The Rules of 1978 are not saved by Article 304 (b). He further submits that Rules of 2002 made under the MMDR Ac....
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.... 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 generating units by the Government of India. For the other unit, the petitioner has linkage with the Central Coal Fields Ltd. The supply of coal from Central Coal Fields Ltd. is yet to commence. The petitioner purchases coal through E-auction for use in its power generating unit. 37. It is ....
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....atus 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 Haryana (2006) 7 SCC 241, the levy is illegal and unjustified. He has relied upon a chart annexed with the supplementary affidavit from which he demonstrates that while under the 3rd Amendment in the year 2004 the annual liability of the petitioner of transit fee increased from Rs. 90.25 lacs (....
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....rest 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 Petitions filed on behalf of the Indian Wood Product Co. Ltd adopting the arguments of Shri V.K. Upadhyay, Shri Bharat Ji Agarwal and Shri S.P. Gupta, Shri Navin Sinha submits that Catechu is the finished product manufactured through a chemical process in its factory situated outside the forest area. I....
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....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 tannin, whereas the mill Kattha contains more of catechu, mill kattha can be used directly in betels while the cottage industry kattha cannot be so used. 14. That the sale and distribution of Khair wood is completely controlled by the U.P. Forest Corporation, which allots it to its registered units including....
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....he 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, exorbitant and confiscatory. Shri Sinha submits that though in Sitapur Packing Wood (supra) the Supreme Court held that transit fee to be regulatory, even if quid pro quo is not required the fee should co-relate to the expenses. He has relied upon judgment in Ram Surat Tiwari v. State of UP and others 1991 All. L.J. 644. ....
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....iness 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 regulatory measures. 47. Shri Navin Sinha has also relied upon Calcutta Municipal Corporation and others vs. Shrey Mercantile (P) Ltd and others (2005) 4 SCC 245 in which the Supreme Court set aside the fee demanded by Calcutta Municipal Corporation at Rs. 3 lacs under the Calcutta Municipal Corporation (Taxation) Regulatio....
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....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 from minerals etc. of "all products of mines or quarries". 7. The legislature having defined "forest-produce", it is not permissible to us to read in the definition something which is not there. We are conscious of the fact that forest wealth is required to be preserved; but, it is not open to us to legislate, as what a cou....
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....rest 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, cannot also be described as restrictions impeding the freedom. The power to regulate the transit of forest produce is not a power to restrict it. If the provisos are in truth restrictive of the right to transport the forest produce, however, good the grounds apparently may be for restricting the transport of forest produce, they can....
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.... 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 preparation, uses of Calcium oxide (widely known as quicklime or burnt lime, which is a chemical compound). Calcium oxide is usually made by the thermal decomposition of materials such as limestone, that contain calcium carbonate in a lime kiln by heating the material to above 825 oC, a process which is called calcination or lime-burning, which ....
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....ed 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 which the State Government is not competent to make Rules under the Forest Act. He submits that under the Coal Mines (Conservation and Development) Act, 1974 the entire coal bearing areas have been nationalised. The Forst Act has no application to such areas. The coal is thus not a forest produce. 60. Shri Punit Kumar Upadhyay appearing in Writ Petit....
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....ing 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 framing regulations was wholly unauthorised, illegal and void. In a fiscal matter it is not proper to hold that in the absence of any express provision a delegated authority can impose tax or fee. Whenever there is a compulsory exaction of any money, there should be specific legislative provision for the same, and there is no room for intendment. The delegated a....
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....d 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 any person other than the Government, officer or agents to purchase tendu leaves from any person other than such Government officer or agent, or collect tendu leaves grown on any land of which he is not owner or tenure-holder. Sub-section (1) (c) prohibits any person other than the Government, officers or agents to transport tendu leaves except in the cases namely; (i....
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.... 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. Divisional Forest Officer or any officer not below the rank of Assistant Conservator of Forests authorised by Divisional Forest Officer in writing. (v) For transport inside the State from an area outside the State, or for transport to any area in the State to which the Act applies from any area in the State to which the Act does not apply Form T.P.5. Divisional Forest Officer or any officer not below the ....
