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Judgments of Supreme Court of India and High Courts

State Of Uttaranchal vs M/S. Kumaon Stone Crusher on 15 September, 2017



CIVIL APPEAL NO. 14874 OF 2017
 (ARISING OUT OF SLP(C)No.19445 of 2004)


C.A. No. 14446/2017 @ SLP(C) No.3189/2012
C.A. No. 14448/2017 @ SLP(C) No.1675/2012
C.A. No. 14922/2017 @ SLP(C) No.8713/2008
C.A. No. 14924/2017 @ SLP(C) No.10601/2008
C.A. No. 14923/2017 @ SLP(C) No.9523/2008
C.A. No. 14920/2017 @ SLP(C) No.6959/2008
C.A. No. 14921/2017 @ SLP(C) No.6958/2008
C.A. No. 14452/2017 @ SLP(C) No.950/2012
C.A. No. 14453/2017 @ SLP(C) No.1031/2012
C.A. No. 14464/2017 @ SLP(C) No.948/2012
C.A. No. 14465/2017 @ SLP(C) No.1169/2012
C.A. No. 14468/2017 @ SLP(C) No.1197/2012
C.A. No. 14469-14476/2017 @ SLP(C) No.2213-2220/2012
T.P.(C) No.76/2012
T.P.(C) No.77/2012
C.A. No. 14485/2017 @ SLP(C) No.1697/2012
C.A. No. 14486/2017 @ SLP(C) No.2082/2012
C.A. No. 14492/2017 @ SLP(C) No.2236/2012
C.A. No. 14493/2017 @ SLP(C) No.2081/2012
C.A. No. 14495/2017 @ SLP(C) No.2399/2012
C.A. No. 14497-14509/2017 @ SLP(C) No.3152-3164/2012
C.A. No. 14510-14523/2017 @ SLP(C) No.2938-2951/2012
C.A. No. 13122-13129/2017 @ SLP(C) No.3192-3199/2012
C.A. No. 13300/2017 @ SLP(C) No.1822/2012
C.A. No. 13301/2017 @ SLP(C) No.4832/2012
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C.A. No. 13320/2017 @ SLP(C) No.6144/2012
C.A. No. 13346-13358/2017 @ SLP(C) No.3512-3524/2012
C.A. No. 13360-13378/2017 @ SLP(C) No.3320-3338/2012
C.A. No. 13386-13395/2017 @ SLP(C) No.3490-3499/2012
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C.A. No. 13488/2017 @ SLP(C) No.6822/2012
C.A. No. 13427/2017 @ SLP(C) No.11395/2013
Signature Not Verified C.A. No. 13518/2017 @ SLP(C) No.6614/2012
Digitally signed by
C.A. No. 13542/2017 @ SLP(C) No.6807/2012
Date: 2017.09.20 C.A. No. 13559/2017 @ SLP(C) No.5965/2012
16:53:17 IST
Reason: C.A. No. 13575/2017 @ SLP(C) No.4761/2012
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C.A. No. 13428/2017 @ SLP(C) No. 21930/2009
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C.A. No. 13409/2017 @ SLP(C) No. 11846/2009
C.A. No. 13536/2017 @ SLP(C) No.12577/2013
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C.A. No. 14076-14078/2017 @ SLP(C) No.8465-8467/2012
CONMT.PET.(C)No.199-201/2014 In SLP(C)No.31530-31532/2011
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C.A. No. 13544/2017 @ SLP(C) No.12578/2013
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C.A. No. 13545/2017 @ SLP(C) No.13521/2013
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C.A. No. 14268/2017 @ SLP(C) No.12948/2012
C.A. No. 13622/2017 @ SLP(C) No.12659/2014
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C.A. No. 14307/2017 @ SLP(C) No.14738/2012
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W.P.(C) No.203/2009 (X)
C.A. No. 2797/2008 (III-A)
C.A. No. 14315-14322/2017 @ SLP(C) No.15555-15562/2012
C.A. No. 13771-13780/2017 @ SLP(C) No.11380-11389/2013
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C.A. No. 14378/2017 @ SLP(C) No.16973/2012
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SLP( C) No.13656/2012 (XI)
C.A. No. 14447/2017 @ SLP(C) No.13640/2012
C.A. No. 14449-14451/2017 @ SLP(C) No.34773-34775/2012
C.A. No. 13574/2017 @ SLP(C) No.18665/2013
C.A. No. 14454-14463/2017 @ SLP(C) No.23589-23598/2012
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C.A. No. 13576/2017 @ SLP(C) No.18664/2013
C.A. No. 14272/2017 @ SLP(C) No. 11923/2009
C.A. No. 5652/2008
SLP (C) No.15721/2012
C.A. No. 13781/2017 @ SLP(C) No.11392/2013
C.A. No. 14477/2017 @ SLP(C) No.17003/2012
C.A. No. 13379/2017 @ SLP(C) No. 24106/2007
C.A. No. 2739-2762/2008
C.A. No. 14177/2017 @ SLP(C) No. 17666/2008
C.A. No. 14191/2017 @ SLP(C) No. 22322/2008
C.A. No. 14248/2017 @ SLP(C) No. 20675/2008
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C.A. No. 2734/2008
C.A. No. 13535/2017 @ SLP(C) No. 18094/2011
C.A. No. 13106-13116/2017 @ SLP(C) No. 26555-26565/2012
C.A. No. 13302-13312/2017 @ SLP(C) No.2812-2822/2014
C.A. No. 13546-13557/2017 @ SLP(C) No. 27709-27720/2012
C.A. No. 13560-13571/2017 @ SLP(C) No. 23599-23610/2012
C.A. No. 14273/2017 @ SLP(C) No. 17572/2009
C.A. No. 2737/2008
C.A. No. 2820/2008
C.A. No. 2706/2008
C.A. No. 13577/2017 @ SLP(C) No.22760/2013
C.A. No. 13464/2017 @ SLP(C) No. 22363/2010
C.A. No. 13447/2017 @ SLP(C) No. 21868/2010
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C.A. No. 13581-13600/2017 @ SLP(C) No. 24075-24094/2012
C.A. No. 13607-13620/2017 @ SLP(C) No. 23682-23695/2012

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C.A. No. 13543/2017 @ SLP(C) No. 26825/2011
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C.A. No. 13647-13674/2017 @ SLP(C) No. 26610-26637/2012
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C.A. No. 13359/2017 @ SLP(C) No. 23547/2005
C.A. No. 2732/2008
C.A. No. 14276/2017 @ SLP(C) No. 18760/2009
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C.A. No. 2819/2008
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C.A. No. 14267/2017 @ SLP(C) No. 21844/2008
C.A. No. 14269/2017 @ SLP(C) No. 24768/2008
C.A. No. 14079/2017 @ SLP(C) No. 27326/2012
C.A. No. 14133/2017 @ SLP(C) No.17217/2009
C.A. No. 1007/2011 (X)
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C.A. No. 1008/2011 (X)
C.A. No. 13130/2017 @ SLP(C) No. 2294/2008
C.A. No. 14487-14491/2017 @ SLP(C) No.33170-33174/2012
C.A. No. 14280/2017 @ SLP(C) No. 29725/2009
CONMT.PET.(C)No.585-587/2016 In SLP(C)No.31530-31532/2011
C.A. No. 14494/2017 @ SLP(C) No.30535/2012
C.A. No. 14293/2017 @ SLP(C) No. 27511/2011
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C.A. No. 14524/2017 @ SLP(C) No. 34384/2012
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C.A. No. 13345/2017@ SLP(C)No.24804/2017@S.L.P.(C)…(CC)No.22596/2015
CONMT.PET.(C) No. 251/2008 In C.A. No. 2797/2008 (III-A)
C.A. No. 14281/2017 @ SLP(C) No. 27771/2009
C.A. No. 13105/2017 @ SLP(C) No. 29549/2016
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C.A. No. 13519/2017 @ SLP(C) No. 33180/2010
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C.A. No. 2047/2006



Delay condoned. Leave granted.

2. This batch of cases relates to levy of transit fee.

Transit fee levied by three States, i.e., State of Uttar

Pradesh, State of Uttarakhand and State of Madhya Pradesh

is in question. 

3. In exercise of power under Section 41 of Indian Forest

Act , 1927 (hereinafter referred to as “1927 Act) rules

have been framed by different States. State of U.P. has

framed   the   Rules,   namely,   the   Uttar   Pradesh   Transit   of

Timber     other   Forest   Produce   Rules,   1978   (hereinafter

referred   to   as   “1978   Rules”).   After   formation   of   the

State   of   Uttarakhand   in   the   year   2000,   the   above   1978

Rules were also extended by the State of Uttarakhand by

2001   Rules.   State   of   Madhaya   Pradesh   has   framed   Rules,

namely,   the   Madhya   Pradesh   Transit   (Forest   Produce)

Rules, 2000(hereinafter referred to as “2000 Rules”). 

4.   Several   writ   petitions   were   filed   in   the   Allahabad

High   Court,   Uttarakhand   High   Court   and   High   Court   of

Madhya   Pradesh   challenging   the   levy   of   transit   fee,

validity of transit fee Rules and for other reliefs. The

writ petitions filed by the writ petitioners were allowed

by   the   Uttarakhand   High   Court   whereas   Allahabad   High

Court dismissed some writ petitions and allowed others.

The   Madhya   Pradesh   High   Court   has   allowed   the   writ

petitions   by   a   common   judgment   dated   14.05.2007.   The

State of Uttarakhand and State of Uttar Pradesh has filed

SLPs, in which leave has   been granted, challenging the

judgments of the High Courts in so far as  writ petitions

filed by the writ petitioners were allowed. The State of

Madhya   Pradesh   has   also   filed   appeals   challenging   the

common   judgment   dated   14.05.2007.   The   writ   petitioners

whose writ petitions were dismissed by the Allahabad High

Court   has   also   filed   SLPs   against   the   said   judgment   in

which leave has been granted. 

5. The entire bunch of cases before us can be described

in four groups. First group consists of appeals filed by

the   State   of   U.P.   as   well   as   State   of   Uttarakhand

challenging   various   judgments   of   Uttarakhand   High   Court

by   which   writ   petitions   filed   by   the   different   writ

petitioners   for   quashing   the   levy   of   transit   fee   were

allowed. The second group of appeals consists of appeals

filed   by   the   State   of   U.P.   challenging   the   judgment   of

Allahabad   High   Court   dated   11.11.2011   and   few   other

judgments   by   which   writ   petitions   filed   by   the   writ

petitioners have been allowed. Third group of appeals has

been filed by the writ petitioners whose writ petitions

filed before the High Court either have been dismissed or

the reliefs claimed in their writ petitions have not been

granted.   The  fourth   group  of   appeals   has   been   filed   by

the   State   of   Madhya   Pradesh   against   the   judgment   dated

14.05.2007   by   which   writ   petitions   filed   by   the   writ

petitioners   in   the   Madhya   Pradesh   High   Court   have   been

allowed quashing the notification fixing the transit fee

and directing for refund of the transit fee. 

6. For   comprehending   the   issues   which   have   come   for

consideration   in   this   batch   of   appeals,   we   shall   first

notice the facts in some of the writ petitions which have

been   decided   by   three   High   Courts,   i.e.,   Uttarakhand,

Allahabad and Madhya Pradesh.

7. The   parties   shall   be   hereinafter   referred   to   as

described   in   the   writ   petitions   filed   before   the   High




8. There are nineteen appeals arising out of judgments

rendered by Uttarakhand High Court. There are only three

main   judgments   rendered   by   Division   Bench   of   the   High

Court   which   have   been   followed   in   other   cases.     It   is

thus   necessary   to   note   the   facts   giving   rise   to   above

mentioned three judgments. 

(1) Judgment   dated   01.07.2004   in   Writ   Petition   No.  
1124   (M­B)   of   2001,   M/s   Kumaon   Stone   Crusher   vs.  

State of U.P.  Ors.

[Giving   rise   to   Civil   Appeal   (arising   out   of   SLP  
No.   19445   of   2004,   State   of   Uttaranchal     Ors.  
vs. State of Kumaon Stone Crusher and Civil  Appeal
(arising out of SLP No. 26273 of 2004,  the   State   of   U.
P.  Ors. vs. M/s. Kumaon Stone  Crusher.]

9. M/s   Kumaon   Stone   Crusher   filed   a   writ   petition

praying for quashing the order dated 14.06.1999 issued by

Conservator of Forest and order dated 01.06.1999 issued

by   Divisional   Forest   Officer   directing   for   making

recovery and levy of Transit Fee upon the finished item

of stone i.e. stone grits, stone chips etc from the writ

petitioner.  Petitioners case was that its stone crusher

which   collects   the   boulders   from   the   bank   of   Sharda

River, which is a Forest Produce, Transit Fee is charged

and   paid.   After   taking   the   boulders   to   the   crushing

centre and involving manufacturing process, boulders are

converted   into   the   commercial   commodity,   namely,   stone

grits and chips. It is pleaded that after it becomes a

commercial commodity, it ceases to be as Forest Produce

and   no   Transit   Fee   can   be   charged   and   recovered


10. The   Division   Bench  vide  its   judgment   dated

01.07.2004   allowed   the   writ   petition   and   quashed   the

orders   dated   14.03.1999   and   21.06.1999.   Both   State   of

Uttarakhand   and   State   of   U.   P.   aggrieved   by   aforesaid

judgments have filed the above noted several appeals. 

(2) JUDGMENT   DATED   30.03.2005   IN   WRIT   PET.   NO.310   OF  
2005,   M/s.   Kumaon   Pea   Gravel   Aggregated  
Manufacturing   Company     vs.   State   of   Uttarakhand  
and Ors. 

[Giving   rise   to   Civil   Appeal   (arising   out   of   SLP  
No. 23547 of 2005 and Civil Appeal (arising out  of
SLP No. 24106 of 2007)]

11. Writ Petitioners, proprietary firms were carrying on

the business of manufacturing  sale of finished produce

of   washed   and   single   pea   gravel   and   bajri.   The   Writ

Petitioner used to purchase river bed material from the

lessee of query on payment of royalty and trade tax on

which   Transit   Fee   is   charged   from   the   State   of

Uttarakhand.   But   when   the   writ   petitioners   transport

their finished products from their factory to customers,

Transit   Fee   is   charged   by   State   of   Uttarakhand   and

further,   when   it   crosses   the   border   of   Uttarakhand   and

enter into the State of U.P., the Transit Pass issued by

the State of Uttarakhand is to be surrendered and again

Transit Passes are to be taken by making payment of the

Transit Fee.

12. High   Court   allowed   the   writ   petition  vide  its

judgment   dated   30.03.2005   holding   that   after   river   bed

material is converted into the Washed  Single Pea Gravel

and   Bajri   after   involving   manufacturing   process,   a   new

commercial commodity comes into existence and same ceases

to   be   a   Forest   Produce.   High   Court   allowed   the   writ

petition holding that no Transit Fee can be realised. It

was   further   observed   that   even   if,   same   is   treated   as

Forest Produce, Transit Fee can not be realised twice on

the   same   material   under   1978   Rules.   Both   State   of   U.P.

and   Uttarakhand   had   filed   Civil   Appeals   against   the

aforesaid judgment.

(3)   Judgment   dated   26.06.2007   in   Writ   Petition   No.  
993   of   2004,   M/s   Gupta   Builders   vs.   State   of  
Uttaranchal  Ors.

13. The writ petitioner in the writ petition has prayed

for issuing a writ of certiorari, quashing     1978 Rules

as applicable in State of Uttaranchal (now Uttarakhand)

so   far   the   1978   Rules   provides   for   Transit   Pass   and

Transit Fee for boulders, sand and bajri, further not to

enforce 1978 Rules as amended by the State of U.P.  vide

amendment Rules 2004. 

14. Writ Petitioner,   a Registered Partnership Firm was

engaged   in   the   business   of   purchase     sale   of   natural

stones, boulders, sand  bajri and supplying the same to

the   various   Government   Departments   including   PWD.   Writ

Petitioner purchased boulders, sand, bajri from the Kol

river bed from Uttaranchal Forest Development Corporation

which is lessee. Writ Petitioner makes payment of royalty

and other charges to the lessee. The Uttar Pradesh Minor

Minerals   (Concession)   Rules,   1963   (hereinafter   referred

to   as   ‘Rules,   1963’)   has   been   adopted   by   the   State   of

Uttarakhand,   as   Uttaranchal   Minor   Minerals   (Concession)

Rules,   2001(hereinafter   referred   to   as   ‘Rules,   2001’).

Uttaranchal   Forest   Development   Corporation   issues   Form

MM­11 to the writ petitioner.

15. Writ Petitioner pleaded that since royalty and other

charges   are   being   paid   in   accordance   with   the   minor

mineral   rules   framed   under   the   Mines   and   Minerals

(Development     Regulation)   Act,   1957   (hereinafter

referred to as ‘MMDR Act, 1957′), no Transit Fee can be

levied on the writ petitioner. The High Court allowed the

writ petition holding that Transit Fee under Rules, 1978

can not be applicable on the transit of minor minerals.

The levy of Transit Fee was held to be illegal. 

16. Following   the   aforesaid   judgment   dated   26.06.2007

several other writ petitions were decided giving rise to

different   other   Civil   Appeals,   which   are   Civil   Appeal

No.1010   of   2011,   Civil   Appeal(arising   out   of   SLP   No.

18094 of 2011) and Civil Appeal  (arising out of SLP No.

26285 of 2011).


17. A   large   number   of   Civil   Appeals   have   been   filed.

Four Transfer Petitions and seven Contempt Petitions have

also   been   filed.   Civil   appeals   have   been   filed   by   the

aggrieved   parties   against   the   various   judgments   of   the

Allahabad High Court. All the civil appeals filed by the

writ petitioners as  well as by the State of U.P. centre

around   leviability     of   transit   fee   on   different   forest

produces as per 1978 Rules.

18. Apart   from   various   other   judgments   against   which

appeals have been filed, two judgments delivered by two

Division   Benches   need   to   be   specially   noted   by   which

judgments bunch of writ petitions numbering more then 100

have   been   decided.   We   shall   notice   these   two   judgments

first before referring to facts of other cases. 

CIVIL APPEAL NOS.2739­2762 OF 2008
(arising   out   of   judgment   dated   27.04.2005   in   Writ
Petition No.975 of 2004, Kumar Stone Works  Others vs.
State of U.P.  Ors.)

19. Several   writ   petitions   were   filed   challenging   the

realisation of transit fee on transport of stone chips,

stone   grit,   stone   ballast,   sand,   morrum,   coal,   lime

stone,   dolomite   etc.     The   writ   petitioners   have   also

challenged the validity of notification dated 14.06.2004

by which 1978 Rules were amended increasing the transit

fee   from   Rs.5/­   to   Rs.38/­   per   tonne   of   lorry   load   of

timber   and   other   forest   produce.   By   judgment   dated

27.04.2005 bunch of writ petitions was decided consisting

of petitions dealing with different materials. The High

Court in its judgment has noticed details of few of the

writ petitions facts of only leading petition which need

to be briefly referred:

20. Writ Petition No.975 of 2004, which was stated to be

leading writ petition:

Petitioners   have   been   granted   mining   lease   by   the

District   Magistrate,   Sonebhadra,   for   excavation   of

boulders,   rocks,   sand   and   morrum   in   the   District   of

Sonebhadra from the plots situated on the land owned by

the State Government which do not come within any forest

area.   The   petitioners’   case   was   that   they   do   not   carry

any mining operation in the forest area. After excavation

they transport the goods from the site to the destination

by truck. The petitioners convert the stone and boulder

into   Gitti.   It   was   further   pleaded   that   while

transporting   the   goods,   they   do   not   pass   through   the

forest area and they are not using any forest road for

the   purpose   of   transportation   of   their   goods.   They   pay

royalty to the State Government under the provisions of

the   U.P.   Minor   Minerals   (Concession)   Rules,   1963.   The

State’s case was that the petitioners are procuring the

grit,   boulder   etc.   from   the   land   of   village   Billi

Markundi   notified   under   Section   4   of   the   Indian   Forest

Act,   1927.   The   petitioners   are   carrying   out   mining

operations in the forest land. With regard to some of the

petitioners   it   was   alleged   that   they   are     carrying

business in the area which had already been notified as

forest area under Section 4 of 1927 Act. It was pleaded

by the State that grit, boulder etc. are being procured

and   transported   from   the   forest   which   are   the     forest

produce. The Transit Rules, 1978 has already been upheld

by this Court.

21. The   Division   Bench   after   hearing   the   parties

dismissed all the writ petitions holding the liability of

the petitioners to pay transit fee. The High Court held

that   validity   of   the   Rules   have   already   been   upheld   by

this   Court   in  State   of   U.P.   vs.   Sitapur   Packing   Wood

Suppliers,   2002   (4)   SCC   566.  The   Court   upheld   the   2004

Amendment.   The   High   Court   also   held   that   the   words

“brought from forest” as occurring in Section 2(4)(b) of

the 1927 Act, necessarily implies that it passes through

the   forest.   It   also   held   forest   must   be   understood

according   to   its   dictionary   meaning.   This   description

covers   all   statutory   recognised   forest,   whether

designated as reserve, protected or otherwise. The Court

held that all goods are passing through   forest, hence,

petitioners cannot deny liability to pay transit fee. The

increase of transit fee to Rs.38/­ can neither be said to

be excessive or exorbitant or prohibitive.  

22. The   several   civil   appeals   have   been   filed   against

the above judgment where the appellants reiterate their

claim as they raised before the High Court.

    Civil Appeal arising out of SLP(C)No.1675 of 2012
State   of   U.P.   Ors.   vs.   M/s.   Ajay   Trading  
(Coal)Co. Ors.
(arising out of the judgment dated 11/21.11.2011) in   Writ
Petition   No.963   of   2011   ­   M/s.   Ajay   Trading   (Coal)Co.
Ors. vs. State U.P.  Ors.)

23. By   judgment   dated   11.11.2011,   two   batches   of   writ

petitions   were   decided.   First   batch   consisted   of   Writ

(Tax) No.327 of 2008(NTPC Limited  another vs. State of

U.P. and others) and other connected matters and second

batch consisted of Writ (Tax) No.963 of 2011 (M/s. Ajay

Trading (Coal) Co. and others vs. State of U.P.  Ors.). 

24. The first group of writ petitions of which Writ (Tax)

No.327 of 2008  was treated as leading writ petition, was

filed   against   the   imposition   of   transit   fee   on   the

transportation of soil(mitti) and coal.  NTPC Limited is

a Government of India undertaking engaged in generation

of   electricity   in   its   various   units,   one   of   them   being

Singrauli Super Thermal Power Station   at Shakti Nagar,

District Sonebhadra which is a Coal Based Thermal Power

Station. For disposal of fly ash, soil is excavated from

non­forest   areas   and   it   is   transported   by   the   route,

which   does   not   fall   within   the   forest   area.   The

Divisional   Forest   Officer   has   demanded   transit   fee   on

transportation   of   soil.   By   amendments   the   petitioners

were   also   permitted   to   challenge   Fourth   and   Fifth

Amendment Rules, 1978. 

