NTPC LIMITED vs STATE OF U. P. - 2011 Supreme(All) 2992

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2011 Supreme(All) 2992

[2011(11) ADJ 390 (DB)]
ALLAHABAD HIGH COURT
SUNIL AMBWANI AND PANKAJ MITHAL, JJ.
NTPC LIMITED AND ANOTHER .....Petitioner
Versus
STATE OF U.P. AND OTHERS .....Respondents
(Writ (Tax) Nos. 327, 1933, 1951, 1952, 1973, 1974, 1987, 2013, 2038, 2039, 2040, 2047, 2067, 2073, 2074, 2075, 2085, 2086, 2097, 2110, 2111, 2112, 2124, 2128, 2136, 2149, 2190, 2191, 2192, 2226, 2251, 2283, 2285, 2042, 2344 of 2008, 90, 96, 95, 167, 168, 169, 170, 175, 177, 190, 185, 181, 232, 269, 257, 325, 314, 319, 339, 340, 347, 370, 26, 395, 437, 438, 432, 457, 458, 55, 498 and 10033 of 2009, 588, 706, 13172, 13398; 728, 729, 735, 736, 12169, 768, 797 of 2009, 34659 of 2007, 15147, 914, 16560, 16927, 959, 1073, 20567, 2117, 1824, 2133, 2143, 2144 of 2009, 293, 335, 431, 1069, 1829, 1842, 355, 831, 1410, 1611, 1224, 1223, 1222, 1786, 1788, 1843, 1866, 1891, 1943, 1975, 2323, 2296, 2299, 2330 of 2008, 52, 53, 54, 296, 498, 499, 1852, 1085, 1127, 1136, 1255, 1256, 1282, 1344, 1413, 1414, 1443, 797, 1492, 1551, 1577, 1754, 1781, 1840, 1857, 1880, 1881, 2011, 2046, 2050, 2168, 2191, 2204, 2205, 2217, 2164 of 2009, 270, 271, 272 of 2010, 2386, 2388 of 2009, 297, 298, 335, 89, 1133, 1166, 1174, 1189, 529, 1199, 1205, 1212, 1236, 1235 of 2010, 292, 293, 335 of 2008, 1246, 1273, 1284, 1292, 1035, 1053, 1055, 1313, 1308, 1323, 1314, 1317, 1318, 1319, 1325, 1329, 1341, 1342, 1354, 1355, 1357, 1358, 1359, 1379, 1383, 1384, 564, 1401, 1398, 1399, 1400, 1407, 1424, 1425, 1426, 1427, 1421, 322, 347, 374, 1435, 1438, 1441, 1447, 1455, 1454, 1478, 1479, 1497, 1498, 1511, 1512, 1527, 1538, 1540, 1541, 1560, 1556, 1557, 1558, 1559, 1565, 1571, 1572, 1579, 1584, 1585, 1586, 1581, 1588, 1592, 1600, 1603, 1604, 1605, 1601, 1612, 1613, 1619, 1621, 1620, 1623 of 2010, 1731, 1733, 1710, 1800 of 2007, 1626, 1625, 1624, 1628, 1632, 1634 of 2010, 2017 of 2009, 1647, 1648, 1649, 1646, 1644, 1656, 1651, 1665, 1666, 1661, 1662, 1676, 1678, 1679, 1686, 1689, 1693, 1698, 1699, 1697, 1700, 1696, 1707, 1710, 1711, 1717, 1722, 1724, 1729, 1734, 1737, 1741, 1739 of 2010, 3, 5, 4, 6, 13, 25, 21, 24, 31, 35, 38, 39, 40, 41, 42, 43, 29, 30, 33, 34, 63, 74, 75, 82, 86, 81, 90, 91, 97, 96, 95, 94 of 2011, 1020, 1021 of 2008, 99, 100, 101, 102, 106, 105, 107, 109, 117, 118, 120, 122, 124, 128, 129, 133, 134, 135 of 2011, 1194, 1195, 1196 of 2008, 137, 138, 142, 143, 144, 149, 150, 155, 158, 161, 162, 168, 169, 175, 176, 181, 178, 184, 197, 198, 200, 204, 206, 208, 209, 212, 213 of 2011, 1010 of 2008, 215, 220, 221, 217 of 2011, 1011 of 2008, 225, 226, 234, 239, 241, 246, 247, 249, 252, 258, 260, 261, 264 of 2011, 2329 of 2008, 272, 271, 275, 277, 278, 291, 296, 299, 300, 301, 302, 303, 304, 305, 306, 312, 318, 310, 311, 319, 331, 