AI Drafter 
TaxTMI 
TaxTMI 
2016 (8) TMI 1378
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....wo vehicles with full load of sand imported from the State of Karnataka were seized by the police. On finding that sand was being unauthorisedly transported on illegal import from the State of Karnataka, the police initiated prosecution and other actions under the Kerala Protection of River Banks and Regulation of Removal of Sand Act, 2001 (for short, 'the Sand Act'). The writ petitioners seek a writ of mandamus directing the police to release the vehicles unconditionally, and also a declaration, that the police or other authorities in Kerala having powers under the Sand Act, will have no authority or powers to seize the sand imported from other States, and that prosecution or other action is not possible in respect of such materials brought from other States, under the Sand Act, especially when import of sand from other States is permitted in the State of Kerala by a Government order. When the two writ petitions came up for consideration before a learned Single Judge of this Court, the writ petitioners sought orders on the basis of a Division Bench decision of this Court, dated 16.08.2011, in W.A. No. 1206/2011. On the other hand the respondents relied on another Division ....
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....f India deals with trade, commerce and intercourse within the territory of India. Article 301 of the Constitution declares the general policy of our democratic policy regarding trade and commerce in India, that, subject to the other provisions of the Part XIII, trade, commerce and intercourse throughout the territory of India shall be free. What is declared and protected under Article 301 is freedom of inter-state, and also intra-state trade, intercourse and commerce, subject to the other provisions of the Constitution restricting and modifying the general provision contained in Article 301 of the Constitution. The said Article declares freedom of inter-state intercourse in trade and commerce, subject to the restrictions and limitations under the Constitution itself, with the object of ensuring that the internal unity, and also the financial stability of India, shall not be affected or broken by internal barriers or restrictions prohibiting or controlling free flow of trade, commerce and intercourse throughout the country. The general policy declared under Article 301 of the Constitution is modified and explained by Article 302, which authorises the Parliament to impose such restri....
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....09. The said circular will show that the Government issued such a circular prohibiting transportation of ordinary sand from the State of Karnataka to other States, in public interest, or considering the huge requirement of ordinary sand for the large scale construction of buildings in some important parts of the State of Karnataka like Bangalore Metropolitan City. 6. On an examination of Article 304 of the Constitution including the proviso to Clause (b), we find that restrictions on the freedom of trade and commerce with or within a particular State in public interest can be made by a State Legislature, only by a law enacted by the Legislature. 7. In view of the provisions contained in Article 304, authorising State Legislatures to impose reasonable restrictions on the freedom of trade in a particular State, only by a special law enacted by the State Legislature, it is contended by the petitioners that a mere circular issued by the Government of Karnataka will not get sanctity as law, as meant under Article 304 of the Constitution. We are not in fact called upon to decide the Constitutional validity of the circular issued by the Government of Karnataka prohibiting export or ....
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....n Bench decision, decided otherwise as regards such conflict, in W.A. No. 1206/2011. The said Division Bench accepted the contention that on payment of necessary tax and other dues in Kerala, such import of sand from the State of Karnataka can be legalised, and held thus: "The appellants have remitted the tax payable in Kerala under the KVAT Act is another contention raised by the appellants. If the claim of the appellants is true, we see no justification for detention of goods in Kerala, no matter, there may be prohibition in Karnataka against transport of sand from Karnataka. The Collector can seize the vehicle with load of sand only if there is a violation of provision of the Kerala Protection of River Banks and Regulation of Removal of Sand Act, 2001. The appellants' contention that sand transported was sourced from Karnataka under permit issued by the Authorities in Karnataka and therefore transport is not illegal under the Sand Act is absolutely tenable." 9. The Division Bench referred the issue to the Full Bench, noticing a clear conflict on the subject, between two Division Bench decisions of co-equal Judge strength. However, the Division Bench observe....