25.   The   second   group   of   writ   petitions   of   which   Writ

(Tax)   No.963   of   2011(M/s.   Ajay   Trading((Coal)   Co.   and

others vs. State of U.P.  ors.) was treated as leading

petition.   That   petitioners   are     incorporated   as   Public

Limited Co./Private Lt. Co./Proprietor Firm Manufacturers

and Traders of goods made of forest produce, the miners,

as   transporters   of   forest   produce   who   challenged   the

applicability   of   Indian   Forest   Act,   1927   on   mines   and

minerals and other forest produce. The validity of Fourth

and   Fifth   Amendment   Rules   by   which   transit   fee   was

increased   was   also   challenged.   Both   the   above   batch   of

writ   petitions   consisted   of   a   large   number   of   writ

petitions dealing with various materials raising various

facts and grounds, some common and some different.

26. The Division Bench by its judgment dated 11.11.2011

has   set   aside   the   Fourth   and   Fifth   Amendment   Rules

increasing   the   transit   fee.   The   Court   recorded   its

conclusion   in   paragraph   187   of   the   judgment   on   various

submissions raised by the learned counsel for the parties

before it.

27.  The claim of various writ petitioners that they are

not liable to pay transit fee was, however, not accepted.

Aggrieved against the judgment dated 11.11.2011 in so far

as it struck down Fourth and Fifth Amendment Rules, the

State   of   U.P.   has   come   up   in   appeals   whereas   writ

petitioners who were denying the liability to pay transit

fee   have   filed   appeals   against   the   judgment   dated

11.11.2011   reiterating   their   claim   that   they   are   not

liable to pay transit fee on various grounds as raised in

their   writ   petitions.   The   claims   in   various   writ

petitions   are   different   and   also   founded   on   different

grounds. It is neither necessary nor desirable to notice

the   facts   and   claim   in   each   case   separately.   The   writ

petitions which have been decided by both the judgments

dated   27.04.2005   as   well   as   11.11.2011   consisted   of

different nature of writ petitions which can be broadly

described in few groups. It shall suffice to notice facts

and claims as raised in few cases of each group:

Group(A) This   represents   petitioners   who   have

obtained   mining   leases   under   U.P.   Minor   Minerals

(Concession)   Rules,   1963   as   well   as   leases   of   major

minerals   for   mining   of   various   minerals.   Some   of   the

mining lease holders are also transporting the minerals.

There   are   other   categories   of   petitioners   who   are   only

transporting   the   minerals   by   their   factories.   Stone

crusher,   dealers   who   are   crushing   the   minerals   and

transporting   finished   materials,   all   these   petitioners

denied their liability to pay transit fee. 

Petitioners claim that the stone ballasts and grit,

boulders etc. are minerals which are covered under MMDR

Act, 1957 and no transit fee can be charged under 1978

Rules.   Some   of   the   petitioners   say   that   they   are

transporting   the   minerals   through   State   and   National

Highways   by   paying   toll   tax.   Petitioners   further   state

that   the   transit   fee   is   charged   twice   that   is   on   raw

material   as   well   as   on   finished   goods   which   is   not

permissible.   Check   posts   have   been   put   on   State   and

National Highways which are illegal.

Group(B) Petitioners   in   this   group   deal   with   coal/

hard   coke/coal   briquettes   /softcoke   /cinder   (rejected

coke). Petitioners claim that coal is not forest produce

and   it   is   governed   by   various   Parliamentary   Acts   which

covers the field. Petitioners further pleaded that they

are   not   mining   coal   from   forest   area   rather   they   are

purchasing   from   Coal   India   Ltd.   after   payment   of

necessary   expenses.   They   are   not   using   any   forest   land

and rather are using State and National highways and PWD

roads. Some petitioners obtained coal from a company or

dealer   by   paying   necessary   charges.   The   petitioner   is

using U.P. roads as a passage only and going out of State

of   U.P.   that   is   to   Delhi   and   Haryana.   Some   petitioners

also rely on exemption notification dated 29.03.2010.

Group(C) This group consisted of limestone, calcium

hydroxide, marble, calcium oxide, dolomite, pawdis, etc.

Petitioners claim that the aforesaid items are not forest

produce. They further pleaded that they are using State

and National highways as well as PWD roads and not using

any forest road. They further pleaded that twice transit

fee is charged, firstly on raw material and secondly on

the finished products by Fourth and Fifth Amendment.

Group(D) This group consists of petitioners who are

dealers in plywood, imported timber/wood, bamboo, veneer,

waste of plywoods, wood charcoal. Petitioners claim that

they are not passing through forest area in U.P. They are

not   transporting   any   forest   produce   rather   are

transporting   finished   goods.   Petitioners   are   purchasing

timber which is coming out of the country.

Group(E) This group consists of petitioners dealing

in   fly   ash,   clinkers   and   gypsum.   Petitioners   claim   to

obtain   the   aforesaid   material   by   manufacturing   process.

Petitioners   claim   that   the   aforesaid   articles   are   not

forest produce since they undergo chemical process. 

28.  In so far as writ petition included in group ‘A’ is

concerned,   we   have   noticed   above   the   facts   of   Writ

Petition   No.26273   of   2004,   M/s.   Kumaon   Stone   Crusher,

decided   on   01.07.2004.   Group   ‘B’   consisting   of

petitioners   who   are   dealing   in  coal/hard   coke/coal

briquettes/soft   coke/cinder(rejected   coke),   etc.   C.A.

No.2706 of 2008 (M/s. Krishna Kumar Jaiswal vs. State of

U.P.     Ors.,   is   one   of   such   writ   petitions   which   was

dismissed by the High Court on 27.04.2005.

29. In   group   ‘B’   reference   is   made   to   Civil   Appeals

arising out of SLP(C)Nos.34909­34916 of 2012 (M./s. Anand

Coal   Agency     Ors.   etc.etc.   vs.   State   of   U.P.     Ors.

etc.etc.).   The   writ   petitioners­appellants   are   involved

in   trading   of   coal.   Petitioners   get   coal   after   the

acceptance of their bid by the Coal India Limited for the

coal field concern. The petitioners imports coal from the

outside the State of U.P. by road and do not use forest

roads. The coal is transported only by National highways

and PWD roads. It was stated that collection of transit

fee on coal is illegal and without jurisdiction. Levy on

schedule minerals is exclusively subject matter of MMDR


30. Another case in this context is Civil Appeal arising

out of SLP(C)No.981 of 2012 (Lanco Anpara Power Ltd. vs.

State of U.P.  Ors.). The writ petitioner­appellant is a

Company   carrying   on   the   business   in   generation,

distribution and sale of electricity in the State of U.P.

Transit fee is charged on transportation of coal from the

colliery  to the thermal power unit of the petitioner at

Anpara. The petitioner contends that condition precedent

for   applicability   of   transit   fee   with   regard   to   forest

produce   as   referred   to   in   Section   2(4)(b)(iv)   is   that

genesis of the produce in question must be traceable to

forest.   In   the   present,   coal   brought   by   the   petitioner

does   not   owe   its   genesis   to   a   forest.   The   transit   fee

thus cannot be levied.

31. In   group   ‘C’,   one   of   the   cases   is   Civil   Appeal

arising out of SLP(C)No.36272 of 2011 (Agra Stone Traders

Association     Ors.   vs.   State   of   U.P.     Ors.,   the   writ

petitioners­appellants   are   engaged   in   the   business   of

purchasing and selling of marbles, marbles goods, marble

chips,   stone   chips,   stone   powder,   dolomite,   limestone

chips   and   pawdis   from   the   State   Rajasthan,   Madhya

Pradesh,   Karnataka,   Andhra   Pradesh,   Orissa,   etc.   from

various   wholesale   shopkeepers,   industries/factories

situated in the above said States. After purchasing the

above   said   materials/finished   goods   the   same   are

transported by them within the State of U.P. for sale to

the consumers from the shops of the writ petitioners. The

above materials are not directly transported from mines

nor the same are in original form of mines and minerals.

The   petitioners   have   all   necessary   passes   and   invoices

from   different   States.   However,   when   petitioners’

vehicles   enter   into   the   State   of   U.P.   transit   fee   is

being   charged   under   1978   Rules.   The   petitioners   denied

their liability to pay transit fee. 

32. One   of   such   cases   is   Civil   Appeal   No.1697   of   2012

(M/s. Aditya Birla Chemicals (India) Limited vs. State of

U.P.  Ors.). The writ petitioner­appellant is a public

limited   company   who   is   engaged   in   the   business   of

manufacture of chemicals and uses  calcium hydroxide and

calcium   oxide.   The   petitioner   pleads   that   calcium

hydroxide is manufactured by treating lime with water at

a   particular   temperature   and   calcium   oxide   is   made   by

thermal   decomposition   of   materials   such   as   limestone,

that   contain   calcium   carbonate   in   a   lime   kiln   which   is

accomplished by heating the material to above 825 degree

centigrade.   These   products   were   also   purchased   from

registered     traders/manufacturers   of   the   State   of

Rajasthan   after   obtaining   invoices   and   passes.   On   such

transportation the State of U.P. is levying transit fee.

The product manufactured and purchased by the petitioners

is not forest produce and no transit fee can be levied. 

33. In   group   ‘D’,   one   of   the   cases   is   Civil   Appeal

arising   out   of   SLP(C)   No.30185   of   2012   (Arvind   Kumar

Singh     Anr.   vs.   State   of   U.P.     Ors.),   the   writ

petitioner­appellant carries on the business of supplying

bamboo,   waste   of   plywood   and   small   twigs/debarked

jalawani   lakdi   of   eucalyptus   and   poplar   trees   to   paper

manufacturing   units.   The   paper   manufacturing   units,   to

which the petitioner supplies are situate in the State of

Haryana, Punjab, Uttar Pradesh and Madhya Pradesh. Waste

of plywood is a waste product obtained from the plywood

industries,   which     is   processed   to   obtain   chips.   The

purchases   are   not   made   by   the   petitioner   inside   any

forest   of   Uttar   Pradesh   or   any   other   State.   The   loaded

trucks of the petitioner do not pass through any forest

road. The waste of plywood and veneer is neither timber

nor   any   kind   of   forest   produce.   They   are   products   of

human/mechanical   effort   and   labour   and   a   result   of   a

manufacturing   process.   There   is   no   liability   to   pay

transit fee on the above items.

34. In   group   ‘E’,   one   of   the   cases   is   Civil   Appeal

arising   out   of   SLP(C)No.5760   of   2012   (Ambuja   Cements

Limited   vs.   State   of   U.P.     Ors.).   The   writ

petitioner­appellant is an ISO Co. for  manufacturing of

cement.   The   fly   ash   (a   by   product   of   Thermal   Power

Plants, purchased by the petitioners); and gypsum (a raw

material used in the manufacture of cement and purchased

by the petitioner) and clinker is not a forest produce.

Clinker/fly ash is an industrial produced and cannot fall

in the ambit of forest produce as defined under Section

2(4) of 1927 Act. The manufacture of clinker comprises of

two   stages.   In   stage   one   raw   material   like   lime   stone,

clay,   bauxite,   iron   ore   and   sand   are   mixed   in   specific

proportion   and   raw   mix   is   obtained   and   in   stage   second

the   raw   material   is   fed   into   kiln   whereby   at   high

temperature,   chemical   reaction   occurs   and   the   product

obtained   is   ‘alite’   which   is   commercially   sold   as

clinker.   The   petitioner   though   was   not   a   party   in   the

writ petition before the High Court but has filed the SLP

with the permission of the Court granted on 10.02.2012.


35. Transfer Petition No.18 of 2012 has been filed under

Article 139A for transferring the Writ Petition No.40 of

2000   pending   in   the   High   Court   of   Judicature   at

Allahabad. The writ petitioner is engaged in business of

manufacturing   and   dealing   in   aluminium   and   semis.

Hindalco   owns   and   operates   the   Aluminium   plant   at

Renukoot and captive thermal power plant is at Renusagar.

Hindalco uses both bauxite and coal in the production of


36. In December, 1999, the State of U.P. demanded transit

fee   on   transport   of   minerals   (bauxite   and   coal).

Aggrieved   thereby   Writ   Petition(C)   No   40   of   2000   was

filed.   An   Interim   order   was   passed   on   18.01.2000

restraining forest department from charging transit fee.

This   interim   order   continued   till   29.10.2013   when   this

court passed detailed interim order.

37. The petitioner’s case is that in SLP(C) No.11367 of

2007,   Kanhaiya   Singh     Anr.   Versus   State   of   U.P.,   the

same question is engaging attention of this Court, hence,

the Writ Petition filed by the petitioner be transferred

and   heard   along   with   the   aforesaid   Special   Leave


38.   Transfer   Petition   No.44   of   2012  has   been   filed   to

transfer   Writ   petition(tax)   No.1629   of   2007   to   hear   it

with SLP(C) No.11367 of 2007. The petitioner has set up

coal based thermal power plant at Renusagar for captive

generation of power which it supplies continuously to the

aluminium   manufacturing   unit   of   the   petitioner   at

Renukoot. In the process of generation of power the said

thermal power plant produces the fly ash which needs to

be   disposed   of   as   per   the   directions   of   the   Central


39. The   petitioner   has   entered   into   agreement   with

various   cement   manufacturers   for   lifting,   disposal     of

fly ash. From November 2007, the forest department of the

State   started   demanding   transit   fee   from   each

Truck/Dumper. Even though the payment of any levy is the

responsibility   of   contractors   who   are   lifting   the   fly

ash. The petitioner filed Writ Petition No.1629 of 2007

challenging   the   aforesaid   demand   of   transit   fee   on   fly

ash   in   which   the   interim   order   was   passed   by   the   High

Court on 29.11.2007. In the aforesaid background it was

prayed that Writ Petition be transferred and heard along

with SLP(C) No.11367 of 2007.

40.   Transfer   Petition   No.76   of   2012  has   been   filed   by

Aditya Birla Chemicals (India) Ltd. for transfer of Writ

Petition   no.101   of   2008   pending   in   the   Allahabad   High

Court.   The   Petitioner   is   engaged   in   the   business   of

manufacturing   and   sale   of   chemicals,   casting   soda,

bleaching   powder,   sodium   chloride   etc.   at   its   factory

situated at Renukoot, District Sonebhadra. For continuous

supply of power to the manufacturing unit petitioner has

set up coal based thermal power plant at Renusagar. Fly

ash is generated from thermal power plant which needs to

be disposed of. Petitioner made available the fly ash to

seven   cement   industries   free   of   cost.   The   petitioner

maintained   its   own   roads   which   is   connecting   National

Highway No. 76E which goes one side to Madhya Pradesh and

to   Mirzapur   on   other   side.   From   November   2007,   forest

department of U.P. Started demanded transit fee on supply

of   fly   ash.   After   filing   the   Writ   petition   the   various

developments took place including decisions of bunch of

writ petitions of 11.11.2011.

41.   The   petitioner   case   is   that   similar   issues   are

pending in SLP(C) No.11367 of 2007 and Writ Petition be

transferred   and   heard   along   with   the   aforesaid   Special

Leave   Petition.   This   Court   in   all   the   above   three

Transfer   Petitions,   on   19.11.2012   passed   an     order   to

take up these matters along with the SLP(C) No.11367 of



42. Contempt Petition No.251 of 2008 in I.A.No.7 of 2008

in   Civil   Appeal   No.2797   of   2008,   the   members   of

applicants association are plying public transport truck

carrying minor minerals like boulders, sand, stone, dust,

etc. Trucks do not enter into any forest area or do not

uses any forest road. In C.A.No.2797 of 2008 an interim

order was passed by this court directing that there shall

be stay of demand by way of transit fee in the meantime.

Applicants case is that the applicant’s association has

also   been   impleaded   in   C.A.   No.   2797   of   2008.   It   is

pleaded   that   despite   the   knowledge   of   interim   order   of

this   court   the   respondent   at   different   check   posts   are

demanding transit fee. Prayer has been made to issue Show

Cause Notice and initiate contempt proceedings. No Notice

has been issued in the contempt proceeding as yet.

43.   Contempt   Petition(C)   No.199­201   of   2014   in   SLP(C)

No.31530 of 2011 and other two Special Leave Petitions.

Applicants are engaged in the business of transportation

of   sand,   stones,   polish   stones,   rough   stones,   crushed

stones,   stone   grits,   stone   marbles   etc.   Applications

claimed that whenever their vehicles entered in the State

of U.P., Transit fee is demanded. It is contended that in

SLP(C) filed by the applicants this court on 02.12.2012

stayed   the   recovery   of   transit   fee.   Applicants   case   is

that   despite   the   knowledge   of   interim   order   dated

02.12.2012   the   same   is   not   being   complied   with,   hence,

the   Contempt   Petition   has   been   filed.   In   Contempt

application, no notice has been issued.

44. One Writ Petition (C)No.203 of 2009 (M/s. Pappu Coal

Master     Ors.   vs.   State   of   U.P.     Anr.)   has   also   been

filed where petitioners have prayed that respondent may

be   restrained   from   charging   any   fee   from   petitioners

under the 1978 Rules as amended by Amendment Rules dated

14.06.2004. This writ petition was directed to be listed

along with SLP(C)No.11367 of 2007.


45. The   State   of   Madhya   Pradesh   has   filed   appeals

against   a   common   judgment   dated   14.05.2007   of   the   High

Court   of   Madhya   Pradesh.   Civil   Appeal   arising   out   of

SLP(C)No.6956 of 2008 has been filed against the common

judgment   rendered   in   six   writ   petitions   which   also

included   Writ   Petition   No.2309   of   2002   (Northern

Coalfields Limited vs. State of Madhya Pradesh and ors.

46. The  writ  petitioners­Northern Coalfields  Limited  is

engaged in excavation and sale of coal. The State of M.P.

framed   M.P.   Transit   (Forest   Produce)   Rules,   2000   for

imposing transit fee. The writ petitioner pleaded in the

writ petition that the State of M.P. has no legislative

competence for imposing any tax on coal. It was further

pleaded that fee can be imposed only if there is any quid

pro   quo  between   the   services   rendered   and   fee   charged.

Notification dated 28.05.2001 issued by the State of M.P.

fixing   fee   of   Rs.7/­   per   metric   tonne   was   challenged.

Following reliefs were sought in the writ petition:

 “i) Issue   on   appropriate   writ/writs,
order/orders,   direction/directions   to
quash   the   authorisation   of   imposing
transit passes on movement of coal under
M.P.   Transit   pass   (Forest   Rule)   2000

ii) To   quash   the   fixation   of   rates   of
fees   for   issuance   of   transit   passes

iii) To   quash   the   demand   for   payment   of
fees for transit of coal ANNEXURE­P/3

iv) To   grant   such   other   appropriate

relief   as   deemed   and   fit   and   proper   in
the facts and circumstances of the case.”

47.   More   or   less   similar   reliefs   were   claimed   in   the

other writ petitions before the M.P. High Court. In some

of   the   writ   petitions   prayer   was   also   made   for   issuing

writ   of   mandamus   declaring   Section   2(4)(b)(iv)   and

Section 41 of the 1927 Act as unconstitutional and ultra

vires  to the extent it  relates to minerals. Prayer was

also made to declare M.P. Transit (Forest Produce) Rules,

2000 and notification dated 28.05.2001 as ultra vires to

the power of the State under 1927 Act.

48.  Counter­affidavit was filed by the State contending

that   as   per   Section   41   of   1927   Act,   the   State   is

conferred   with   a   power   to   make   rules   to   regulate   the

transit of all timer and other forest­produce. 

49.   The   High   Court   after   hearing   the   parties   and

considering   the   submissions   by   the   impugned   judgment

quashed the notification dated 28.05.2001 by which fee of

Rs.7/­ was fixed. The High Court also directed refund of

the   amount   in   a   phased   manner   with   a   period   of   five

years.   Aggrieved   by   the   judgment   dated   14.05.2001   the

State of Madhya Pradesh has filed these appeals.

50.   We   have   heard   learned   counsel   appearing   for   the

States as well as learned counsel appearing for various

writ petitioners.

51.   While   referring   the   respective   submissions   of   the

learned   counsel,   submissions   on   behalf   of   the   writ

petitioners have been referred to as submissions of writ

petitioners and the submissions on behalf of the States

have been referred to as on behalf of the State.

VI. Submissions   with   regard   to   the   judgment   of  
Uttarakhand High Court

52. As   noted   above   both   the   State   of   Uttarakhand   and

State of U.P. have challenged the judgment of Uttarakhand

High Court. Shri Dinesh Dwivedi, learned senior counsel

questioning the judgment dated 01.07.2004 of Uttarakhand

High   Court   in   M/s.   Kumaon   Stone   Crusher   vs.   State   of

Uttarakhand,   submits   that   boulders   crushed   into   grits

retain   same   characteristic   that   is   forest   produce.   By

obtaining grits, stone chips and dust no new material is

obtained.   Challenging   the   judgment   of   Uttarakhand   High

Court   in   M/s.   Gupta   Builders   dated   26.06.2007,   it   is

submitted that the mere fact that royalty has been paid

by   the   writ   petitioners   in   accordance   with   the   Uttar

Pradesh   Minor   Minerals   (Concession)   Rules,   1963   as

adopted   in   Uttarakhand   by  Uttarakhand   Minor   Minerals

(Concession)   Rules,   2001   shall   have   no   effect   on   the

entitlement   of   the   State   to   levy   transit   fee.   The

judgment   of   the   High   Court   that   no   transit   fee   can   be

levied   on   the   minerals   is   erroneous.   It   is   further

submitted   that   the   High   Court   erred   in   adopting   a   very

restrictive meaning of word ‘forest’ whereas the forest

has   to   be   understood   in   a   wide   sense.   It   is   contended

that   Forest   Act,   1927   and   MMDR   Act,   1957   operate   in

different   fields.   In   so   far   as   the   case   of   the   writ

petitioners   is   that   transit   fee   is   being   charged   for

second   transit   also.   It   is   submitted   that   transit   pass

has its destination and after it reaches its destination,

the pass comes to an end, the transit fee can be validly


53. Replying   the   above   submission   of   State,   learned

counsel for writ petitioners submits that main challenge

in   the   writ   petitions   filed   by   petitioners   was   that   no

Transit Fee can be levied on finished products from the

stone crusher. It is contended that river bed materials

i.e.   boulders   and   bajri   by   applying   mechanical   process

are converted into small size stone grits, chips and dust

which   become   a  commercial   commodity   and   ceases   to   be   a

Forest Produce therefore no Transit Fee can be charged.

It   is   further   contended   that   in   Section   2(4)(b)   of   the

1927   Act   the   words   ‘found   in’   and   ‘brought   from’   are

qualified by word ‘when’, which denotes the time factor.

