TaxTMI 
TaxTMI 
2017 (9) TMI 1901
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....2012) , T.P. (C) No. 76/2012, T.P. (C) No. 77/2012) , C.A. No. 14485/2017 (Arising out of SLP (C) No. 1697/2012) , C.A. No. 14486/2017 (Arising out of SLP (C) No. 2082/2012) , C.A. No. 14492/2017 (Arising out of SLP (C) No. 2236/2012) , C.A. No. 14493/2017 (Arising out of SLP (C) No. 2081/2012) , C.A. No. 14495/2017 (Arising out of SLP (C) No. 2399/2012) , C.A. Nos. 14497-14509/2017 (Arising out of SLP (C) Nos. 3152-3164/2012) , C.A. Nos. 14510-14523/2017 (Arising out of SLP (C) Nos. 2938-2951/2012) , C.A. Nos. 13122-13129/2017 (Arising out of SLP (C) Nos. 3192-3199/2012) , C.A. No. 13300/2017 (Arising out of SLP (C) No. 1822/2012) , C.A. No. 13301/2017 (Arising out of SLP (C) No. 4832/2012) , C.A. Nos. 13313-13319/2017 (Arising out of SLP (C) Nos. 4002-4008/2012) , C.A. No. 13320/2017 (Arising out of SLP (C) No. 6144/2012) , C.A. Nos. 13346-13358/2017 (Arising out of SLP (C) Nos. 3512-3524/2012) , C.A. Nos. 13360-13378/2017 (Arising out of SLP (C) Nos. 3320-3338/2012) , C.A. Nos. 13386-13395/2017 (Arising out of SLP (C) Nos. 3490-3499/2012) , C.A. Nos. 13405-13408/2017 (Arising out of SLP (C) Nos. 13019-13022/2012) , C.A. Nos. 13411-13426/2017 (Arising out of SLP (C) Nos. 12808-12....
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....C.A. Nos. 14076-14078/2017 (Arising out of SLP (C) Nos. 8465-8467/2012, Conmt. Pet. (C) Nos. 199-201/2014 in SLP (C) Nos. 31530-31532/2011) , C.A. Nos. 13760-13770/2017 (Arising out of SLP (C) Nos. 2776-2786/2014) , C.A. Nos. 14080-14100/2017 (Arising out of SLP (C) Nos. 15501-15521/2012) , C.A. Nos. 14101-14117/2017 (Arising out of SLP (C) Nos. 15611-15627/2012) , C.A. Nos. 14118-14132/2017 (Arising out of SLP (C) Nos. 15430-15444/2012) , C.A. Nos. 14134-14145/2017 (Arising out of SLP (C) Nos. 15405-15416/2012) , C.A. No. 13544/2017 (Arising out of SLP (C) No. 12578/2013) , C.A. No. 14146/2017 (Arising out of SLP (C) No. 12176/2012) , C.A. No. 13606/2017 (Arising out of SLP (C) No. 12657/2014) , C.A. Nos. 14157-14176/2017 (Arising out of SLP (C) Nos. 15446-15465/2012) , C.A. Nos. 14178-14190/2017 (Arising out of SLP (C) Nos. 16987-17001/2012) , C.A. Nos. 14192-14193/2017 (Arising out of SLP (C) Nos. 15543-15544/2012) , C.A. Nos. 14194-14206/2017 (Arising out of SLP (C) Nos. 15417-15429/2012) , C.A. No. 13545/2017 (Arising out of SLP (C) No. 13521/2013) , C.A. Nos. 14207-14225/2017 (Arising out of SLP (C) Nos. 15466-15484/2012) , C.A. Nos. 14227-14247/2017 (Arising out of SLP (C) N....
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....-14423/2017 (Arising out of SLP (C) Nos. 16975-16984/2012) , C.A. Nos. 14426-14444/2017 (Arising out of SLP (C) Nos. 16951-16969/2012, SLP (C) No. 13656/2012 (XI) ) , C.A. No. 14447/2017 (Arising out of SLP (C) No. 13640/2012) , C.A. Nos. 14449-14451/2017 (Arising out of SLP (C) Nos. 34773-34775/2012) , C.A. No. 13574/2017 (Arising out of SLP (C) No. 18665/2013) , C.A. Nos. 14454-14463/2017 (Arising out of SLP (C) Nos. 23589-23598/2012) , C.A. Nos. 14466-14467/2017 (Arising out of SLP (C) Nos. 19075-19076/2012) , C.A. No. 13576/2017 (Arising out of SLP (C) No. 18664/2013) , C.A. No. 14272/2017 (Arising out of SLP (C) No. 11923/2009) , C.A. No. 5652/2008 (Arising out of SLP (C) No. 15721/2012) , C.A. No. 13781/2017 (Arising out of SLP (C) No. 11392/2013) , C.A. No. 14477/2017 (Arising out of SLP (C) No. 17003/2012) , C.A. No. 13379/2017 (Arising out of SLP (C) No. 24106/2007) , C.A. Nos. 2739-2762/2008) , C.A. No. 14177/2017 (Arising out of SLP (C) No. 17666/2008) , C.A. No. 14191/2017 (Arising out of SLP (C) No. 22322/2008) , C.A. No. 14248/2017 (Arising out of SLP (C) No. 20675/2008) , C.A. No. 14226/2017 (Arising out of SLP (C) No. 22629/2008) , C.A. No. 2734/2008) , C.A. No. 135....
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....2) , C.A. No. 1008/2011 (X) ) , C.A. No. 13130/2017 (Arising out of SLP (C) No. 2294/2008) , C.A. Nos. 14487-14491/2017 (Arising out of SLP (C) Nos. 33170-33174/2012) , C.A. No. 14280/2017 (Arising out of SLP (C) No. 29725/2009) , Conmt. Pet. (C) Nos. 585-587/2016 in SLP (C) Nos. 31530-31532/2011) , C.A. No. 14494/2017 (Arising out of SLP (C) No. 30535/2012) , C.A. No. 14293/2017 (Arising out of SLP (C) No. 27511/2011) , C.A. No. 14308/2017 (Arising out of SLP (C) No. 27487/2011) , C.A. No. 14496/2017 (Arising out of SLP (C) No. 32133/2012) , C.A. No. 14524/2017 (Arising out of SLP (C) No. 34384/2012) , C.A. No. 14310/2017 (Arising out of SLP (C) No. 27840/2011) , C.A. No. 14075/2017 (Arising out of SLP (C) No. 32029/2012) , C.A. Nos. 14525-14531/2017 (Arising out of SLP (C) Nos. 36975-36981/2012) , C.A. No. 14532/2017 (Arising out of SLP (C) No. 30185/2012) , C.A. Nos. 13719-13720/2017 (Arising out of SLP (C) Nos. 34637-34638/2014) , C.A. No. 13345/2017(Arising out of SLP (C) No. 24804/2017 (Arising out of S.L.P.(C) ... (CC) No. 22596/2015)), Conmt. Pet. (C) No. 251/2008 in C.A. Nos. 2797/2008 (III-A) ) , C.A. No. 14281/2017 (Arising out of SLP (C) No. 27771/2009) , C.A. No. 13105....
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...., Kailash Chand, Syed Shahid Hussain Rizvi, Advs. for AP & J Chambers, Sharmila Upadhyay, Abhishek Chaudhary, E.C. Agrawala, Piyush Sharma, Pawanshree Agrawal, Pawan Kumar, R.N. Pareek, Rachana Srivastava, Monika, Sukrit R. Kapoor, Nitya Madhusoodhanan, Arun Kumar Sinha, Mukti Chowdhary, Manish Kumar Saran, Aniruddha P. Mayee, Samir Ali Khan, K.V. Sreekumar, Shamik Shirishbhai Sanjanwala, Sunil Kaundal, Abhijit Sengupta, Arvind Kumar, E.R. Sumathy, Garvesh Kabra, K.V. Bharathi Upadhyaya, Nirnimesh Dubey, Mridula Ray Bhardwaj, K.K. Mohan, Baij Nath Patel, Sweta, Romila, C.D. Singh, Prateek Rusia, Jitendra Mohan Sharma, Ajit Sharma, Kamal Mohan Gupta, Ravindra S. Garia, Kaushal Yadav, N. Annapoorani, Anita Bafna, T. Harish Kumar, Praveen Jain, Prashant Kumar, Rahul Kaushik, Aruna Gupta, M.A. Chinnaswamy, Shrish Kumar Mishra, Gaurav Dhingra, Pramod Dayal, Abha Jain, Jaivir Singh, Gaurav Jain, Anupam Mishra, Shiv Prakash Pandey, Pragati Neekhra, R.P. Gupta, Jitendra Kumar, R.D. Upadhyay, Abha R. Sharma, Anil Kumar Jha, Aftab Ali Khan, Neeraj Shekhar, Nishit Agrawal, T.A. Rehman, Vipin Kumar Jain, Santosh Kumar Tripathi, Nipun Goel, Dhruv Surana, Ashish Choudhury, Bharti Tyagi, Ashok Ku....