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....ually 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 Records & Settlement, Cuttack and others (1998) 7 SCC 162; Saf Yeast Company Private Limited v. State of U.P and another (2009) 24 VST 152 (All) that the general law yields to special law on the principles 'generalia specialibus non derogant'. 72. It is submitted relying upon G. Ganapathraj Surana and others vs. State of Tamil Nadu and others 1993 Supp (2) SCC 565 that endeavour should be made by the court to reconcile the over....
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....ect. 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 that the movement is not unauthorised as well as to protect the environment, the imposition of fees on different forest produce at different rates is discriminatory, and is violative of Article 14 of the Constitution of India. He submits that such a high fee amounts to restriction on trade which is neither reasonable nor in public interest and refers to Mohd. Yasin v. John Mohammad 1986 (3) SCC 20. 77. Shri Udit Chandra, appearing in ....
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.... 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 justify the same but also to show quid pro quo of the services rendered. He also relies upon Calcutta Municipal Corporation v. Shrey Mercantile (supra) where the registration fee imposed on advalorem rate was held by the Supreme Court as tax under the garb of fee. He refers to the transit fee prescribed at Rs. 1/- per form under the Tamil Nadu Timber Transit Rules, 1968; Rs. 5 to Rs. 25/- under the Karnataka Forest Rules, 1969; no prescription....
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....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 petitioners through non-forest land. The petitioners are purchasing marble from different sale depots established in the industrial area of different districts in the State of Rajasthan. Only National Highway road is used during transportation. THE REPLY/DEFENCE BY STATE 83. In the counter affidavit of Shri Anwar Ahmad, Forest Range Officer, Renukoot Forest Division, Renukoot, District Sonebhadra, it is stated that the fee payable for different classes of transit ....
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....agraphs 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 advalorem process. The fluctuations in market price would be automatically absorbed in advalorem and consequently the smooth inflow of transit fee will take place to the Government without any further procedure to be followed, which takes reasonable time to process. 12. That in order to rationalize the transit fees, a committee was formed and the committee discussed different parameters for the determination of transit fee in relation to forest produce. In drew the conclusion that fo....
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....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 should be its energy strategy based on coal and how to reduce carbon dioxide emissions generated by burning coal. Directly and indirectly, the Government is trying to pursue green house gas friendly policies by promoting aforestation, promoting renewable energy, energy conservation, policies on abatement of air pollution. This advalorem fee is also a step in this direction. Murthy, Panda and Parikh (2000) examined the impact of carbon dioxide on agriculture and concluded that impact on agriculture will....
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....nd 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. The transit fee is transitory fees and is regulatory in nature. The question of quid pro quo is necessary only if the fee is compensatory in nature. It is thus not necessary to establish the factum of rendering of service. THE NOTIFICATIONS 88. The notification dated 10th February, 1969 published in the U.P. Gazette, issued under Section 39 (3) read with Section 80A of the India Forest Act, 1927 declares both the sides of the 20 roads in Distt Meerut; 8 in Muzaffar Nagar; 18 in Saharanpur; 7 in Dehradun; 16 in ....
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....ld 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 Government Order dated 20.12.2007 in reference to DO letter dated 19.12.2007 of the Government of U.P. regarding identification of forest like areas in all the districts of the state in reference to I.A. no.-979 filed in Hon'ble Supreme Court. The letter reads as follows:- "To Principal Secretary, Government of U.P., Forest Section-2 Lucknow Sub.: Identification of forest like areas in all the districts of the state in reference to I.A. no.-979 filed in Hon'ble Supreme Court. Ref.: D.O. letter no.3697/14-2-2007 dated 19.12....
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....uce." 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 and Kharia Coal Project in Distt. Mirzapur (Sonbhadra) for 40 years is annexed as Annexure No.SCA-1. Para 6 of the Government Order provides that said land, even after the construction will continue to be the protected/ reserved forest and the lease will not change its current legal character. In para 5 it is stated that the NCL will make compensatory plantation of trees in Distt. Kanpur, Pratapgarh and Sultanpur on 1565.59 hects. of non-forest land under the Social Forestry Programme. The land was transferred after seeking approval of the Government of India vide letter dated 30.7.1990 by the ....
