Writ (Tax) Nos. 327 of 2008 Connected with Writ (Tax) Nos. 1933 of 2008; 1951 of 2008; 1952 of 2008; 1973 of 2008; 1974 of 2008; 1987 of 2008; 2013 of 2008; 2038 of 2008; 2039 of 2008; 2040 of 2008; 2047 of 2008; 2067 of 2008; 2073 of 2008; 2074 of 2008; 2075 of 2008; 2085 of 2008; 2086 of 2008; 2097 of 2008; 2110 of 2008; 2111 of 2008; 2112 of.... Case: NTPC Limited and Anr. Vs State of U.P. and others, [Alongwith Writ (Tax) No. 963 of 2011 Connected with Writ (Tax) Nos. 933 of 2011; 941 of 2011; 942 of 2011; 943 of 2011; 961 of 2011; 962 of 2011; 970 of 2011; 971 of 2011; 972 of 2011; 989 of 2011; 990 of 2011; 995 of 2011; 996 of 2011; 998 of 2011; 1008 of 2011; 1009 of 2011; 1010 of 2011; 1011 of 2011; 993 of 2011; 994 of 2011; 999 of 2011; 1000 of 2011; 1007 of 2011; 974 of 2011; 1015 of 2011; 1020 of 2011; 1021 of 2011; 1023 of 2011; 1027 of 2011; 1030 of 2011; 1031 of 2011; 1032 of 2011; 1033 of 2011; 1034 of 2011; 1041 of 2011; 1044 of 2011; 1045 of 2011; 1046 of 2011; 1047 of 2011; 1048 of 2011; 1054 of 2011; 1056 of 2011; 1058 of 2011; 1065 of 2011; 1062 of 2011; 1063 of 2011; 1064 of 2011; 1066 of 2011; 1067 of 2011; 1068 of 2011; 1069 of 2011; 1070 of 2011; 1071 of 2011; 1072 of 2011; 1073 of 2011; 1074 of 2011; 1039 of 2011; 1078 of 2011; 1096 of 2011; 1097 of 2011; 1100 of 2011; 1089 of 2011; 1091 of 2011; 1093 of 2011; 1094 of 2011; 1099 of .... High Court of Allahabad (India)
| Case Number | Writ (Tax) Nos. 327 of 2008 Connected with Writ (Tax) Nos. 1933 of 2008; 1951 of 2008; 1952 of 2008; 1973 of 2008; 1974 of 2008; 1987 of 2008; 2013 of 2008; 2038 of 2008; 2039 of 2008; 2040 of 2008; 2047 of 2008; 2067 of 2008; 2073 of 2008; 2074 of 2008; 2075 of 2008; 2085 of 2008; 2086 of 2008; 2097 of 2008; 2110 of 2008; 2111 of 2008; 2112 of... |
| Judges | Sunil Ambwani and Pankaj Mithal, JJ. |
| Issue | Indian Forest Act, 1927 - Sections 2, 2(4), 2(6), 2(7) 3, 4, 5, 11, 12, 14, 15, 20, 26, 29, 30, 32, 33, 39(1)(3), 41, 41(1), 41(2), 42, 47(1), 51, 76, 80 and.80A; General Clauses Act, 1897 - Section 21; Mines and Minerals (Development and Regulation) Act, 1957 - Sections 2, 9, 15, 15(3) and 23C; Haryana Local Area Development Tax Act, 2000; ... |
| Judgement Date | November 11, 2011 |
| Court | High Court of Allahabad (India) |
Judgment:
Sunil Ambwani and Pankaj Mithal, JJ.