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....he High Courts in so far as writ petitions filed by the writ Petitioners were allowed. The State of Madhya Pradesh has also filed appeals challenging the common judgment dated 14.05.2007. The writ Petitioners whose writ petitions were dismissed by the Allahabad High Court has also filed SLPs against the said judgment in which leave has been granted. 5. The entire bunch of cases before us can be described in four groups. First group consists of appeals filed by the State of U.P. as well as State of Uttarakhand challenging various judgments of Uttarakhand High Court by which writ petitions filed by the different writ Petitioners for quashing the levy of transit fee were allowed. The second group of appeals consists of appeals filed by the State of U.P. challenging the judgment of Allahabad High Court dated 11.11.2011 and few other judgments by which writ petitions filed by the writ Petitioners have been allowed. Third group of appeals has been filed by the writ Petitioners whose writ petitions filed before the High Court either have been dismissed or the reliefs claimed in their writ petitions have not been granted. The fourth group of appeals has been filed by the State of Madhya P....
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....gments have filed the above noted several appeals. (2) JUDGMENT DATED 30.03.2005 IN WRIT PET. No. 310 OF 2005, M/s. Kumaon Pea Gravel Aggregated Manufacturing Co. v. State of Uttarakhand and Ors. [Giving rise to Civil Appeal (arising out of SLP No. 23547 of 2005 and Civil Appeal (arising out of SLP No. 24106 of 2007) ] 11. Writ Petitioners, proprietary firms were carrying on the business of manufacturing & sale of finished produce of washed and single pea gravel and bajri. The Writ Petitioner used to purchase river bed material from the lessee of query on payment of royalty and trade tax on which Transit Fee is charged from the State of Uttarakhand. But when the writ Petitioners transport their finished products from their factory to customers, Transit Fee is charged by State of Uttarakhand and further, when it crosses the border of Uttarakhand and enter into the State of U.P., the Transit Pass issued by the State of Uttarakhand is to be surrendered and again Transit Passes are to be taken by making payment of the Transit Fee. 12. High Court allowed the writ petition vide its judgment dated 30.03.2005 holding that after river bed material is converted into the Washed & Single P....
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....ppeal (arising out of SLP No. 18094 of 2011) and Civil Appeal (arising out of SLP No. 26285 of 2011). II. CIVIL APPEALS ARISING OUT OF JUDGMENTS OF ALLAHABAD HIGH COURT 17. A large number of Civil Appeals have been filed. Four Transfer Petitions and seven Contempt Petitions have also been filed. Civil appeals have been filed by the aggrieved parties against the various judgments of the Allahabad High Court. All the civil appeals filed by the writ Petitioners as well as by the State of U.P. centre around leviability of transit fee on different forest produces as per 1978 Rules. 18. Apart from various other judgments against which appeals have been filed, two judgments delivered by two Division Benches need to be specially noted by which judgments bunch of writ petitions numbering more then 100 have been decided. We shall notice these two judgments first before referring to facts of other cases. CIVIL APPEAL Nos. 2739-2762 OF 2008 (KUMAR STONE WORKS and Ors. v. STATE OF U.P. and Ors.) (arising out of judgment dated 27.04.2005 in Writ Petition No. 975 of 2004, Kumar Stone Works and Ors. v. State of U.P. and Ors.) 19. Several writ petitions were filed challenging the realisation....
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....ng Wood Suppliers, 2002 (4) SCC 566. The Court upheld the 2004 Amendment. The High Court also held that the words "brought from forest" as occurring in Section 2 (4) (b) of the 1927 Act, necessarily implies that it passes through the forest. It also held forest must be understood according to its dictionary meaning. This description covers all statutory recognised forest, whether designated as reserve, protected or otherwise. The Court held that all goods are passing through forest, hence, Petitioners cannot deny liability to pay transit fee. The increase of transit fee to Rs. 38/- can neither be said to be excessive or exorbitant or prohibitive. 22. The several civil appeals have been filed against the above judgment where the Appellants reiterate their claim as they raised before the High Court. Civil Appeal arising out of SLP (C) No. 1675 of 2012 State of U.P. and Ors. v. M/s. Ajay Trading (Coal) Co. and Ors. (arising out of the judgment dated 11/21.11.2011) in Writ Petition No. 963 of 2011-M/s. Ajay Trading (Coal) Co. and Ors. v. State U.P. and Ors.) 23. By judgment dated 11.11.2011, two batches of writ petitions were decided. First batch consisted of Writ (Tax) No. 327 of 2....
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.... against the judgment dated 11.11.2011 reiterating their claim that they are not liable to pay transit fee on various grounds as raised in their writ petitions. The claims in various writ petitions are different and also founded on different grounds. It is neither necessary nor desirable to notice the facts and claim in each case separately. The writ petitions which have been decided by both the judgments dated 27.04.2005 as well as 11.11.2011 consisted of different nature of writ petitions which can be broadly described in few groups. It shall suffice to notice facts and claims as raised in few cases of each group: Group (A) This represents Petitioners who have obtained mining leases under U.P. Minor Minerals (Concession) Rules, 1963 as well as leases of major minerals for mining of various minerals. Some of the mining lease holders are also transporting the minerals. There are other categories of Petitioners who are only transporting the minerals from their factories. Stone crusher, dealers who are crushing the minerals and transporting finished materials, all these Petitioners denied their liability to pay transit fee. Petitioners claim that the stone ballasts and grit, boul....
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....ticed above the facts of Writ Petition No. 26273 of 2004, M/s. Kumaon Stone Crusher, decided on 01.07.2004. Group 'B' consisting of Petitioners who are dealing in coal/hard coke/coal briquettes/soft coke/cinder (rejected coke) , etc. C.A. No. 2706 of 2008 (M/s. Krishna Kumar Jaiswal v. State of U.P. and Ors., is one of such writ petitions which was dismissed by the High Court on 27.04.2005. 29. In group 'B' reference is made to Civil Appeals arising out of SLP (C) Nos. 34909-34916 of 2012 (M./s. Anand Coal Agency and Ors. etc. etc. v. State of U.P. and Ors. etc. etc.) . The writ Petitioners-Appellants are involved in trading of coal. Petitioners get coal after the acceptance of their bid by the Coal India Limited for the coal field concern. The Petitioners imports coal from the outside the State of U.P. by road and do not use forest roads. The coal is transported only by National highways and PWD roads. It was stated that collection of transit fee on coal is illegal and without jurisdiction. Levy on Schedule minerals is exclusively subject matter of MMDR Act. 30. Another case in this context is Civil Appeal arising out of SLP (C) No. 981 of 2012 (Lanco Anpara Powe....
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....istered traders/manufacturers of the State of Rajasthan after obtaining invoices and passes. On such transportation the State of U.P. is levying transit fee. The product manufactured and purchased by the Petitioners is not forest produce and no transit fee can be levied. 33. In group 'D', one of the cases is Civil Appeal arising out of SLP (C) No. 30185 of 2012 (Arvind Kumar Singh and Anr. v. State of U.P. and Ors.) , the writ Petitioner-Appellant carries on the business of supplying bamboo, waste of plywood and small twigs/debarked jalawani lakdi of eucalyptus and poplar trees to paper manufacturing units. The paper manufacturing units, to which the Petitioner supplies are situate in the State of Haryana, Punjab, Uttar Pradesh and Madhya Pradesh. Waste of plywood is a waste product obtained from the plywood industries, which is processed to obtain chips. The purchases are not made by the Petitioner inside any forest of Uttar Pradesh or any other State. The loaded trucks of the Petitioner do not pass through any forest road. The waste of plywood and veneer is neither timber nor any kind of forest produce. They are products of human/mechanical effort and labour and a result....