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....antation 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 have been advanced by learned counsels appearing for the parties, unnecessarily expanding the scope of challenge to the Rules of 1998 as amended by the 5th Amendment by Notification dated 4.6.2011. The constitutional validity of the Rules have been upheld by the Supreme Court in Sitapur Packing Wood Suppliers (supra) in the year 2002 wherein it was held that powers of the State Government under Entry 17A of List III of the Seventh Schedule of the Constitution of India would include the power to regulate transit of forest produce and to levy transit fees. The Rules are not confined only to the transit of....
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....xpenses 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 movement. It is not a regulation on excavation and manufacture of forest produce. He submits that in pith and substance the regulation of movement of forest produce by the Rules of 1978 made by the State Government in exercise of the delegated power of the Central Government would clearly fall within Entry 17A; Forests in List-III of the Seventh Schedule. The various entries in the three schedules are by way of fields of legislation. The Rules of 1998, do not seek to regulate mines and minerals; if there is any entrenchment, it is only incidental or ancillary and that Court should try to reconcile such entrenchm....
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....e 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 M.P. Vs. S.P. Sales Agencies & Ors., (2004) 4 SCC 448 in which the Supreme Court after considering the process of manufacture of 'kattha' and 'catcheu' held in para 80 as follows:- "8. In view of the foregoing discussion and definitions extracted above from various dictionaries, catechu means any of the various dry, earthy, or resinous astringent substances extracted from wood, leaves or fruits of various tropical Asiatic plants, viz., acacia and other trees and shrubs. Khair tree is one of the types of acacia tree and log of wood of the said tree is basic raw material for the manufacture of kattha and cutch. A....
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....atters 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 Lime, Hard Coke, Gypsum, Rejected Coke, Ash-burn, and Sponge Iron are not forest produce, Shri Ravi Kant submits that no data or literature has been furnished. The contention is rather cavalier. He submits that the argument that the fee is arbitrary and violative of Art.14 has no legs to stand as fee has not been challenged on the ground of breach of Art.14, Art.301 and Art.19 (1) (g). While considering the challenge to Art.14 the Court has to proceed under a presumption that the Act is constitutional. The burden is clearly on the petitioner to establish it. THE FOREST 105. The preamble of the Indian Forest Act, 1927 decl....
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.... 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 necessarily reflect sociological concerns. Under the directions of the Supreme Court to identify the forest like areas, many State Governments including the State of Uttar Pradesh have held State level expert committee meetings. In the Government Order dated 20.12.2007 issued by Government of Uttar Pradesh the expert committee has fixed parameters for identification of forest like areas to include a minimum number of 50 trees per hectare in a minimum area of 2 hectares in Terai and Plain region and a minimum number of 100 trees per hectare in minimum area of 30 hectare in Vindhya and Bundelkhand region. The expert committee recommended....
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....lowing, 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, horns, bones, silk, cocoons, honey and wax, and all other parts or produce of animals, and (iv) peat, surface soil, rock, and minerals (including lime-stone, laterite, mineral oils, and all products of mines or quarries). 111. The ambit of the definition of forest produce and regulation of its transit has raised several issues before the Court. In order to understand the scope of the definition, we must appreciate that the definition is not exhaustive, but inclusive. The test appears to be that any article or thing, which is ordinarily found in or brought from a forest, shall be treated as forest produce. Besides the produce of forests, ....
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.... 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 Agricultural Produce Markets Act, 1969, that catechu means any of the various dry, earthy, or resinous astringent substances extracted from wood, leaves or fruits of various tropical Asiatic plants viz. Acacia and other trees and shrubs. Khair tree is one of the types of acacia tree and log of wood of the said tree is basic raw material for the manufacture of kattha and cutch. After employing a series of activities to the log of khair wood, various substances, namely, cutch and kattha etc. are extracted which are known as one of the types of catechu. Both cutch and kattha come within the sweep of the expression "catechu" which has been enumerated in the d....
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....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 respectfully agree with the interpretation given to the words 'brought from' in Kumar Stone's case and hold that when the items included in sub-section (4) (b), are found in, or brought from a forest, they will be treated as forest produce for the purposes of charging transit fee. The question as to what is the meaning of words 'brought from' and would cover such items mentioned in sub-section (4) (b) though they do not have their origin in forest but they are transported through a forest and whether the interpretation of the words 'brought from' in Kumar Stone's case is correct, has been referred to a larger bench in M/s Nagarjuna Construction Limited. THE 'CLIMATE CHA....