The word ‘when’ signifies that the item while leaving the

forest is in continuous process of transit from the point

where it is said to be found in. But once, the continuous

transit   of   forest   produce   terminates   at   any   point   of

place which is not a forest item included in Clause B(4)

(2),   shall   cease   to   be   a   Forest   Produce   and   further

transit of such material being material not brought from

forest   shall   not   attract   tax   under   Section   41   of   Act,


54. The   stone   or   sand   which   is   in   its   primary   or

dominantly primary state is subjected to a manufacturing

process for making it marketable product, which is not a

Forest   Produce.   Act,   1927   does   not   provide   for   any

definition   of   term   ‘Manufacturing   Process’.   The   term

‘Manufacturing   Process’   is   to   be   given   a   liberal

interpretation. The process of stone crushing have to be

held to be Manufacturing Process. It is further contended

that levy of Transit Fee on Transit Pass does not have

any relationship with the distance of the destination of

the transit and the Transit Pass originally issued at the

time   of   First   Sale   of   transit   required   only   on

endorsement and the insistence of levy of Transit Fee at

the   time   of   second   transit   is   irrational   and


55. Learned   counsel   for   the   State   of   U.P,   challenging

the judgment of High Court of Uttarakhand has also raised

the similar submissions as has been raised by the learned

counsel for the State of Uttarakhand.


56. Following   are   various   submissions   on   behalf   of

several writ petitioners and their reply by  State:­

(i) (a)The products which are being transited by them

or   on   their   behalf   are   not   Forest   Produce   since   they

have   undergone   manufacturing   process   resulting   into   a

new   commodity.   All   the   writ   petitioners   supported   the

judgment of Uttarakhand High Court dated 01.07.2004 in

M/s   Kumaon   Stone   Crusher   wherein,   the   High   Court   has

held   that   no   levy   of   Transit   Fee   can   be   made   on   the

finished items of stone i.e. stone grits, sand grits 

chips   etc.   They   submitted   that   in   the   stone   crusher,

factories, boulders and stones obtained from different

mining   lessees   are   subjected   to   a   process   by   which

different   items   are   formed   thereby   losing   their

character   of   Forest   Produce.     Several   other   materials

like lime stone, fly ash, clinker, calcium hydro­oxide

and   calcium   oxide,   cinder,   gypsum   are   also   obtained

after undergoing a manufacturing process, which are no

longer a forest produce. Another group of petitioners

who deal with marble stone, stone slabs and tiles also

raise similar submission that marble slabs are finished

goods   which   are   different   from   Forest   Produce   and   no

Transit Fee can be demanded. 

  (b)Another   group   of   petitioners   who   deal   with   in

veneer,   plywood   also   claimed   that   after   undergoing

manufacturing process veneer and plywood are no longer

a Forest Produce hence, no Transit Fee can be charged.

Last category of articles for which non­leviability of

transit fee is claimed   comprises of coal, hard coke,

finished coal,  coal briquettes,  soft­coke. With regard

to   coal   it   is   submitted   that   coal   is   not   a   Forest

Produce   at   all,   since   it   is   obtained   from   collieries

which are not in forest. It is further submitted that

in   view   of   Mines   and   Minerals   (Development  

Regulation) Act, 1957 (hereinafter referred to as ‘MMDR

Act,   1957)   and   Coal   Bearing   Areas   (Acquisition  

Development)   Act,   1957,   the   regulation   of   coal   is

outside   the   Indian   Forest   Act,   1927   (hereinafter

referred to as ‘Act, 1927’).

(c)The  above  submissions  of  writ  petitioners  have

been refuted by learned counsel appearing for State of

U.P.   and   State   of   Uttarakhand.   It   is   submitted   that

stone boulders and stone ballasts after being subjected

to   crushing   by   which   stone   grits,   sand   grits     chips

are obtained, does not in any manner change the nature

of product.   Stone grits, sand grits  chips obtained

after   crushing   are   still   a   Forest   Produce   on   which

Transit   Fee   is   charged.   Accepting   the   aforesaid

argument   will   lead   to   a   situation   where   State   shall

lose   its   regulatory   power   on   Forest   Produce   on   mere

facial   change   of   the   Forest   Produce.   With   regard   to

other articles the State has refuted the submission and

it   is   submitted   that   all   the   articles   claimed   by   the

writ petitioners are Forest Produce   which are subject

to Transit Fee. 

(d)With regard to parliamentary enactments relating

to   coal   as   claimed   by   the   writ   petitioners,   it   is

submitted that parliamentary enactments regarding coal

are on different subjects and has no effect on the Act,

1927 and the rules framed therein. 

(e)Learned Additional Advocate General of the State

of U.P., during his submission has submitted that in so

far   as,   fly   ash,   clinker   and   synthetic   gypsum   are

concerned, the State does not claim them to be Forest

Produce and no Transit Fee shall be charged on fly ash,

clinker   and   synthetic   gypsum.   He,   however,   submitted

that   gypsum   is   a   naturally   mined   Forest   Produce   and

what is excluded is only synthetic gypsum.

(f)For   veneer   and   plywood,   it   is   submitted   that

veneer is small pieces of timber which remains a Forest

Produce   and   plywood   is   also   a   kind   of   timber   which

retains   its   natural   character   of   Forest   Produce.   With

other   articles,   with   regard   to   which,   it   is   claimed

that   by   manufacturing   process   and   chemical   treatment

they   are   transformed   to   new   commercial   commodity   is

refuted by counsel for the State.

(ii) (a)One of the the main planks of attack of learned

counsel for the writ petitioners to the 1927 Act   1978

Rules is based on 1957 Act. It is submitted that 1957 Act

is enacted by the Parliament in reference to Entry 54 of

List I of Seventh Schedule of the Constitution of India.

It relates to regulation of mines and the development of

minerals   to   the   extent   to   which   such   regulation   and

development under the control of the Union is declared by

the Parliament by law. The legislative competency of the

State   with   regard   to   mines   and   minerals   development   is

contained in Entry 23 of List II which Entry is subject

to   provisions   of   List   I   with   respect   of   mines   and

minerals   development   under   the   control   of   the   Union   of

India. It is submitted that in so far as transit fee on

minerals   is   concerned,   the   entire   field   is   covered   by

1957 Act wherein there is a declaration by the Parliament

that Union shall take under its control the regulation of

mines   and   the   development   of   minerals   to   the   extent

provided   therein.   The   entire   regulation   of   minerals

including its transport being covered under 1957 Act, the

State is denuded     of any jurisdiction to legislate. It

is further contended that 1957 Act is a special enactment

which   shall   override   the   1927   Act   which   is   a   general

enactment.   It   is   further   contended   that   provisions   of

1978   Rules   and   the   provisions   of   Section   41   of   Forest

Act, due to the repugnancy to the provisions of 1957 Act

shall stand overridden. The transit and transportation of

minerals   is   an   integral   part   of   regulation   and

development   of   minerals   and   the   Parliament   having

unequivocally enacted the law it is to occupy the entire

field   regarding   the   transit   and   transportation   of

minerals   and   development   of   mines.   No   other   law   can

trench upon occupied field. The provision of Forest Act,

1927   including   Section   41   and   Transit   Fee   Rules,   1978

framed   thereunder   shall   stand   impliedly   repealed   after

enactment   of   1957   Act,   especially   after   insertion   of

Section   4(1A)   and   Section   23C   by   Act   38   of   1999   with

effect from 18.12.1999. 

(b)Learned counsel for the State refuting the above

submissions   contends   that   repugnancy   between   a

parliamentary     statute   and   a   statute   of   State

legislature   arises   when   the   two   laws   operate   in   the

same   field,   they   collide   with   each   other.   It   is

submitted that subject matters of 1927 Act and 1957 Act

are   distinct   and   different.   In   1927   Act   provisions

relating   to   transport   of   forest   produce   is   only

incidental and ancillary in nature. The object of two

legislations   is   entirely   different.   Forest   Act,   1927

comprehensively   deals   with   forest   and   forest   wealth

whereas 1957 Act deals with mines and minerals wealth.

He   further   submits   that   1957   Act   does   not   impliedly

overrule   the   1927   Act,   both   the   legislations   being

under different subjects. It is submitted that argument

of implied repeal could have arisen only where there is

no option. To take a view that 1957 Act shall impliedly

overrule 1927 Act regarding transit of forest­ produce,

the control of the State under Section 41 shall be lost

and the very purpose and object of the Forest Act shall

be   defeated.     An   activity   of   mining   held   in   a   forest

cannot be regulated and prevented by mining officers in

the forest area, they cannot enter into forest area and

exercise their powers. The machinery for enforcement of

forest   laws   and   the   mining   laws   are   different.   Their

powers   are   different,   officers   are   different,

consequences   of   breach   are   different   and   both

provisions   operate   in   different   fields.   It   is   thus

submitted   that   the   provisions   of   Indian   Forest   Act,

1927 in so far as Section 41 of 1927 Act and 1978 Rules

are   concerned,   shall   not   stand   impliedly   overruled   by

Parliamentary enactment of 1957 Act.

(iii)     (a)It   is   submitted   that   Division   Bench   of   the

Allahabad High Court in  Kumar Stone Works and others  by

its   judgment   dated   27.04.2005   has   mis­interpreted   the

words ”brought from” as contained in Section 2(4)(b) of

1927   Act.   It   is   submitted   that   there   is   no   issue   with

regard   to   the   words   ”found   in”.   The   words   “found   in”

clearly mean found in a forest. The word “when” signifies

the physical presence of the item. The word ‘when’ also

qualifies the words “brought from a forest”. Thus when a

forest   produce   is   brought   from   a   forest,   the   things

mentioned in sub­clause (1) of sub­section (4) of Section

2 will be treated as forest produce. The thrust of the

submission is that the words ‘brought from forest’, mean

that the forest produce originated from forest. For any

produce to be forest to be brought from forest means it

is   starting   point   of   transit   and   not   in   transit.   The

Division   Bench   of   the   High   Court   in   its   judgment   dated

27.04.2005   erred   in   equating   the   words   “brought   from

forest” as “brought through forest”. The High Court has

held that even forest produce passes through forest area

it shall be liable to payment of transit fee. 

(b)It   is   further   submitted   by   the   learned   counsel

for the writ petitioners that in fact the Division Bench

of   the   Allahabad   High   Court   wide   its   order   dated

04.03.2008   in  M/s.   Nagarjuna   Construction   Ltd.  has

already   expressed   its   disagreement   with   the   Division

Bench judgment in  Kumar Stone Works and others v. State

of   U.P.   and   others,   2005   (3)   AWC   2177,  and   referred

following two questions for consideration of the larger


(i) Whether   the   words   ‘brought   from’
used   in   section   2(4)(b)   of   the
Indian Forest Act would cover such
items mentioned in sub­clauses (i)
to   (iv)   of   Section   2(4)   (b)   which
though   did   not   have   origin   in   the
forest   but   they   are   transported
through a forest?

(ii) Whether   the   interpretation   of   the
words   ‘brought   from’   given   by
Division   Bench   in   Kumar   Stones
Case(Supra)   is   correct?   Let   the
papers   be   placed   before   the
Hon’ble   Chief   Justice   for
appropriate orders.”
(c)It   is   submitted   that   the   Division   Bench   of

Allahabad High Court while delivering the judgment dated

11.11.2011 although noticed that the above questions have

been referred to for consideration of a larger Bench did

not   await   the   judgment   of   larger   Bench   rather   chose   to

follow the Division Bench judgment in Kumar Stone Works. 

(d)Learned   counsel   for   the   State   has   refuted   the

aforesaid submission. It is submitted that the Division

Bench of the Allahabad High Court in  Kumar Stone Works

has   correctly   held   that   the   term   ‘brought   from   a

forest’   must   be   read   to   mean   ‘brought   through   a

forest’. It is submitted that any other interpretation

would render the term to be in conflict with the term

‘found   in   a   forest’.   It   is   submitted   that   the   High

Court   has   referred   to   various   dictionary   meanings   of

word ‘brought’ and after relying on said definition the

Division Bench held that the words ‘brought from’ mean

‘brought through forest’.

(iv) (a)One more submission which has been raised by the

writ   petitioners   is   that   the   word   ‘forest’   as   used   in

1927 Act as well as in Transit Fee Rules, 1978 has to be

read as ‘forest’ as enumerated in the 1927 Act, i.e.,  a

reserved forest, a village forest and a protected forest.

Thus, transit fee can be charged only when forest produce

transit through a reserved forest, a village forest or a

protected forest. It is submitted that the Division Bench

in   its   judgment   dated   11.11.2011   has   adopted   a   very

expensive   definition   of   forest   when   it   held   that   the

forest   has   to   be   understood   as   a   large   track   of   land

covered   with   trees       and   undergrowth   usually   of

considerable   extent,   on   the   principles   of   sound

ecological   and   scientific   basis   reflecting   sociological

concerns.   Learned   counsel   for   the   petitioners   submits

that the definition of forest as adopted by the Division

Bench of Uttarakhand High Court in M/s. Gupta Builders in

Writ Petition No.993 of 2004 giving rise to C.A.No. 1008

of 2011(State of Uttar Pradesh vs. M/s. Gupta Builders 

Ors.) is a correct definition of forest. It is submitted

that   Uttarakhand   High   Court   has   rightly   adopted   a

restrictive meaning of forest in the Forest Act, 1927. 

(b)The   above   submission   of   learned   counsel   for   the

petitioners   is   opposed   by   the   State   of   U.P.   It   is

submitted   by   learned   senior   counsel   that   the   word

‘forest’ has to be understood broadly and the definition

of   forest   as   given   by   this   Court   in  T.N.   Godavarman

Thirumulkpad vs. Union of India and others, 1997 (2) SCC

267,  is   to   be   followed   and   the   Division   Bench   in   its

judgment   dated   11.11.2011   has   correctly   interpreted   the

word ‘forest’.

(v) (a)Some of the writ petitioners have submitted that

although   they   are   not   passing   through   any   forest   but

still transit fee is charged by the State on the ground

that several State highways, PWD roads and several roads

have been declared protected forests by the State of U.P.

by issuing notification under the provisions of 1927 Act.

It   is   submitted   that   passing   through   National   highways

and State highways cannot be treated akin to passing from

any   kind   of   forest   so   as   to   attract   leviability   of

transit fee. 

(b)Learned   Additional   Advocate   General   for   the

State   of   U.P.   submits   that   the   roads   from   which   the

petitioners claim to have passed are roads which have

been   declared   as   protected   forests.   Hence,   forest

produces transiting from the above roads are liable to

pay transit fee. In support of his submission he refers

to   notification   dated   10.02.1960   issued   under   proviso

to sub­section (3) of Section 29 as well as Section 80A

of 1927 Act. 

(vi)   (a)One   of   the   submissions   raised   by   learned

counsel   for   the   petitioner   is   that   Rule   3   read   with

Schedule A of 1978 Rules is totally independent of Rule

5 and same has no correlation with each other. Rule 3

and   Schedule   A   nowhere   contemplates   or   has   a   column

prescribing   charging   of   a   fee.   It   is   submitted   that

transit fee is chargeable on transit pass issued under

Rule 4(b) which is required to be   checked under Rule

6(4)   only.   Referring   to   Rule   5,   it   is   submitted   that

Rule   5   contemplates   charging   a   fee   in   those   cases   in

which transit is done on the transit pass issued under

Rule 4(1)(b) and checked under Rule 6(4).

(b)It   is   submitted   that   fee   cannot   be   charged   in

any other case. The above submissions have been refuted

on   behalf   of   the   State.   It   is   contended   that   on   all

transit pass issued under the Rule 1978 transit fee is

required to be paid.

 (vii) The petitioners further submitted that although

no final notification has been issued under Section 20 of

1927 Act but still the Forest Department treats several

areas in the District of Sonebhadra and other Districts

as forest area and transit fee is asked for treating the

said areas as forest area. It is submitted that Section 4

notification   is   only   a   preliminary   notification   which

cannot be treated as notification declaring the area as

reserved forest.

(viii) (a)Learned counsel for the petitioners submitted

that   the   Constitution   Bench   judgment   of   this   Court   in

State   of   West   Bengal   vs.   Keshoram   Industries   and   ors,

(2004)   10   SCC   201  where   Constitution   Bench   held   that

Union’s power to regulate and control does not result in

depriving the States of their power to levy tax or fees

within   their   legislative   competence   without   trenching

upon   the   field   of   regulation   and   control   of   the   Union,

need not be relied on. 

(b)The   Constitution   Bench   also   interpreted   Seven­

Judge Bench decision in Synthetics and Chemicals Ltd etc

vs.   State   of   U.   P.   and   ors.,   (1990)   1   SCC   109.   It   is

submitted that with regard to the interpretation put by

the   Constitution   Bench   in  State   of   West   Bengal   vs.

Keshoram Industries (supra) a reference has already been

made   to   a   Nine   Judge   Bench   by   reference   order   dated

30.03.2011   in  Mineral   Area   Development   Authority   vs.

Steel Authority and India Ors., (2011) 4 SCC 450.

(ix)  The   State   of   U.P.   cannot   realize   transit   fee   as

per   Third   Amendment   Rules   dated   09.09.2004.   Third

Amendment   Rules   having   been   substituted   by   Fourth  

Fifth   Amendment   Rules   and   Fourth     Fifth   Amendment

Rules   having   been   struck   down   by   judgment   dated

11.11.2011,   Third   Amendment   Rules   shall   not   revive.

Third Amendment Rules are not in existence.

VIII. Following are the submissions on behalf of   
State of U.P. in support of  Civil Appeals    
filed  by them and their reply by the writ   
petitioners thereto:­

57.  Shri   Ravindra   Srivastava,   learned   senior   counsel

leading   the   arguments   on   behalf   of   the   State   of   U.P.

contends that this Court in State of U.P. and others vs.

Sitapur   Packing   Wood   Suppliers   and   others,   2002(4)SCC

566,  has  upheld   the   validity   of   1978   Rules   and   has

pronounced that transit fee is a regulatory in nature and

for   regulatory   fee  quid   pro   quo  is   not   necessary.   The

High   Court   for   its   judgment   has   relied   on  Jindal

Stainless Ltd.(2) and Anr. Vs. State of Haryana and Ors.,

2006   (7)   SCC   241,  which   has   been   overruled   by   9­Judges

Constitution   Bench   in  Jindal   Stainless   Ltd.     Anr.   v.

State of Haryana  Ors., 2016(1) Scale 1, the very basis

of   the   judgment   of   the   High   Court   is   knocked   out.   The

State   being   entitled   to   levy   transit   fee   it   can   change

the   basis   of   levy   of   transit   fee.   That   option   on   the

basis of advalorem  is also permissible both for fee and

tax and no exception can be taken to the Fifth Amendment

on the ground that the Fifth Amendment adopts  advalorem

basis for fixing the fee. The increase in transit fee by

Fourth   and   Fifth   Amendments   cannot   be   held   to   be

arbitrary or excessively disproportionate. The finding of

the High Court that the State had not provided any data

to justify the increase in transit fee is incorrect since

the State had in fact by a table which itself has been

noted in paragraph 85 of the judgment has mentioned the

income and expenditure related to transit fee, a perusal

of   which   could   indicate   that   the   expenditure   of   State

Government was much more than collection of transit fee

even after Fifth Amendment. The value of timber and other

forest­produce   has   increased   manifold.   The   increase   in

levy of transit fee had become necessary to meet the ever

increasing   expenditure   incurred   by   the   State.   The   High

Court committed error in striking down Fourth and Fifth

Amendments without there being any sufficient and valid


58. Learned   counsel   for   the   writ   petitioners   have

vehemently opposed the above submission and supported the

judgment of the High Court striking down the Fourth and

Fifth   Amendment   Rules.   It   is   submitted   that  Jindal

Stainless   (2)  overruled   by   the   judgment   of   9­Judges

constitution   Bench   does   not   have   much   bearing   in   the

facts of the present case. The High Court independent of

reliance   placed   on  Jindal   Stainless   (2)  has   held   that

transit fee is excessive in nature and the State of U.P.

had not produced data for justifying the increase in the

transit fee. It is true that for regulatory fee quid pro

quo  is   not   to   be   proved   but   the   State   was   obliged   to

prove a broad correlation between the levy of transit fee

and the expenditure incurred by the State on the transit

of forest­produce. The High Court in paragraph 177 to 186

has   considered   the   issue   in   detail   and   has   returned

findings   to   support   its   conclusion   that   exorbitant

increase   in   transit   fee   has   robbed   the   regulatory

character   of   the   transit   fee   which   has   become

confiscatory   and   has   partaken   character   of   tax.   The

figures given in paragraph 85 of the judgment are figures

of expenditure of the entire forest department which can

have no correlation with the collection of transit fee.

The entire expenditure of the forest department cannot be

met by collection of transit fee. The State does not give

any detail of expenditure which it has actually incurred

in regulation of transit of the forest­produce. 

59. Learned   counsel   for   the   writ   petitioners   have

demonstrated   by   different   charts   of   the   respective

increase   in   the   transit   fee   by   Fourth   and   Fifth

Amendment   Rules   as   compared   to   fee   which   was   being

charged   under   Third   Amendment   Rules.   It   is   submitted

that   regulatory   fee   could   not   have   been   charged   on

advalorem  basis which is generally adopted for levying

a   tax   and   not   a   fee.   The   charging   of   transit   fee   by

Fourth and Fifth Amendment Rules, is for the purposes

of   augmenting   the   Revenue   of   the   State   and   not   for

regulation   of   transit   which   changes   the   character   of

transit fee into a tax, which is not permissible under


60. After  noticing   the  respective  submissions  of  both

parties,   we   now   proceed   to   consider   them   in   the   same


IX. Whether by Manufacturing process/chemical 
Treatment as claimed by the writ petitioners, 
the forest produce looses its character of 
forest produce.

61. We first take the case of writ petitioners of stone

boulders   which   are   crushed   into   stone   grits,   stone

chips and stone dust etc. Stone boulders are obtained

from   riverbed,   stone   rocks     stone   mines.   After

crushing   of   the   stone   boulders,   stone   grits,   stone

chips   and   stone   dust   are   obtained   which   does   not

transform into any new commodity, except that the stone

in   smaller   pieces   and   shapes   are   obtained.   The

Allahabad   High   Court,   in   its   judgment   in   Kumar   Stone

Works   (Supra)   decided   on   27.04.2005   has   given   a

detailed reasoning for not accepting stone grits, stone

chips and stone dust as a new commodity. It held that

the   character   of   Forest   Produce   is   not   lost   by   such

crushing of the stone.   High Court of Uttarakhand has

taken a contrary view in its judgment dated 01.07.2004

in Kumaon Stone Crusher (Supra), as noted above. 

62. Learned   counsel   for   the   writ   petitioners   have

relied on few judgments of this Court which need to be

noticed.   Reliance   is   placed   on   Two   Judge   Bench   in

Suresh   Lohiya   vs.   State   of   Maharashtra   and   another,

(1996) 10 SCC 397. In the above case, the question for

consideration was, as to whether, the Bamboo mat is a

Forest Produce. The definition of ‘Timber’ and ‘tree’,

given in sub clause 6 and sub clause 7 of Section 2 was

noticed which is to the following effect: 

“2. (6) ‘timber’ includes trees when they
have fallen or have been felled, and all
wood whether cut up or fashioned or hol­
lowed out for any purpose or not; and

2.(7)   ‘tree’   includes   palms,   bamboos,
stumps, brushwood and canes.”