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.... (tax) No. 1629 of 2007 to hear it with SLP (C) No. 11367 of 2007. The Petitioner has set up coal based thermal power plant at Renusagar for captive generation of power which it supplies continuously to the aluminium manufacturing unit of the Petitioner at Renukoot. In the process of generation of power the said thermal power plant produces the fly ash which needs to be disposed of as per the directions of the Central Government. 39. The Petitioner has entered into agreement with various cement manufacturers for lifting, disposal of fly ash. From November 2007, the forest department of the State started demanding transit fee from each Truck/Dumper. Even though the payment of any levy is the responsibility of contractors who are lifting the fly ash. The Petitioner filed Writ Petition No. 1629 of 2007 challenging the aforesaid demand of transit fee on fly ash in which the interim order was passed by the High Court on 29.11.2007. In the aforesaid background it was prayed that Writ Petition be transferred and heard along with SLP (C) No. 11367 of 2007. 40. Transfer Petition No. 76 of 2012 has been filed by Aditya Birla Chemicals (India) Ltd. for transfer of Writ Petition No. 101 of 2....
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....s entered in the State of U.P., Transit fee is demanded. It is contended that in SLP (C) filed by the applicants this Court on 02.12.2012 stayed the recovery of transit fee. Applicants case is that despite the knowledge of interim order dated 02.12.2012 the same is not being complied with, hence, the Contempt Petition has been filed. In Contempt application, no notice has been issued. 44. One Writ Petition (C) No. 203 of 2009 (M/s. Pappu Coal Master and Ors. v. State of U.P. and Anr.) has also been filed where Petitioners have prayed that Respondent may be restrained from charging any fee from Petitioners under the 1978 Rules as amended by Amendment Rules dated 14.06.2004. This writ petition was directed to be listed along with SLP (C) No. 11367 of 2007. V. CIVIL APPEALS AGAINST THE JUDGMENT DATED 14.05.2007 OF THE MADHYA PRADESH HIGH COURT 45. The State of Madhya Pradesh has filed appeals against a common judgment dated 14.05.2007 of the High Court of Madhya Pradesh. Civil Appeal arising out of SLP (C) No. 6956 of 2008 has been filed against the common judgment rendered in six writ petitions which also included Writ Petition No. 2309 of 2002 (Northern Coalfields Limited v. Stat....
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....ounsel, submissions on behalf of the writ Petitioners have been referred to as submissions of writ Petitioners and the submissions on behalf of the States have been referred to as on behalf of the State. VI. Submissions with regard to the judgment of Uttarakhand High Court 52. As noted above both the State of Uttarakhand and State of U.P. have challenged the judgment of Uttarakhand High Court. Shri Dinesh Dwivedi, learned senior Counsel questioning the judgment dated 01.07.2004 of Uttarakhand High Court in M/s. Kumaon Stone Crusher v. State of Uttarakhand, submits that boulders crushed into grits retain same characteristic that is forest produce. By obtaining grits, stone chips and dust no new material is obtained. Challenging the judgment of Uttarakhand High Court in M/s. Gupta Builders dated 26.06.2007, it is submitted that the mere fact that royalty has been paid by the writ Petitioners in accordance with the Uttar Pradesh Minor Minerals (Concession) Rules, 1963 as adopted in Uttarakhand by Uttarakhand Minor Minerals (Concession) Rules, 2001 shall have no effect on the entitlement of the State to levy transit fee. The judgment of the High Court that no transit fee can be levie....
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....tence of levy of Transit Fee at the time of second transit is irrational and unreasonable. 55. Learned Counsel for the State of U.P, challenging the judgment of High Court of Uttarakhand has also raised the similar submissions as has been raised by the learned Counsel for the State of Uttarakhand. VII. SUBMISSIONS RELATING TO JUDGMENTS OF THE ALLAHABAD HIGH COURT. 56. Following are various submissions on behalf of several writ Petitioners and their reply by State: (i) (a) The products which are being transited by them or on their behalf are not Forest Produce since they have undergone manufacturing process resulting into a new commodity. All the writ Petitioners supported the judgment of Uttarakhand High Court dated 01.07.2004 in M/s. Kumaon Stone Crusher wherein, the High Court has held that no levy of Transit Fee can be made on the finished items of stone i.e. stone grits, sand grits & chips etc. They submitted that in the stone crusher, factories, boulders and stones obtained from different mining lessees are subjected to a process by which different items are formed thereby losing their character of Forest Produce. Several other materials like lime stone, fly ash, clinker,....
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.... synthetic gypsum are concerned, the State does not claim them to be Forest Produce and no Transit Fee shall be charged on fly ash, clinker and synthetic gypsum. He, however, submitted that gypsum is a naturally mined Forest Produce and what is excluded is only synthetic gypsum. (f) For veneer and plywood, it is submitted that veneer is small pieces of timber which remains a Forest Produce and plywood is also a kind of timber which retains its natural character of Forest Produce. With other articles, with regard to which, it is claimed that by manufacturing process and chemical treatment they are transformed to new commercial commodity is refuted by counsel for the State. (ii) (a) One of the main planks of attack of learned Counsel for the writ Petitioners to the 1927 Act & 1978 Rules is based on 1957 Act. It is submitted that 1957 Act is enacted by the Parliament in reference to Entry 54 of List I of Seventh Schedule of the Constitution of India. It relates to Regulation of mines and the development of minerals to the extent to which such Regulation and development under the control of the Union is declared by the Parliament by law. The legislative competency of the State with....
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....7 Act shall impliedly overrule 1927 Act regarding transit of forest-produce, the control of the State Under Section 41 shall be lost and the very purpose and object of the Forest Act shall be defeated. An activity of mining held in a forest cannot be regulated and prevented by mining officers in the forest area, they cannot enter into forest area and exercise their powers. The machinery for enforcement of forest laws and the mining laws are different. Their powers are different, officers are different, consequences of breach are different and both provisions operate in different fields. It is thus submitted that the provisions of Indian Forest Act, 1927 in so far as Section 41 of 1927 Act and 1978 Rules are concerned, shall not stand impliedly overruled by Parliamentary enactment of 1957 Act. (iii) (a) It is submitted that Division Bench of the Allahabad High Court in Kumar Stone Works and Ors. by its judgment dated 27.04.2005 has mis-interpreted the words "brought from" as contained in Section 2 (4) (b) of 1927 Act. It is submitted that there is no issue with regard to the words "found in". The words "found in" clearly mean found in a forest. The word "when" signifies the physic....
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.... the term 'found in a forest'. It is submitted that the High Court has referred to various dictionary meanings of word 'brought' and after relying on said definition the Division Bench held that the words 'brought from' mean 'brought through forest'. (iv) (a) One more submission which has been raised by the writ Petitioners is that the word 'forest' as used in 1927 Act as well as in Transit Fee Rules, 1978 has to be read as 'forest' as enumerated in the 1927 Act, i.e., a reserved forest, a village forest and a protected forest. Thus, transit fee can be charged only when forest produce transit through a reserved forest, a village forest or a protected forest. It is submitted that the Division Bench in its judgment dated 11.11.2011 has adopted a very expansive definition of forest when it held that the forest has to be understood as a large track of land covered with trees and undergrowth usually of considerable extent, on the principles of sound ecological and scientific basis reflecting sociological concerns. Learned Counsel for the Petitioners submits that the definition of forest as adopted by the Division Bench of Uttarakhand Hig....
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.... be charged in any other case. The above submissions have been refuted on behalf of the State. It is contended that on all transit pass issued under the Rule 1978 transit fee is required to be paid. (vii) The Petitioners further submitted that although no final notification has been issued Under Section 20 of 1927 Act but still the Forest Department treats several areas in the District of Sonebhadra and other Districts as forest area and transit fee is asked for treating the said areas as forest area. It is submitted that Section 4 notification is only a preliminary notification which cannot be treated as notification declaring the area as reserved forest. (viii) (a) Learned Counsel for the Petitioners submitted that the Constitution Bench judgment of this Court in State of West Bengal v. Kesoram Industries and Ors. (2004) 10 SCC 201 where Constitution Bench held that Union's power to regulate and control does not result in depriving the States of their power to levy tax or fees within their legislative competence without trenching upon the field of Regulation and control of the Union, need not be relied on. (b) The Constitution Bench also interpreted Seven-Judge Bench de....
