IMPORTANT POINT
Rule 5 of U.P. Transit of Timber and Other Forest Produce Rules, 1978 providing for levy of Transit fee is regulatory in nature so no quid pro quo need be established to prove its validity. High Court was in error in holding it invalid in absence of quid pro quo.

Headnote:The Indian Forest Act, 1927-Section 41-Power to make rules transit of forest produce-U.P. Transit of Timber and Other Forest Produce Rules, 1978-Rule 5-Fees payable for different classes of passes issued to regulate Transit to Forest Produce-High Court holding constitutional compliance in providing fee under Rule 5 but held it invalid on ground that there are no services provided in lieu of fee and directed the State to provide services in return of fee to save Rule 5-Appeal against to Supreme Court-Whether Rule 5 can be held invalid in absence of quid pro quo (something in return)? (No)-Rule 5 is regulatory and in case of regulatory fee no quid pro quo need be established-Case law referred-Appeal allowed.
       Held : The distinction between tax and fee is well settled and need not be restated herein. It is clear from the aforenoticed 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. (Para 8)
       (After referring case law) Held : 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. 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. (Paras 10 & 11)

JUDGMENT

Y.K. Sabharwal, J.-Delay condoned.

2. Special leave granted.

3. The only question that is required to be determined in these appeals is about the validity of the levy of transit fee under Rule 5 of U.P. Transit of Timber and Other Forest Produce Rules, 1978 (for short the Rules ). The High Court has held the Rule to be constitutionally valid but levy of transit fee has been invalidated in absence of quid pro quo. The Rule has not been struck down as in the view of the High Court it is open to the State Government to support the levy of transit fee by rendering service as quid pro quo. This aspect alone is under challenge in these appeals filed by the State Government aggrieved by the conclusion of the High Court that the levy of transit fee is invalid.

4. The Rules have been framed in exercise of the powers under Sections 41, 42, 51 and 76 of the Indian Forest Act, 1927. Rule 3 provides for regulation of transit of forest produce by means of passes. It places restrictions on movement of forest produce without transit pass into or from or within the State of U.P. The imposition of fee is provided in Rule 5. Rule 14 provides for affixing of transit marks to timber. Rules 3, 5 and 14 read as under:

"3. Regulation of transit of forest produce by means of passes.-No forest produce shall be moved into or from or within the State of Uttar Pradesh except as hereinafter provided, without a transit pass in the form in Sch. A to these rules, from an officer of the Forest Department or a person duly authorized by or under these rules to issue such pass or otherwise than in accordance with the conditions of such pass or by any route or to any destination other than the route or destination specified in such pass :

Provided that no transit pass shall be required for the removal-

(a) of any forest produce which is being removed for bona fide consumption by any person in exercise of a privilege granted in this behalf by the State Government or of a right recognized under the Act, within the limits of a village in which it is produced;

(b) of forest produce by contractors agency from the forests managed by the Forest Department, in which case the movement shall be regulated by the relevant conditions of sale and terms of the corresponding agreement deed executed by the buyer;

(c) of such forest produce as may be exempted by the State Government from the operation of these rules by notification in the Official Gazette.

5. Fees payable for different classes of passes.-At the check Chowki or depot established under rule 15 and specified under proviso (ii) to Clause (b), sub-rule (1) of rule 4, the forest produce along with the two copies of the pass (duplicate and triplicate) shall be produced for examination under sub-rule (4) of rule 6 and for payment of transit fee on the forest produce calculated at the following rates; corresponding receipt shall be granted in the form given in Schedule C-

(i) per lorry of timber ...Rs.5.00 per or other forest tonne of produce capacity

(ii) per cart load of ... 2.50timber or other forest produce

(iii) per camel load of ... 1.25

timber or otherforest roduce

(iv) per pony load of ... 0.50

timber orothe forest produce

(v) per head of ... 0.25

timber or the forest produce

Note-In respect of resin and resin products, the provisions of the Uttar Pradesh Resin and Other Forest Produce (Regulation of Trade) Act, 1976 and the rules framed thereunder, shall apply.

14. Property and transit marks to be affixed to ti

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2002 Supreme(SC) 534

IMPORTANT POINTRule 5 of U.P. Transit of Timber and Other Forest Produce Rules, 1978 providing for levy of Transit fee is regulatory in nature so no quid pro quo need be established to prove its validity. High Court was in error in holding it invalid in absence of quid pro quo.

Cases Referred (4)

IMPORTANT POINT
Rule 5 of U.P. Transit of Timber and Other Forest Produce Rules, 1978 providing for levy of Transit fee is regulatory in nature so no quid pro quo need be established to prove its validity. High Court was in error in holding it invalid in absence of quid pro quo.