63. The above judgment of this court was based on ‘con­

sideration of definition of timber and tree’ as given

in Section 2 (6)  2 (7). This Court held that defini­

tion of timber included tree and all wood whether cut

or   fashioned   or   hollowed   out   for   any   purposes.   This

Court   held   that   said   definition   of   timber   cannot   be

read in definition of tree which includes Bamboo hence,

fashioned Bamboos are not included in the definition of

tree. The Bamboo mat was thus held, not to be a Forest

Produce.  The above judgment was based on its own facts

and   does   not   help   the   writ   petitioner   in   the   present


64. In  CST   vs.   Lal   Kunwa   Stone   Crusher   (P)   Ltd.,

(2000) 3 SCC 525,  the Court was considering liability

of Trade Tax on stone chips, gittis and stone ballast.

The   question   raised   before   the   Court   was,   as   to

whether, the stone gittis, sand chips and dust continue

to   be   stone   grits,     chips   and   dust   or   after   crushing

them,   they   get   converted   into   a   new   commercial   prod­

ucts, so as to attract the tax on their sale.  The case

of   dealer   was   that   at   the   time   of   purchase   of   goods

sales   tax   has   been   paid   hence,   goods   emerging   out   of

same are not liable to be taxed again. This Court held

that the word ‘stone’ is wide enough to accept various

forms of grits, gitti, kankar and ballast hence, no tax

was   leviable   on   the   sand   chips,   grits     dust   etc.   In

para 5 following was held: 

“5. The view taken by the Tribunal as af­
firmed by the High Court is that the goods
continue to be stone and they are not com­
mercially different goods to be identified
differently for the purposes of sales tax.
The   decision   relied   on   by   the   minority
view   in   the   Tribunal   in  Reliable   Rocks
Builders  Suppliers v. State of Karnataka
turned   on   the   concept   of   consumption   of
goods for the purpose of bringing into ex­
istence new goods. In that case the Court
was not concerned with an entry of the na­
ture   with   which   we   are   concerned   in   the
present case. Where the dealer had brought
into   existence   new   commercial   goods   by
consuming the boulders to bring out small
pieces of stone, it was held that such ac­
tivity   attracted   purchase   tax.   In   the
present case, however, stone, as such, and
gitti   and   articles   of   stones   are   all   of
similar nature though by size they may be
different.   Even   if   gitti,   kankar,   stone
ballast,   etc.   may   all   be   looked   upon   as
separate   in   commercial   character   from
stone   boulders   offered   for   sale   in   the
market, yet it cannot be presumed that En­
try 40 of the notification is intended to
describe the same as not stone at all. In
fact   the   term   “stone”   is   wide   enough   to
include  the  various  forms   such   as   gitti,
kankar, stone ballast. In that view of the
matter,   we   think   that   the   view   taken   by
the majority of the Tribunal and affirmed
by   the   High   Court   stands   to   reason.   We
are, therefore, not inclined to interfere
with the same.”

65. The above judgment held that the nature and charac­

ter of the stone remains the same, even after, crushing

the boulders into small stones, dust etc. Reliance by

the   writ   petitioner   is   also   placed   on   judgment   in

(2003) 3 SCC 122, Tej Bahadur Dube (Dead by Lrs.) vs.

Forest   Range   Officer   F.   S.   (S.W.),   Hyderabad.   In   the

above case, the appellant was charged for violation of

Rule 3 to 7 of the A.P. Sandalwood and Red Sanderswood

Transit Rules, 1969. The assessee was found transport­

ing   finished   sandalwood   products.   He   was   charged   with

the   violation   of   aforesaid   rules.   Assessee’s   case   was

that he has obtained permission of the authorities for

converting   sandalwood   purchased   by   him   into   various

types   of   handles   which   are   ultimately   used   in   other

sandalwood handicrafts. This Court held that sandalwood

products   which   have   been   converted   into   such   products

after   obtaining   proper   permission   was   not   prohibited,

in para 6 following was held:

“6. As noticed above, the original appel­
lant was a holder of a licence to deal in
and stock sandalwood. From the material on
record, it is seen that the said appellant

had   obtained   necessary   permit   from   the
competent   authorities   for   converting   the
sandalwood   purchased   by   him   into   various
types of handles which are ultimately used
in other sandalwood handicrafts which per­
mission was valid up to 31­12­1982 period
covering the period of seizure. The appel­
lant had contended that it is pursuant to
the  said   permission  he   had   converted   the
sandalwood pellets into handles to be used
in   the   other   sandalwood  artefacts   and   he
had   informed   the   authorities   concerned
about such conversion as per Exts. P­18 to
P­27. It is also the case of the appellant
that   converted   sandalwood   artefacts   or
parts   thereof   do   not   require   any   transit
permit   and   it   is   only   sandalwood   in   its
original form or chips and powder of san­
dalwood   which   requires   a   transit   permit.
The trial court has agreed with this sub­
mission  of   the   appellant.   We   also   notice
under the Rules and the Act what is pro­
hibited   is   the   transportation   of   sandal­
wood as defined in Section 2(o) of the Act
and   not   sandalwood   products   which   have
been   converted   into   such   products   after
obtaining   proper   permission   from   the   au­
thorities. Such converted sandalwood prod­
ucts   under   the   Rules   do   not   require   any
transit   permit.   We   say   so   because   the
Rules referred to in these proceedings do
not   contemplate   such   transit   permit   and
the   respondents   have   not   produced   any
other Rules to show such transit permit is
required. On the contrary, the respondent
argues   that   even   converted   sandalwood
products   require   transit   permit   because
they remained to be sandalwood as contem­
plated under Section 2(o) of the Act. In
the absence of any specific rules or pro­
visions in the Act to this effect, we are

unable to agree with this argument. We are
of   the   opinion   that   once   sandalwood   is
subjected to a certain process from which
a sandalwood product is lawfully obtained,
then such product ceases to be sandalwood
as understood in Section 2(o) of the Act.”

66. The  above case  also  does  not  lend any support to

the case of writ petitioners. In the above case, appel­

lant had obtained permission of the competent authority

for   converting   the   sandalwood   into   various   types   of

handles hence, the transportation was not found viola­

tive of rules. 

67. In   this   context,   it   is   necessary   to   refer   to   a

Three Judge Bench Judgment of this court in  Karnataka

Forest Development Corporation Ltd. vs. Cantreads Pri­

vate   Limited   and   others   (1994)   4   SCC   455.  This   Court

had   occasion   to   consider   Karnataka   Forest   Act,   1963.

Caoutchouc   or   latex   covers   natural   covering   sheets   of

various grades or not, was the question under consider­

ation.   After   noticing   the   various   dictionary   meanings

of caoutchouc, it was held that since processing does

not result in bringing out a new commodity but it pre­

serves   the   same   and   rendered   it   fit   for   markets,   it

does not change its character hence, it remained a For­

est   Produce.   Thus   rubber   sheets   converted   from

caoutchouc   continue   to   be   a   Forest   Produce.   In   the

above   case,   this   court   has   also   held   that   a   ‘test   of

commercial   parlance’   by   considering   entries   in   sales

tax is not applicable while considering the definition

of Forest Produce.

68. The   Court   observed   that   the   definition   of   Forest

Produce is in technical or botanical sense. The above

judgment   fully   supported   the   contention   of   the   State

that   while   considering   the   definition   of   the   Forest

Produce, scientific and botanical sense has to be taken

into consideration and commercial parlance test may not

be adequate in such cases.

69. We thus are of the view that judgment of Division

Bench of the Allahabad High Court dated 27.04.2005 in

Kumar Stone Works deserved to be approved and judgment

of Uttarakhand dated 01.07.2004 in Kumaon Stone Crusher

deserves to be set aside in so far as above aspect is


70. Now, we come to the case of marble slabs  tiles,

chips   etc.   Writ   Petitioners   have   placed   reliance   on

Three   Judge   Bench   Judgment   in  Income   Tax   Officer,

Udaipur vs. Arihant Tiles and Marbles Private Limited,

(2010) 2 SCC 699. The question of consideration in the

above case was that whether conversion of raw marbles

blocks into final products or polished marble slabs or

tiles in factory constitute ‘manufacture or production’

so   as   to   entitle   the   assessee   relief   under   80­1A(2)

(iii). This Court held that process which was applied

by the assessee will come in the category of ‘manufac­

ture or production’. In para 16 of the judgment follow­

ing was stated: 

“16.   In   the   present   case,   we   have   ex­
tracted   in   detail   the   process   undertaken
by each of the respondents before us. In
the   present   case,   we   are   not   concerned
only   with   cutting   of   marble   blocks   into
slabs.   In   the   present   case   we   are   also
concerned   with   the   activity   of   polishing
and   ultimate   conversion   of   blocks   into
polished   slabs   and   tiles.   What   we   find
from the process indicated hereinabove is
that   there   are   various   stages   through
which the blocks have to go through before
they   become  polished   slabs   and   tiles.   In
the circumstances, we are of the view that

on the facts of the cases in hand, there
is   certainly   an  activity   which   will  come
in the category of “manufacture” or “pro­
duction” under Section 80­IA of the Income
Tax Act.”

71. In   the   above   view,   this   Court   held   that   assessee

was   entitled   for   the   benefit   of   Section   80­1A   of   the

Income Tax Act, 1961. The above case was directly con­

cerned as to what was the ‘manufacture or production’,

which   was   defined   in   the   Act   itself   and   the   marble

slabs or tiles were held to be covered by ‘manufacture

or production’. The case was on its own facts and the

Court   was   not   concerned,   as   to   whether,   the   marble

blocks after it became marble slabs or tiles loses its

nature or character of Forest Produce. The said judg­

ment does not help in the present case.

72. This Court in  Akbar Badrudin Giwani vs. Collector

of Customs, Bombay, (1990) 2 SCC 203, again reiterated

that the general principle of interpretation of tariff

entries according to any tax statutes of a commercial

nomenclature can be departed from where the application

of   commercial   meaning   or   trade   nomenclature   runs

counter to the statutory context.   In the present case

statutory context of Forest Produce as defined in Act,

1927   has   to   be   taken   in   its   botanical   and   scientific


73. We   thus   conclude   that   the   Transit   Fee   on   marble

slabs and tiles cannot be denied and the State did not

commit any error in demanding the Transit Fee on tran­

sit of aforesaid goods. 

74. It goes without saying that on forest produce which

are   exempted   by   notification   issued   under   Proviso   to

Rule 3 of 1978, no transit fee is leviable. One of such

notification   dated   29.03.2010   has   been   brought   on


X. Whether   coal   (and   its   various   varieties),   lime  
stone, dolomite, fly ash, clinker, gypsum,  veneer
and plywood are forest produce ?

75. Coal is formed from plant substances preserved from

complete decay in a normal environment and later altered

by various chemical and physical agencies. There are four

stages in coal formation: peat, lignite, bituminous and

anthracite.   The   stage   depends   upon   the   conditions   to

which   the   plant   remains   are   subjected   after   they   were

buried   –  the   greater   the   pressure   and   heat,   the   higher

the   rank   of   coal.   Higher­ranking   coal   is   denser   and

contains   less   moisture   and   gases   and   has   a   higher   heat

value than lower­ranking coal.

76. The formation of coal itself is due to large tracts

of forest getting buried under the ground due to natural

processes   such   as   floods   and   sedimentation.   Further,   a

major   portion   of   the   coal   reserves   of   the   country   are

situated beneath forest lands and clearance for mining of

the   same   from   forest   lands.   Coal,   thus,   is   clearly   a

forest produce.

77. Hard coke and soft coke are made from coal. Coke can

be formed naturally as well as by synthetic method. Hard

coke,   soft   coke,   coal   briquettes   are   all   different

variations   of   coal   which   do   not   shed   their   natural

characteristic and are all forest produce. 

78. Limestone   is   expressly   mentioned   in   definition   of

forest   produce,   slake   lime/quick   line/hydrated   line   are

all   produce   of   limestone.   Further,   produce   known

quicklime is produced by heating of limestone, upon which

limestone breaks down into Calcium oxide (quicklime) and

carbon dioxide. That upon adding water to the same, the

quicklime is converted into slaked lime and thereafter,

upon   being   carbonated,   the   produce   will   revert   to   its

natural state of being limestone. Hence, the said process

does not change the nature of the product, as the basic

ingredient   is   essentially   limestone,   and   merely   upon

heating and addition of water, the nature of the produce

i.e.   limestone,   does   not   change.   Hence,   limestone   is   a

forest produce. 

79.   Dolomite is a sedimentary rock. Dolomite is formed

by   the   post   depositional   alteration   of   lime   mud   and

limestone   by   magnesium­rich   ground   water.   Dolomite   and

limestone are very similar stones and are forest produce.

80.   Coming   to   fly   ash,   clinker   and   gypsum,   learned

Additional Advocate General has submitted before us that

the State has accepted that fly ash, clinker an synthetic

gypsum are not forest produce. Thus, fly ash, clinker and

synthetic   gypsum   are   not   forest   produce.   Gypsum   is

naturally found and obtained in the natural form, hence

it is a forest produce.

Veneer and waste plywood

81. The veneer is nothing but thin sheets of wood which

are cut from existing logs  planks, which is then again

glued   upon   planks   of   wood.   The   essential   nature   of   the

product of veneer is merely sliced/cut up wood. Hence, it

continues to be a forest produce. 

82. The waste plywood that is remains of plywood and ve­

neer are nothing but cut­up logs. The process of manufac­

turing involves placing logs and wood into a specialized

machine, which cuts out thin sheets of wood from the log.

That when the logs reaches a certain diameter of thick­

ness, the same can no longer be suitable for extraction

by the machines and unutilized wood is left behind in the

process   of   slicing   as   well.   Essential   character   of   the

product does not change, hence, it comes within the defi­

nition of timber and forest produce.


83. We now proceed to consider the impact of 1957 Act on

Forest   Act,   1927   and   the   Transit   Fee   Rules   1978   framed

under Section 41 of 1927 Act. The Indian Forest Act, 1927

is   a   pre­constitutional   legislation   enacted   by   Indian

legislature as per Section 63 of Government of India Act,

1915. 1927 Act was the law enforced in the territory of

India   immediately   before   the   commencement   of   the

Constitution   and   by   virtue   of   Article   372   of   the

Constitution of India, 1927 Act continues in force until

altered or repealed by a competent legislation. The 1927

Act   was   enacted   to   consolidate   the   law   relating   to

forests,   the   transit   of   forest­produce   and   the   duty

leviable on timber and other forest­produce. The 1957 Act

was   enacted   for   regulation   of   mines   and   development   of

minerals under the control of the Union. The 1957 Act was

enacted   under   Entry   54   of   List   I   of   the   Constitution

which is to the following effect:

“Regulation   of   mines   and   mineral
development   to   the   extent   to   which   such
regulation   and   development   under   the
control   of   the   Union   is   declared   by
Parliament by law to be expedient in the
public interest.”

84.    List   II   also   contains   Entry   23   which   relates   to

regulation   of   mines   and   mineral   development.   Entry   23

List II is as follows:

“Regulation   of   mines   and   mineral
development subject to the provisions of
List   I   with   respect   to   regulation   and
development   under   the   control   of   the

85.   Entry   23   of   List   II   has   been   made   subject   to

provisions   of   List   I.   The   Parliamentary   legislation   in

reference   to   Entry   54   to   the   extent   regulation   and

development   of   minerals   declared   under   control   of   the

Union of India is extracted from the legislative field of

the State.  

86.   The   writ   petitioners   contend   that   State   is   denuded

with   legislative   competence   regarding   mineral,   its

regulation   or   transportation.   Learned   counsel   for   the

writ petitioners have referred and relied on the various

pronouncements   of   this   Court   in   reference   to

Parliamentary   enactment   1957.   It   is   not   necessary   to

refer   to   a   large   number   of   cases   of   this   Court   on   the

subject,   the   reference   of   only   few   of   such   cases   shall

serve the purpose for the present case.

87.   The   Constitution   Bench   judgment   of   this   Court   in

Hingir­Rampur Coal Co., Ltd. and others vs. The State of

Orissa and others, AIR 1961 SC 459,  needs to be noted.

The   State   of   Orissa   has   enacted   Orissa   Mining   Areas

Development Fund Act, 1952 by which levy and demand was

raised.   The   appellant   challenged   the   enactment   on   the

ground that legislation covers the same field which was

occupied   by   1957   Act   referable   to   Entry   54   of   List   I.

Considering   the   submission   of   the   appellant,   the

Constitution Bench stated following:

“23…..If   Parliament   by   its   law   has
declared   that   regulation   and   development
of   mines   should   in   public   interest   be
under   the   control   of   the   Union,   to   the
extent   of   such   declaration   the
jurisdiction of the State Legislature is
excluded.   In   other   words,   if   a   Central
Act   has   been   passed   which   contains   a
declaration by Parliament as required by
Entry   54,   and   if   the   said   declaration
covers the field occupied by the impugned
Act   the   impugned   Act   would   be   ultra
vires,   not   because   of   any   repugnance
between the two statutes but because the
State Legislature had no jurisdiction to
pass   the   law.   The   limitation   imposed   by
the   latter   part   of   Entry   23   is   a
limitation   on   the   legislative   competence
of   the   State   Legislature   itself.   This
position is not in dispute.

88.   The   validity   of   1957   Act   was   considered   in   the

context   of   Industries   (Development   and   Regulation)

Act,1951   and   Mines   and   Minerals(Development   and

Regulation) Act, 1948. This Court repelled challenge to

the   1952   Act   on   the   ground   that   the   declaration   under

1948 Act was not referable to Entry 54.

89.   The   next   judgment   which   needs   to   be   considered   is

State of Orissa vs. M.A. Tulloch and Co., 1964(4)SCR 461.

Orissa Mining Areas Development Fund Act, 1952 came for

consideration   in   reference   to   Mines   and   Minerals

(Development and Regulation) Act, 1957. This Court held

that 1952 Act was enacted by virtue of legislative power

under Entry 52 of List II whereas 1957 Act was enacted in

reference   to   Entry   54   of   List   I.   This   Court   held   that

Central Act 1957 contained a declaration as contained in

Section 2  which is to the following effect:

“Section   2.Declaration   as   to   the
expediency of Union control.­ It is hereby
declared   that   it   is   expedient   in   the
public interest that the Union should take
under its control the regulation of mines
and   the   development   of   minerals   to   the
extent hereinafter provided.”

90.   After   noticing   the   above   declaration,   this   Court

laid down following:

“It does not need much argument to realise
that   to   the   extent   to   which   the   Union
Government   had   taken   under   “its   control”
the   regulation   and   development   of
minerals”   so   much   was   withdrawn  from   the
ambit   of   the   power   of   the   State
Legislature under Entry 23 and legislation
of   the   State   which   had   rested   on   the
existence of power under that entry would
to   the   extent   of   that   “control”   be
superseded or be rendered ineffective, for
here we have a case not of mere repugnancy
between   the   provisions   of   the   two
enactments   but   of   a   denudation   or
deprivation of State legislative power by
the   declaration   which   Parliament   is
empowered to make and has made.”

91.   This   Court   further   held   that   intention   of   the

Parliament was to cover the entire field. The Court held

that   after   enactment   of   1957   Act,   1952   Act   shall

disappear.   This   Court,   thus,   upheld   the   demands   which

were raised for the period upto June, 1958.

92.   There   cannot   be   any   dispute   to   the   proposition   as

laid   down   in   the   above   noted   cases   and   several   other

subsequent judgments of this Court reiterating the above

proposition. The ratio laid down above, however, is not

attracted in the facts of the present case. The present

is not a case where the legislation, 1927 Act and Rules

1978 are referable to Entry 23 of List II. The present is

a case where we are concerned with a pre­constitutional

legislation which is 1927 Act which has been continued as

per   Article   372   of   the   Constitution.   Article   372

sub­clause (1) is as follows:

“372.Continuance in force of existing laws
and their adaptation.­ (1) Notwithstanding
the   repeal   by   this   Constitution   of   the
enactments referred to in Article 395 but
subject   to   the   other   provisions   of   this
Constitution, all the laws in force in the
territory of India immediately before the
commencement   of   this   Constitution   shall
continue in force therein until altered or
repealed   or   amended   by   a   competent
legislature or other competent authority.”

93. The law which has been continued in force by virtue

of Article 372 is to continue until altered or repealed

or   amended   by   a   competent   legislature.   Several

pre­constitutional   laws   which   have   been   continued   under

Article   372   came   before   this   Court   for   consideration

wherein Article 354 was also considered.

94.  A Constitution Bench of this Court in  B.V. Patankar

and others vs. C.G. Sastry, AIR 1961 SC 272, had occasion

to consider Mysore House Rent and Accommodation Control

Order, 1948, which was a pre­constitution law and by Part

B   States   (Laws)   Act,   1951   extended   the   operation   of

Transfer of Property Act, 1882 in the State of Mysore. In

the above case arguments were raised that the House Rent

and   Accommodation   Control   Order,   1948   as   extended   in

Mysore   from   April,   1951     became   repugnant   and   was

repealed.   It   was   held   that   the   pre­constitutional   law

which   was   saved   by   Article   372   remained   unaffected   by

Article 254. Following was stated in paragraph 7:

“7.   ….The   argument,   therefore,   that   as
from   April   1,   1951,   as   a   result   of
repugnancy the House Rent Control Order of
1948   stood   repealed   must   be   repelled   as
unsound   and   cannot   be   sustained,   because
it was an existing law which was saved by
Article   372   of   the   Constitution   and
remained unaffected by Article 254….”

95.  In  Pankajakshi  (Dead)  Through   Legal   Representatives

and others vs. Chandrika and others, 2016 (6) SCC 157, a

Constitution Bench of this Court had occasion to consider

a   pre­constitutional   law,   i.e.,   Travancore­Cochin   High

Court   Act   in   the   context   of   Code   of   Civil

Procedure(Amendment)   Act,   1976.   In   the   above   case   an

earlier judgment of this Court, namely, Kulwant Kaur and

others vs. Gurdial Singh Mann (Dead) by Lrs. And others,

2001   (4)   SCC   262,  came   to   be   considered   wherein   this

Court   had   occasion   to   consider   Section   42   of   Punjab

Courts Act, 1918. This Court held that Article 254 of the

Constitution would have no application to such a law for

the   simple   reason   that   it   is   not   a   law   made   by   the

legislature of a State but is an existing law continued

by virtue of Article 372 of the Constitution of India. In

paragraph 27 following has been held:

“27. Even the reference to Article 254 of
the Constitution was not correctly made by
this Court in the said decision in Kulwant
Kaur case. Section 41 of the Punjab Courts
Act   is   of   1918   vintage.   Obviously,
therefore,   it   is   not   a   law   made   by   the
Legislature   of   a   State   after   the
Constitution of India has come into force.
It   is   a   law   made   by   a   Provincial
Legislature   under   Section   80­A   of   the
Government   of   India  Act,   1915,   which   law
was   continued,   being   a   law   in   force   in
British   India,   immediately   before   the
commencement   of   the   Government   of   India
Act,   1935,   by   Section   292   thereof.   In
turn, after the Constitution of India came
into   force   and,  by   Article   395,  repealed
the   Government   of   India   Act,   1935,   the
Punjab   Courts   Act   was   continued   being   a
law   in   force   in   the   territory   of   India
immediately before the commencement of the
Constitution of India by virtue of Article
372(1) of the Constitution of India. This

being   the   case,   Article   254   of   the
Constitution   of   India   would   have   no
application to such a law for the simple
reason   that  it   is  not  a  law  made   by  the
Legislature of a State but is an existing
law continued by virtue of Article 372 of
the Constitution of India. If at all, it
is   Article   372(1)   alone  that   would   apply
to such law which is to continue in force
until altered or repealed or amended by a
competent   legislature   or   other   competent
authority.   We   have   already   found   that
since Section 97(1) of the Code of Civil
Procedure   (Amendment)   Act,   1976   has   no
application   to   Section   41   of   the   Punjab
Courts Act, it would necessarily continue
as   a   law   in   force.   Shri   Viswanathan’s
reliance   upon   this   authority,   therefore,
does not lead his argument any further.”