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....tate Government was much more than collection of transit fee even after Fifth Amendment. The value of timber and other forest-produce has increased manifold. The increase in levy of transit fee had become necessary to meet the ever increasing expenditure incurred by the State. The High Court committed error in striking down Fourth and Fifth Amendments without there being any sufficient and valid ground. 58. Learned Counsel for the writ Petitioners have vehemently opposed the above submission and supported the judgment of the High Court striking down the Fourth and Fifth Amendment Rules. It is submitted that Jindal Stainless (2) overruled by the judgment of 9-Judges constitution Bench does not have much bearing in the facts of the present case. The High Court independent of reliance placed on Jindal Stainless (2) has held that transit fee is excessive in nature and the State of U.P. had not produced data for justifying the increase in the transit fee. It is true that for regulatory fee quid pro quo is not to be proved but the State was obliged to prove a broad correlation between the levy of transit fee and the expenditure incurred by the State on the transit of forest-produce. The....
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....arned Counsel for the writ Petitioners have relied on few judgments of this Court which need to be noticed. Reliance is placed on Two Judge Bench in Suresh Lohiya v. State of Maharashtra and Anr. (1996) 10 SCC 397. In the above case, the question for consideration was, as to whether, the Bamboo mat is a Forest Produce. The definition of 'Timber' and 'tree', given in sub Clause 6 and sub Clause 7 of Section 2 was noticed which is to the following effect: 2. (6) 'timber' includes trees when they have fallen or have been felled, and all wood whether cut up or fashioned or hollowed out for any purpose or not; and 2. (7) 'tree' includes palms, bamboos, stumps, brushwood and canes. 63. The above judgment of this Court was based on 'consideration of definition of timber and tree' as given in Section 2 (6) & 2 (7) . This Court held that definition of timber included tree and all wood whether cut or fashioned or hollowed out for any purposes. This Court held that said definition of timber cannot be read in definition of tree which includes Bamboo hence, fashioned Bamboos are not included in the definition of tree. The Bamboo mat was thus he....
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....e nature and character of the stone remains the same, even after, crushing the boulders into small stones, dust etc. Reliance by the writ Petitioner is also placed on judgment in (2003) 3 SCC 122, Tej Bahadur Dube (Dead by L.Rs.) v. Forest Range Officer F.S. (S.W.), Hyderabad. In the above case, the Appellant was charged for violation of Rule 3 to 7 of the A.P. Sandalwood and Red Sanderswood Transit Rules, 1969. The Assessee was found transporting finished sandalwood products. He was charged with the violation of aforesaid rules. Assessee's case was that he has obtained permission of the authorities for converting sandalwood purchased by him into various types of handles which are ultimately used in other sandalwood handicrafts. This Court held that sandalwood products which have been converted into such products after obtaining proper permission was not prohibited, in para 6 following was held: 6. As noticed above, the original Appellant was a holder of a licence to deal in and stock sandalwood. From the material on record, it is seen that the said Appellant had obtained necessary permit from the competent authorities for converting the sandalwood purchased by him into vario....
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....of various grades or not, was the question under consideration. After noticing the various dictionary meanings of caoutchouc, it was held that since processing does not result in bringing out a new commodity but it preserves the same and rendered it fit for markets, it does not change its character hence, it remained a Forest Produce. Thus rubber sheets converted from caoutchouc continue to be a Forest Produce. In the above case, this Court has also held that a 'test of commercial parlance' by considering entries in sales tax is not applicable while considering the definition of Forest Produce. 68. The Court observed that the definition of Forest Produce is in technical or botanical sense. The above judgment fully supported the contention of the State that while considering the definition of the Forest Produce, scientific and botanical sense has to be taken into consideration and commercial parlance test may not be adequate in such cases. 69. We thus are of the view that judgment of Division Bench of the Allahabad High Court dated 27.04.2005 in Kumar Stone Works deserved to be approved and judgment of Uttarakhand dated 01.07.2004 in Kumaon Stone Crusher deserves to be set....
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....ontext. In the present case statutory context of Forest Produce as defined in Act, 1927 has to be taken in its botanical and scientific sense. 73. We thus conclude that the Transit Fee on marble slabs and tiles cannot be denied and the State did not commit any error in demanding the Transit Fee on transit of aforesaid goods. 74. It goes without saying that on forest produce which are exempted by notification issued under Proviso to Rule 3 of 1978, no transit fee is leviable. One of such notification dated 29.03.2010 has been brought on record. X. Whether coal (and its various varieties) , lime stone, dolomite, fly ash, clinker, gypsum, veneer and plywood are forest produce? 75. Coal is formed from plant substances preserved from complete decay in a normal environment and later altered by various chemical and physical agencies. There are four stages in coal formation: peat, lignite, bituminous and anthracite. The stage depends upon the conditions to which the plant remains are subjected after they were buried-the greater the pressure and heat, the higher the rank of coal. Higher-ranking coal is denser and contains less moisture and gases and has a higher heat value than lower-ra....
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....which cuts out thin sheets of wood from the log. That when the logs reaches a certain diameter of thickness, the same can no longer be suitable for extraction by the machines and unutilized wood is left behind in the process of slicing as well. Essential character of the product does not change, hence, it comes within the definition of timber and forest produce. XI. FOREST ACT 1927 & MMDR ACT, 1957 83. We now proceed to consider the impact of 1957 Act on Forest Act, 1927 and the Transit Fee Rules 1978 framed Under Section 41 of 1927 Act. The Indian Forest Act, 1927 is a pre-constitutional legislation enacted by Indian legislature as per Section 63 of Government of India Act, 1915. 1927 Act was the law enforced in the territory of India immediately before the commencement of the Constitution and by virtue of Article 372 of the Constitution of India, 1927 Act continues in force until altered or repealed by a competent legislation. The 1927 Act was enacted to consolidate the law relating to forests, the transit of forest-produce and the duty leviable on timber and other forest-produce. The 1957 Act was enacted for Regulation of mines and development of minerals under the control of ....
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....cause the State Legislature had no jurisdiction to pass the law. The limitation imposed by the latter part of Entry 23 is a limitation on the legislative competence of the State Legislature itself. This position is not in dispute. 88. The validity of 1957 Act was considered in the context of Industries (Development and Regulation) Act, 1951 and Mines and Minerals (Development and Regulation) Act, 1948. This Court repelled challenge to the 1957 Act on the ground that the declaration under 1948 Act was not referable to Entry 54. 89. The next judgment which needs to be considered is State of Orissa v. M.A. Tulloch and Co., 1964 (4) SCR 461. Orissa Mining Areas Development Fund Act, 1952 came for consideration in reference to Mines and Minerals (Development and Regulation) Act, 1957. This Court held that 1952 Act was enacted by virtue of legislative power under Entry 52 of List II whereas 1957 Act was enacted in reference to Entry 54 of List I. This Court held that Central Act 1957 contained a declaration as contained in Section 2 which is to the following effect: Section 2. Declaration as to the expediency of Union control.-It is hereby declared that it is expedient in the public ....
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....fore this Court for consideration wherein Article 254 was also considered. 94. A Constitution Bench of this Court in B.V. Patankar and Ors. v. C.G. Sastry AIR 1961 SC 272, had occasion to consider Mysore House Rent and Accommodation Control Order, 1948, which was a pre-constitution law and by Part B States (Laws) Act, 1951 extended the operation of Transfer of Property Act, 1882 in the State of Mysore. In the above case arguments were raised that the House Rent and Accommodation Control Order, 1948 as extended in Mysore from April, 1951 became repugnant and was repealed. It was held that the pre-constitutional law which was saved by Article 372 remained unaffected by Article 254. Following was stated in paragraph 7: 7.....The argument, therefore, that as from April 1, 1951, as a result of repugnancy the House Rent Control Order of 1948 stood repealed must be repelled as unsound and cannot be sustained, because it was an existing law which was saved by Article 372 of the Constitution and remained unaffected by Article 254.... 95. In Pankajakshi (Dead) Through Legal Representatives and Ors. v. Chandrika and Ors. 2016 (6) SCC 157, a Constitution Bench of this Court had occasion to....
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.... find out as to whether the 1927 Act and Rules, 1978 framed thereunder survive even after enforcement of 1957 Act, we have not to look into Article 254 but we have to find out as to whether the above pre-constitutional law is altered or repealed or amended by a competent legislature. To find out this competent legislation as contemplated by Sub-clause (1) of Article 372 in the context of pre-constitutional law the nature and content of pre-constitutional law has to be found out. There cannot be any dispute that Act, 1927 was enacted to consolidate the law relating to forests, the transit of forest-produce and the duty leviable on timber and other forest-produce. Essentially the 1927 Act is related to the forest. In the Constitution initially the forest was in Entry 19 of List II. Thus, it was the State legislature which was competent to alter or repeal or amend the said law. Various amendments in the 1927 Act were made by the State of U.P. in different provisions of 1927 Act in exercise of its legislative power as conferred by List II. 97. By the Constitution (Forty-second Amendment) Act, 1976, with effect from 03.01.1977 Entry 19 was omitted from List II and transferred in List I....