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....le 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 activities by the Marrakesh Accords). Greenhouse gases removed from the atmosphere through eligible sink activities generate credits known as removal units (RMUs). Any greenhouse gas emissions from eligible activities, in turn, must be offset by greater emission cuts or removals elsewhere. Article 6 of the Kyoto Protocol Provides flexibility for signatories, allowing them to meet targets while not reducing domestic emissions to the extent that they are required by the protocol. Article 6 provides that: For the purpose of meeting its commitments under Article 3, any Party included in Annex I may transfer to, or acquire from, any other such Party emission reduction units resulting....
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....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 KP. Developed countries (Annex I Parties) have a heavier burden than developing countries (non-Annex I Parties) under the principle of 'common but differentiated responsibilities' (article 10 KP). Because of their high industrial activity, the former are mostly responsible for the GHG emissions and consequently their high levels in the atmosphere. The major feature of the KP is that it sets binding targets for the Annex I Parties for reducing GHG emissions. Overall emissions must be reduced by at least 5% below the 1990 levels within the commitment period from 2008 to 2012 (article 3 (1) KP). This measure applies for six different GHG (mainly carbon dioxide). The KP introduces new market-based mecha....
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....e 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 sustainable development reconciles the two disciplines and functions as a bridge between them and potentially prevents them from running in opposite directions, that is, extreme mercantilism reading to a 'tragedy of commons' and extreme environmentalism leading to a 'stagnating of growth'. If the environment attenuates below the point and becomes irreparable, economic development too will come to an end. For a long lasting growth of the economy, environment protection is a precondition. Hence, sustainable development just ensures that development is sensitized to the environmental imperatives so that economic progress goes on forever. Hence, it has all the more a strong case for becoming a prominent principle....
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....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 development to that extent shall subscribe the States' power to legislate. In State of West Bengal vs. Keso Ram Industries Ltd (supra) relying upon Automobile Transport (Rajasthan) Ltd vs. State of Rajasthan AIR 1962 1406 it was held that so long as a tax or fee on mineral rights remains in pith and substance, a tax for augmenting the revenue resources of the State or a fee for rendering services by the State and it does not impinch upon regulations of mines and mineral development and the control of industry by the Central Government. It is not unconstitutional. It is for the Parliament to state by law the limitations and sweep thereof which it may choose to impose on field available to the State for taxation by reference to Entry 50 ....
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....ment 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 questions are closely related to the questions referred to as above. 127. In the present case, we are concerned with transit fee on transportation of forest produce in the State of UP. If the transit fee in the present case is regulatory in nature, the State Government has a right in exercise of powers under Sections 41, 42, 51 and 76 of the Indian Forest Act, 1927 (a Central Act), under Entry 17-A of List III, to make rules to levy fee on the regulation of transit of forest produce. The minerals defined as forest produce under Section 2 (4) (b) (iv) when found in or brought from a forest are forest produce, the regulation of transport of which would also definitely fall in the field of legislation under Entry 17A of List III on which a f....
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....1 (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 produce within the State of U.P. 130. In Shrikant Bhalchandra Karulkar Vs. State of Gujarat, (1994) 5 SCC 459 the Supreme Court held that no doubt in view of the provisions of Art.245 and 246 of the Constitution of India the State legislature has no legislative competence to make laws having extra territorial operation, but so long as law made by State legislature is applicable to the persons residing within its territory and to all things and acts within its territory, it cannot be considered extra-territorial. The doctrine of 'territorial nexus' as evolved by the Supreme Court is well established. If there is a territorial nexus between the persons/ property subject matter of the act in the State seeking to comply with the provisions oft he Ac....
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....r 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 and transactions including the aspects of crime having global criminal and terror networks, held that the Parliament is constitutionally restricted from enacting legislation with respect to extra-territorial aspects or causes that do not have, nor expected to have any direct or indirect, tangible or intangible impact or the effect or consequence for the territory of India, or any part of India or the interests of the welfare of the well being of or security of inhabitants of India and Indians. The Supreme Court held in para 125 and 126 as follows:- "125. It is important for us to state and hold here that the powers of legislation of the Parliament with regard to all aspects or causes that are within the purview of its competence, including with re....