96.     Thus,   to   find   out   as   to   whether   the   1927   Act   and

Rules,   1978   framed   thereunder   survive   even   after

enforcement of 1957 Act, we have not to look into Article

254   but   we   have   to   find   out   as   to   whether   the   above

pre­constitutional law is  altered or repealed or amended

by   a   competent   legislature.   To   find   out   this   competent

legislation as contemplated by sub­clause (1) of Article

372 in the context of pre­constitutional law the nature

and   content   of   pre­constitutional   law   has   to     be   found

out.   There   cannot   be   any   dispute   that   Act,   1927   was

enacted to consolidate the law relating to forests, the

transit of forest­produce and the duty leviable on timber

and   other   forest­produce.   Essentially   the   1927   Act   is

related to the forest. In the Constitution initially the

forest was in Entry 19 of List II. Thus, it was the State

legislature   which   was   competent   to   alter   or   repeal   or

amend   the   said   law.   Various   amendments   in   the   1927   Act

were made by the State of U.P. in different provisions of

1927   Act   in   exercise   of   its   legislative   power   as

conferred by List II.

97.     By   the   Constitution   (Forty­second   Amendment)   Act,

1976,   with   effect   from   03.01.1977   Entry   19   was   omitted

from List II and transferred in List III as Entry 17A.

Entry   17A   is   “Forests”.   Thus,   with   effect   from

03.01.1977, both the Parliament and the State legislature

are competent legislature within the meaning of Article

372 sub­clause (1). The question to be answered thus is

as   to   whether   a   competent   legislature   has   altered   or

repealed or amended 1927 Act.

98.   Writ Petitioners have also contended that 1927 Act

in so far as Section 41 and Transit Fee Rules, 1978 are

concerned, stand impliedly repealed by virtue of 1957 Act

and in any view of the matter after amendment of 1957 Act

by Act 38 of 1999 by which specific provisions regarding

transport of minerals were inserted in 1957 Act, Section

4(1A)   and   Section   23C   which   were   inserted   with   effect

from 18.12.1999.

99.   Justice   G.P.   Singh   in   Principles   of   Statutory

Interpretation, 14th Edition, explained the implied repeal

as follows:

“There  is   a   presumption   against   a  repeal
by   implication;   and   the   reason   of   this
rule   is   based   on   the   theory   that   the
Legislature   while   enacting   a   law   has
complete knowledge of the existing laws on
the   same   subject­matter,   and   therefore,
when   it   does   not   provide   a   repealing
provision,   it   gives  out  an   intention   not
to   repeal   the   existing   legislation.   When
the  new  Act  contains   a  repealing   section
mentioning   the   Acts   which   it   expressly
repeals,   the   presumption   against   implied
repeal   of   other   laws   is   further
strengthened   on   the   principle   expressio
unius est exclusio alterius. Further, the
presumption   will   be   comparatively   strong
in case of virtually contemporaneous Acts.
The   continuance   of   existing   legislation,
in the absence of an express provision of
repeal, being presumed, the burden to show
that   there   has   been   a   repeal   by
implication   lies   on   the   party   asserting
the   same.   The   presumption   is,   however,

rebutted   and   a   repeal   is   inferred   by
necessary implication when the provisions
of the later Act are so inconsistent with
or   repugnant   to   the   provisions   of   the
earlier   Act   ‘that   the   two   cannot   stand
together’.   But,   if   the   two   may   be   read
together and some application may be made
of the words in the earlier Act, a repeal
will not be inferred…”

100.  This Court in Municipal Council, Palai through the

Commissioner of Municipal Council, Palai vs. T.J. Joseph

in  AIR   1963   SC   1561,    has   elaborated   the   concept   of

implied repeal in following words:

“9.  It   is   undoubtedly   true   that   the
legislature   can   exercise   the   power   of
repeal   by   implication.   But   it   is   an
equally well­settled principle of law that
there is a presumption against an implied
repeal.   Upon   the   assumption   that   the
legislature   enacts   laws   with   a   complete
knowledge of all existing laws pertaining
to the same subject the failure to add a
repealing clause indicates that the intent
was not to repeal existing legislation. Of
course, this presumption will be rebutted
if   the   provisions   of   the   new   act   are   so
inconsistent   with   the   old   ones   that   the
two   cannot   stand   together.   As   has   been
observed   by   Crawford   on   Statutory
Construction, p. 631, para 311:

“There   must   be   what   is   often
called   ‘such   a   positive
repugnancy   between   the   two
provisions   of   the   old   and   the

new statutes that they cannot be
reconciled   and   made   to   stand
together’.   In   other   words   they
must be absolutely  repugnant  or
irreconcilable. Otherwise, there
can be no implied repeal … for
the intent of the legislature to
repeal   the   old   enactment   is
utterly lacking.”

The   reason   for   the   rule   that   an   implied
repeal   will   take   place   in   the   event   of
clear   inconsistency   or   repugnancy,   is
pointed out in Crosby v. Patch and is as

“As   laws   are   presumed   to   be
passed   with   deliberation,   and
with   full   knowledge   of   all
existing   ones   on   the   same
subject, it is but reasonable to
conclude   that   the   Legislature,
in   passing   a   statute,   did   not
intend   to   interfere   with   or
abrogate any former law relating
to   the   same   matter,   unless   the
repugnancy   between   the   two   is
irreconcilable.   Bowen   v.   Lease
(5 Hill 226). It is a rule, says
Sedgwick, that a general statute
without negative  words  will not
repeal the particular provisions
of a former one, unless the two
acts   are   irreconcilably
inconsistent.   ‘The   reason   and
philosophy   of   the   rule,’   says
the   author,   ‘is,   that   when   the
mind of the legislator has been
turned   to   the   details   of   a
subject,   and   he   has   acted   upon
it,   a   subsequent   statute   in

general   terms,   or   treating   the
subject in a general manner, and
not   expressly   contradicting   the
original   act,   shall   not   be
considered as intended to effect
the more  particular or positive
previous   provisions,   unless   it
is  absolutely necessary to give
the   latter   act   such   a
construction, in  order  that its
words shall have any meaning at

For implying a repeal the next thing to be
considered   is   whether   the   two   statutes
relate to the same subject­matter and have
the  same   purpose.   Crawford   has   stated   at
p. 634:

“And,   as   we   have   already
suggested,  it is essential that
the new statute cover the entire
subject   matter   of   the   old;
otherwise there is no indication
of the intent of the legislature
to   abrogate   the   old   law.
Consequently,   the   later
enactment will be construed as a
continuation of the old one.”

The   third   question   to   be   considered   is
whether   the   new   statute   purports   to
replace   the   old   one   in   its   entirety   or
only   partially.   Where   replacement   of   an
earlier   statute   is   partial,   a   question
like   the   one   which   the   court   did   not
choose   to   answer   in  the  Commissioners   of
Sewers case would arise for decision.

10.  It   must   be   remembered   that   at   the

basis of the doctrine of implied repeal is
the presumption that the legislature which
must   be   deemed   to   know   the   existing   law
did not intend to create any confusion in
the   law   by   retaining   conflicting
provisions   on   the   statute   book   and,
therefore,   when   the   court   applies   this
doctrine it does no more than give effect
to   the   intention   of   the   legislature
ascertained by it in the usual way i.e. by
examining the scope and the object of the
two   enactments,   the   earlier   and   the

101.   The   question   of   repeal   by   implication   arises   when

two   statutes   become   inconsistent   to   the   extent   that

competence of one is not possible without disobedience to


102.   The   principles   for   ascertaining   the

inconsistency/repugnancy   between   two   statutes   were   laid

down   by   this   Court   in  Deep   Chand   vs.   State   of   U.P   and

others, AIR 1959 SC 648.  K. Subba Rao, J. speaking for

the Court stated following in paragraph 29:

“29……Repugnancy   between   two   statutes   may
thus   be   ascertained   on   the   basis   of   the
following three principles:

(1)   Whether   there   is   direct
conflict   between   the   two

(2)   Whether   Parliament   intended
to   lay   down   an   exhaustive   code
in respect of the subject­matter
replacing   the   Act   of   the   State
Legislature and

(3)   Whether   the   law   made   by
Parliament   and   the   law   made   by
the State Legislature occupy the
same field.”

103.   The   Constitution   Bench   in  State   of   Kerala   and

others vs. Mar Appraem Kuri Company Limited and another,

2012   (7)   SCC   106,  had   occasion   to   consider   when   by   a

subsequent enactment the case of pro tanto repeal can be

read.   In   the   above   case   State   of   Kerala   had   enacted

Kerala   Chitties   Act,   1975.   The   Seventh   Schedule   of   the

Constitution,   List   III   Entry   7   pertains   to   contracts

including   special   forms   of   contracts.   The   Parliament

enactment,   Chit   Funds   Act,   1982   and   State   legislature

Kerala   Chitties   Act,   1975,   the   subject   being   under

concurrent   list,   in   paragraph   27,   the   Court   held   that

when there is a conflict in respect of a matter in the

concurrent   list   between   Parliamentary   and   the   State

legislations, Parliamentary legislation will pre­dominate

by virtue of  non obstante    clause of Article 254 and by

reason   of   Article   372   sub­clause   (1).   This   Court   held

that the legislative intent to abrogate or wipe off the

former enactment is to be looked into to find out whether

it is a case of pro tanto repeal. Following was stated in

paragraph 19:

“19.  Further,   the   learned   counsel
emphasised on the words “to the extent of
the   repugnancy”   in   Article   254(1).   He
submitted that the said words have to be
given   a   meaning.   The   learned   counsel
submitted   that   the   said   words   indicate
that the entire State Act is not rendered
void   under   Article   254(1)   merely   by
enactment   of   a   Central   law.   In   this
connection,   it   was   submitted   that   the
words “if any provision of a law” and the
words   “to   the   extent   of   the   repugnancy”
used in Article 254(1) militate against an
interpretation   that   the   entire   State   Act
is rendered void as repugnant merely upon
enactment   by   Parliament   of   a   law   on   the
same subject.”

104.   A   repeal   may   be   brought   about   by   subsequent

legislation   without   any   reference   to   the   legislation

intended to be repealed, since, it matters little as to

whether   repeal   is   done   expressly   or   inferentially.   As

noted above, 1957 Act was enacted in reference to Entry

54 of List I to provide for the regulation of mines and

the   development   of   minerals   whereas   the   subject   of   the

legislation under the 1927 Act was the forest, transit of

forest­produce and the duty leviable on timber and other


105.  It is sine qua non that both the sets of laws must

deal with “the same subject matter”. In the instant case,

under the Forest Act “transit of forest­produce” itself

is subject of primary legislation as can be seen from the

preamble   and   the   provisions   to   Section   41     42   of   the

Act.   In   contrast,   the   1957   Act   in   view   of   Section   2

thereof,   gives   control   to   the   Union   under   its   control

“Regulation   of   Mines   and   Development   of   Minerals”.   The

detailed   provisions   as   primary   legislation,   deal   with

regulation of mines and development of minerals (Section

4 to 17 and Section 18). For the purposes of Regulation

of Mines and Development of Minerals, it is provided that

no mining operation can be undertaken without the license

or   permit   as   per   Section   4.   Provisions   relating   to

transport or storage are only incidental and ancillary in

nature. But the main point of difference is the subject

matter of legislation under the 1957 Act is “Regulation

of Mines and Development of Minerals”. 

106. When the minerals are forest­produce by definition

under the 1927 Act under Section 2(4), validity of which

is   not   challenged,   forest­produce   and   its   transit   is

altogether   a   different   subject   matter   than   the   subject

matter   governed   by   1957   Act.   The   object   of   the   two

legislations   is   different.   The   regulation   is   different.

The   Forest   Act   comprehensively   deals   with   forest   and

forest   wealth   with   a  different   object   and   the   1957   Act

deals with mines and mineral wealth.

107.  Much emphasis has been given by the counsel for the

writ   petitioners   on   Section   4(1A)   and   Section   23C.

Section 4(1A) is couched in negative as follows:

“No   person   shall   transport   or   store   or
cause   to   be   transported   or   stored   any
mineral otherwise than in accordance with
the provisions of this Act and the rules
made thereunder.” 

108.   Section   23C   provides   power   of   State   Government   to

make rules for preventing illegal mining, transportation

and storage of minerals.

109. The Rules may cover inspection, checking and search

of minerals at the place of excavation as well as transit

of   the   minerals.   The   Rules   under   Section   23C   are   only

incidence of regulation of minerals which is the subject

matter of the  1957 Act.

110. The 1927 Act is a comprehensive statute relating to

transit of forest­produce and the duty leviable on timber

and other forest­produce.

111. The 1927 Act provides comprehensive provisions with

regard to reserved forest, village forest and protected

forest. The forests are directly linked with environment

and   ecological   balance   but   because   of   large   human

development,   exploitation   of   forests   and   other   natural

resources and deforestation, the international community

has   been   alarmed,   several   international   conventions   and

treaties   were   made   including   Kyoto   Protocol   and   Paris

Convention to which India is a signatory.  

112.   Article   48A   also   inserted   by   the   Forty­second

Amendment Act, 1976 which is to the following effect:

“48A.   Protection   and   improvement   of
environment   and   safeguarding   of   forests
and wild life.­ The State shall endeavour
to   protect   and   improve   the   environment
and to safeguard the forests and and wild

life of the country.”

113.  Article 51A of the Constitution lays down as one of

the fundamental duties that every citizen to protect and

improve the natural environment including forests, lakes,

rivers and wild life, and to have compassion for living


114.   As   per   the   National   Forest   Policy,   1988   issued   by

the Ministry of Environment  Forests, one of the basic

objectives   if   the   State   is   to   ‘encourage   efficient

utilization of forest produce and maximizing substitution

of   wood’   and   states   that   “the   principal   aim   of   Forest

Policy   must   be   to   ensure   environmental   stability   and

maintenance   of   ecological   balance   including   atmospheric

equilibrium,   which   are   vital   for   sustenance   of   all

lifeforms,   human,   animal   and   plant.   The   derivation   of

direct   economic   benefit   must   be   subordinated   to   this

principal aim.”

115.   The   subjects   of   1927   Act   and   1957   Act   are   thus

distinct   and   separate.   The   1957   Act   was   on   development

and regulation of mines and minerals. Mines and minerals

are   also   found   in   forests.   The   definition   of

forest­produce as contained in Section 2 sub­section (4)

of   the   Act   includes   peat,   surface   oil,   rock   and

minerals(including   lime­stone,   laterite,   mineral   oils,

and all products of mines or quarries).

116.  The State has been empowered to regulate transit of

forest­produce under Section 41 of the Act. Regulation of

transit of forest­produce is a larger activity covering

transit   of   different   kinds   of   forest­produce   including

minerals.   Both   the   legislations   being   on   different

subject matters the provisions relating to transportation

of minerals as contained in 1957 Act can at best be said

to   be   incidentally   affecting   the   1927   Act,   incidental

encroachment   of   one   legislation   with   another   is   not

forbidden in the constitutional scheme of distribution of

legislative powers. 

117.   This   Court   has   time   and   again   emphasised   that   in

the   event   any   overlapping   is   found     in   two   Entries   of

Seventh Schedule or two legislations, it is the duty of

the Court  to find out its true intent and purpose and to

examine   the   particular   legislation   in   its   pith   and

substance. In Kartar Singh vs. State of Punjab, 1994 (3)

SCC   569,  paragraphs   59,   60   and   61   following   has   been


“59….But before we do so we may briefly
indicate the principles that are applied
for   construing   the   entries   in   the
legislative lists. It has been laid down
that the entries must not be construed in
a   narrow   and   pedantic   sense   and   that
widest   amplitude   must   be   given   to   the
language of these entries. Sometimes the
entries   in   different   lists   or   the   same
list may be found to overlap or to be in
direct conflict with each other. In that
event it is the duty of the court to find
out   its   true   intent   and   purpose   and   to
examine the particular legislation in its
‘pith and substance’ to determine whether
it   fits   in   one   or   other   of   the   lists.
[See   :   Synthetics   and   Chemicals   Ltd.   v.
State of U.P.; India Cement Ltd. v. State
of T.N.”

60.  This   doctrine   of   ‘pith   and
substance’   is   applied   when   the
legislative   competence   of   a   legislature
with regard to a particular enactment is
challenged with reference to the entries
in the various lists i.e. a law dealing
with   the   subject   in   one   list   is   also
touching   on   a   subject   in   another   list.
In   such   a   case,   what   has   to   be
ascertained is the pith and substance of
the enactment. On a scrutiny of the Act
in   question,   if   found,   that   the
legislation   is   in   substance   one   on   a
matter   assigned   to   the   legislature
enacting that statute, then that Act as

a   whole   must   be   held   to   be   valid
notwithstanding any incidental trenching
upon   matters   beyond   its   competence   i.e.
on   a   matter   included   in   the   list
belonging   to   the   other   legislature.   To
say differently, incidental encroachment
is not altogether forbidden.

118.  In A.S. Krishna and others vs. State of Madras, AIR

1957 SC 297  this Court laid down following in paragraph


“12.   This   point   arose   directly   for
decision   before   the   Privy   Council   in
Prafulla   Kumar   Mukherjee   v.   The   Bank   of
Commerce, Ltd. [1946 74 I.A. 23 There, the
question   was   whether   the   Bengal
Money­Lenders Act, 1940, which limited the
amount   recoverable   by   a   money­lender   for
principal   and   interest   on   his   loans,   was
valid   in   so   far   as   it   related   to
promissory notes. Money­lending is within
the exclusive competence of the Provincial
Legislature under Item 27 of List II, but
promissory   note   is   a   topic   reserved   for
the center, vide List I, Item 28. It was
held   by   the   Privy   Council   that   the   pith
and substance of the impugned legislation
begin   money­lending,   it   was   valid
notwithstanding   that   it   incidentally
encroached   on   a   field   of   legislation
reserve   for   the   center   under   Enter   28.
After   quoting   its   approval   the
observations of Sir Maurice Gwyer C.J. in
Subrahmanyan   Chettiar   v.   Muttuswami
Goundan, (supra) above quoted, Lord Porter
observed :

“Their Lordships agree that this passage
correctly describes the grounds on which
the rule is founded, and that it applies
to   Indian   as   well   as   to   Dominion

No   doubt   experience   of   past   difficulties
has made the provisions of the Indian Act
more   exact   in   some   particulars,   and   the
existence of the Concurrent List has made
it   easier   to   distinguish   between   those
matters which are essential in determining
to which list particular provision should
be   attributed   and   those  which   are   merely
incidental.   But   the   overlapping   of
subject­matter   is   not   avoided   by
substituting three lists for two, or even
by   arranging   for   a   hierarchy   of
jurisdictions.   Subjects   must   still
overlap,   and   where   they  do,  the  question
must be asked what in pith and substance
is   the   effect   of   the   enactment   of   which
complaint is made, and in what list is its
true nature and character to be found. If
these   questions  could   not   be   asked,  must
beneficent legislation would be satisfied
at   birth,   and   many   of   the   subjects
entrusted to Provincial legislation could
never effectively be dealt with.”

119.     Further   in  Union   of   India   and   others   vs.   Shah

Govedhan L. Kabra Teachers’ College, 2002 (8) SCC 228 in

paragraph 7 following was laid down:

“7. It is further a well­settled principle
that entries in the different lists should
be   read  together   without   giving  a   narrow
meaning   to   any   of   them.   Power   of

Parliament   as   well   as   the   State
Legislature   are   expressed   in   precise   and
definite   terms.   While   an   entry   is   to   be
given its widest meaning but it cannot be
so   interpreted   as   to   override   another
entry   or   make   another   entry   meaningless
and   in   case   of   an   apparent   conflict
between different entries, it is the duty
of   the   court   to   reconcile   them.   When   it
appears   to   the   court   that   there   is
apparent   overlapping   between   the   two
entries   the   doctrine   of   “pith   and
substance” has to be applied to find out
the true nature of a legislation and the
entry within which it would fall. In case
of conflict between entries in List I and
List   II,   the   same   has   to   be   decided   by
application of the principle of “pith and
substance”.   The   doctrine   of   “pith   and
substance”   means   that   if   an   enactment
substantially   falls   within   the   powers
expressly   conferred   by   the   Constitution
upon the legislature which enacted it, it
cannot   be   held   to   be   invalid,   merely
because   it   incidentally   encroaches   on
matters   assigned   to   another   legislature.
When   a   law   is   impugned   as   being   ultra
vires of the legislative competence, what
is required to be ascertained is the true
character   of   the   legislation.   If   on  such
an   examination   it   is   found   that   the
legislation   is   in   substance   one   on   a
matter assigned to the legislature then it
must be held to be valid in its entirety
even   though   it   might   incidentally   trench
on   matters   which   are   beyond   its
competence.  In   order   to  examine  the  true
character   of   the   enactment,   the   entire
Act,   its   object,   scope   and   effect,   is
required to be gone into. The question of
invasion   into   the   territory   of   another

legislation   is   to   be   determined   not   by
degree   but   by   substance.   The   doctrine   of
“pith and substance” has to be applied not
only   in   cases   of   conflict   between   the
powers of two legislatures but in any case
where   the   question   arises   whether   a
legislation   is   covered   by   particular
legislative power in exercise of which it
is purported to be made.”

120.   Thus, even it is assumed that, in working of two

legislations which pertain to different subject matters,

there is an incidental encroachment in respect of small

area of operation of two legislations. Legislation cannot

be struck down as being beyond legislative competence nor

it   can   be   held   that   one   legislation   repeals   the   other.

Thus, when we look into the pith and substance of both

the   legislations,   it   is   clear   that   they   operate   in

different   field   and   the   submission   cannot   be   accepted

that 1957 Act impliedly repeals the 1927 Act in so far as

Section 41 and 1978 Rules are concerned. 

121.   We,   thus,   conclude   that   the   submission   of   learned

counsel for the writ petitioners that in view of the 1957

Act   especially   as   amended   by   Act   38   of   1999,   the

provisions of 1927 Act  1978 Rules   have become void,

inoperative and stand repealed, cannot be accepted.