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.... by implication. But it is an equally well-settled principle of law that there is a presumption against an implied repeal. Upon the assumption that the legislature enacts laws with a complete knowledge of all existing laws pertaining to the same subject the failure to add a repealing Clause indicates that the intent was not to repeal existing legislation. Of course, this presumption will be rebutted if the provisions of the new act are so inconsistent with the old ones that the two cannot stand together. As has been observed by Crawford on Statutory Construction, p. 631, para 311: There must be what is often called 'such a positive repugnancy between the two provisions of the old and the new statutes that they cannot be reconciled and made to stand together'. In other words they must be absolutely repugnant or irreconcilable. Otherwise, there can be no implied repeal... for the intent of the legislature to repeal the old enactment is utterly lacking. The reason for the Rule that an implied repeal will take place in the event of clear inconsistency or repugnancy, is pointed out in Crosby v. Patch and is as follows: As laws are presumed to be passed with deliberation,....
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....ion arises when two statutes become inconsistent to the extent that competence of one is not possible without disobedience to other. 102. The principles for ascertaining the inconsistency/repugnancy between two statutes were laid down by this Court in Deep Chand v. State of U.P and Ors. AIR 1959 SC 648. K. Subba Rao, J. speaking for the Court stated following in paragraph 29: 29......Repugnancy between two statutes may thus be ascertained on the basis of the following three principles: (1) Whether there is direct conflict between the two provisions; (2) Whether Parliament intended to lay down an exhaustive code in respect of the subject-matter replacing the Act of the State Legislature and (3) Whether the law made by Parliament and the law made by the State Legislature occupy the same field. 103. The Constitution Bench in State of Kerala and Ors. v. Mar Appraem Kuri Co. Limited and Anr. 2012 (7) SCC 106, had occasion to consider when by a subsequent enactment the case of pro tanto repeal can be read. In the above case State of Kerala had enacted Kerala Chitties Act, 1975. The Seventh Schedule of the Constitution, List III Entry 7 pertains to contracts including special fo....
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.... of Regulation of Mines and Development of Minerals, it is provided that no mining operation can be undertaken without the license or permit as per Section 4. Provisions relating to transport or storage are only incidental and ancillary in nature. But the main point of difference in the subject matter of legislation under the 1957 Act is "Regulation of Mines and Development of Minerals". 106. When the minerals are forest-produce by definition under the 1927 Act Under Section 2 (4) , validity of which is not challenged, forest-produce and its transit is altogether a different subject matter than the subject matter governed by 1957 Act. The object of the two legislations is different. The Regulation is different. The Forest Act comprehensively deals with forest and forest wealth with a different object and the 1957 Act deals with mines and mineral wealth. 107. Much emphasis has been given by the counsel for the writ Petitioners on Section 4 (1A) and Section 23C. Section 4 (1A) is couched in negative as follows: No person shall transport or store or cause to be transported or stored any mineral otherwise than in accordance with the provisions of this Act and the Rules made thereun....
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....on 2 Sub-section (4) of the Act includes peat, surface oil, rock and minerals (including lime-stone, laterite, mineral oils, and all products of mines or quarries) . 116. The State has been empowered to regulate transit of forest-produce Under Section 41 of the Act. Regulation of transit of forest-produce is a larger activity covering transit of different kinds of forest-produce including minerals. Both the legislations being on different subject matters the provisions relating to transportation of minerals as contained in 1957 Act can at best be said to be incidentally affecting the 1927 Act, incidental encroachment of one legislation with another is not forbidden in the constitutional scheme of distribution of legislative powers. 117. This Court has time and again emphasised that in the event any overlapping is found in two Entries of Seventh Schedule or two legislations, it is the duty of the Court to find out its true intent and purpose and to examine the particular legislation in its pith and substance. In Kartar Singh v. State of Punjab, 1994 (3) SCC 569, paragraphs 59, 60 and 61 following has been held: 59....But before we do so we may briefly indicate the principles tha....
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.... its approval the observations of Sir Maurice Gwyer C.J. in Subrahmanyan Chettiar v. Muttuswami Goundan, (supra) above quoted, Lord Porter observed: Their Lordships agree that this passage correctly describes the grounds on which the Rule is founded, and that it applies to Indian as well as to Dominion legislation. No doubt experience of past difficulties has made the provisions of the Indian Act more exact in some particulars, and the existence of the Concurrent List has made it easier to distinguish between those matters which are essential in determining to which list particular provision should be attributed and those which are merely incidental. But the overlapping of subject-matter is not avoided by substituting three lists for two, or even by arranging for a hierarchy of jurisdictions. Subjects must still overlap, and where they do, the question must be asked what in pith and substance is the effect of the enactment of which complaint is made, and in what list is its true nature and character to be found. If these questions could not be asked, must beneficent legislation would be satisfied at birth, and many of the subjects entrusted to Provincial legislation could never....
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.... there is an incidental encroachment in respect of small area of operation of two legislations. Legislation cannot be struck down as being beyond legislative competence nor it can be held that one legislation repeals the other. Thus, when we look into the pith and substance of both the legislations, it is clear that they operate in different field and the submission cannot be accepted that 1957 Act impliedly repeals the 1927 Act in so far as Section 41 and 1978 Rules are concerned. 121. We, thus, conclude that the submission of learned Counsel for the writ Petitioners that in view of the 1957 Act especially as amended by Act 38 of 1999, the provisions of 1927 Act & 1978 Rules have become void, inoperative and stand repealed, cannot be accepted. XII. Interpretation of Section 2 (4) (b) of 1927 Act 122. The meaning of words 'brought from' as used in Section 2 Sub-section (4) Sub-clause (b) has become very significant in the present case since it is a case of large number writ Petitioners that the goods which they are transiting did not originate from any forest area rather they have been taken from non-forest area, hence, there is no liability to pay transit fee. Whether f....
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....from the forest, is found in the forest while 'brought from' means that items having origin in forest have moved out from the forest. 125. The 1978 Rules framed Under Section 41 of the 1927 Act also reflect that Rule making authority has also understood the meaning of word 'brought from' in the above sense. As per Rule 3 no forest produce shall be moved to or from or within the State of U.P. except or without a transit pass in the form in the Schedule A. The Schedule A of the Rules contains the form. Item No. 1 of the form is as follows: 1. Locality of origin; (a) name and situation of forest, (b) name of forest owner. 126. The above Item No. 1 also thus clearly refers to locality of origin of the produce and form requires name and situation of forest and name of the forest owner. Thus, locality of origin is related to a forest which supports the interpretation as placed by us. 127. Learned Counsel for the writ Petitioners have also placed reliance on a judgment of the Division Bench of the Karnataka High Court in Yeshwant Mony Dodamani and Ors. (1962 CRLJ 832) . The Division Bench had occasion to consider the definition of forest produce as contained in Su....
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....es existing in the forest. The distinctive feature is either the existence or the growth or deposit within the area of a forest and not their discovery by some living person. The idea underlying the expression 'brought from' is equally emphatic of the source of the thing so brought being within the area of a forest. The conveyance or transport involved in the idea of a thing being brought undoubtedly has its beginning in the forest by virtue of the use of the expression 'from.' 128. We are of the view that Karnataka High Court has correctly interpreted the word "brought from" as occurring in Clause (b) of Section 2 (4) . We are, thus, of the view that the word 'brought from' has to be understood in the above manner. We, however, may clarify that the origin of forest produce may be in any forest situate within the State of U.P. or outside the State of U.P. Since, transit pass is necessary as per Rule 3 for moving a forest produce into or from or within the State of U.P. Any produce, goods entering within or the outside the State which is the forest produce having originated in the forest requires a transit pass for transiting in the State of U.P. Conversely,....
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....the Uttarakhand High Court in M/s. Gupta Builders cannot be approved. 132. It is relevant to note that even before this Court's definition in T.N. Godavarman case (supra) in expansive manner, the forest was understood by the State legislature in a very wide manner. This is reflected by definition of forest and forest land as given in Section 38A inserted by Uttar Pradesh Amendment Act 5 of 1956 with effect from 3.12.1955. The definitions of 'forest' as given in Section 38A (b) and 'forest land' in 38A (c) of 1927 Act are as follows: 38A (b) "forest" means a track of land covered with trees, shrubs, bushes or woody vegetation whether of natural growth or planted by human agency, and existing or being maintained with or without human effort, or such tract of land on which such growth is likely to have an effect on the supply of timber, fuel, forest-produce, or grazing facilities, or on climate, stream-flow, protection of land from erosion, or other such matters and shall include- (i) land covered with stumps of trees of a forest; (ii) land which is part of a forest or was lying within a forest on the first day of July, 1962; (iii) such pasture land, water....