332, 415, 416, 429, 454, 464, 465, 475, 490, 494, 498, 503, 505, 524, 528, 529, 511, 536, 549, 550, 554, 565, 594, 608, 605, 606, 607, 613, 616, 617, 651, 657 of 2011, 785 of 2010, 670, 672, 701, 731, 739, 741, 698, 699, 748, 787, 797, 796, 803, 818, 823, 824, 848, 870, 871, 872, 880, 860, 861, 862, 863 of 2011, 762 of 2010, 886, 887, 888, 911, 912, 904, 894, 896, 879, 918, 921, 925, 926, 913, 914, 915, 922, 919, 920, 842, 931, 944, 946, 947, 967, 211, 361, 373, 375, 376, 386, 388, 390, 392, 393, 394 of 2011, 491, 495, 545, 578, 584, 591, 622, 628, 652, 669, 668, 672, 688, 711, 712, 725, 750, 751, 795, 816, 827, 843, 857, 970, 971, 972, 1005, 1092, 1104, 1324, 1675 of 2010, 514, 668, 669, 714, 720, 769, 779, 806, 829, 849, 885, 907, 929 of 2011, 316, 321, 323, 338, 386, 412, 419, 421, 430, 441, 466, 476, 477, 213, 214, 215, 228, 229, 238, 239, 247, 249, 275, 276, 280, 282, 284, 302, 303, 307, 308, 309, 310, 5, 110, 128, 135, 137, 153, 155, 161, 177, 184, 189, 193, 195, 202, 204, 205, 210 of 2010, 1732 of 2007, 1889 of 2008, 1583, 2266 of 2009, 842, 931 of 2011, 527, 882 of 2010, 928 of 2011, 963, 933, 941, 942, 943, 961, 962, 970, 971, 972, 989, 990, 995, 996, 998, 1008, 1009, 1010, 1011, 993, 994, 999, 1000, 1007, 974, 1015, 1020, 1021, 1023, 1027, 1030, 1031, 1032, 1033, 1034, 1041, 1044, 1045, 1046, 1047, 1048, 1054, 1056, 1058, 1065, 1062, 1063, 1064, 1066, 1067, 1068, 1069, 1070, 1071, 1072, 1073, 1074, 1039, 1078, 1096, 1097, 1100, 1089, 1091, 1093, 1094, 1099, 1102, 1103, 1105, 1106, 1107, 1108, 1109, 1113, 1114, 1115, 1117, 1118, 1119, 1120, 1236, 1137, 1140, 1141, 1138, 1139, 1146, 1156, 1153, 1152, 1148, 1142, 1149, 1150, 1151, 1157, 1160, 1161, 1162, 1163, 1159, 1165, 1166, 1167, 1168, 1169, 1170, 965, 977, 979, 980, 981, 983, 987, 1017, 1022, 1028, 1037, 1040, 1042, 1052, 1060, 1049, 1050, 1079, 1080, 1081, 1082, 1083, 1100, 1122, 1123, 1126, 1131, 1132, 1133, 1171, 1173, 1174, 1175, 1177, 1178, 1179, 1180, 1184, 1188, 1190, 1191, 1192, 1193, 1199, 1200, 1201, 1205, 1206, 1196, 1202, 1203, 1204, 1207, 1208, 1209, 1087, 1090, 1101, 1211, 1212, 1213, 1214, 1084, 1219, 1221, 1222, 1231, 1236, 1237, 1238, 1225, 1229, 1230, 1239, 1247, 1251, 1242, 1243, 1244, 1245, 1246, 1248, 1249, 1250, 1255, 1256, 1260, 1116, 1059, 1262, 1263, 1264, 1265, 1269, 1270, 1278, 1282, 1283, 1284, 1287, 1288, 8202, 6736, 3993 and 20885 of 2011, 15406, 24040, 13442 of 2010, 1293, 1294, 1297, 1295 of 2011, 1627, 1719 of 2010, 1299, 1301, 1306, 1308, 1305, 1320, 1324, 1319, 1321, 1322, 1325, 1326, 1311, 1312, 1332, 1333, 1335, 1331, 1328, 1334, 1317, 1309, 1347, 1340, 1341, 1342, 1343, 1345, 1346, 1349, 1358, 1352, 1360, 1362, 1363, 1365, 1366, 1369, 1375, 1376, 1377, 1276, 1303, 1383, 1385, 1386, 1387, 1390, 1391, 1330, 1406, 1393, 1399, 1400, 1401, 1403, 1405 and 1379 of 2011, decided on 11th November, 2011)