XII. Interpretation of Section 2(4)(b) of 1927 Act

122.   The   meaning   of   words   ‘brought   from’   as   used   in

Section 2 sub­section (4) sub­clause (b) has become very

significant   in   the   present   case   since   it   is   a   case   of

large number writ petitioners that the goods which they

are   transiting   did   not   originate   from   any   forest   area

rather they have been taken from non­forest area, hence,

there is no liability to pay transit fee. Whether forest

produce   as   defined   in   Section   2     sub­section   (4)

sub­clause (b) should be forest produce which originated

from forest or even the forest produces which are merely

passing through a forest area shall attract the liability

of transit fee is the question to be answered.

123.   The   Division   Bench   judgment   of   the   Allahabad   High

Court   in  Kumar   Stone   Works,  although   has   referred   to

various definitions of meaning of word ‘brought’ but it

did not advert to the fact as to what meaning has to be

attributed   to   word   ‘from’   with   which   word   the   word

‘brought’ is prefixed. The word ‘from’ has been defined

in  Advanced   Law   Lexicon   by   P.   Ramanatha   Aiyar,   3rd

Edition in following words:

“From: As used as a function word, implies
a   starting   point,   whether   it   be   of   time,
place,   or   condition;   and   meaning   having   a
starting point of motion, noting the point of
departure,   origin,   withdrawal,   etc.,   as   he
travelled “from” New York to Chicago. Silva V.
MacAuley, 135 Cal App. 249, 26 P.2d 887. One
meaning of “from” is “out of.” Word “from” or
“after”   and   event   or   day   does   not   have   an
absolute   and   invariable   meaning   but   each
should   receive   an   inclusion   or   exclusion
construction according to intention with which
such   word   is   used.   Acme   Life   Ins.   CO.   v.
White,   Tex.   Civ.   App.   99   SW   2d   1059,   1060.
Words “from” and “to”, used in contract, may
be   given   meaning   to   which   reason   and   sense
entitles   them,   under   circumstances   of   case.
Woodruff v. Adams, 134 Cal App.490, 25 P, 2d

124.  The word ‘from’ is used to denote a point of time,

a place or a period. Both the words ‘found in or brought

from’ have been used before word ‘forest’. Both the words

that   is   ‘found   in’   and   ‘brought   from’,   has   clear   nexus

with forest. The true meaning of the words ‘brought from’

has to be appreciated when read in the context of word

‘found   in’.   The   word   ‘brought   from’   is   an   expression

which conveys the idea of the items having their origin

in   the   forests   and   they   have   been   taken   out   from   the

forest.   The   word   ‘from’   refers   to   the   place   from   which

the goods have been moved out that is from the place of

their original location. The forest is birth place, the

origin of the items mentioned in sub­clauses (1) to (iv)

of sub­clause(b) of Section 2(4). The ‘found in’   means

that the item which has origin from the forest, is found

in   the   forest   while   ‘brought   from’   means   that   items

having origin in forest have moved out from the forest.

125.  The 1978 Rules framed under Section 41 of the 1927

Act   also   reflect   that   rule   making   authority   has   also

understood   the   meaning   of   word   ‘brought   from’   in   the

above   sense.   As   per   Rule   3   no   forest   produce   shall   be

moved to or from or within the State of U.P. except or

without a transit pass in the form in the Schedule A. The

Schedule A of the Rules contains the form. Item No.1 of

the form is as follows:

“1. Locality of origin;

(a) name and situation of forest,

(b) name of forest owner.”

126.   The   above   Item   No.1   also   thus   clearly   refers   to

locality of origin of the produce and form requires name

and   situation   of   forest   and   name   of   the   forest   owner.

Thus,   locality   of   origin   is   related   to   a   forest   which

supports the interpretation as placed by us. 

127.   Learned counsel for the writ petitioners have also

placed   reliance   on   a  judgment   of   the   Division   Bench   of

the   Karnatka   High   Court   in  Yeshwant   Mony   Dodamani   and

Ors. (1962 CRLJ 832). The Division Bench had occasion to

consider the definition of forest produce as contained in

sub­section (4) of Section 2 of the Act. In paragraph 6

of the judgment following has been stated:

“6.   On   a   plain   reading   of   these   expressions
‘found in’ or ‘brought from’, there can hardly
be   any   doubt   that   both   of   them   indicate   the
forest to be the source or original depository
of the forest produce in question. The learned
Government   Pleader   has   very   strenuously
contended   that   the   expression   ‘found   in’   a
forest   merely   means   ‘come   across’   or
‘discovered’   in   a   forest   irrespective   of   the
fact   whether   the   article   or   goods   so
discovered   were   originally   sourced   or
deposited  or  grown  in  a forest  or  some  other
place   which   is   not   a   forest.   All   that   is
necessary, according to the learned Government
Pleader,  is that  somebody  (meaning  apparently
a   forest   officer   or   a   forest   guard   or   other
person   acting   under   the   authority   of   the   Act
or   Rules)   finds   or   discovers   these   goods
within,   the   area   of   a   forest   Same   argument,
however,   is   not   available   nor   is   it   pressed
with,   reference   to   other   expression   ‘brought

from’   a   forest.   It   is   conceded   that   the
expression   ‘brought   from’   a   forest   certainly
excludes   the   idea   of   a   thing   being   brought
from outside the forest but taken through it.
It   is,   however,   contended   that   if   an   article
so brought from outside the forest is ‘found’
i.e., discovered by somebody within a forest,
it   would   come   within   the   definition.   We   find
it   difficult   to   accept   this   argument   which
places extreme strain both on the language and
upon logic. The expression at the commencement
of   Clause   (b)   of   Section   2(4)   should   be
compared   with   the   expression   at   the
commencement   of   Clause   (a)   of   Section   2(4).
The   articles   listed   under   Clause   (a)   become
forest­produce by virtue of their own nature,
whether they are found in a “forest or not, or
brought   from   a   forest   or   not.   On   the   other
hand,   the   articles   listed   under   Clause   (b)
become forest­produce, not by virtue of their
nature  alone,  but  by  virtue of  the  fact that
they   are   found   in   or   brought   from   a   forest.
The   term   ‘found   in’   a   forest   does   not
necessarily, in our opinion, require an actual
discovery   of   those   items   by   a   living   person
before those items can become forest­produce.

 In our opinion, the term ‘found in’ actually
refers   to   things   growing   in   a   forest   like
timber trees, fuel trees, fruits, flowers etc.
or mineral deposits or stones existing in the
forest. The distinctive feature is either the
existence or the growth or deposit within the
area   of   a   forest   and   not   their   discovery   by
some   living   person.   The   idea   underlying   the
expression ‘brought from’ is equally emphatic
of   the   source   of   the   thing   so   brought   being
within the area of a forest. The conveyance or
transport   involved   in   the   idea   of   a   thing
being brought undoubtedly has its beginning in
the   forest   by   virtue   of   the   use   of   the

expression ‘from.’”

128.     We   are   of   the   view   that   Gujarat   High   Court   has

correctly   interpreted   the   word   “brought   from”   as

occurring in clause (b) of Section 2(4). We are, thus, of

the   view   that   the   word   ‘brought   from’   has   to   be

understood in the above manner. We, however, may clarify

that the origin of forest produce may be in any forest

situate within the State of U.P. or outside the State of

U.P. Since, transit pass is necessary as per Rule 3 for

moving a forest produce into or from or within the State

of U.P. Any produce, goods entering within or the outside

the State which is the forest produce having originated

in the forest requires a transit pass for transiting in

the   State   of   U.P.   Conversely,   any   goods   which   did   not

originate in forest whether situate in the State of U.P.

or outside the State but is only passing through a forest

area may not be forest produce answering the description

of forest produce within the meaning of Section 2(4)(b).

XIII.  Meaning of ‘Forest’

129.   Safeguarding of forest has also been recognised by

our Constitution under Article 48A which oblige the State

to protect and improve the environment and to safeguard

the   forests   and   wild   life   of   the   country.   Article   51A

sub­clause(g)   enumerates   the   fundamental   duty   of   every

citizen   of   India   to   protect   and   improve   the   natural

environment   including     the   forests,   lakes,   rivers,


130.   The   Forest   Conservation   Act,   1980   is   another

Parliamentary   enactment   which   has   been   specifically

enacted to provide for the conservation of the forest and

for matters connected therewith. The definition of forest

cannot   be   confined   only   to   reserved   forests,   village

forests and protected forests as enumerated in 1927 Act.

This   Court   has   already   held   in  T.N.   Godavarman

Thirumulkpad vs. Union of India and others, 1997 (2) SCC

267, that the word “forest“ must be understood according

to its dictionary meaning,   in paragraph 4 following is


“4….The   word   “forest”   must   be   understood
according   to   its   dictionary   meaning.   This
description   covers   all   statutorily   recognised
forests,   whether   designated   as   reserved,
protected   or   otherwise   for   the   purpose   of

Section   2(i)   of   the   Forest   Conservation   Act.
The   term   “forest   land”,   occurring   in   Section
2,   will   not   only   include   “forest”   as
understood   in   the   dictionary   sense,   but   also
any area recorded as forest in the Government
record irrespective of the ownership. This is
how it has to be understood for the purpose of
Section   2   of   the   Act.   The   provisions   enacted
in   the   Forest   Conservation   Act,   1980   for   the
conservation   of   forests   and   the   matters
connected therewith must apply clearly to all
forests   so   understood   irrespective   of   the
ownership or classification thereof…” 

131.   Thus,   forest   shall   include   all   statutorily

recognised   forests,   whether   designated   as   reserve,

protected or otherwise. The term “forest land”, occurring

in   Section   2,   will   not   only   include   “forest”   as

understood   in   the     dictionary   sense,   but   also   any   area

recorded as forest in the Government records irrespective

of   the   ownership.   The   restrictive   meaning   of   forest   as

given by the Uttarakhand High Court in M/s Gupta Builders

cannot be approved.

132.   It   is   relevant   to   note   that   even   before   this

Court’s   definition   in  T.N.   Godavarman   case   (supra)  in

expensive manner, the forest was understood by the State

legislature in a very wide manner. This is reflected by

definition of forest and forest land as given in Section

38A   inserted   by   Uttar   Pradesh   Amendment   Act   5   of   1956

with effect from 3.12.1955. The definitions of ‘forest’

as given in Section 38A(b) and ‘forest land’ in 38A(c) of

1927 Act are as follows:

“38A(b) “forest” means a track of land covered
with trees, shrubs, bushes or woody vegetation
whether of natural growth or planted by human
agency, and existing or being maintained with
or without human effort, or such tract of land
on   which   such   growth   is   likely   to   have   an
effect   on   the   supply   of   timber,   fuel,
forest­produce,   or   grazing   facilities,   or   on
climate,  stream­flow,  protection  of land  from
erosion,   or   other   such   matters   and   shall

(i) land covered with stumps of trees of
a forest;

(ii) land   which   is   part   of   a   forest   or  
was   lying   within   a   forest   on   the  
first day of July, 1962;

(iii)such  pasture  land, water­logged  or  
non­cultivable   land,   lying   within,  
or adjacent to, a forest as may be  
declared to be a forest by the State 

38A(c) “forest land” means a land covered
by forest or intended to be utilized 
as a forest;”

133.   The   definition   of   forest   as   contained   in   Section

38A(b), as noticed above, gives very wide definition of

forest and giving restrictive meaning of forest in view

of   the   wide   definition   given   by   the   State   legislature

cannot be accepted. We, thus, are of the view that the

interpretation of forest as given by the Division Bench

in its judgment dated 11.11.2011 has to be approved and

the   restrictive   definition   as   given   by   the   Uttarakhand

High Court in its judgment dated 26.6.2007 in M/s. Gupta

Builders   cannot   be   approved.   We,   thus,   reject   the

submission   of   learned   counsel   for   the   petitioners   to

adopt a restrictive meaning of word ‘forest’.

XIV. Whether Notification dated 10.02.1960
 declares Roads as Protected Forest

134.   Whether   passing   through   the   roads   as   notified   by

notification   dated   10.02.1960   can   be   treated   to   be

passing through a protected forest is the question to be

answered.   The   notification   which   has   been   relied   by

learned Additional Advocate General is notification dated

10.02.1960. It is useful to extract the contents of the

said notification:

“February 10, 1960

No.1115/XIV­331­50,­Whereas the Governor Uttar
Pradesh, is of the opinion that the making of
enquiry   and   record   contemplated   under
sub­section(3)   of   section   29   of   the   Indian
Forest   Act   1927(Act   no.XVI   of   027),   will
occupy such length of time as in the meantime
to   endanger   the   rights   of   the   State
Government, now therefore, in exercise of the
powers   conferred   by   the   proviso   to   the
aforesaid   sub­section   and   by   the
sub­section(1) of the said section, read with
section   80­A   of   the   aforesaid   Act,   the
Governor   of   Uttar   Pradesh   is   pleased   to
declare   that   pending   such   enquiry   and   record
the provisions  of  Chapter  IV  of  the  said  Act
to be applicable to the lands specified in the
schedule here to : A)

Dis Ser Na Mile Description of boundary
tri ial me age
ct   No of to
. Ro be
ad decl
, ared
4 4
F To
  f f   f f

M g t M g t
. . . .
1.Me 1 Mee 3 0 0 3 2 0 The
erut   rut 1 boun
. ­Ba dary
ghp of
at  the
Roa land
d has
…. … …. … … … … … ……..

………… ………… ………… ………”

135.   A   perusal   of   the   schedule   indicates   that   in   48

Districts as they existed in 1960, different roads have

been   declared   to   be   protected   forests   from   mileage   to

mileage.   A   perusal   of   the   schedule   which   is   part   of

notification issued by the State of U.P. indicates that

in the various roads mentioned in the Schedule National

highways are also included.


136. For finding the consequences of notification dated

10.02.1960 proviso to the sub­section (3) of Section 29

read with Section 80A, referred in the notification needs

to   be   looked   into.   Section   29   contained   in   Chapter   IV

(deals with protected forests) is quoted below:

“29. Protected Forests.­(1) The [State
Government]   may,   by   notification   in
the   [official   gazette],   declare   the
provisions   of   this   Chapter   applicable
to any forest­land or waste­land which
is   not   included   in   a   reserved   forest
but   which   is   the   property   of   the
Government,   or   over   which   the
Government   has   proprietary   rights,   or
to   the   whole   or   any   part   of   the
forest­produce of which the Government
is entitle.

(2)   The   forest­land   and   waste­lands
comprised   in   any   such   notification
shall be called a “protected forest”.
(3) No such notification shall be made
unless   the   nature   and   extent   of   the
rights   of   Government   and   of   private
persons in or over the forest­land or
waste­land comprised therein have been
inquired into and recorded at a survey
or settlement, or in such other manner
as   the   [State   government]   thinks
sufficient. Every such record shall be
presumed   to   be   correct   until   the
contrary is proved.

Provided that, if, in the case of any
forest­land or waste land, the  [State
Government]   thinks   that   such   inquiry
and   record   are   necessary,   but   that

they   will   occupy   such   length   of   time
as   in   the   meantime   to   endanger   the
rights   of   Government,   the   [State
Government]   may,   pending   such   inquiry
and record, declare such land to be a
protected   forest,   but   so   as   not   to
abridge or affect any existing  rights
of individuals or communities.”

137.   Section   80A   which   has   been   referred   in   the

notification   is a provision which has been inserted by

U.P. Act 18 of 1951 with effect from 06.10.1951. Section

80A is as follows:

“80A.  The   State   Government   may,   by
notification   in   the   Official   Gazette,
declare that any of the provisions of
or under this Act, shall apply to all
or any land on the banks of canals or
the   sides   of   roads   which   are   the
property of the State Government or a
local   authority,   and   thereupon   such
provisions shall apply accordingly.”

138.   Under   Section   80A   the   State   Government   may,   by

notification   declare   that   any   of   the   provisions   of   Act

shall apply on the banks of canals or the sides of roads

which are the property of the State Government or a local

authority. Section 80A is included in Chapter XIII which

is   a   miscellaneous   Chapter.   Section   80A   empowers   the

State to declare any land on the  banks of canals or the

sides   of   roads  as   protected   forest   on   which   any   other

provisions of the Act can be applied. Notification dated

10.02.1960 declared that provisions of Chapter IV of the

Act shall be applied. Thus land mentioned in the schedule

is declared as protected forest.

139.   Section   80A   delineates   the   legislative   scheme   of

declaring   protected   forests   of  banks   of   canals   or   the

sides   of   roads.   The   State   while   issuing   notification

under   Section   80A   can   only   effectuate,   the   object   and

purpose   of   Section   80A   as   enacted   by   the   State


140.   The notification dated 10.02.1960 has to be read

in   the   light   of   the   substantive   provisions   contained

under Section 80A. When Section 80A empowers the State

to declare any land on the banks of canals or the sides

of roads  as protected forests State can do only which

is permitted by the State and no more. Section 80A read

with notification dated 10.02.1960 shall only mean that

both the  sides of the roads which have been mentioned

in the Schedule are now declared protected forests. The

purpose for such declaration  is not far to seek. Both

sides   of   canals   or   both   sides   of   the   roads   can   be

declared   as   protected   forests   for   maintenance   and

management   of   the   same   by   applying   the   different

provisions of the Act. Maintenance of forests on both

sides   of   canals   is   with   the   object   and   purpose   of

environment   protection.   Maintenance   of   protected

forests on both the sides of the road is for the same

purpose and object, and also with object to combat the

vehicular pollution and to improve the environment and

ecology.   By   notification   under   Section   80A,   it   cannot

be   accepted   that   road   itself   has   been   declared   as

protected forest. The object is not to declare the road

as protected forest so as to apply different provisions

of 1927 Act on the roads itself. The interpretation put

by the State that roads declared by notification dated

10.02.1960   have   become   protected   forests   is   not

compatible   with   provisions   of   Chapter   IV.   The   State

cannot   exercise   its   power   under   Section   30   nor   any

Rules under Section 32 can be framed by the State for

the   roads   itself.   The   maintenance   and   regulation   of

roads are governed by different statutes and principles

of   law.   We,   thus,   reject   the   submissions   of   learned

counsel   for   the   the   State   that   merely   because   both

sides   of   roads   are   declared   protected   forests,   the

roads   itself   have   become   protected   forests.   We,   thus,

conclude   that   merely   passing   through   the   roads   as

included   in   the   notification   dated   10.02.1960,   it

cannot   be   held   that   the   goods   or   forest   produce   are

passing through the protected forests. 

XV. Whether Rule 3 is independent of Rule 5

141.   Rule   3   is   couched   in   negative   term   providing   that

“……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 Schedule

A……”. Thus transit of forest produce is permissible only

with   a   transit   pass.   Rule   4(1)   contains   provisions

regarding   officers   and   persons   who   issue   passes.   Rule

4(1) is as follows:

Officers “Rule   4.(1):The   following   officers  and
Persons  and persons shall have power to           to
issue  issue passes under these rules:­

(a) For forest produce belongings to  Government
or not owned by any  other   person,   the
Conservator of  Forest,   the   Divisional
Forest  Officer, the Sub­Divisional  Forest
Officer or any other  officer  
authorized in this  behalf   in  
writing by conservator  of   Forest  
or the Divisional  Forest Officer;

(b) For forest produce owned by any  person,
such person or his agent  if   so
authorized in writing by  the   Divisional
Forest Officer­

  (i)   Provided   that   any   person   who  
desires to obtain a transit  pass
or authorization to  issue   passes
under clause  (b) of sub­rule(1) above  
shall   apply   in   the   form   in  
Schedule ‘B’ and the  Divisional
Forest Officer  may,   before   issuing
the  transit   pass   or  
authorization   to   issue   such  
passes, conduct such inquiry  and
call for such  information  as
considered  necessary;

  (ii)Such authorization shall  specify
the period during which   it   shall
remain in  force,   and   shall   also  
specify the route to be  adopted
and check Chawki or  depot   through
which to  produce must pass; and

(iii)Any authorization may at any  time   be
changed (on request  or   otherwise)
or cancelled  by   the   Division   Forest  
Officer   or   Conservation   of  

142.   Now   we   come   to   Rule   (5)   which   provides   for   fees

payable   for   different   passes.   Rule   5   along   with   its

Marginal note (as originally framed) is as follows:

Fees   Payable 5.   At   the   check   Chawki   or   depot
for established under rule 15 and specified
different under   proviso   (ii)   to   clause(b),
classes  sub­rule   (1)   of   rule   4,   the   forest
of passes produce   along­with   the   two   copies   of
the   pass(duplicate   and   triplicate)
shall be produced for examination under
sub­rule(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 load of timber or other
forest produce            ……Rs.5.00 per
                             tonne of 

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

(iii) per camel load of timber or other
forest produce                ……Rs.1.25

(iv) per pony load of timber or other 
forest produce                ……Rs.0.50

(v) per head load of timber or other 
forest produce              ……Rs. 0.25”

143.  Referring to Chawki or depot established under Rule

15 and specified under proviso(ii) to clause(b), sub­rule

(1)   of   Rule   4,   learned   counsel   contends   that   transit

passes as referred to under proviso (ii) to clause(b) of

sub­rule   (1)   of   Rule   4   are   only   to   be   charged   with

transit fees.

144.   Rule   4   as   noticed   above   contains   provisions

regarding   officers   and   persons   who   have   power   to   issue

passes.   Under   Rule   4(1)(a)   for   the   forest   produce

belonging to government or not owned by any other person

various officers of the forest department are authorized

to   issue   passes.   Rule   4   clause   (b)   relates   to   various

produce   own   by   any   person.   Pass   can   be   issued   by   such

persons or his agents if so authorized in writing by the

Divisional Forest Officer. Any person who is referred to

in Rule 4(b) has to apply in the form in Schedule B to

the   Divisional   Forest   Officer   whereon   authorization   has

to   be   issued   by   the   authorized   Divisional   officer.   The

words   in   Rule   5   namely   “…Chawki   or   depot   established

under   Rule   15   and   specified   under   proviso(ii)   to

clause(b),   sub­rule   (1)   of   Rule   4”   are   the   words

qualifying the words chawki or depots. The fee has to be

paid   for   different   passes   at   chawki   or   depot   where   it

shall be produced for examination and payment of transit

fees. All forest produces are to be produced at chawki or

depot for payment of transit fee. Reading of Rule 5 does

not   indicate   any   intention   that   only   one   category   of

passes as referred to in Rule 4(1)(b) are leviable with

transit   fee.   The   words“…specified   under   proviso(ii)   to

clause(b),   sub­rule(1)   of   Rule   4   only   refer   to   check

Chawki   or   depot   where   forest   produce   is   to   be   produced

for   examination.   The   Marginal   Note   of   Rule   5   also

clarifies the intent of the Rule. The Marginal note reads

as “Fees payable for different classes of passes.” Thus

Marginal   Note   clarifies   that   transit   fee   is   payable   at

all   kinds   of   passes   and   submission   is   incorrect   that

leviablity of fee is only on one category of passes as

referred to in Rule 4(1)(b). Marginal note has been held

to   be   an   internal   aid   to   statutory   interpretation   of   a

statute.   Justice   G.P.Singh   in   Principles   of   Statutory

interpretation 14th Edition regarding marginal note states

as follows:

“…Marginal   notes   appended   to
Articles   of   the   Constitution   have   been
held   to   constitute   part   of   the
Constitution as passed by the Constituent
Assembly   and   therefore   they   have   been
made   use   of   in   construing   the   Articles,
e.g.   Article   286,   as   furnishing   ‘prima
facie’, ‘some clue as to the meaning and
purpose of the Article’.