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In these writ petitions with NTPC Ltd. and Anr. v. State of U.P. and Ors. Writ (Tax) No. 327 of 2008 as leading writ petition of the first batch; and the others filed after June 4th, 2011 with M/s Ajay Trading (Coal) Company and Ors. v. State of U.P. and Ors. Writ (Tax) No. 963 of 2011 of the second batch, the Petitioners incorporated as public limited companies/private limited companies, registered partnership/proprietorship firms, manufacturers and traders of goods made out of forest produce, the miners and the transports of forest produce, have challenged the applicability of the Indian Forest Act, 1927, on mines and minerals including coal and other forest produce; as also the validity of the U.P. Transport of Timber and Other Forest Produce Rules, 1978 (in short the Rules of 1978) made under Section 41(1)(c) of the Indian Forest Act, 1927; as amended by the 4th Amendment to the Rules in 1978 notified on 13.12.2010, increasing levy of transit fee from Rs. 38 per metric tonne, to Rs. 75; Rs. 100 and Rs. 200 per cubic meter of capacity per lorry load of different quality of timber and other forest produce; and the 5th Amendment to the Rules of 1978, notified on 4.6.2011 enhancing transit fee and changing the basis of levy from cubic feat to advalorum between 5% to 15%, on variety of forest produce including timber, firewood, and other forest produce coming from mines e.g., coal, limestone, sand, bajari and other minerals, as unconstitutional, beyond legislative competence of State Government so far as mines and minerals, and, as violative of Article 14, 19(1) (g), and 301 of the Constitution of India, as well as ultra vires the provisions of Section 41, 42, 51 and 76, of the Indian Forest Act, 1927.
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The State Government issued a Notification dated 14.8.1997 under Clause (c) of proviso to Rule 3 of the Rules of 1978 in supersession to the Notification dated 25.10.1991 to exempt all timbers and barks of the species given in Column-I including 20 trees, not situated in any forest from the operation of the Rules within the area of all the districts mentioned in Column-II (42 Districts excluding certain Tehsils of District Rampur, Shahjahanpur, Allahabad, Sidharthnagar, Padrauna and Varanasi). By a notification dated 29.3.2010 the State Government has exempted the forest produce such as peat, surface soil, rock and minerals (including limestone, laterite, mineral oils and all products of mines or quarries), as mentioned in Sub-clause (iv) of Clause (b) of Sub-section (4) of Section 2, of the Forest Act, 1927, excavated from non-forest land and moved thereby, from the operation of Clause (c) of proviso to Rule 3 of the Rules of 1978 made under Sections 41, 42, 51 and 76 of the Indian Forest Act, 1927.
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During the pendency of these writ petitions, the Conservator of Forest, Agra Circle, Agra, issued an order to the Regional Director, Social Forestry Division, Agra on 28.7.2011, directing him not to recover transit fee on any finished product of limestone such as quicklime, burnt lime etc. from out of limestone defined under Section 2(4)(b) (iv) of the Indian Forest Act, 1927.
THE EARLIER CHALLENGE
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The Rules of 1978 framed in exercise of powers under Sections 41, 42, 51, and 76 of the Indian Forest Act, 1927 were challenged in the High Court by traders and transporters of timber in Writ Petition No. 901 of 1984 and other connected writ petitions, which were allowed on 16.5.1986. The Rules were invalidated as imposing fees without rendering any service, as quid pro quo. The State of U.P filed Civil Appeal, which was allowed by the Supreme Court; in State of U.P. and Ors. v. Sitapur Packing Wood Suppliers and Ors. (2002) 4 SCC 566. The Supreme Court upheld the judgment of the High Court in so far as the question of constitutional competence of the State Government to impose transit fees. The powers of the State Government, it was held, under Entry 17-A of List III of the Seventh Schedule of the Constitution of India, would include power to regulate transit of forest produce. The Supreme Court also upheld the findings of the High Court that the power to regulate the transit of timber under the Act and the Rules is not confined to the transit of timber of forest produce by the owner thereof; it would also extend to those traders, who arrange to transport it for any reason and will be included within the general power of control over transit under Section 41 (2) of the Act.
