The State lacks legislative competence to levy transit fees on mineral transport via railways under forest transit rules. The regulatory authority under the relevant forest statute is confined to traditional land and water modes, and the lack of a computable mechanism for railway transit renders such levies unconstitutional.

Headnote:(A) Indian Forest Act, 1927 - Section 41 - Constitution of India - Articles 246, 265, 301 - Transit fee on forest produce - Legislative competence - Scope of regulatory power - The statutory provision vesting control over transit "by land or water" does not include transport by railway. Levy of fee by the State on goods transported via railway falls outside the scope of subordinate legislation and infringes upon fields reserved for the Union. (Paras 31, 33)

(B) Interpretation of Taxing Statutes - Strict construction - Where the charging and computation mechanism of a fiscal statute fails due to the mode of transport not being encompassed by the specific rules, the levy is unsustainable - Rules contemplating load-based charges for traditional land/water transport are inapplicable to railway freight. (Paras 24, 34, 44)

Facts of the case:
Petitioners challenged the validity of specific transit rules and notifications imposing fees on the transportation of industrial minerals through the railway network, arguing that such materials do not constitute forest produce for the purpose of transit regulation and that the State lacks the legislative authority to impose taxes on rail-based transit.

Findings of Court:
The existing statutory framework for forest transit regulation cannot be interpreted to include railway transport, which is governed by distinct constitutional entries. The impugned notifications imposing fees on a per-ton basis are fiscal in nature, lack statutory foundation, and constitute an invalid exercise of delegated legislative power.

Issues: Whether forest transit rules apply to rail-based transport of minerals, and whether the State has the competence to levy transit fees under the guise of forest conservation regulation.

Ratio Decidendi: Regulatory powers regarding transit are confined to conventional land and water routes. Because the governing statute and subordinate rules lack specific procedures or mechanisms for regulating or computing fees for rail-based transit, any such levy is unauthorized and unenforceable.

Result: The writ petition is allowed; the impugned notifications and consequential orders are quashed insofar as they apply to the railway-based transportation of minerals.

C.A.V Order

Per Ramesh Sinha , Chief Justice

1.Heard Mr. Rajeev Shakdhar, Senior Cousnel appearing through Video Conferencing assisted by Mr. Ankit Singhal, learned counsel through Video Conferencing, Mr. Pawan Shree Agrawal and Mr. Ashish Mittal, learned counsel for the petitioners. Also heard Mr. Praveen Das, learned Deputy Advocate General appearing for the State/respondents No.1 to 3 and Mr. Ramakant Mishra, learned Deputy Solicitor General with Ms. Annapurna Tiwari, learned Central Government Counsel appearing for the Union of India/respondent No.4.

2. The petitioners have filed the instant writ petition challenging the constitutional validity, legality and propriety of Rules 3 and 5 of the Chhattisgarh Transit (Forest Produce) Rules, 2001 (hereinafter referred to as “the Rules of 2001”), on the ground that the same are ultra vires the provisions of the Indian Forest Act, 1927 (for short, the Act of 1927) and Article 246 read with Schedule VII of the Constitution of India. The petitioners further assail Notification No. 06-02/2014/10-2 dated 30.06.2015, published in the Official Gazette on 10.07.2015, and Notification No. F.No. 6-2/2014/10-2/Van dated 27.07.2022, published in the Official Gazette on 04.08.2022, issued by the respondent–State, to the extent they impose fees for issuance of transit passes for transportation of iron ore at the rate of ₹15/- per ton and ₹57/- per ton, respectively. The petitioners also challenge the legality, validity and propriety of the letters dated 23.08.2022 and 02.09.2022 issued by respondent Nos. 1 and 2, respectively, whereby directions have been issued for compliance with Notification No. F No. 6-2/2014/10-2/Van dated 27.07.2022.

3. The petitioner has prayed for the following relief(s):

“10.1 That this Hon'ble Court may kindly be pleased to declare that the Rule 3 and 5 of Chhattisgarh Transit (Forest Produce) Rules, 2001 is ultra vires to the Indian Forest Act 1927, the Mines and Minerals (Development and Regulation) Act. 1957 as also Articles 14,19, 265 and 301 of the Constitution of India.

10.2 That this Hon'ble Court may kindly be pleased to declare that the notifications dated 30.6.2015 and 27.7.2022 issued in exercise of power conferred under Rule 5 of Chhattisgarh Transit (Forest Produce) Rules, 2001 is ultra vires to the principal Act i.e., Indian Forest Act 1927, the Mines and Minerals (Development and Regulation) Act. 1957 as also Articles 14,19, 265 and 301 of the Constitution of India.

10.3 That this Hon'ble Court may further be pleased quash and set aside letters dated 23.8.2022 and 2.9.2022 issued by the Respondent No. 2 and 3 respectively;

10.4 Cost of the petition may also be granted to the petitioner.

10.5 Any other relief or relief(s) which this Hon'ble Court may deem fit and proper in view of the facts and circumstances of the case, may also kindly be granted.”

4. Brief facts necessary for adjudication of the present writ petition are that petitioner No.1, Steel Authority of India Limited (‘SAIL’), is the successor of Hindustan Steel Limited and is a public limited Company substantially owned, controlled and supervised by the Central Government. The Bhilai Steel Plant (for short, ‘BSP’), situated in District Durg, is one of the units of petitioner No.1 and is widely known as Bhilai Steel Plant. The petitioners hold valid mining leases for extraction of iron ore over forest land falling within the territorial jurisdiction of the Divisional Forest Offices at Rajnandgaon and Balod. The respondents are “State” within the meaning of Article 12 of the Constitution of India and are amenable to the writ jurisdiction of this Court.

5. The State of Chhattisgarh, in exercise of powers conferred under Sections 41, 42 and 76 of the Act of 1927, framed the Rules of 2001, which came into force with effect from 25.08.2001, repealing the earlier Rules of 1961. The said Rules constitute subordinate legislation deriving their authority from the Act of 1927, which permits regulation and levy of

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Cases Referred (12)