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.... 136. For finding the consequences of notification dated 10.02.1960 proviso to the Sub-section (3) of Section 29 read with Section 80A, referred in the notification needs to be looked into. Section 29 contained in Chapter IV (deals with protected forests) is quoted below: 29. Protected Forests.- (1) The [State Government] may, by notification in the [official gazette], declare the provisions of this Chapter applicable to any forest-land or waste-land which is not included in a reserved forest but which is the property of the Government, or over which the Government has proprietary rights, or to the whole or any part of the forest-produce of which the Government is entitle. (2) The forest-land and waste-lands comprised in any such notification shall be called a "protected forest". (3) No such notification shall be made unless the nature and extent of the rights of Government and of private persons in or over the forest-land or waste-land comprised therein have been inquired into and recorded at a survey or settlement, or in such other manner as the [State government] thinks sufficient. Every such record shall be presumed to be correct until the contrary is proved. Provided ....
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..... Both sides of canals or both sides of the roads can be declared as protected forests for maintenance and management of the same by applying the different provisions of the Act. Maintenance of forests on both sides of canals is with the object and purpose of environment protection. Maintenance of protected forests on both the sides of the road is for the same purpose and object, and also with object to combat the vehicular pollution and to improve the environment and ecology. By notification Under Section 80A, it cannot be accepted that road itself has been declared as protected forest. The object is not to declare the road as protected forest so as to apply different provisions of 1927 Act on the roads itself. The interpretation put by the State that roads declared by notification dated 10.02.1960 have become protected forests is not compatible with provisions of Chapter IV. The State cannot exercise its power Under Section 30 nor any Rules Under Section 32 can be framed by the State for the roads itself. The maintenance and Regulation of roads are governed by different statutes and principles of law. We, thus, reject the submissions of learned Counsel for the State that merely b....
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....e forest produce along-with the two copies of the pass (duplicate and triplicate) shall be produced for examination Under Sub-rule (4) of Rule 6 and for payment of transit fee on the forest produce calculated at the following rates; corresponding receipt shall be granted in the form given in Schedule C- (i) per lorry load of timber or other forest produce ......Rs. 5.00 per tonne of capacity (ii) per cart load of timber or other forest produce ......Rs. 2.50 (iii) per camel load of timber or other forest produce ......Rs. 1.25 (iv) per pony load of timber or other forest produce ......Rs. 0.50 (v) per head load of timber or other forest produce ......Rs. 0.25 143. Referring to Chawki or depot established under Rule 15 and specified under proviso (ii) to clause (b) , Sub-rule (1) of Rule 4, learned Counsel contends that transit passes as referred to under proviso (ii) to clause (b) of Sub-rule (1) of Rule 4 are only to be charged with transit fees. 144. Rule 4 as noticed above contains provisions regarding officers and persons who have power to issue passes. Under Rule 4 (1) (a) for the forest produce belonging to government or not owned by any other person various offic....
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....of the rule, and is not inconsistent with the rule, but makes explicit what is implicit in the rule. 145. This Court has also occasion to consider the value of marginal note in several cases. In 2004 (2) SCC 579, N.C. Dhoundial v. Union of India and Ors., It was laid down in paragraph 15 that heading or marginal note can be relied upon to clear any doubt or ambiguity in the interpretation of the provision and to listen the legislative intent. Following was laid down in para 15: 15....The language employed in the marginal heading is another indicator that it is a jurisdictional limitation. It is a settled Rule of interpretation that the Section heading or marginal note can be relied upon to clear any doubt or ambiguity in the interpretation of the provision and to discern the legislative intent (vide Uttam Das Chela Sunder Das v. Shiromani Gurdwara Parbandhak Committee and Bhinka v. Charan Singh). 146. In event the interpretation as put by learned Counsel for the Petitioner is accepted that fee under Rule 5 is chargeable only on passes obtained under Rule 4 (1) (b) only, the easiest manner to avoid payment of transit fee is not to apply in form B for obtaining the booklet for is....
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....965 with effect from 25.11.1965. By the aforesaid U.P. Act 23 of 1965 Section 5 has been substituted to the following effect: Section 5. Bar of accrual of forest rights.- After the issue of the notification Under Section 4 no right shall be acquired in or over the land comprised in such notification, except by succession or under a grant or a contract in writing made or entered into by or on behalf of the Government or some person in whom such right was vested when the notification was issued; and no fresh clearings for cultivation or for any other purpose shall be made in such land, nor any tree therein felled, girdled, lopped, tapped, or burnt, or its bark or leaves stripped off, or the same otherwise damaged, nor any forest-produce removed therefrom, except in accordance with such Rules as may be made by the State Government in this behalf. 150. Section 5 clearly provides that after the issue of the notification Under Section 4 no forest produce can be removed therefrom, except in accordance with such Rules as may be made by the State Government in this behalf. The Regulation by the State thus comes into operation after the issue of notification Under Section 4 and thus the s....
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....4. It is, further, relevant to note that the High Court in its judgment dated 11.11.2011 has issued following directions in the last paragraph of the judgment which contained operative portion as below: 188. All the writ petitions are consequently allowed. The Notifications dated 20.10.2010, by which the 'U.P. Transport of Timber and Other Forest Produce Rules, 1978', was amended by the 4th Amendment; and the Notification dated 4.6.2011, by which the 'U.P. Transport of Timber and Other Forest Produce Rules, 1978' was amended by the 5th Amendment, are quashed. It will be open to the Respondents to impose and collect the transit fees on such forest produce prevailing on such rates as it was being charged prior to the 4th Amendment to the Rules notified on 20.10.2010, i.e. at the rate of Rs. 38/- per tonne of capacity per lorry load of timber or other forest produce; Rs. 19/- per tonne of capacity per cart load of timber or other forest produce; Rs. 1.25 per camel load of timber and other forest produce; Rs. 4/- per pony load of timber or other forest produce and Rs. 2/- per head load of timber or other forest produce. We also declare that the imposition of transit f....
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....pulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered". This definition brings out, in our opinion, the essential characteristics of a tax as distinguished from other forms of imposition which, in a general sense, are included within it. It is said that the essence of taxation is compulsion, that is to say, it is imposed under statutory power without the taxpayer's consent and the payment is enforced by law (Vide Lower Mainland Dairy v. Orystal Dairy Ltd. 1933 AC 168.). The second characteristic of tax is that it is an imposition made for public purpose without reference to any special benefit to be conferred on the payer of the tax. This is expressed by saying that the levy of tax is for the purposes of general revenue, which when collected form part of the public revenues of the State. As the object of a tax is not to confer any special benefit upon any particular individual, there is, as it is said, no element of quid pro quo between the taxpayer and the public authority (See Findlay Shirras on "Science of Public Finance", Vol. p. 203.) . Another feature of taxation is that as it is a part of the com....
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....person in return for the privilege that is conferred. A most common illustration of this type of cases is furnished by the licence fees for motor vehicles. Here the costs incurred by the Government in maintaining an office or bureau for the granting of licences may be very small and the amount of imposition that is levied is based really not upon the costs incurred by the Government but upon the benefit that the individual receives. In such cases, according to all the writers on public finance, the tax element is predominant (Vide Seligman's Essays on Taxation, p. 409.) , and if the money paid by licence holders goes for the upkeep of roads and other matters of general public utility, the licence fee cannot but be regard as a tax. 159. In another Constitution Bench in Corporation of Calcutta and Anr. v. Liberty Cinema AIR 1965 SC 1107, following was stated in paragraphs 16 and 17: 16. Both these cases discussed other tests besides the requirement of the rendering of services for determining whether a levy is a fee, but with these we are not concerned in the present case. These cases also discussed the correlation of the costs of the services to the levy but with also we ar....
