TaxTMI 
TaxTMI 
1986 (8) TMI 58
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....ereinafter referred to as " the District Council "), appellant No. 1 herein. On April 20, 1968, the Secretary of the Executive Committee of the District Council issued a notification levying royalty in exercise of its power under the United Khasi and Jaintia Hills Autonomous District (Management and Control of Forests) Act, 1958 (Act I of 1959) (hereinafter referred to as " the Act "), on red pine, white pine and log pine timber grown in the private forests situated within the jurisdiction of the District Council at the rates specified therein. The notification reads thus: " No. JAD/FOR/68/26 Dated, Jowai, April 20, 1968. In exercise of the powers conferred under section 8 of the U. K. and J. Hills Autonomous District (Management and Control of Forests) Act, 1958, as adopted under the Jowai Autonomous District (Administration) Act, 1967, the Executive Committee of the Jowai Autonomous District Council is pleased to fix a flat rate of royalty for both red pine and white pine at 80 P. per cubit foot for all the squared log pine timber irrespective of the girth classes other than the pine timber that 'comes from private forests and for the squared log pine timber from the privat....
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....on were private forests and further held that the District Council had no constitutional authority to impose either royalty or tax or fee on private forests and that the notification dated April 20, 1968, issued under section 8 of the Act was ultra vires and not sanctioned by the Sixth Schedule to the Constitution. As consequence of the above finding, the High Court issued a writ of mandamus to the appellants (respondents in the writ petitions) restraining them from realising royalty from the respondents in respect of timber extracted by them from the two forests referred to above. Aggrieved by the judgments/orders passed by the High Court in the said writ petitions, the District Council and others, who were respondents in the writ petitions, have preferred these appeals to this court by special leave. The Autonomous District of Jowai was previously a sub-division of the United Khasi Jaintia Autonomous District and took the present shape of an autonomous district with effect from December 1, 1964, pursuant to a notification issued by the Governor of Assam on November 23, 1964. The District Council came into being on March 23, 1967, and in that very year it passed the jowai Au....
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....ince the commencement of the Constitution. They are applicable to the tribal areas within the jurisdiction of the District Council of jowai, appellant No. 1. in these appeals. Paragraph 1 of the Sixth Schedule to the Constitution provides that subject to the provisions of that paragraph, the tribal areas in each item of Parts I, II and III of the table appended to paragraph 20 of that Schedule shall be an autonomous District. If there are different Scheduled Tribes in an autonomous District, the Governor may, by public notification, divide the area or areas inhabited by them into autonomous regions. The Governor has been given power to alter the boundaries of the autonomous Districts and the procedure for reorganisation of the autonomous District is given in sub-paragraph (3) of Paragraph of the Sixth Schedule to the Constitution. Paragraph 2 of that Schedule provides that there shall be a District Council for each autonomous District consisting of not more than thirty members, of whom not more than four persons shall be nominated by the Governor and the rest shall be elected on the basis of adult suffrage. There shall be a separate Regional Council for each area constituted as ....
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....l or water-course for the purpose of agriculture ; (d) the regulation of the practice of jhum or other forms of shifting cultivation ; (e) the establishment of village or town committees or councils and their powers; (f) any other matter relating to village or town administration, including village or town police and public health and sanitation; (g) the appointment of succession of Chiefs or Headmen: (h) the inheritance of property; (i) marriage and divorce; (j) social customs. (2) In this paragraph, a 'reserved forest' means any area which is a reserved forest under the Assam Forest Regulation, 1891, or under any other law for the time being in force in the area in question. (3) All laws made under this paragraph shall be submitted forthwith to the Governor and, until assented to by him, shall have no effect." "8. Powers to assess and collect land revenue and to impose taxes.(1) The Regional Council for an autonomous region in respect of all lands within such region and the District Council for an autonomous District in respect of all lands within the district except those which are in the areas. under the authority of Regional Councils, if any, with....
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....e Constitution have been enumerated. While the subjects relating to taxation are dealt with separately in paragraph 8, paragraph 3 does not contain any subject which authorises the District and Regional Councils to levy taxes. Paragraph 3 confers powers on the said Councils to make laws only to regulate matters specified therein. Paragraph 3(1)(b) empowers the District Council to make laws with respect to the management of any forest not being a reserved forest. Paragraph 3(2) defines a " reserved forest " as any area which is a reserved forest under the Assam Forest Regulation, 1891, or under any other law for the time being in force in the area in question. It may also be noted that there is no specific reference to the power to levy any fees in respect of any matter mentioned in paragraph 3 in the Sixth Schedule to the Constitution similar to the corresponding provisions in the penultimate entry in List I and the last entry in the other two Lists in the Seventh Schedule to the Constitution. But having regard to the nature of the fee which is an amount levied as quid pro quo for services rendered, the power to levy fees in respect of any of the matters mentioned in paragraph 3 sh....
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....f the Act shall be managed by the owners thereof subject to the rules that may be framed by the District Council from time to time in the general interest of the forestry of the district. Private forests are forests belonging to an individual or clan or joint clans which are grown or inherited by him or them in recognised private land (Ri Kynti). In section 4 of the Act, as regards removal of forest produce, it is provided thus : " Removal of forest Produce.-No timber or forest produce shall be removed for the purpose of sale, trade or business from Protected forests, Green blocks, Raid forests without the order in writing of the Forest Officer of the District Council which order may be given only on previous receipt of the royalty on such timber or forest produce at rates as may be prescribed by the District Council. Provided : (i) that the royalty on timbers of reserved trees from Raid forests shall be half the full rates in respect of persons living in the neighbouring area of the forest where the timber is needed for their own domestic use, i.e., for building purpose only; (ii) that no royalty shall be charged for the removal of timber from Green blocks by the owner....
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....f forest produce ; and (f) prescribe or authorise any forest officer to prescribe, subject to the control of the Executive Committee, the fees, royalties or other payments for forest produce, and the manner in which such fees, royalties, or other payments are to be levied, in transit or partly in transit or otherwise." The question before us is whether the royalty levied by the impugned notification can be realised by the District Council in respect of trees in private forests. " Royalty " according to Jowitts' Dictionary of English Law means " a payment reserved by the grantor of patent, lease of mine or similar right and payable proportionately to the use made of the right by the grantee ". In the true sense, what is sought to be recovered under the Act is not royalty since the forest does not belong to the District Council. The amount claimed by way of royalty under the notification is a compulsory exaction of money by a public authority for public purposes enforceable by law and is not a payment for services rendered. It is truly in the nature of a tax. In the High Court, various claims were put forward in support of the impugned levy. It was contended that the royalty....
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.... that the impugned royalty was leviable under any other provision. It was no doubt true that it was argued before the High Court that it was open to the District Council to levy fees as quid pro quo for the services rendered by it to the forest owners or contractors. The High Court erred in holding that even fees could not be levied under paragraph 3 of the Sixth Schedule to the Constitution. We have already held that even though there is no express provision to levy such fees, the District Council can levy fees under paragraph 3. But that would not save the notification since there is no material placed before the court to uphold the notification on that ground. No evidence is placed before the court showing the expenses incurred by the District Council towards the services rendered and the total amount of royalty realised by it. Unless the levy satisfies the true characteristics of fee as laid down by this court in Commissioner, Hindu Religious Endowments v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt [1954] SCR 1005, it cannot be upheld even as a fee. (See also Om Parkash Agarwal v. Giri Raj Kishori [1986] 1 SCC 722; [1987] 164 ITR 376 (SC)). In so far as the question ....