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.... issues here. 11. Notwithstanding the declaration of policy under Article 301 of the Constitution of India as regards freedom of trade and intercourse throughout the territory, Clause (b) of Article 304 gives constitutional sanction for reasonable restrictions on the freedom of trade, commerce and intercourse within a particular State, by way of Legislation. It is imperative, as an essential requirement and a constitutional mandate, for the protection of our federal system and also the dealings and relationship between different States in India, that ban or prohibition of export of any substance made by a particular State by law as authorised under the Constitution must, in all ways possible, be respected, honoured, and accepted by other States. Prohibition of export in one State cannot be ignored or defied, or challenged by the other States, and import or transportation of such prohibited goods cannot be justified by the other States on the basis of permitted import in those States. It is true that import of sand to Kerala is permitted by the Government of Kerala. But, when such export is prohibited in a neighbouring State, we cannot defy and question the Karnataka law saying t....
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....he learned Government Pleader representing the State of Kerala submitted that it is true that the Sand Act in Kerala cannot have application in the present circumstances where the subject matter is not river sand collected or extracted in Kerala, but powers of prosecution and seizure can be exercised by the police, and other authorities appointed by the Government, under the provisions of the MMDR Act. The learned Government Pleader submitted that it is provided under the Kerala Rules framed recently in 2015, that illicit import and transportation of sand from other States can be dealt with and punished under the MMDR Act. In Aloshias C. Antony & others V. Chief Secretary, Government of Kerala and others 2014(1) KHC 329, involving a batch of writ petitions challenging the extent of the powers of the police and the other authorities under the MMDR Act in the absence of specific notification by the Government, a learned Single Judge of this Court held that even in the absence of such notification under Section 21(4) of the MMDR Act the authorities are well within their powers to seize vehicles and minerals, and that the general powers of police under the Code of Criminal Procedure fo....
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....and as regards other minerals legislative powers are within the exclusive province of the parliament. 16. The object of the Sand Act in Kerala is very clear from the preamble and the different provisions of the Act. Section 15(1) of the MMDR Act authorises State Governments to make Rules in respect of minor minerals, and the scope of these rules must be for regulating the grant of quarry leases, mining leases or other mineral concessions. This is not the subject dealt with under the Sand Act in Kerala. The object of the Sand Act in Kerala is to protect the biophysical environment system of river banks and river beds in the State of Kerala, and to regulate the extraction and removal of river sand in Kerala, and also the matters connected therewith or incidental thereto. The scheme of the various provisions of the Kerala Sand Act also will show that the subject matter of legislation is in fact river sand collected or extracted from various rivers and river beds in Kerala, and the object is preservation and protection of biophysical environment system of river banks and river beds by such process. Much thought or probe is not required to find that sand, or even river sand, brought ....
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....itioners is to the effect that when there is a separate definition of minor minerals under Clause (e), the definition of minerals in Clause (a) cannot include minor minerals. On an examination of the different definitions and also the application of different provisions including Section 15 which authorises the State Governments to make rules for regulating the grant of quarry leases, mining leases or mineral concessions in respect of minor minerals, we find that the definition of minerals under Clause (a) of Section 3 of the MMDR Act is a very wide definition covering minor minerals also. The answer to the question raised by the learned counsel for the petitioners is contained in the scheme of the provisions of the Act. One may ask why minor mineral is separately defined under the law, if it is included in the definition of minerals. We find that it is with a specific object the parliament defined minerals generally and minor minerals specifically. The scheme of the provisions of the MMDR Act is that exclusive powers are given to the Centre to deal with minerals other than minor minerals, but under Section 15, State Governments are authorised to make Rules with respect to minor mi....
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....e of Kerala. These Rules provide for grant of quarrying permits, quarrying leases, and also the regulation of the minor minerals extracted under such leases and licences. Rule 58 deals with penalty for violation of the Rules, and Sub rule 3 thereof deals with seizure of minor minerals collected or transported or possessed in violation of the Rules, and also the seizure of the tools, vehicles etc. used for such violation. Sub Rule 4 of Rule 58 deals with seizure of minor minerals along with vehicle, in the case of illegal transport of minor minerals without any valid permit issued by the competent authority. Sub Rule (1) of Rule 58 provides for punishment of imprisonment for a term which may extend to one year, for contravention of any provision of the Rules. On an examination of Rule 58 dealing with different aspects including seizure of materials and also punishment for contravention of Rules, we find that what is dealt with under Rule 58 is not in fact a situation of violation of Sub Section 1A of Section 4 of the MMDR Act. The Kerala Minor Mineral Concession Rules, 1967 were in force in Kerala when the vehicles of the petitioners with full load of sand were seized by the police.....