A   note   appended   to   a   statutory
provision   or   subordinate   legislation   is
merely explanatory in nature and does not

dilute the rigour of the main provision.
Notes under the rules cannot control the
rules   but   they   can   provide   an   aid   for
interpretation of those rules. Further, a
note which is made contemporaneously with
the rules is part of the rule, and is not
inconsistent   with   the   rule,   but   makes
explicit what is implicit in the rule.”

145. This Court has also occasion to consider the value

of marginal note in several cases. In  2004 (2) SCC 579,

N.C.Dhoundial versus Union of India  Ors.,  It was laid

down in paragraph 15 that heading or marginal note can be

relied   upon   to   clear   any   doubt   or   ambiguity   in   the

interpretation   of   the   provision   and   to   listen   the

legislative intent. Following was laid down in para 15:

“15….The   language   employed   in   the
marginal   heading   is   another   indicator
that   it   is   a   jurisdictional   limitation.
It   is   a   settled   rule   of   interpretation
that the section heading or marginal note
can be relied upon to clear any doubt or
ambiguity   in   the   interpretation   of   the
provision   and   to   discern   the   legislative
intent   (vide  Uttam   Das   Chela   Sunder   Das
v.  Shiromani   Gurdwara   Parbandhak
Committee and Bhinka v. Charan Singh).”

146.   In   event   the   interpretation   as   put   by   learned

counsel   for   the   petitioner   is   accepted   that   fee   under

Rule 5 is chargeable only on passes obtained under Rule

4(1)(b)   only,   the   easiest   manner   to   avoid   payment   of

transit fee is not to apply in form B for obtaining the

booklet for issuance of pass by the person or from its

authorized representative, which cannot be the intent of

the   Rule.   Rule   4   is   a   rule   made   with   regard   to   the

persons and officers who have power to issue passes that

has nothing to do with payment of fee which is separately

provided   in   Rule   5   and   is   applicable   to   all   kinds   of


147. Rule 6(4) on which also emphasis has been given by

learned counsel for the petitioner only provides that the

first copy of the triplicate forms of pass shall form the

counterfoil and second and third parts shall be given to

the   person   in­charge   of   the   produce   under   transit   and

shall   be   produced   whenever   required   by   any   checking

officer. Schedule A which is appended to the Rules also

use the word counterfoil and all passes are to be issued

in   form  A   as   required   by   Rule   3  as   well  as   Rule  6(1).

When all transit passes have to be in same form and in

triplicate we fail to see that how it can be read that

only on one category of passes fee is leviable and Rule 5

is not applicable and  is completely independent of Rule


148.     We   thus   are   of   the   view   that   the   submissions   of

learned   counsel   of   the   petitioner   that   transit   fee   is

payable only with regard to passes issued under Rule 4(1)

(b)   which   are   required   to   be   checked   under   Rule   6(4),

cannot   be   accepted.  Pay   ability   of   transit   fee   is

attached with transit pass issued under form A except in

cases where no transit pass is required for the removal

of forest produce as enumerated in proviso to Rule 3. We

thus do not accept the interpretation of Rule 3, 4, 5  6

as   contended   by   learned   counsel   for   the   petitioner   in

respect of pay ability of transit fee on transit passes

issued under 1978 Rules.

XVI. Non­issuance   of   Section   20   Notification   after  
Section 4 Notification of 1927 Act

149.   At this juncture, it is also necessary to notice

one   submission   raised   by   the   learned   counsel   for   the

petitioners.   It   is   contended   that   the   State   of   Uttar

Pradesh although  issued notification under Section 4 of

1927 Act proposing to constitute a land as forest but no

final notification having been issued under Section 20 of

1927 Act the land covered by a notification issued under

Section   4   cannot   be   regarded   as   forest   so   as   to   levy

transit fee on the forest produce transiting through that

area.     With   reference   to   above   submission,   it   is

sufficient   to   notice   Section   5   as   inserted   by   Uttar

Pradesh   Act   23   of   1965   with   effect   from   25.11.1965.   By

the   aforesaid   U.P.   Act   23   of   1965   Section   5   has   been

substituted to the following effect:

“Section  5.   Bar  of  accrual  of  forest
rights.­   After   the   issue   of   the
notification under section 4 no right
shall be acquired in or over the land
comprised in such notification, except
by   succession   or   under   a   grant   or   a
contract   in   writing   made   or   entered
into by or on behalf of the Government
or some person in whom such right was
vested   when   the   notification   was
issued;   and   no   fresh   clearings   for
cultivation   or   for   any   other   purpose
shall   be   made   in   such   land,   nor   any
tree therein felled, girdled, lopped,
tapped,   or   burnt,   or   its   bark   or
leaves   stripped   off,   or   the   same
otherwise   damaged,   nor   any
forest­produce   removed   therefrom,
except   in   accordance   with   such   rules
as may be made by the State Government
in this behalf.”

150.  Section 5 clearly provides that after the issue of

the notification under Section 4 no forest produce can be

removed therefrom, except in accordance with such rules

as may be made by the State Government in this behalf.

The   regulation   by   the   State   thus   comes   into   operation

after the issue of notification under Section 4 and thus

the   submission   of   the   petitioners   that   since   no   final

notification   under   Section   20   has   been   issued   they   can

not be regulated by Rules 1978 cannot be accepted.

151. We, however, make it clear that we have not entered

into   the   issue   as   to   whether   actually   after   Section   4

notification State has taken any further steps including

notification under Section 20 or not.

152.  In so far as submission of learned counsel for the

writ petitioner that Constitution Bench judgment in State

of  West   Bengal   vs.   Keshoram   Industries   (surpa)  having

been   referred   to   a   Nine   Judge   Bench   which   reference

having not been answered, the interpretation given by the

Five Judge Bench of Synthetics and Chemicals vs. State of

U. P. and ors cannot be relied, suffice it to say for the

purposes of this batch of cases it is not necessary for

us to rest our decision on the preposition as laid down

in  Keshoram   Industries.  Independent   of   preposition   as

laid   down   by   the   Constitution   Bench   in  Keshoram

Industries   there are clear pronouncement of this court

as noticed above by us for deciding the issues raised in

this batch of cases.

153.  The writ petitioners have contended that in view of

striking   down   Fourth   and   Fifth   Amendment   Rules   to   1978

Rules,   the   Third   Amendment   dated   09.09.2004   could   not

have   been   resorted   to   for   realising   the   transit   fee   at

the rate of Rs.38/­. The petitioners relying on judgments

of  Firm  A.T.B Mehtab   Majid and Co. vs. State of Madras

and another, AIR 1963 SC 928; B.N. Tiwari vs. Union of

India, AIR 1965 SC 1430 and State of U.P. and others vs.

Hirendera   Pal   Singh,   2011   (5)   SCC   305,  have   submitted

that   the   earlier   Rule   does   not   revive   even   when

substituted Rule is struck down by the Court. Shri D.K.

Singh,   learned   Additional   Advocate   General   has   refuted

the   submission   and   placed   reliance   on   judgment   of   this

Court in Supreme Court Advocate­on­record Association vs.

Union of India, 2016(5)SCC 1.  This Court in the interim

order dated 29.10.2013 has expressly directed that “the

State   shall   be   free   to   recover   transit   fee   for   forest

produce removed from within the State of U.P. at the rate

stipulated in the Third amendment to the Rules mentioned

in   the   earlier   part   of   this   order.”   Further,   after

noticing the striking down of Fourth and Fifth Amendment

Rules by the High Court, this Court in the same interim

order permitted the State to recover transit fee in terms

of the Third Amendment Rules.

154.     It   is,   further,   relevant   to   note   that   the   High

Court   in   its   judgment   dated   11.11.2011   has   issued

following   directions   in   the   last   paragraph   of   the

judgment which contained operative portion as below:

“188. All   the   writ   petitions   are
consequently allowed.   The Notifications dated
20.10.2010,   by   which   the   ‘U.P.   Transport   of
Timber   and   Other   Forest   Produce   Rules,   1978’,
was   amended   by   the   4th  Amendment;   and   the
Notification dated 4.6.2011, by which the ‘U.P.
Transport   of   Timber   and   Other   Forest   Produce
Rules, 1978’ was amended by the 5th  Amendment,
are   quashed.     It   will   be   open   to   the
Respondents   to   impose   and   collect   the   transit
fees on such forest produce prevailing on such
rates as it was being charged prior to the 4 th
Amendment to the Rules notified on 20.10.2010,
i.e.   at   the   rate   of   Rs.38/­   per   tonne   of
capacity   per   lorry   load   of   timber   or   other

forest produce; Rs. 19/­ per tonne of capacity
per   cart   load   of   timber   or   other   forest
produce; Rs. 1.25 per camel load of timber and
other forest produce; Rs.4/­ per pony load of
timber or other forest produce and Rs.2/­ per
head   load   of   timber   or   other   forest   produce.
We also declare that the imposition of transit
fee   on   ‘Sponge   Iron’   which   is   not   a   forest
produce   after   undergoing   the   process   of
manufacture, converting it into a commercially
different   commodity   than   forest   produce,   and
‘Tendu Patta’, the trade and transportation of
which   is   monopolized   by   the   State   Government,
is not valid in law, and restrain Respondents
from requiring transit passes and transit fees
on it.  The costs are made easy.

Petitions allowed.

155.  The High Court has thus even though had struck down

Fourth   and   Fifth   Amendment   Rules   but   has   clearly

permitted the State to recover transit fee in accordance

with the rate as was applicable prior to Fourth Amendment

Rules. We, thus, do not find any infirmity in the State’s

recovery   of   transit   fee   at   the   rate   of   Third   Amendment

Rules.   There   being   express   order   by   the   High   Court   on

11.11.2011   as   well   as   interim   order   by   this   Court     on

29.10.2013 permitting the State to recover transit fee as

per   the   rate   as   was   prevalent   by   Third   Amendment   Rules

prior to enforcement to Fourth Amendment Rules, we are of

the   view   that   the   question   as   to   whether     by   striking

down   Fourth   and   Fifth   Amendment   Rules,   Third   Amendment

Rule does not revive need not be gone into in the present

case. In view of the order of the Division Bench of the

High dated 11.11.2011, the State was fully competent to

recover   the   transit   fee   as   per   Third   Amendment   Rule,

which direction of the High Court we duly affirm.


156.   We   now   proceed   to   consider   the   respective

contentions   of   the   parties   on   the   Fourth   and   Fifth

Amendment Rules. Before we proceed to consider the rival

contentions, it is necessary to have broad  over­view  of

the   concept   of   fee   and   tax.   Further,   the   nature   of

regulatory   fee   and   its   essential   characteristic   also

needs to be looked into.

157.   The  locus classicus  on the concept of fee and tax

is the judgment of this Court in The Commissioner, Hindu

Religious Endowments, Madras vs. Sri Lakshmindra Thirtha

Swamiar   of   Sri   Shirur   Mutt,   AIR   1954   SC   282,  B.K.

Mukherjea, J. speaking for 7­Judge Bench has elaborately

defined the tax and fee in paragraphs 43 and 44 which are

quoted below:

“43.   A   neat   definition   of   what   “tax”   means
has   been   given   by   Latham   C.J.   of   the   High
Court   of   Australia   in   Matthews   v.   Chicory
Marketing Board (60 C.L.R. 263, 276.).

“A   tax”,   according   to   the   learned
Chief   Justice,   “is   a   compulsory
exaction of money by  public authority
for public purposes enforceable by law
and   is   not   payment   for   services

This definition brings out, in our opinion,
the   essential   characteristics   of   a   tax   as
distinguished   from   other   forms   of
imposition   which,   in   a   general   sense,   are
included   within   it.   It   is   said   that   the
essence of taxation is compulsion, that is
to say, it is imposed under statutory power
without   the   taxpayer’s   consent   and   the
payment   is   enforced   by   law   (Vide   Lower
Mainland   Dairy   v.   Orystal   Dairy   Ltd.   1933
AC 168.). 

The second characteristic of tax is that it
is   an   imposition   made   for   public   purpose
without reference to any special benefit to
be conferred on the payer of the tax. This
is expressed by saying that the levy of tax
is   for   the   purposes   of   general   revenue,
which   when   collected   form   part   of   the
public revenues of the State. As the object
of   a   tax   is   not   to   confer   any   special
benefit   upon   any   particular   individual,
there is, as it is said, no element of quid
pro quo between the taxpayer and the public
authority (See Findlay Shirras on “Science
of Public Finance”, Vol. p. 203.). Another
feature of taxation is that as it is a part
of   the   common   burden,   the   quantum   of

imposition   upon   the   taxpayer   depends
generally upon his capacity to pay.

44.   Coming   now   to   fees,   a   ‘fee’   is
generally   defined   to   be   a   charge   for   a
special service rendered to individuals by
some governmental agency. The amount of fee
levied   is   supposed   to   be   based   on   the
expenses   incurred   by   the   Government   in
rendering the service, though in many cases
the   costs   are   arbitrarily   assessed.
Ordinarily,   the   fees   are   uniform   and   no
account   is   taken   of   the   varying   abilities
of   different   recipients   to   pay   (Vide   Lutz
on   “Public   Finance”   p.   215.).   These   are
undoubtedly   some   of   the   general
characteristics,   but   as   there   may   be
various kinds of fees, it is not possible
to   formulate   a   definition   that   would   be
applicable to all cases.”

158.   Further,   on   distinction   between   tax   and   fee

following was stated in paragraphs 45 and 46:

“45…The   distinction   between   a   tax   and   a
fee lies primarily in the fact that a tax is
levied as a part of a common burden, while a
fee   is   a   payment   for   a   special   benefit   or
privilege.   Fees   confer   a   special   capacity,
although   the   special   advantage,   as   for
example in the case of registration fees for
documents or marriage licences, is secondary
to   the   primary   motive   of   regulation   in   the
public   interest   (Vide   Findlay   Shirras   on
“Science   of   Public   Finance”   Vol.   I,   p.

202.).   Public   interest   seems   to   be   at   the
basis of all impositions, but in a fee it is
some   special   benefit   which   the   individual
receives.   As   Seligman   says,   it   is   the

special   benefit   accruing   to   the   individual
which is the reason for payment in the case
of   fees;   in   the   case   of   a   tax,   the
particular advantage if it exists at all is
an   incidental   result   of   State   action   (Vide
Seligman’s Essays on Taxation, p. 408.).

46. If, as we hold, a fee is regarded as a
sort of return or consideration for services
rendered,   it   is   absolutely   necessary   that
the levy of fees should, on the face of the
legislative   provision,   be   co­related   to   the
expenses incurred by Government in rendering
the services. As indicated in article 110 of
the   Constitution,   ordinarily   there   are   two
classes   of   cases   where   Government   imposes
‘fees’   upon   persons.   In   the   first   class   of
cases, Government simply grants a permission
or   privilege   to   a   person   to   do   something,
which   otherwise   that   person   would   not   be
competent   to   do   and   extracts   fees   either
heavy or moderate from that person in return
for the privilege that is conferred.

A most common illustration of this type
of   cases   is   furnished   by   the   licence   fees
for motor vehicles. Here  the costs incurred
by   the   Government   in   maintaining   an   office
or   bureau   for   the   granting   of   licences   may
be   very   small   and   the   amount   of   imposition
that is levied is based really not upon the
costs   incurred   by   the   Government   but   upon
the benefit that the individual receives. In
such cases, according to all the writers on
public   finance,   the   tax   element   is
predominant   (Vide   Seligman’s   Essays   on
Taxation, p. 409.), and if the money paid by
licence holders goes for the upkeep of roads
and other matters of general public utility,
the   licence   fee   cannot   but   be   regard   as   a

159.     In   another   Constitution   Bench   in  Corporation   of

Calcutta and Anr. vs. Liberty Cinema, AIR 1965 SC 1107,

following was stated in paragraphs 16 and 17:

“16. Both these cases discussed other tests
besides the requirement of the  rendering  of
services for determining whether a levy is a
fee, but with these we are not concerned in
the present case. These cases also discussed
the correlation of the costs of the services
to   the   levy   but   with   also   we   are   not
concerned as it is not sought to uphold the
present   levy   on   the   ground   of   such
correlation. We have referred to these cases
only for  showing that to make a levy  a  fee
the services rendered in respect of it must
benefit, or confer  advantage  on, the  person
who pays the levy.

20. The other case to which we wish to refer
in this connection is The Hingir­Rampur Coal
Co.,   Ltd.   v.   The   State   of   Orissa   and   ors.,
[1961]2SCR537   .   There   the   imposition   by   a
certain statute of a levy on lessees of coal
mines in a certain area and the creation of
a   fund   with   it,   was   called   in   question.   It
was held  that the levy  was a fee  in return
for   services   and   was   valid.   It   was   there
said   at   p.   549,   “If   the   special   service
rendered   is   distinctly   and   primarily   meant
for   the   benefit   of   a   specified   class   or
area,   the   fact   that   in   benefiting   the
specified class or area the State as a whole
may   ultimately   and   indirectly   be   benefited
would not detract from the character of the
levy as a fee.” It may be mentioned that the
levy   there   went   to   meet   expenditure
necessary   or   expedient   for   providing

amenities   like   communication,   water   supply
and   electricity   for   the   better   development
of   the   mining   area   and   to   meet   the   welfare
of   the   labour   employed   and   other   persons
residing   or   working   in   the   area   of   the
mines.   Here   again   there   is   no   element   of
control   but   the   services   resulted   in   real
benefit specially accruing to the persons on
whom   the   levy   was   imposed.   These   decisions
of   this   Court   clearly   establish   that   in
order   to   make   a   levy   a   fee   for   services
rendered   the   levy   must   confer   special
benefit   on   the   persons   on   whom   it   is
imposed.   No   case   has   been   brought   to   our
notice in which it has been held that a mere
control   exercised   on   the   activities   of   the
persons on whom the levy is imposed so as to
make   these   activities   more   onerous,   is
service   rendered   to   them   making   the   levy   a

160.   The   nature   of   transit   fee   came   for   consideration

before   this   Court   in  State   of   Tripura   and   others   vs.

Sudhir Ranjan Nath, 1997 (3) SCC 665. The Tripura Transit

Rules levy the transit fee. The High Court has declared

Rule   3   which   provided   for   charging   of   transit   fee   as

unconstitutional.   In   appeal   against   the   said   judgment,

referring to the judgment of the Corporation of Calcutta

and   Anr.   vs.   Liberty   Cinema   (supra)  it   was   held   that

expression ‘licence fee’ does not  necessarily mean a fee

in lieu of services and that in the case of regulatory

fees, no quid pro quo need be established. Following was

held in paragraph 15:

“15.  This   decision   has   been   followed   in
several   decisions,   including   the   recent
decisions   of   this   Court   in  Vam   Organic
Chemicals   Ltd.  v.  State   of   U.P.,   1997   (2)
SCC   715    and  Bihar   Distillery  v.  Union   of
India, 1997 (2) SCC 727. The High Court was,
therefore,   not   right   in   proceeding   on   the
assumption   that   every   fee   must   necessarily
satisfy   the   test   of   quid   pro   quo   and   in
declaring   the   fees   levied   by   sub­rules   (3)
and   (4)   of   Rule   3   as   bad   on   that   basis.
Since   we   hold   that   the   fees   levied   by   the
said sub­rules is regulatory  in nature, the
said   levy   must   be   held   to   be   valid   and
competent,   being   fully   warranted   by   Section


161.   This   Court   held   that   transit   fee   is   a   regulatory

fee in nature.

162.     In  Secunderabad   Hyderabad   Hotel   Owners’   Assn.   v.

Hyderabad Municipal Corpn., 1999 (2) SCC 274, where this

Court held that a fee which is charged for regulation for

such   activity   would   be   validly   classified   as   a   fee   and

not a tax although no service is rendered. In paragraph 9

following was stated:

“9.  It   is,   by   now,   well   settled   that   a
licence   fee   may   be   either   regulatory   or

compensatory.   When   a   fee   is   charged   for
rendering   specific   services,   a   certain
element of quid pro quo must be there between
the   service   rendered   and   the   fee   charged   so
that the licence fee is commensurate with the
cost of rendering the service although exact
arithmetical   equivalence   is   not   expected.
However,   this   is   not   the   only   kind   of   fee
which   can   be   charged.   Licence   fees   can   also
be regulatory when the activities for which a
licence   is   given   require   to   be   regulated   or
controlled.   The   fee   which   is   charged   for
regulation for such activity would be validly
classifiable as a fee and not a tax although
no   service   is   rendered.   An   element   of   quid
pro   quo   for   the   levy   of   such   fees   is   not
required   although   such   fees   cannot   be

163.   The   Uttar   Pradesh   Transit   of   Timber   and   other

Forest Produce Rules, 1978, itself came for consideration

before  this Court  in  State  of  U.P.  vs.  Sitapur  Packing

Wood Suppliers, 2002 (4) SCC 566. The High Court had held

the   Rules   to   be   constitutionally   valid   but   levy   of

transit fee was invalidated. In absence of quid pro quo,

the High Court did not strike down the Rules and observe

that it is open to the State Government to levy transit

fee by rendering service as  quid pro quo.  Rules 3 and 5

of   1978   Rules   as   well   as   provisions   of   Section   41   of

Forest   Act,   1927   were   considered   by   this   Court.   This

Court relying on the judgments of this Court in State of

Tripura  v.  Sudhir   Ranjan   Nath,   Corpn.   of   Calcutta  v.

Liberty  Cinema  and   Secunderabad  Hyderabad  Hotel  Owners’

Assn.  v.  Hyderabad   Municipal   Corpn.  held   transit   fee

under Rule 5 as clearly regulatory and it was held that

it was not necessary for the State to establish quid pro

quo. Following was held in paragraphs 8,9 and 10:

“8. 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.

9.  In  State   of   Tripura  v.  Sudhir   Ranjan
Nath  almost   similar   question   came   up   for
consideration   in   relation   to   the   State   of
Tripura. It was held that Sections 41 and 76
of   the   Act   vest   total   control   over   the
forest   produce   in   the   State   Government   and
empower   it   to   regulate   the   transit   of   all
timber   or   other   forest   produce   for   which
purpose   the   State   Government   is   also
empowered to make the Rules. The decision of
the   High   Court   invalidating   the   levy   of
application   fee   in   the   said   case   on   the

ground   that   the   State   had   not   established
that   the   services   were   rendered   in   lieu   of
the   said   fee,   was   reversed   by   this   Court
holding that the fee was regulatory and not
compensatory.   Reference   may   be   made   to   the
decision   in   the   case   of  Corpn.   of   Calcutta
v.  Liberty   Cinema  wherein   it   was   held   that
the   expression   licence   fee   does   not
necessarily   mean   a   fee   in   lieu   of   services
and   in   case   of   regulatory   fee   no   quid   pro
quo   need   be   established.   Following  Liberty
Cinema   case2  similar   views   have   been
expressed   in  Secunderabad   Hyderabad   Hotel
Owners’   Assn.  v.  Hyderabad   Municipal   Corpn.
and P. Kannadasan v. State of T.N.