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....ia 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 State. It imposes limitations on the powers of the State and is thus binding on the Union and State legislature. The Parliament may by law impose such restrictions under Art.302 on freedom of trade, commerce or intercourse between one State and another as may be required in public interest. Such law, however, notwithstanding anything contained in Art.302, can authorise the Parliament or the State to give any preference to one State over other or discriminate between one State and another, by virtue of prohibition contained in Art.303 on any entry relating to trade and commerce in any of the lists in view of the Seventh Schedule, except in case where under Clause (2) the discrimination is necessary for the purposes of dealing with situation arising from scarcity....
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....pensatory 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 there is some link between the tax and the facilities extended to the trade directly or indirectly, is not contrary to the 'working test', propounded in Automobile Transport's case, but it obliterates very basis of compensatory tax. Both these tests namely the 'working test', and 'some connection test', cannot stand together and therefore is 'some connection test', as propounded in Bhagat Ram's case is not applicable to the concept of compensatory tax. Accordingly the opinion expressed in Bhagat Ram's case and State of Bihar Vs. Bihar Chamber of Commerce, (196) 9 SCC 136 were overruled. 139. The Supreme Court held in para 45 and 46 in Jindal Stainless Ltd (2) (supra) that whenever a law is impugned as violative of Art.301 of the Constitution, the Court has to see whethe....
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....ht 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 arguments raised and the material placed before us, even if the Rules of 1978 are valid, the notifications dated 13.12.2010, dated 4th June, 2011 under challenge, increasing the transit fees firstly on dubic feet basis and thereafter item wise on advalorem basis linked to the price by making distinction between the forest produce, and the minor minerals, which are also forest produce, and without providing justification for such increase, converted the regulatory fees into compensatory tax. The State has completely failed to justify, such arbitrary increase, both on the principle of reasonableness and in public interest. 143. We further find that so far as trade, and transport of coal and tendu patta is concerned, the trade is monopolised by State legislation and its transport ....
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....yment 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. 147. Some of the basic principles relating to validity of the fee laid down by the Supreme Court may be summerised as follows:- (a) the benefit enjoyed by the payer of the fee is usually proportional to the special benefit; and (b) the money raised by a fee is set apart and appropriated specially for the performance of the service for which it has been imposed and (c) it is not merged with the general revenues of the State vide Indian Mica and Micanite Industries vs. State of Bihar 1971 (2) SCC 236; Secretary, Government of Madhya Pradesh vs. Zenith Lamp and Electrical (1973) 1 SCC 162 and Southern Pharmaceuticals and Chemicals v. State of Kerala (1981) 4 SCC 391. If the special service rendered is distinctly and primarily meant for the benefit of a specified class or area, the fact, tha....
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....asis 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 imposition levied is not necessarily based upon the costs incurred by the Government but upon the benefit that the individual receives. In such cases of fee the tax element is predominant. In other cases the Government does some positive work for the benefits of the persons and the money is taken as a return for the work done or services rendered. 154. In B.S.E. Brokers' Forum vs. Securities and Exchange Board of India (2001) 3 SCC 482 the Supreme Court held that once the Court comes to the conclusion that the fee in question is primarily a regulatory fee, i.e. for the regulation of the business of the stock exchanges, then the argument that the service rendered by the Securities and Exchange Board of India should be confined to the contributories alone, cannot be accepted. The Court has to investigate wheth....
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....ts 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 on the principle of equivalence and on the basis of reimbursement/recompense. 157. It was further held in Jindal Stainless Limited (2) vs. State of Haryana that if the law enacted is to enforce discipline or conduct under which the trade has to perform, or if the payment is for regulation of conditions or incidence of trade or manufacture then the levy is regulatory. 158. The legislative competence of the State to make the Rules of 1978 was upheld by the Supreme Court in State of U.P. and others vs. Sitapur Packing Wood Suppliers and others (supra). The Supreme Court held that the powers of the State Government under Entry 17A of List III of the Seventh Schedule of the Constitution of India would include the powers to regulate transit of forest produce. We do not find any substance in the submission, that....