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....tation of minerals including minor minerals will have to be dealt with under the 2015 Kerala Rules framed by the State Government under Section 23C of the MMDR Act. The Rules framed by the Government of Kerala under Section 23C of the MMDR Act have already come into force in the State of Kerala. Rule 29 of these Rules provides that whoever contravenes the provisions of these Rules shall be punishable with the penalty provided for in sub Section 2 of Section 21 of the MMDR Act. Sub Rule 3 of Rule 3 of these Rules made under Section 23C of the MMDR Act provides that no person shall transport or cause to be transported any mineral or mineral products by any carrier without having a valid mineral transit pass under these Rules. In this case the petitioners did not have any permit or pass justifying import of sand from Karnataka or justifying transportation of such sand within the State of Kerala. The police seized the sand and the vehicles when the petitioners failed to produce any pass or permit as prescribed under the law. Of course, it is true that the above Rules were made in 2015 as authorised under Section 23C of the MMDR Act, but the vehicles and the sand in this case were seize....
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....n as provided under the MMDR Act. Such procedures are provided under Section 21 of the MMDR Act. 22. Sub section 1 of Section 21 of the MMDR Act provides that whoever contravenes the provisions of sub section 1 or sub Section 1A of Section 4 shall be punished with imprisonment for a term which may extend to two years, or with fine which may extend to ` 25,000/- or with both. Sub Section 4 of Section 21 provides that whenever any person raises, transports or causes to be raised or transported, without any lawful authority, any mineral from any land, and, for that purpose, uses any tool, equipment, vehicle or any other thing, such mineral, tool, equipment, vehicle or any other thing shall be liable to be seized by an officer or authority specially empowered in this behalf. Sub Section 4A further provides that any mineral or other material seized under sub Section 4, shall be liable to confiscation by an order of the court competent to take cognizance of the offence, and shall be disposed of in accordance with the directions of such court. 23. Now, let us see how situations like the present one involving illicit import or transport, or possession of minerals including minor mine....
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....may be confiscated by the competent criminal court. The violations of sub-ss.(1) and (1A) of S. 4 of the Act are cognizable offences, by virtue of S.21 (6) of the Act. S. 22 says that the criminal court shall take cognizance of any offence punishable under the Act or Rules only on a complaint made in writing by a person authorised in this behalf by the Central or State Government. The State Government have issued a notification under S. 22 of the Act, as per S.R.O. No. 827/91 published in Kerala Gazette (Extraordinary) No. 796 dated 26.06.1991, authorising all District Collectors and all Police Officers of and above the rank of Sub Inspector, apart from Geologists, in their respective jurisdiction, to act as the competent authority under S. 22. S. 23A of the Act enables such authorised Officers to compound any offence punishable under the Act on payment of a sum that the said authority may specify." 25. We fully agree with the Division Bench on this legal aspect. Illicit import of sand to Kerala, or illicit possession of such sand, or illicit transport of such sand, or even illicit possession or transport of sand not covered by the Kerala Sand Act is punishable under Section 21 ....
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....iable to confiscation in all situations. What we find on an analysis of the various provisions is that confiscation of properties is authorised under Sub Section 4A, by orders of the court having jurisdiction. However the court is competent to pass appropriate orders, for disposal of the properties. In appropriate cases where the facts and situations are of extreme violation, confiscation will have to be ordered by the court. However, in the case of minerals illicitly transported or imported, confiscation must be the rule. But in the case of vehicles and other articles, appropriate orders including confiscation orders can be passed by the court having jurisdiction, and such properties can be appropriately dealt with. 28. Competence of the police officer who made seizure in this case, to initiate prosecution under Section 22 of the MMDR Act cannot be questioned or doubted, because there is already a Government order authorising police officers of and above the rank of Sub Inspectors to initiate prosecution under Section 22. If an officer is authorised under the law to initiate prosecution, and if his powers as police officer under the Code of Criminal Procedure including Section ....