NTPC LIMITED Vs. STATE

JUDGEMENT

(1.) PANKAJ Mithal, J. In these writ petitions with NTPC Ltd. & Anr. Vs. State of U.P. & 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 & Ors. Vs. State of U.P. & 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 Art.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.

(2.) 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.

(3.) 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 others vs. Sitapur Packing Wood Suppliers and others (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.