2013 (8) TMI 420 - ALLAHABAD HIGH COURT

Constitutional validity - Legislative competence for 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 - Meaning of ‘forest’ and ‘forest land’ - words 'forest' and 'forest land' are not defined - words must be understood according to its dictionary meaning for purpose of section 2(1) Forest Conservation Act - 'forest land' would also include forest like areas, whether notified or not – forest like area explained by court by referring various correspondences between departments - it would cover all statutory recognized forest either notified as reserved, protected or village forest or not - principles and criteria of defining forest has to be based on sound ecological and scientific basis.

Forest produce - Definition of forest produce is inclusive and not exhaustive - Only those articles and goods, which are defined in Section 2 (4), (a) & (b) are included within meaning of words 'forest produce' – Held that:- Where a forest produce changes its essential character into a commercially new article - totally different from forest produce, having a distinct character - with aid of human skill it ceases to be forest produce – court did not persuaded to hold that Kattha and Cutch which come within ambit of expression Katechu that is covered within definition of forest produce as same has been decided in State of M.P. vs. S.P. Sales Agencies (2004 (3) TMI 713 - SUPREME COURT)

Whether Kattha and Cutch – expression catechu comes within sweep of cutch and kattha and is included within meaning of word as forest produce - sponge iron made by manufacturing process from iron ore is not a forest produce - all minerals from mines and quarries are forest produce.

Monopolized Transportation - State monopolized entire trade of tendu patta - collection, packing, storage and transportation of tendu leaves in State of U.P. is strictly regulated by statute and Rules - Rule 4 regulates entire transport of tendu leaves under prescribed forms – Held that:- trade and transportation of tendu leaves which is monopolised by S/G is not valid in law thus restraining respondents from requiring transit passes and transit fees on it - no object is sought to be achieved in regulating transportation of same forest produce within, brought from outside or within or to be taken out from State of U.P. is thus not covered and regulated by provisions of Rules of 1978.

Transit fees - imposition of transit fee under Rule 5 of Rules of 1978 is challenged – court held that fees is transitory and regulatory in nature – purpose of imposing transit fee on movement of forest produce is to protect environment from deforestation and overexploitation of natural resources including mines and minerals - found in or brought from forest and not only include notified, protected reserved and village forest but also forest lands, and forest like areas, whether notified by State Government or not.

Amount of levy of transit fee – Held that :- levy of transit fee at rate of Rs.38 p.m.t per truck, by notification (14.6.2004) declared to be valid by court as same has been decided in Kumar Stone Works and others vs. State of UP and others (2005 (4) TMI 544 - ALLAHABAD HIGH COURT) .

Ad-valorem Increase in transit fees - increase of transit fee under Rules of 1978 as notified by 4th Amendment of Rules notified on 20.12.2010, on cubic meter of capacity and thereafter by 5th Amendment to Rules notified on 4.6.2011 on a-valorem basis - Held that:- S/G has not justified increase of transit fees as regulatory fees on quid pro quo - S/ G has no powers to levy under IFA - increasing on ad valorem basis price of forest produce coming from mines as notified in Schedule 'C', has changed character of regulatory fees, to compensatory tax - same has also been decided in Ahmedabad Urban Development Authority v. Sharad kumar Jayanti kumar Pasawalla and others (1992 (5) TMI 175 - SUPREME COURT).

Increase of fees – validity of 4th and 5th amendments were challenged on ground of increase in fees as not valid – Held that:- basis of increase has not been justified and established mainly in co-relation with objects sought to be achieved as stated namely to maintain ecological balance- further no empirical data with scientific and sociological concerns has been produced before Court.

Restriction on trade – increase in transit fee challenged on constitutional grounds – Held that:- exorbitant increase of transit fees by 4th and 5th Amendment to Rules of 1978 - without rendering any services to facilitate trade - Rules have been framed by State Government under Indian Forest Act which is Central Act – it further restrict freedom of trade, commerce and intercourse - and is thus violative of Art.301 – not saved by Art.304 (b) - increase in transit fee thus cannot be treated to be reasonable restriction on freedom of trade, commerce and intercourse with or within State in public interest. Mohd. Yasin v. John Mohammad 1986 (3) SCC 20.( John Mohammad 1986 (3) SCC 20. 1986 (4) TMI 330 - SUPREME COURT).

Principles of sustainable development - increase in transit fee on ad valorem basis on timber, coal and other minerals, necessary for raising infrastructure, generating power and manufacture of essential goods have a direct impact and impede development of State - No scientific study in this regard has been conducted by S/G - nor any reports placed before Court to justify increase of fees - taking into consideration right to development, which is a fundamental right of citizens of State under Art.21. (T.N. Godaverman's)

Justifiability of increase in transit fees - S/G failed to justify increase of transit fees on ad valorem basis by linking it only with increased cost of enforcement for collections- collections are above cost of enforcement and raising revenue for State - imposition will increase cost of generation of power, and manufacture of essential goods necessary for creating infrastructure affecting development of State.

Legislative competence – rules regulating transit of forest produce challenged on ground of competence of S/G – Held that:- S/G has legislative competence under Section 41, 42, 51 and 76 to make rules regulating transit of forest produce – after providing transit passes and transit fees under Section 41 (2) (c) - Rules of 1978 are intra vires Forest Act r.w. Forest Conservation Act- There is no repugnancy between Mines and Minerals Regulation and Development Act, 1957, enacted with reference to Entry 54 of List 1 in Seventh Schedule - Forest Act and Rules framed therein w.r.t Entry 17A of List 3 of Seventh Schedule - Rules of 1978, are not violative of Art.245 (2) - even if they have extra-territorial operations – main reason stated for this is that Rules of 1978 have been made by S/G under Act of Parliament with close nexus with residents of State of U.P. as citizens of India – main purpose to be achieved is to protect environment from deforestation, poaching, maintaining ecological balance and to restrict over-exploitation of mineral resources of State - Jindal Stainless Limited & anr vs. State of Haryana and others (2006 (4) TMI 120 - SUPREME Court.)

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. - Decided in favor of petitioner.