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Galfar Engineer and Contracting (India) Pvt. Ltd V/S State of Uttarakhand

Company & Directors' Information:- THE INDIA COMPANY PRIVATE LIMITED [Active] CIN = U74999TN1919PTC000911

Company & Directors' Information:- INDIA CORPORATION PRIVATE LIMITED [Active] CIN = U65990MH1941PTC003461

Company & Directors' Information:- ENGINEER & ENGINEER PRIVATE LIMITED [Active] CIN = U74999DL2016PTC293097

    Writ Petition No. 2859 (MS) of 2013

    Decided On, 25 April 2014



    For Petitioner: R.K. Raizada, Sr. Advocate and Piyush Garg And For Respondents: R.C. Arya, Standing Counsel and Virendra Kaparwan

Judgment Text

1. In all these writ petitions, identical questions of fact and law are involved, therefore, all the writ petitions were taken up together for hearing and are being disposed of by this common judgment with the consent of learned counsel for the parties. Petitioners are involved in the business of mines and minerals. As per Section 41 of the Forest Act, State of Uttar Pradesh was pleased to enact the Uttar Pradesh Transit of Timber and Other Forest Produce Rules, 1978 whereunder transit fee @ ` 5 per ton was imposed for transportation of forest products. After creation of State of Uttarakhand, State of Uttarakhand was pleased to enact the Uttarakhand Transit of Timber and Forest Produce Rules, 2012 thereby enhancing transit fee of forest products from ` 5 per ton to ` 50 per ton. Feeling aggrieved from the enhancement of transit fee from ` 5 per ton to ` 50 per ton by 2012 amendment, petitioners have invoked writ jurisdiction of this Court under Article 226 of the Constitution.

2. Mr. R.K. Raizada, Sr. Advocate with Mr. Piyush Garg & Mr. B.S. Adhikari, Advocates appearing for the petitioners, has vehemently argued that although transit fee can be imposed under Rule 5 of the Rules read with Section 41 of the Indian Forest Act but transit fee should not be excessive and while imposing the transit fee, the State Government must keep in mind principle of equivalence and transit fee should be levied in order to meet out real expenses for the purpose of regulating the transportation of forest products. He further contends that State Government cannot be permitted to generate revenue in the garb of transit fee. He further contends that if transit fee @ ` 50 per ton is allowed to be recovered, then Forest Department would earn about ` 100 crore per annum while the real expenses to regulate the transportation of forest products is not more than ` 22 crore per annum, therefore, enhanced transit fee is excessive, arbitrary, irrational and unjustified.

3. On the other hand, Mr. Subhash Upadhyay, learned Chief Standing Counsel and Mr. R.C. Arya, learned Standing Counsel for the State of Uttarakhand, vehemently argued that there is no denial to the fact that State Government can impose transit fee, which is regulatory in nature; if competence to levy the transit fee is not under challenge, then ordinarily, this Court, while exercising jurisdiction under Article 226 of the Constitution of India, should not interfere in the policy matter of the State Government to find out as to whether levied transit fee is excessive or unreasonable; to maintain the ecological balance, the State Government is required to maintain forest and is further required to do comprehensive patrolling to protect the forest, forest products and wild life; since about 65% of the total area of State of Uttarakhand is covered by the forest, therefore, heavy expenses are being incurred by the State Government to protect, maintain and develop the forests.

4. Hon'ble Apex Court in the case of Vain Organic Chemicals Ltd. v. State of U. P., reported in : 1997 (2) SCC 715 has field that although in the case of regulatory fee like the licence fee existence of quid pro quo is not necessary, however, fee imposed must not be, in the circumstances of the case, excessive.

5. The view taken by the Hon'ble Apex Court in the case of Vam Organic (supra) was relied upon by Three-Judge Bench of Hon'ble Apex Court in the case of A.P. Paper Mills Ltd. v. Govt. of A.P. and another, reported in : 2000 (8) SCC 167 : (AIR 2000 SC 3290).

