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2014 Supreme(UK) 586

UTTARAKHAND HIGH COURT
ALOK SINGH, J.
Galfar Engineer and Contracting (India) Pvt. Ltd. - Appellant
Vs.
State of Uttarakhand and others - Respondents
Writ Petition No. 2859 of 2013
Decided On : 25/04/2014

Important Points

The main legal point established in the judgment is that the transit fee for forest products should not be excessive and must have a rational relationship with the expenses incurred by the government for regulating transportation of forest products.

Subject

Regulatory Law - Environmental Regulation

Act Referred

EVIDENCE ACT : S.57
FOREST ACT : S.41
UTTAR PRADESH TRANSIT OF TIMBER AND OTHER FOREST PRODUCE RULES : R.5

Headnote

Transit Fee - Forest Products - Section 41 of the Forest Act, 1978 - Section 57 of the Indian Evidence Act - The court discussed the legality of the enhanced transit fee for forest products from 5 per ton to 50 per ton imposed by the State of Uttarakhand under the Uttarakhand Transit of Timber and Forest Produce Rules, 2012. The court referred to the principles established in Vam Organic Chemicals Ltd. v. State of U.P., A.P. Paper Mills Ltd. v. Govt. of A.P., and State of U.P. and others v. Sitapur Packing Wood Suppliers and others, emphasizing that the transit fee should not be excessive and must have a rational relationship with the expenses incurred by the government for regulating transportation of forest products. The court held that the enhanced transit fee was not excessive, arbitrary, or unjustified, and thus, upheld the State's competence to levy the transit fee.

Fact of the Case:

Petitioners, involved in the business of mines and minerals, challenged the enhancement of transit fee for forest products from 5 per ton to 50 per ton by the State of Uttarakhand under the Uttarakhand Transit of Timber and Forest Produce Rules, 2012, invoking writ jurisdiction under Article 226 of the Constitution.

Finding of the Court:

The court found that the State Government was competent to levy the transit fee on forest products and that the enhanced transit fee was not excessive, arbitrary, or unjustified, considering the expenses incurred by the Forest Department.

Issues: The main issue was the legality of the enhanced transit fee for forest products imposed by the State of Uttarakhand.

Ratio Decidendi: The court relied on established legal principles to determine that the transit fee should not be excessive and must have a rational relationship with the expenses incurred by the government for regulating transportation of forest products.

Final Decision: All the writ petitions were dismissed, and the court upheld the State's competence to levy the transit fee on forest products.

ORDER

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.

2. 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.

3. 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 Rs. 100 crore per annum while the real expenses to regulate the transportation of forest products is not more than Rs. 22 crore per annum, therefore, enhanced transit fee is excessive, arbitrary, irrational and unjustified.

4. 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.

5. Hon'ble Apex Court in the case of Vam Organic Chemicals Ltd. v. State of U.P., reported in 1997 (2) SCC 715 has held 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.

6. 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).

7. 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
















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