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In Sitapur Packing Wood Suppliers (supra), the Supreme Court, following State of Tripura v. Sudhir Ranjan Nath (1997) 3 SCC 665, in which the application fees for transit of timber was upheld, and the judgments in Corporation of Calcutta v. Liberty Cinema AIR 1965 SC 1107; Secunderabad Hyderabad Hotel Onwers' Association v. Hyderabad Municipal Corporation (1999) 2 SCC 274 and P. Kannadasan v. State of T.N. (1996) 5 SCC 670, held that transit fee under Rule 5 is clearly regulatory and, thus it was not necessary for the State to establish quid pro quo. The Supreme Court held in paragraphs 8 to 11 as follows:
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The distinction between tax and fee is well settled and need not be restated herein. It is clear from the afore-noticed provisions of the Act and the Rules that the transitory fee is regulatory in nature. The question of quid pro quo is necessary when a fee is compensatory. It is well established that for every fee quid pro quo is not necessary. The transit fee being regulatory, it is not necessary to establish the factum of rendering of service. Thus, there is no question of a levy of transit fee being invalidated on the ground that quid pro quo has not been established.
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In State of Tripura and Ors. v. Sudhir Ranjan Nath (1997) 3 SCC 665 almost similar question came up for consideration in relation to 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 and Anr. v. Liberty Cinema (1965) 2 SCR 477 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's case similar views have been expressed in Secundrabad Hyderabad Hotel Owners' Association and Ors. v. Hyderabad Municipal Corporation, Hyderabad and Anr. (1999) 2 SCC 274 and P. Kannadasan and Ors. v. State of T.N. and Ors. (1996) 5 SCC 670.
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The transit fee under Rule 5 is clearly regulatory and, thus, it was not necessary for the State to establish quid pro quo. The High Court was in error in holding that transit fee is invalid in absence of quid pro quo. As a consequence the penalty would also be valid. The penalty was held to be invalid by the High Court in view of its conclusion about the invalidity of the transit fee. The penalty, however, cannot be beyond what is permissible in the Act. That aspect, however, is not under challenge in these appeals as the State Government after the impugned judgment of the High Court realizing its mistake amended the Rule so as to bring the provision of penalty in accord with the provisions of the Act.
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For the aforesaid reasons, we allow these appeals and hold that the levy of the transit fee is valid and the judgment of the High Court is accordingly set aside. The parties are, however, left to bear their own costs.
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In the year 2004 by Notification dated 14.6.2004 (after more than 25 years of the enforcement of the Rules of 1978), the transit fee was increased from Rs. 5/- to Rs. 38/-, per tonne of weight and came to be challenged again both on the ground of legislative competence of the State Government to make Rules to levy transit fee on stone chips, stone grit, stone balast, sand, morrum, coal, limestone, dolomite etc., and also on the ground that the mines and minerals are not 'forest produce' as defined under Sub-section (4) of Section 2 of the Indian Forest Act, 1927 as these are not found in or brought from a forest. In Kumar Stone Works and Ors. v. State of UP and Ors. 2005 (3) AWC 2177 this Court held that the phrase 'that is to say' occurring in Clause (b) is exhaustive and indicates the intention of the Parliament to limit the restriction to those goods alone as are specifically mentioned therein. The only items mentioned in various sub-clauses of Clause (b) of Sub-section (4) of Section 2 would be forest produce when found in or brought from forest. It was further held in paragraph-24 of the judgment that there is no reference to any reserved forest area. Any of the items mentioned in Clause (a) of the aforesaid provision would constitute a forest produce whether found in or brought from a reserved forest area or not. Clause (b), however, refers to a forest produce if found in or brought from a forest. The mineral excavated from the mines/areas, which are not situate in a reserved forest area, is of no consequence. The Court then observed that in Suresh Lohiya v. State of Maharashtra and Anr. (1996) 10 SCC 397, the Supreme Court, while considering the definition clause of Sub-section (4) of Section 2 of the Act, held that the legislature having defined 'forest produce', it is not permissible for us to read in the definition something which is not there. In this case the Supreme Court was dealing with the issue whether the bamboo mats can be treated to be bamboo and thus a forest produce. The Supreme Court held:
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The legislature having defined...
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