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2017 (9) TMI 1901 - SC - Indian LawsLevy of transit fee on Minerals - levy by three States, i.e., State of Uttar Pradesh, State of Uttarakhand and State of Madhya Pradesh - HELD THAT - The High Court has rejected the submission of the writ Petitioners, holding that both 1927 Act and 1957 Act operate into different spheres. The High Court further held that Rule framed by the State Under Section 41 of the Act, 1927 i.e. Rule 5 of Rules, 2000 is valid. Various submissions of the writ Petitioners reiterated before us on the basis of Act, 1957 and Rules framed thereunder including Section 4 (1A) and Section 23C of Act, 1957 have already been considered by us, while considering the submission raised with regard to Civil Appeals arising from the judgment of the Allahabad High Court. The above submission having already noted and considered, it needs no repetition here. Hence, submission raised by learned Counsel for the writ Petitioners on the basis of Act, 1957 is thus rejected. Now, we come to the reason on the basis of which Division Bench of the High Court has allowed the Writ Petition by quashing the Notification dated 28.05.2001. The High Court held that the Notification dated 28.05.2001 is contrary to the provisions of Section 41 of the Act, 1927 and the notification transgresses Rule 5 of Rules, 2000 because Rule 5 provides that State Government or an authorised officer by it, from time to time, shall fix the rate of the fee for issue of Transit Pass. The fee is to be issued for issue of Transit Pass and Transit Pass by no stretch of imagination can have any nexus with unit of minerals. Thus in fact, it is a fee pertaining to the minerals and not a fee issued on Transit Pass. Whether the view of the High Court, holding that State could not have asked for payment of fee on Forest Produce on the basis of quantity/volume of the Forest Produce is correct ? We revert back to provision of Section 41 of the Act, 1927. Section 41 empowers the State to make Rules to regulate the transit of Forest Produce. The Rules thus can very well regulate the transit of the Forest Produce. Sub-Section 2 of Section 41 provides that in particular and without prejudice to the generality of the foregoing provision such Rules may, (c) provide for the issue, production and return of such passes and for the payment of fees therefore. The power given to State is to regulate the transit of all timber and other Forest Produce and the Rules may provide for issue of passes and for the payment of fees, therefore, fee for issue of the passes has correlation with the Forest Produce which is clear from the scheme of Rules, 2000. According to Rule 3 no Forest Produce shall move into or outside or within the State of Madhya Pradesh except in the manner as provided without a Transit Pass in Form A, B and C. The Forms of Transit Pass are part of the rules. When the State is empowered to fix rates of fee, it can very well fix the fee on the quantity of Forest Produce. High Court having upheld both Section 41 of the Act, 1927 as well as Rule 5 of Rules, 2000, we see no reason as to how the notification issued under Rule 5 can be held to be beyond the powers of the State - When the State is empowered to fix the rate of fee, it has latitude under the statute to adopt a basis, for fixation of rates of fee. It cannot be said that under the statute fee can be charged only to meet the expenses which are incurred for printing or preparation of passes. The High Court has taken a incorrect view of the matter while coming to the conclusion that Notification dated 28.5.2001 is beyond the power of the State under Rule 5 of Rules, 2000. Rule 5 clearly empowers the State to fix the rate of fee and the rate of fee can be fixed on the basis of quantity/volume of the Forest Produce. The view that the High Court committed error in setting aside the Notification dated 28.05.2001. Also, 1927 Act and 1957 Act operate in different fields. State has power to regulate transit of forest produce Under Section 41 of 1927 Act and the Regulation of minerals and effect of transit Rules framed by the State is only incidental on the regulatory control on the mineral as exercised under 1957 Act. The above observations of the Division Bench thus cannot be approved - High Court committed error in quashing the order dated 28.05.2001. Petition dismissed.
Issues Involved:
1. Levy of transit fee by the States of Uttar Pradesh, Uttarakhand, and Madhya Pradesh. 2. Validity of transit fee rules and amendments. 3. Interpretation of the term "forest produce." 4. Impact of the Mines and Minerals (Development and Regulation) Act, 1957 on the Indian Forest Act, 1927. 5. Legality of transit fee on manufactured goods and minerals. 6. Refund of transit fee collected under invalidated rules. Detailed Analysis: I. Levy of Transit Fee: The primary issue was the levy of transit fee by the States of Uttar Pradesh, Uttarakhand, and Madhya Pradesh on the transportation of forest produce. The States levied this fee under the Indian Forest Act, 1927, and respective state rules. The Supreme Court consolidated various appeals challenging the validity of these levies. II. Validity of Transit Fee Rules and Amendments: The Court examined the validity of the Uttar Pradesh Transit of Timber and other Forest Produce Rules, 1978, and its amendments. The Fourth and Fifth Amendment Rules were struck down by the Allahabad High Court for being excessive and confiscatory. The Supreme Court upheld this decision, noting that the amendments were excessive and changed the fee's character into a tax. III. Interpretation of "Forest Produce": The Court clarified that the term "forest produce" includes items like stone grits, stone chips, coal, limestone, and marble slabs, which do not lose their character as forest produce even after processing. However, items like fly ash, clinker, and synthetic gypsum were not considered forest produce. IV. Impact of the Mines and Minerals (Development and Regulation) Act, 1957: The Court held that the Indian Forest Act, 1927, and the Rules framed under Section 41 are neither overridden nor impliedly repealed by the Mines and Minerals (Development and Regulation) Act, 1957. Both legislations operate in different spheres and fields. V. Legality of Transit Fee on Manufactured Goods and Minerals: The Court ruled that the crushing of stones into grits, chips, and dust does not result in a new commodity different from forest produce. Similarly, coal, limestone, and marble slabs remain forest produce. The Court also upheld the validity of transit fees on these items, rejecting the argument that they lose their character as forest produce after processing. VI. Refund of Transit Fee Collected Under Invalidated Rules: The Court directed that the writ petitioners from whom transit fee was realized with effect from 01.05.2016 under the Fifth Amendment to 1978 Rules are entitled to claim a refund along with interest at 9%, provided they establish that they have not passed on the burden to any other person. Separate Judgments: The Court delivered a separate judgment for the State of Madhya Pradesh, allowing its appeals and setting aside the High Court's decision that quashed the notification fixing the transit fee. The Court held that the State was justified in fixing the rate of transit fee and that the notification was within the power of the State under Rule 5 of the 2000 Rules framed under the 1927 Act. Conclusion: The Supreme Court's judgment addressed the validity of transit fee levies, the interpretation of "forest produce," the impact of the MMDR Act, and the legality of transit fees on processed goods and minerals. The Court upheld the striking down of excessive amendments to transit fee rules and provided guidelines for the refund of fees collected under invalidated rules.
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