6. Hon'ble Apex Court in the case of State of U.P. and others v. Sitapur Packing Wood Suppliers and others, reported in : 2002 (4) SCC 566 : (AIR 2003 SC 2165) in paragraphs 7, 8, 9, and 10 has held as under:

"7. Having found that the constitutional competence in providing fee as set out in Rule 5 is not lacking, the High Court accepted the challenge to the validity of levy on the ground that the fee is not supported by the principle of quid pro quo. It held that no service is provided in lieu of the fee to any person much less to the person from whom the transit fee is charged. In the view of the High Court, reasonable relationship between the levy of the fee and the services rendered had not been established.

8. The distinction between tax and fee is well settled and need not be restated herein. It is clear from the afore-noticed provisions of the Act and the Rules that the transitory fee is regulatory in nature. The question of quid pro quo is necessary when a fee is compensatory. It is well established that for every fee quid pro quo is not necessary. The transit fee being regulatory, it is not necessary to establish the factum of rendering of service. Thus, there is no question of a levy of transit fee being invalidated on the ground that quid pro quo has not been established

9. In State of Tripura and Ors. v. Sudhir Ranjan Nath : AIR 1997 SC 1168) 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 : AIR 1965 SC 1107) 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 : AIR 1999 SC 635) and P. Kannadasan and Ors. v. State of T.N : AIR 1996 SC 2560)

10. 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."

7. As per dictum of Hon'ble Apex Court in the case of Sitapur Packaging : AIR 2003 SC 2165) (supra), transit fee under Rule 5 is clearly regulatory in nature and thus, it was not necessary for the State Government to establish quid pro quo, therefore, this judgment has full application in the present case, consequently, I find that State Government is competent to levy transit fee on the forest products and the State Government is not required to establish quid pro quo.

8. I am conscious about the fact that although this Court while exercising the writ jurisdiction under Article 226 of the Constitution of India is not supposed to behave like an expert body in accountancy, however, this Court, with the help of material placed before this Court, should make every attempt to find out as to whether transit fee levied is excessive or arbitrary.

9. Undisputedly, in the year 1978 about 34-year ago, transit fee imposed was ` 5 per ton on the forest products and after 34-year in the year 2012, it was enhanced to ` 50 per ton.

10. As per Section 57 of the Indian Evidence Act, this Court must take judicial notice of the fact that during 34-years cost of regulating, controlling and managing the transportation of the forest products must have increased manifold.

11. Learned counsel for the petitioner, while taking me to the counter-affidavit filed by the Principal Secretary, Forest & Environment, State of Uttarakhand, has argued that to maintain the barriers established by the Forest Department, Forest Department is incurring expenses of about ` 21-22 crore per annum while total revenue being generated by charging transit fee @ ` 50 per ton is about ` 100 crore per annum, therefore, transit fee is excessive and there is no rationality between transit fee levied and expenses being incurred by the Forest Department.

12. Perusal of the affidavit filed by the Principal Secretary, Forest & Environment, would reveal that of course, for maintaining the barriers established for collection of transit fee, the State Government is incurring expenses of ` 21-22 crore per annum but affidavit further reveals that the Department is paying huge salaries to the officers, officials and other staff of

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the Forest Department, who are responsible to regulate transportation of forest produce and protection and development of the forest. Affidavit further demonstrates that over and above the salaries of the employees of forest Department, expenses are also being incurred on the vehicles, telephones, JCB machines for the purpose of regulating transportation of forest products within forest and outside the forest area. 13. Since regulatory fee has no nexus with quid pro quo, therefore, State Government is not required to demonstrate every expense justifying rate of regulatory fee i.e. transit fee. 14. Having perused the entire material, I find that enhanced transit fee @ ` 50 per ton, after 34-years, from ` 5 per ton cannot be said to be excessive, arbitrary or unjustified. 15. Consequently, all the writ petitions fail and are, hereby, dismissed. No order as costs. All the pending applications stand disposed of. Let copy of tins judgment be placed in all the connected petitions.