Advocates:
V.B. Upadhyay, S.P. Gupta, Aloke Kumar, Bharatji Agarwal, Rahul Agarwal, Navin Sinha, Vipin Sinha, Manish Goyal, N.C. Gupta, Punit Kumar Upadhyay, Nitin Kesarwani, Tarun Agarwal, Siddhartha Srivastava, V.K. Singh, Rajeev Misra, Udit Chandra, Susheel Gupta for the Petitioner; Ravi Kant and Alok Kumar, C.S.C. for the Respondents.

Headnote:(A) (Indian) Forest Act, 1927—Sections 39(3), 41(1) (c), 42, 51, 76 and 80-A—U.P. Transport of Timber and Other Forest Produce Rules, 1978—Rules 3 and 5—Constitution of India, 1950—Articles 14, 19(1)(g) and 300—Schedule VII, List III, Entry 17-A—U.P. Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1972—Section 4—Mines and Minerals (Development and Regulation) Act, 1957—Section 2—U.P. Mines and Minerals (Concession) Rules, 1963—Forest produce—Transit fee—Levy of—Enhancement—Validity of—Applicability of 1927 Act on mines and minerals including coal and other forest produce—Legislative competence of State Government so far as mines and minerals concerned—Charge of transit fee of transportation of soil and coal—Scope—"Forest land" not confined only to notified forest—Imposition of fees in respect of timber and forest produce coming from mines has completely changed the character of fees—A forest produce if changes its essential character either by processing or by manufacturing process, ceases to be forest produce—Word "catechu" comes within the meaning of word as forest produce—State Government is competent to make rules regulating the transit of forest produce—Imposition of transit fee under Rule 5 of 1978 Rules is transitory and regulatory in nature—However, State Government has not justified the increase of transit fees as regulatory fees on quid pro quo—Impugned increase of transit fee on ad valorem basis has thus rendered the fees as compensatory tax, for which the State Government has no powers to levy under 1927 Act—Impugned notification quashed—And imposition of transit fee on "Sponge Iron" which is not a forest produce and "Tendu Patta" held not valid in law—Direction issued. [Paras 160 to 188]
       (B) (Indian) Forest Act, 1927—Section 2(4)—"Forest Produce"—Connotation and its extent of—Discussed. [Paras 110 to 117]
       (C) Constitution of India, 1950—Schedule VII, List III, Entry 17-A—Forest and Forest produce—Power to legislate upon—Competency of State Government—Discussed. [Paras 119 to 144]
       (D) Fee or Tax—Power to levy—Explained. [Paras 145 to 158]

JUDGMENT

By the Court.—In these writ petitions with NTPC Ltd. and another v. State of U.P. and others, (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 others v. State of U.P. and others, (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 Articles 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. 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

4. 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 v. 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 Sche

Click Here to Read the rest of this document

2011 Supreme(All) 2992

Cases Referred (91)