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....arkundi 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 like areas in all the districts of the State in reference to I.A. No. 979 filed in the Supreme Court vide d.o. letter dated 19.12.2007 of the Government of UP and which include all the areas in Vindhya and Bundelkhand region having 100 trees per hec. in a minimum area of 3 hec. and in Terai and Plain region area having minimum number of 50 trees per hec. in a minimum area of 2 hec. as forest like areas. 160. With this change in the legal concept and meaning of the word 'forest' and 'forest land', almost the entire forest and forest land notified as reserved, protected and village forest, the entire land recorded as forest in the Government records, the sides of all the major roads in the notified district in the State of UP and all the Forest Ranges notified under the Wild (Protection) Act, 1972 are included withi....
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.... 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 Act and Rules must necessarily be held to be supplanted, substituted and superseded by the MMDR Act in so far as they relate to minerals, overlooks the fact, that both the Acts operate in different fields and are referable to the different entries in the lists in Seventh Schedule. The MMDR Act has been enacted by the Parliament with reference to Entry 54 of List I, whereas the Indian Forest Act, 1927 traces its origin and is referable to Entry 17-A of List III of the Seventh Schedule. There is no overlapping in the object and purpose of enacting the two legislations nor can it be said that the provisions of MMDR Act so far as they relate to regulation and development of mines fully occupy the field. The Forest Act, 1927 read with Forest Conservation Act, 1980 have been enacted as legislations relating to forest to check ....
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....r 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 West Bengal vs. Kesoram Industries (supra) is entirely misplaced. 166. The powers of the State Government to regulate transit of forest produce under the Rules of 1978 of the Indian Forest Act, 1927 with reference to Entry 17A of List III of the Seventh Schedule has been specifically upheld in Sitapur Packing Wood Suppliers, with reference to timber. The Rules of 1978 were applicable to the mines and minerals as forest produce right from the inception, and thus the argument that the constitutional validity was upheld only with reference to timber as forest produce, is not valid. In Kumar Stone Works (supra) this Court considering the applicability of the Rules of 1978 to stone chips, stone gittis, stone ballast, sand, morrum, limestone, dolomite etc. which are all minerals excavated from the mines, did not go into the questio....
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....rther 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 not produced out of the processing including manufacture out of the forest produce, the same cannot be excluded from the definition of forest produce. We are thus not persuaded to hold that Kattha and Cutch, which come within the sweep of expression Katechu as held in State of M.P. vs. S.P. Sales Agencies (supra), would be covered within the definition of forest produce. 170. In Belsund Sugar Co Ltd. Vs. State of Bihar (1999) 9 SCC 620, the plucked tea leaves even after undergoing processing of rostering and blending were held to be forest produce. We thus hold that except for Sponge Iron, which is manufactured by a process in which the iron ore undergone a change after mixing with coal and dolomite by the process of feeding with primary air and secondary air by coal resulting into Sponge Iron, which is a commercially different pro....
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....owers. 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 of the purposes of this Act as may be prescribed, but shall not be entitled to payment of any amount by way of commission or otherwise for the collection of tendu leaves. The price of the tendu leave is fixed by the State Government under Section 7. Section 8 provides that the State Government shall purchase all tendu leaves offered for sale. Sections 9 and 10 provide for registration of growers and disposal of the leaves. 173. The U.P. Tendu Patta (Vyapar Viniyaman) Niyamawali, 1972 provides for appointment of agents. Rule 4 provides for transport permit and permit for sale and purchase of tendu leaves. The transport permit in Forms TP-1, T.P-2, and TP-3 is provided for transport from collection depot to storage godown; from one storage godown to another or to distribution centre and from distribution centre to Sattadars or Mazdoors. Th....