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....es and that in the case of regulatory fees, no quid pro quo need be established. Following was held in paragraph 15: 15. This decision has been followed in several decisions, including the recent decisions of this Court in Vam Organic Chemicals Ltd. v. State of U.P., 1997 (2) SCC 715 and Bihar Distillery v. Union of India, 1997 (2) SCC 727. The High Court was, therefore, not right in proceeding on the assumption that every fee must necessarily satisfy the test of quid pro quo and in declaring the fees levied by sub-rules (3) and (4) of Rule 3 as bad on that basis. Since we hold that the fees levied by the said sub-rules is regulatory in nature, the said levy must be held to be valid and competent, being fully warranted by Section 41. 161. This Court held that transit fee is a regulatory fee in nature. 162. In Secunderabad Hyderabad Hotel Owners' Assn. v. Hyderabad Municipal Corporation, 1999 (2) SCC 274, where this Court held that a fee which is charged for Regulation for such activity would be validly classified as a fee and not a tax although no service is rendered. In paragraph 9 following was stated: 9. It is, by now, well settled that a licence fee may be either regu....
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.... question came up for consideration in relation to the State of Tripura. It was held that Sections 41 and 76 of the Act vest total control over the forest produce in the State Government and empower it to regulate the transit of all timber or other forest produce for which purpose the State Government is also empowered to make the Rules. The decision of the High Court invalidating the levy of application fee in the said case on the ground that the State had not established that the services were rendered in lieu of the said fee, was reversed by this Court holding that the fee was regulatory and not compensatory. Reference may be made to the decision in the case of Corporation of Calcutta v. Liberty Cinema wherein it was held that the expression licence fee does not necessarily mean a fee in lieu of services and in case of regulatory fee no quid pro quo need be established. Following Liberty Cinema case similar views have been expressed in Secunderabad Hyderabad Hotel Owners' Assn. v. Hyderabad Municipal Corporation and P. Kannadasan v. State of T.N. 10. The transit fee under Rule 5 is clearly regulatory and, thus, it was not necessary for the State to establish quid pro quo. ....
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....ded that no transit pass hall be required for the removal- (iii) of any forest produce which is being removed for bona fide consumption by any person in exercise of a privilege granted in this behalf by the 'State Government' or of a right recognised under this Act, within the limits of a village in which it is produced; (iv) of forest produce by contractor's agency from the forests managed by the Forest Department, in which case the movement shall be regulated by the relevant conditions of sale and terms of the corresponding agreement deed executed by the buyer; (v) of such forest produce as may be exempted by the State Government from the operation of these Rules by notification in the official Gazette. 167. Rule 5 prescribes for fees payable for different classes of passes. Rule 5 (as originally framed) is as below: 5. Fees payable for different classes of passes. - At the Check Chowki or depot established under Rule 15 and specified under proviso (ii) to Clause (b) of Sub-rule (1) of Rule 4, the forest produce alongwith the two copies of the pass (duplicate and triplicate) shall be produced for examination Under Sub-rule (4) of Rule 6 and for payment of tra....
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....the effect of Third, Fourth & Fifth Amendment Rules with regard to a lorry load having different capacities. The chart is as follows: 171. The above chart indicates that by Third Amendment Rules which was enforced from 14.06.2004 that is after 26 years of enforcement of Transit Rule, the Transit Fee was increased 7 times. Whereas by Fourth amendment which was imposed with effect from 20.10.2010. Transit Fee was increased more than 16 times. As per Fifth amendment rules, Transit Fee was based on ad-valorem basis and although the minimum amount was fixed but there was no cap on the maximum amount. Thus Transit Fee payable was on the value of all forest produce. Whereas with regard to timber ad-valorem was at the rate of 5 per cent but with regard to coal, lime stone, sand, stone, bajri & other minerals ad-valorem is at the rate of 15 per cent. 172. High Court after considering the impact of Fifth Amendment has held that by Fifth Amendment the increase in Transit Fee is more than ten times. The Fifth Amendment Rule was issued in six months of issuance of Fourth Amendment Rule. In the affidavit filed before the High Court the State has pleaded that every year expenditure increases 10....
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....h needs to be noted is Sreenivasa General Traders and Ors. v. State of Andhra Pradesh and Ors. (1983) 4 SCC 353. In this case, the Court after referring to earlier judgments of this Court laid down the following in para 31: 31. The traditional view that there must be actual quid pro quo for a fee has undergone a sea change in the subsequent decisions. The distinction between a tax and a fee lies primarily in the fact that a tax is levied as part of a common burden, while a fee is for payment of a specific benefit or privilege although the special advantage is secondary to the primary motive of Regulation in public interest. If the element of revenue for general purpose of the State predominates, the levy becomes a tax. In regard to fees there is, and must always be, correlation between the fee collected and the service intended to be rendered. In determining whether a levy is a fee, the true test must be whether its primary and essential purpose is to render specific services to a specified area or class; it may be of on consequence that the State may ultimately and indirectly be benefited by it. The power of any legislature to levy a fee is conditioned by the fact that it must b....
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....ith regard to above collection and expenses has submitted that by collection of Transit Fee State was trying to meet the entire expenses of Forest Department and the expenses of entire establishment and no details were given of expenses incurred for Regulation of Transit Fee separately. It is submitted that Transit Fee is not the only source of Forest Department to meet the expenses of entire establishment of the Forest Department. 181. Shri Udit Chandra, learned Counsel appearing for some of the Petitioners has referred to a Division Bench judgment of Allahabad High Court in Civil Misc. Writ Petition No. 72465 of 2011-M/s. Singh Timber Trader and Ors. v. State of U.P. and Ors. (reported in 2016 (1) Allahabad Daily Judgment 174) . It is submitted that the writ Petitioners in the above case, the manufacturers of plywood and veneer prayed for quashing of the notification dated 20.10.2010 by which Rule 11 of the U.P. Establishment and Regulation of Saw Mills Rules, 1978 had been substituted by U.P. Establishment and Regulation of Saw Mills (Fourth Amendment) Rules, 2010. By the said Fourth Amendment, Rules, 2010 licence fee for Saw Mills had been enhanced by 15 times from Rs. 5,000/-....
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.... 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 cubic feet basis and thereafter item wise on ad valorem 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. 184. The aforesaid figures, as noticed in paragraph 85, were expressly considered by the High Court in para 181 of the judgment where following observation has been made: 181....The collections in 2010-11, before the 4th and 5th Amendments to the Rules of 1978 was 11288. 2 lacs, whereas the expenditure o....
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....m an exercise of the police power. The "police power" is different from the "taxing power" in its essential principles. The power to regulate, control and prohibit with the main object of giving some special benefit to a specific class or group of persons is in the exercise of police power and the charge levied on that class to defray the costs of providing benefit to such a class is "a fee". Therefore, in the aforestated judgment in Kesoram case it has been held that where Regulation is the primary purpose, its power is referable to the "police power". If the primary purpose in imposing the charge is to regulate, the charge is not a tax even if it produces revenue for the Government. But where the Government intends to raise revenue as the primary object, the imposition is a tax. In the case of Synthetics & Chemicals Ltd. v. State of U.P. it has been held that Regulation is a necessary concomitant of the police power of the State and that though the doctrine of police power is an American doctrine, the power to regulate is a part of the sovereign power of the State, exercisable by the competent legislature. However, as held in Kesoram case in the garb of Regulation, any fee or lev....
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....ee of correlation. 190. The Court also addressed the issue as to whether advalorem principle which is appropriate to taxation would be inapplicable in the context of an impost which is meant as a contribution towards the costs of service. The Court held that in view of the inherent complexity of these fiscal adjustments, courts give a larger discretion to the legislature in the matter of its preferences of economic and social policies. The Court further held that the question of the measure of tax or a fee should be advalorem or ad quantum is again a matter of fiscal policy. The Court ultimately held that although advalorem principle which may not be an ideal basis for distribution of a fee but no unconstitutionality or infirmity can be incurred. However, the Court has held that 'fee' meant to defray expenses of services cannot be applied towards objects of general public utility. In paragraph 96 following is stated: 96. The power to raise funds through the fiscal tool of a fee is not to be confused with a compulsion so to do. While "fee" meant to defray expenses of services cannot be applied towards objects of general public utility as part of general revenues, the conv....
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....tious matter, it is registered as a suit and proceeded with accordingly. If in respect of all other suits of whatever nature and complexity an upper limit of Rs. 15,000 on the court fee is fixed, there is no logical justification for singling out this proceeding for an ad valorem impost without the benefit of some upper limit prescribed by the same statute respecting all other litigants. Neither before the High Court -- nor before us here -- was the impost sought to be supported or justified as something other than a mere fee, levy of which is otherwise within the State's power or as separate "fee" from another distinct source. It is purported to be collected and sought to be justified only as court fee and nothing else. 92. The discrimination brought about by the statute, in our opinion, fails to pass the constitutional muster as rightly pointed out by the High Court. The High Court, in our opinion rightly, held: There is no answer to this contention, except that the legislature has not thought it fit to grant relief to the seekers of probates, whereas Plaintiffs in civil suits were thought deserving of such an upper limit. The discrimination is a piece of class legislatio....
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....d amendment to the Rules mentioned in the earlier part of this order. 2) Any such recovery shall remain subject to the ultimate outcome of present petitions pending in this Court. 3) In the event of writ Petitioners/private parties succeeding in their cases, the amount deposited/recovered from them shall be refunded to them with interest at the rate of 9% p.a. from the date the deposit was made till actual refund. 4) The State shall maintain accurate amount of recovery made and the nature and the quantum/quantity of the produce removed by the private parties concerned. 5) Even in the 2nd batch of cases arising out of Writ Petition No. 975 of 2004 whereby the High Court has struck down the 4th and 5th amendment to the Rules, the State shall be free to make recoveries in terms of the 3rd amendment in regard to the forest produce removed from within the State of U.P. The operation of the orders passed by the High Court shall to that extent remain stayed. 6) This modification shall not apply to exempted goods or industrial by products like Klinker and fly ash. 196. By a subsequent order dated 26.04.2016, this Court further modified the interim order dated 29.10.2013. The ord....
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....question of considering any claim of refund of any transit fee prior to 01.05.2016. The transit fee is an indirect tax and the State is entitled to consider the claim of refund provided the transit fee has not passed on to the consumer which may result into unjust enrichment. Thus we permit the State to consider any claim of refund of transit fee on the condition that State shall permit refund only after being satisfied that there is no passing of the transit fee to the ultimate consumer and refund may not result in unjust enrichment. XIX. CIVIL APPEALS OF STATE OF M.P. FILED AGAINST THE JUDGMENT DATED 14.05.2007 200. The Writ Petitions were filed by the Respondents to the Civil Appeals in the High Court of Madhya Pradesh praying for quashing the Notification dated 28.05.2001 issued by the State of Madhya Pradesh fixing the amount of Transit Fee for issuance of Transit Pass in exercise of power under Rule 5 of the M.P. Transit (Forest Produce) Rules, 2000 (hereinafter referred to as 'Rules, 2000') . Writ Petitioners have also prayed for declaring Section 2 (4) (b) (iv) and Section 41 of Indian Forest Act, 1927 (hereinafter referred to as 'Act, 1927') as unconstitu....
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....declared the Notification dated 28.05.2001 as beyond the scope of Section 41 of Act, 1927. 204. Learned senior Counsel in support of the Appellants contends that the Act, 1927, the Transit Rules, 2000, and Act, 1957 operate in different fields and spheres and the mere incidental trenching or overlapping of the provisions of the State enactment will not render the State enactment unconstitutional. The view of the High Court that Notification dated 28.05.2001 is invalid and beyond the scope of Section 41 of Act, 1927 is erroneous. The Transit Pass is computed on the basis of weight/volume of the Forest Produce so as to maintain the consistency and transparency in computation of transit fees. The computation or measure of levy will never change the nature of the levy which in the present case is regulatory in nature. 205. The High Court having held that the Rules framed by the State Under Section 41 of the Act, 1927 operates in different fields and spheres from the MMDR Act, 1957 and the State government has the legislative competence to frame the rules, holding that the computation of fee on the basis of weight/volume of the Forest Produce is illegal, cannot be sustained. He furthe....
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....so noticed the judgment of this Court in Sudhir Ranjan Nath (supra) and Sitapur Packing Wood Suppliers (supra). In para 63 of the judgment following was held: 63...We have referred to two judgments of the Apex Court and we are of the considered opinion on that both the enactments operate in different areas. The operational sphere being different we conclude and hold that the submission that Section 2 (4) (b) (iv) and Section 41 should be declared ultra vires is sans substratum and we repel the same. 209. The Division Bench of the High Court further rejected the submission of the writ Petitioners impugning the Rule 5 of Rules, 2000 framed Under Section 41 of the Act, 1927. In para 71 & 72 following has been held: 71. On a perusal of the aforesaid form it is perceptible that there is mention of locality of storage, name and address of the owner, description of produce and quantity, name of place of transportation, route and barrier at which forest produce would be produced for check. On a perusal of the aforesaid form it is manifest that it pertains to forest produce at large. Fee can be levied but the fee must have nexus with the transit for checking in the context of forest go....
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....hus the fee is to be fixed for issue of a transit pass and a transit pass by no stretch of imagination can have any nexus with the unit of minerals in fact if we allow ourselves to say, it is said to be a gymnastic in the Rule making process to impose a fee on the minerals in the guise of collection of fee on transit pass. In fact it is a fee pertaining to minerals and not a fee on issue of transit pass. As we have scanned the anatomy of the provisions of both the enactments Rules framed there under and analysed the purport and import of the notification, the true nature and character of levy surface something different. The exact nature of levy cannot be marginalised by making a sweeping statement that is a measure of levy and the unit of minerals has been chosen as a rational basis as there is transportation by rope ways by land and by other means. The units chosen really tries to enter into the arena of Regulation and control. It may innocuous look to be a measure or standard of fee on transit but in essentiality it is a trespass into the area of Regulation and control. As has been stated earlier the 1957 Act is a regulatory Act and meant for minerals and minerals area developme....
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....for issue of transit pass as per the provisions of Rule 4. 214. The Rule provides for fixing of rates of fee for issue of Transit Pass. The word 'rate' has been defined in Advanced Law Lexicon by P. Ramanatha Aiyar, in the following words: Rate means a rate, cess or assessment the proceeds of which are applicable to public local purposes and leviable on the basis of a valuation of property, and includes any sum which, although obtained in the first instance by a precept, certificate or other instrument requiring payment from some authority or officer, is or can be ultimately raised out of a rate. 215. When the State is empowered to fix rates of fee, it can very well fix the fee on the quantity of Forest Produce. High Court having upheld both Section 41 of the Act, 1927 as well as Rule 5 of Rules, 2000, we see no reason as to how the notification issued under Rule 5 can be held to be beyond the powers of the State. 216. When the State is empowered to fix the rate of fee, it has latitude under the statute to adopt a basis, for fixation of rates of fee. It cannot be said that under the statute fee can be charged only to meet the expenses which are incurred for printing or....
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.... High Court in its judgment has held that both 1957 Act and 1927 Act operate in different fields. However, it had also made observations that imposing fee by fixing tonnage and cubic meter as unit had entered into Regulation and control, which is in the realm of the MMDR Act. In paragraph 74, following has been observed: 74....Though a stance has been taken that it is a regulatory fee and the State has to undertake many works for routes and environment and, therefore, it is to be regarded as regulatory fee but as we perceive, imposing fee by fixing tonnage and cubic meters as unit, it enters into the 'Regulation and control' which is in the realm of the MMDR Act, for it has impact on the mining activity and the primary purpose, as is patent, is to regulate the mineral. It is not for the purpose of regulating the transit of minerals but to have a regulatory measure of control of minerals. The difference between issue of transit pass for a fee has been galvanised into a fee on mineral unit which has a controlling effect on the development of minerals. 219. We have already found that 1927 Act and 1957 Act operate in different fields. State has power to regulate transit of f....
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.... be read to mean that both sides of the road have been declared as protected forest on which Chapter IV of the 1927 Act shall be applicable. VI. Rule 3 of 1978 Rules is not independent of Rule 5 of 1978 Rules. Transit fee is payable on all kinds of transit passes and cannot be confined only to transit passes as referred to in Rule 4 (1) (b) only. VII. After issuance of notification Under Section 4 of 1927 Act, removal of forest produce therefrom shall be governed by the Rules framed by the State in view of U.P. Act 23 of 1965 by which original Section 5 has been substituted in its application in the State of U.P. The fact that no notification Under Section 20 has been issued does not mean that restriction put by the State Government by Rules are not applicable. VIII. The Division Bench of the Allahabad High Court by its judgment dated 11.11.2011 has rightly struck down Fourth and Fifth Amendment Rules to 1978 Rules as being excessive and confiscatory in nature. IX. The notification dated 28.05.2001 issued by the State of Madhya Pradesh in exercise of power under Rule 5 of 2000 Rules cannot be said to be beyond the scope of Rule 5 of 2000 Rules and Section 41 of 1927 Act. The St....