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....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 provisions of the Rules of 1978. 176. In State of UP & others vs. Sitapur Packing Wood Suppliers (supra) the Supreme Court, while setting aside the judgment of the High Court and upholding the levy of transit fee on timber, relied upon the judgment in State of Tripura vs. Sudhir Ranjan Nath in which the validity of the application fees charged on one time basis for year for transit of timber was upheld. The Supreme Court relied upon judgments in Corporation of Calcutta vs. Liberty Cinema (supra); Secunderabad Hyderabad Hotel Onwers' Association vs. Hyderabad Municipal Corporation (supra) and P. Kannadasan vs. State of T.N. (supra). In paragraph-10 of the judgment following the aforesaid cases the Supreme Court held that the transit fee under Rule 5 is clearly regulatory and thus it was not necessary for the State to establish quid pro quo. In the ....
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.... 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 produce coming from mines, and further the imposition of fees on such classification on advalorem basis at 5% in respect of timber subject to minimum of Rs. 2000/- for the timber of higher quality of wood and Rs. 750/- of the timber of other trees advalorem at the rate of 5% and other forest produce coming from mines at advalorem basis at the rate of 15% or minimum of Rs. 750/- has completely changed the character of the fees. 179. The object and purpose of the Rules of 1978 is to regulate the transit of timber for which the purpose as disclosed in the counter affidavit is to check illegal felling, mining poaching, and also protecting environment by indiscriminate mining of non-renewable sources of energy keeping in view the commitments made by India to the Kyoto Protocol that went into effect on February 16, 2005. The categorisation and the increase of....
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....or 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 fees on advalorem basis, would be far above the entire expenses born by the department for enforcement on collection of the fees, and thus the large amount of the collection of transit fees will go into the coffers of the State to raise its revenues. Even if entire collections are spent on maintenance of staff, vehicles, fuel and other administrative expenses of forest department, it looses its character as regulatory fees, to regulate transit of forest produce, with no benefit or service directly or indirectly to facilitate the trade or transit of forest produce. There is no averment, nor it is argued by learned counsel appearing for the State that any facility or services are to be provided or are contemplated for the trade. 182. We further find that absolutely no object is sought to be achieved by increasing the transit fee on advalorem basis. The State ....
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....uch 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 advalorem basis, on some forest produce, as high as 15%, which will adversely affect the trade, already overburdened with increasing cost of fuel on transportation. 185. Keeping in view the concept of sustainable development, we find substance in arguments addressed by the learned counsels appearing for the petitioners, that the development of the State has to be kept in mind while increasing the fees to reduce the exploitation of natural resources including forest produce. The State Government was required to carry out an exercise on the empirical data to study the scientific basis with ecological and social concerns, the maintenance of balance between development and exploitation of natural resources. 186. While we agree with Shri Ravi Kant appearing for the State that the petitioners have not placed any such facts, which may amount to a shut down situation....
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....utch 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 produce; for example sponge iron made by manufacturing process from iron ore is not a forest produce. All the minerals from mines and quarries, such as clinker and fly ash, calcium hydroxide, calcium oxide, quick lime, hydrated lime, hard coke, gypsum, rejected coke, ash burn coke and soil (mitti) are forest produce. (iv) The State has monopolised the entire trade of tendu patta by enacting UP Tendu Patta (Vypyar Viniyaman) Adhiniyam, 1972. The collection, packing, storage and transportation of tendu leaves in the State of U.P. is strictly regulated by U.P. Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1962 and the Rules framed thereunder in which Rule 4 regulates the entire transport of tendu leaves under the prescribed forms. No object is thus sought to be achieved in regulating the transportation of the same forest produce under the Rules of 1978 made by State under Section 41 (....
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....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 valorem basis subject to minimum of Rs.750/-, and on all other forest produce coming from mines including coal, lime stone, sand, Bajari and other minerals on the price at the rate of 15% with minimum of Rs.750/- as well, as on cart loads on the same basis subject to minimum of Rs.400/- for timber of specified trees; Rs.200/-, for timber of specified trees and Rs.200/- for forest produce coming from mines as notified in Schedule 'C', has changed the character of regulatory fees, to compensatory tax. The State Government has not justified the increase of transit fees as regulatory fees on quid pro quo. The increase of transit fee on ad valorem basis has thus rendered the fees as compensatory tax, for which the State Government has no powers to levy under the Indian Forest Act, 1927. (ix) The basis of the increase of fees by the 4th Amendment and the 5th Amendment to the Rules of 1978 h....