10.  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


164.  In view of the foregoing discussion, it is now well

settled   that   transit   fee   charged   under   1978   Rules   is

regulatory fee in character and further the State is not

to   prove  quid   pro   quo  for   levy   of   transit   fee.   After

having   noticed   the   nature   and   character   of   the   transit

fee as envisaged in 1978 Rules, we now proceed to notice

various   provisions   of   1978   Rules   as   well   as   Fourth   and

Fifth Amendment Rules.

165.   Section   41   of   the   Forest   Act,   1927   empowered   the

State   to   make   Rules   to   regulate   transit   of   forest

produce. The State of Uttar Pradesh by Uttar Pradesh Act

23 of 1965 with effect from 23.11.1965 after sub­section

(2)   of   Section   41   inserted   sub­sections   (2A)   and   (2B).

Sub­section (2A) is as follows:

“(2A)   The   State   Government   may   by
notification in the Gazette delegate, either
unconditionally   or   subject   to   such
conditions   as   may   be   specified   in   the
notification,   to   any   Forest­officer,   not
below the rank of Conservator, the power to
prescribe   fees   under   clause   (c)   of
sub­section (2).”

166.   The   State   of   U.P.   in   exercise   of   power   under

Section   41   framed   Rules,   namely,   the   Uttar   Pradesh

Transit of Timber and other Forest Produce Rules, 1978.

Rule   3   provided   for   regulation   of   transit   of

forest­produce   by   means   of   passes   which   is   to   the

following effect:

“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   Schedule   A   to   these   Rules,   from   an
officer of the Forest Department or a person
duly   authorised   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   hall   be
required for the removal­

(iii) 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   recognised   under   this
Act,   within   the   limits   of   a
village   in   which   it   is

(iv) of   forest   produce   by
contractor’s   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

(v) of   such   forest   produce   as   may

be   exempted   by   the   State
Government   from   the   operation
of   these   rules   by   notification
in the official Gazette.”

167.   Rule   5   prescribes   for   fees   payable   for   different

classes   of   passes.   Rule   5(as   originally   framed)   is   as


“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) of sub­rule
(1) of Rule 4, the forest produce alongwith
the   two   copies   of   the   pass   (duplicate   and
triplicate)   shall   be   produced   for
examination under sub­rule (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 load of  .Rs. 

timber or other  5.00 per
forest produce tonne of

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

(iii)per camel load  .Rs. 1.25
of timber or other
forest produce

(iv)per pony load of  .Re. 0.50

timber or other 
forest produce

(v)per head load of  .Re. 0.25
timber or other 
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.”

168.   By the Uttar Pradesh Transit of Timber and other

Forest   Produce   (Third   Amendment)   Rules,   2004   fee

prescribed in Rule 5 was increased, for example per lorry

load of timber or other forest produce in place of Rs.5/­

per tonne of capacity is shown fee of Rs.38/­ per tonne

of capacity. Now, comes to Fourth Amendment Rules, 2010

dated 20.10.2010, the fee which was Rs.38/­ for per tonne

per   lorry   load   of   timber   or   other   forest   produce   was

increased as Rs.200/­ per cubic meter of capacity other

than   of   Khair,   Sal   and   Sagaun   (Teak),   Shisham,   Sandal

Wood   and   Red   Sanders.   Then   comes   to   Fifth   Amendment

Rules,2011 dated 04.06.2011. Rule 5 was amended where the

basis of levy of fee was changed into  advalorem  at the

rate of 5% or minimum Rs.2,000/­ for per lorry load of

timber   or   other   than   of   Khair,   Sal   and   Sagaun   (Teak),

Shisham, Sandal Wood and Red Sanders. Relevant extract of

Rule 5 as amended by Fifth Amendment is as follows:

(i)(a)   per   lorry Rs.200.00   per (i)(a)   per Advalorem at the
load   of   timber cubic   Meter lorry   load   or rate   of   5%   or
other   than   of of capacity timber   of minimum
Khair,   Sal   and Khair, Sal and Rs.2000/­ 
Sagaun   (Teak) Sagaun   (Teak)
Shisham,   Sandal Shisham,Sandal
Wood   and   Red Wood   and   Red
Sanders Sanders
(b)per   lorry   load Rs.75.00   per (b)   per   lorry Advalorem at the
of   timber   other cubic   Meter load of timber rate   of   5%   or
than of Khair, Sal of capacity other   than   of minimum Rs.750.
and Sagaun (Teak), Khair, Sal and
Shisham,   Sandal Sagaun   (Teak),
Wood   and   Red Shisham,Sandal
Sanders   or   other Wood   and   Red
forest produce Sanders   or
other   forest
produce   except
as   mentioned
in (i)c)
(c)per   lorry Advalorem at the
load   of   other rate   of   15%   of
forest   produce minimum Rs.400/­
coming   from
mines,   e.g.,
coal,   lime,
stone,   sand,
Bajari,   and


169.  Before we proceed further with the discussion it is

necessary   to   note   the   actual   impact   on   Transit   Fee   of

Fourth and Fifth Amendment Rules. We have already noted

that   initially   when   Transit   Fee   Rules   were   framed   in

1978, Transit Fee on per lorry load of timber was Rs. 5

per tonne of capacity. By 3rd  amendment with effect from

14.06.2004 Rs. 5/­ was increased as Rs. 38 per tonne of

capacity.     By   4th  amendment   rules,   the   Transit   Fee   was

increased   as   Rs.   200/­   per   cubic   meter   with   regard   to

timber, Khair, Sal  Sagaun, Sisham, Sandal wood and Red

Sanders and with regard to other timber Rs. 75 per cubic

meter. 170.  The same amount was leviable on other forest

produce. The chart has been given by learned Counsel for

the petitioners reflecting the effect of Third, Fourth 

Fifth Amendment Rules with regard to a lorry load having

different capacities. The chart is as follows: 


Vehicle As per As per As per G. O. dt. As per G. O. Dt.

s 1978 G.O. Dt. 20.10.2010 04.06.2011
Rules 16.04.20 (a) Rs. 200/- per
Rs. 5/- 04 Rs. Cubic Meter
per 38/- per Capacity

Ton Ton (b)Rs. 75/- Per
Cubic Meter

6 9 Ton 9 Ton x (a) 28.57 Cubic (a) Per Lorry Ad-Valor
wheele x Rs. Rs. 38/- Meter x Rs. 200/- load of timber em at
r 5/- Rs. Rs. 5714/- of Khair, Sal the rate
Rs. 342/- and Sagaun of 5% or
45/- (Teek), minimu
Shisham, m Rs.
Sandal wood 2000/-
and Red

10-12 15 Ton 15 Ton x 36.50 Cubic (b) Per lorry Ad-valor
wheele X Rs. Rs. 38/- Meter x Rs. 200/- load of timber em at
r 5/- Rs. Rs. 7300/- other than of the rate
Rs. 570/- Khair, Sal and of 5% or
75/- Sagaun (Teek), minimu
Shisham, m Rs.
Sandal wood 750/-
and Red
Sanders and
other forest
produce as
mentioned in (i)

6 (b) 28.57 Cubic (c) Per lorry Ad-Valor
wheele Meter x Rs. 75/- load of other em at
r Rs. 2142/- forest produce the rate
coming from of 15%
mines i.e. coal, or
lime, stone, minimu
sand, bajri and m Rs.
other minerals. 750/-

10-12 36.50 Cubic
wheele Meter x Rs. 75/-
r Rs. 2737/-

171.   The   above   chart   indicates   that   by   Third   Amendment

Rules which was enforced from 14.06.2004 that is after 26

years of enforcement of Transit Rule, the Transit Fee was

increased 7 times. Whereas by Fourth amendment which was

imposed   with   effect   from   20.10.2010.   Transit   Fee   was

increased   more   than   16   times.   As   per   Fifth   amendment

rules,   Transit   Fee   was   based   on  ad­valorem  basis   and

although   the   minimum   amount   was   fixed   but   there   was   no

cap on the maximum amount. Thus Transit Fee payable was

on the value of all forest produce.  Whereas with regard

to timber  ad­valorem  was at the rate of 5 per cent but

with   regard   to   coal,   lime   stone,   sand,   stone,   bajri  

other minerals ad­valorem is at the rate of 15 per cent. 

172.   High   Court   after   considering   the   impact   of   Fifth

Amendment has held that by Fifth Amendment the increase

in Transit Fee is more than ten time. The Fifth Amendment

Rule   was   issued   in   six   months   of   issuance   of   Fourth

Amendment   Rule.   In   the   affidavit   filed   before   the   High

Court the State has pleaded that every year expenditure

increases   10%   to   20%,   When   every   year   expenditure

increases only 10 to 20%, what was necessity to increase

the   transit   several   time   fee   by   5th  Amendment,   remains


173.   Learned   senior   counsel  Shri   N.   K.   Kaul  appearing

for   the   respondent,     Indian   Wood   Products   Co.   has

explained   the   impact   of   increase   of   Transit   Fee   on   the

basis of ad­valorem. According to the chart in so far as

the   Transit   Fee   on   Khair   wood   as   paid   by   Indian   Wood

Products   Ltd,   the   payment   was   made  96.38  times   by   4th

amendment and 362.33 times from 3rd amendment on the basis

of 5th amendment of the Rules dated 04.06.2011. 

174.     Before   we   arrive   at   any   conclusion   regarding

validity or otherwise of the Fourth and Fifth Amendment

Rules following three issues need to be addressed:

(a) Whether   there   is   a   broad   correlation   between

increase in the fee and expenses incurred in regulation

of   forest   produce,   although   the   State   is   not   liable   to

prove any quid pro quo?

(b) Whether   the   State   has   satisfactorily   justified   the

increase   in   Transit   Fee   by   4th    5th  amendment   by

producing relevant material?

(c) Whether   by   adoption   of  ad­valorem  basis   by   5th

amendment Rules the Transit Fee no longer remains a fee

and has changed into character of a tax?

175.   We have already noticed the pronouncement of this

Court that for regulatory fee, State is not to prove any

quid pro quo. Regulatory Fee can be charged, even if, no

services   are   rendered   by   the   State   in   lieu   of   fee

realised.   This   Court   in   few  more  cases   had   occasion   to

advert to the aforesaid issue which need to be noted. In

The State of Maharashtra and Others vs. Salvation Army,

Western India Territory, (1975) 1 SCC 509, this Court had

occasion   to   consider   the   provisions   of   Bombay   Public

Trust   Act,   1950   wherein,   two   per   cent   contribution   was

required to be paid to Public Trust Administration Fund.

This Court noticed the essential elements to characterise

the payment as a fee. In para 14 following was stated:

“14…Thus,   two   elements   are   essential   in
order   that   a   payment   may   be   regarded   as   a
fee.   In   the   first   place,   it   must   be   levied
in   consideration   of   certain   services   which
the   individuals   accept   either   willingly   or
unwillingly   and   in   the   second   place,   the
amount   collected   must   be   earmarked   to   meet
the expenses of rendering these services and
must   not   go   to   the   general   revenue   of   the
state   to   be   spent   for   general   public


176.  Another case which needs to be noted is  Sreenivasa

General   Traders   and   Others   vs.   State   of   Andhra   Pradesh

and   Others,   (1983)   4   SCC   353.   In   this   case,   the   Court

after referring to earlier judgments of this Court laid

down the following in para 31:

“31.The traditional view that there must  be
actual   quid   pro   quo   for     a   fee     has
undergone     a   sea   change   in   the   subsequent
decisions. The distinction between a tax and
a fee lies primarily in the fact that a tax
is levied as part of a common burden, while
a   fee   is   for   payment   of   a   specific
benefit     or   privilege   although   the   special
advantage is secondary to the primary motive
of regulation   in public   interest. If   the
element  of   revenue  for  general  purpose
of     the     State   predominates,   the     levy
becomes   a tax.   In regard   to   fees there
is,     and   must     always   be,     correlation
between   the   fee   collected   and     the   service
intended   to   be   rendered.   In   determining
whether  a levy is a fee, the true test must
be   whether     its   primary     and   essential
purpose is to render specific services to a
specified   area   or   class;   it   may   be   of   on
consequence     that   the   State   may   ultimately
and   indirectly   be   benefited     by   it.     The
power   of   any   legislature   to   levy   a   fee   is
conditioned by   the fact   that it   must be
“by    and large” a   quid pro   quo  for   the
services   rendered.   However,   correlationship
between  the levy  and the services rendered
(sic   or)   expected   is     one       of     general

character     and     not     of     mathematical
exactitude.   All     that   is   necessary   is   that
there   should   be   a   “reasonable   relationship”
between     the   levy     of   the   fee,   and   the
service rendered…”

177.  In Delhi Race Club Limited vs. Union of India  and

Others, (2012) 8 SCC 680, following was laid down in para

39 and 43: 

“39. Dealing with such regulatory fees, this
Court   in   Vam   Organic   Chemicals   Ltd.     Anr.
Vs. State of U.P. observed that in case of a
regulatory   fee,   like   the   licence   fee,   no
quid   pro   quo   is   necessary,   but   such   fee
should not be excessive…”

“43…Hence, in our opinion, the licence fee
imposed in the present case is a regulatory
fee   and   need   not   necessarily   entail
rendition of specific services in return but
at the same time should not be excessive. In
any   case,   the   appellant   has   not   challenged
the   amount   of   the   levy   as   unreasonable   and
expropriatory or excessive…”

178.   Thus   the   issue   (a)   as   noted   above,   has   to   be

answered holding that although, the State is not required

to prove any quid pro quo for levy or increase in fee but

a   broad   correlation   has   to   be   established   between

expenses   incurred   for   regulation   of  Transit  and  the  fee



179.  The issue (b) that whether State has satisfactorily

justified the increase in Transit Fee by Fourth and Fifth

Amendment   Rules   by   producing   any   material   has   to   be

answered on the basis of material which has been produced

by the State before the High Court and has been adverted

to   before   us   by   learned   senior   counsel   Shri   Ravindra

Srivastava.   The   submission   of   learned   counsel   for   the

State   is   that   the   High   Court   has   not   adverted   to   the

relevant   material   produced   by   the   State  which   was   filed

before   the   Court   by   means   of   a   counter   affidavit.   The

above submission is not correct since in para 85 of the

judgment,   the   High   Court   has   noticed   the   figures   which

were   placed   by   the   State   in   its   affidavit   regarding

amount   of   collection   of   Transit   Fee   and   the   expenses

incurred   by   the   State   on   the   establishment   and   other

miscellaneous   expenses.   The   following   chart   of   expenses

and   Transit   Fee   and   the   cost   of   enforcement   by   Forest

Department has been noticed by the High Court in para 85

which is to the following effect:

वन उपज अभभिवहन सस पप्राप रप्राजस्व तथप्रा इससस पप्राप करनस हसतत पवतर न पर भकयप्रा गयप्रा व्यय

वरर वन उपज वन भवभिप्राग पवतर न पर भकयप्रा गयप्रा व्यय

अभभिवहन सस अधधिषप्रान अन्य अनतसप्रासांभगक ययोग
पप्राप रप्राजस्व व्यय
(रूपयस लप्राख मम
2 3 4 5 6 7
2004-05 3867.00 10997.33 15.37 201.33 11213.93
2009-10 9086.17 27684.38 15.61 238.73 27938.72
2010-11 11288.2 31786.85 31.09 387.22 32205.16
2011-12 3848.33 11338.75 2.94 41.89 11383.58
(Upto July

180.   Learned counsel appearing for the writ petitioners

with   regard   to   above   collection   and   expenses   has

submitted   that   by   collection   of   Transit   Fee   State   was

trying   to   meet   the   entire   expenses   of   Forest   Department

and  the  expenses   of  entire   establishment   and   no  details

were given of expenses incurred for regulation of Transit

Fee separately.   It is submitted that Transit Fee is not

the only source of Forest Department to meet the expenses

of entire establishment of the Forest Department. 

181.   Shri   Udit   Chandra,   learned   counsel   appearing   for

some of the petitioners has referred to a Division Bench

judgment   of   Allahabad   High   Court   in  Civil   Misc.Writ

Petition   No.72465   of   2011­M/s.   Singh   Timber   Trader   and

others vs. State of U.P. and others (reported in 2016(1)

Allahabad Daily Judgment 174). It is submitted that the

writ petitioners in the above case, the  manufacturers of

plywood   and   veneer   prayed   for   quashing   of   the

notification   dated   20.10.2010   by   which   Rule   11   of   the

U.P.   Establishment   and   Regulation   of   Saw   Mills   Rules,

1978   had   been   substituted   by   U.P.   Establishment   and

Regulation of Saw Mills (Fourth Amendment) Rules, 2010.

By the said Fourth Amendment, Rules, 2010 licence fee for

Saw Mills had been enhanced by 15 times from Rs.5,000/­

per   year   to   Rs.75,000/­   per   year.   What   is   submitted   is

that the State in the said writ petition for justifying

the enhancement of licence fee for Saw Mills has relied

on   the   same   figures   of   expenditure   on

enforcement/regulation   in   U.P.   Forest   Department   which

has   been   relied   in   the   High   Court   in   the   impugned

judgment in support of increase in the transit fee. It is

submitted that thus the figures of expenditure which are

claimed   by   the   State   are   not   clearly   figures   of

expenditure   on   regulation   of   transit   but   include   other

expenditures of the forest department also. It is useful

to extract the following portion of the above mentioned

Division Bench judgment dated 23rd December, 2014:

“The   State   Government   in   the   counter
affidavit   has   tried   to   justify   the
enhancement in the fee in the following

(a)   Expenditure   on   enforcement/
regulation   in   U.P.   Forest   Department
has   increased   about   three   times   i.e.
from   Rs.11213.93   lakh   in   year   2004­05
to 32205.16 lakh in year 2010­11.

Year      Expenditure on regulation
                                  (Rupees in
Establish Other Incidental Total
­ment expenditure
2004­05 10997.33 15.37 201.33 11213.93
2009­10 27684.38 15.61 238.73 27938.72
2010­11 31786.85 31.09 387.22 32205.16

The   license   fee/renewal   of   saw

mills   and   veneer/plywood   are   thus
regulatory   in   nature   and   the   same   has
been   enhanced   with   a   view   to   balance
and meet the enhanced expenditure being
incurred   on   enforcement/regulation   of
the Forest Department..”

182.   From the above it is clear that the submission of

learned counsel for writ petitioners is correct that the

expenditure which is claimed by the State as noticed in

paragraph 85 of the impugned judgment  of the High Court

is the expenditure not confined to regulation of transit

but other expenditures of the forest department as well.

Thus,   the   correlation   sought   to   be   established   by   the

State   on   account   of   transit   fee   raised   and   those

expenditures as claimed is unfounded and has rightly not

been accepted by the High Court.

183.   The High Court after considering the stand of the

State has held the following in paragraphs 141 and 142:

“141....The increase of the  transit fees by
the   4th   Amendment   on   cubic   feet   basis   and
thereafter   by   impugned   5th   Amendment   on   ad
valorem basis on movement of forest produce
on   the   ground   that   the   value   of   the   forest
produce   has   increased,   has   made   it
unconstitutional   on   both   the   counts   namely
that   the   cost   of   forest   produce   has   no
co­relation   with   the   objects   sought   to   be
achieved   by   regulation   of   transit,   and
secondly   the   State   has   not   justified   the
increase   on   any   empirical   data   based   on
scientific   evaluation   of   the   cost   of
regulation.   The   fee   has   thus   changed   its
character   from   regulatory   fee,   and   in   the
absence of any defence on quid pro quo, to a
compensatory   tax,   which   has   the   effect   of
augmenting the revenue of the State.

142.   In   our   opinion,   considering   the
arguments   raised   and   the   material   placed
before   us,   even   if   the   Rules   of   1978   are
valid,   the   notifications   dated   13.12.2010,
dated   4th   June,   2011   under   challenge,
increasing the transit fees firstly on cubic

feet   basis   and   thereafter   item   wise   on   ad
valorem basis linked to the price by making
distinction   between   the   forest   produce,   and
the   minor   minerals,   which   are   also   forest
produce, and without providing justification
for   such   increase,   converted   the   regulatory
fees   into   compensatory   tax.   The   State   has
completely failed to justify, such arbitrary
increase,   both   on   the   principle   of
reasonableness and in public interest.”

184.   The aforesaid figures, as noticed in paragraph 85,

were expressly considered by the High Court in para 181

of   the   judgment   where   following   observation   has   been


“181....The   collections   in   2010­11,   before
the   4th   and   5th   Amendments   to   the   Rules   of
1978   was   11288.   2   lacs,   whereas   the
expenditure   of   the   establishment   and   other
administrative   expenses   on   the   enforcement
for   the   entire   year   2010­11   on   the
collection of transit fees by the department
was   32205.16   lacs.   It   is   likely   to   128
increase,   as   admitted   by   only   10­20%   every
year.   The   revenue   to   be   generated   by   the
transit fee, would thus be at least 10 times
more than the cost in collection of fees. By
any   conservative   estimate   the   increase   of
fees on ad valorem basis, would be far above
the   entire   expenses   born   by   the   department
for   enforcement   on   collection   of   the   fees,
and thus the large amount of the collection
of transit fees will go into the coffers of
the   State   to   raise   its   revenues.   Even   if
entire   collections   are   spent   on   maintenance
of   staff,   vehicles,   fuel   and   other

administrative   expenses   of   forest
department,   it   looses   its   character   as
regulatory   fees,   to   regulate   transit   of
forest   produce,   with   no   benefit   or   service
directly   or   indirectly   to   facilitate   the
trade or transit of forest produce. There is
no   averment,   nor   it   is   argued   by   learned
Counsel   appearing   for   the   State   that   any
facility   or   services   are   to   be   provided   or
are contemplated for the trade.”

185.   The   High   Court   thus   held,   after   considering   the

material brought by the State for increase  transit fee,

that   increase   in   transit   fee   was   excessive   and   the

character of the fee has changed from simple regulatory

fee to a fee  which is for raising revenue.

186.  The High Court in para 181 has returned the finding

that   “The   revenue   to   be   generated   by   the   transit   fee,

would   thus   be   at   least   10   times   more   than   the   cost   in

collection of fees.”

187.   A   three­judges   Bench   in  Calcutta   Municipal   Corpn.

And others vs. Shrey Mercantile (P) Ltd. and others, 2005

(4)   SCC   245  had   considered   provisions   of   Calcutta

Municipal   Corporation   (Taxation)   Regulations,   1989

whether   levy   was   made   on  advalorem  basis.   The   Court

examined the issue as to whether such levy is a “fee” or

a “tax”. The Court held the levy in the nature of tax and

also held it arbitrary and discriminatory, violative of

Article 14. The following was held in paragraph 16 by the

High Court:

“16.Therefore, the main difference between
“a   fee”   and   “a   tax”   is   on   account   of   the
source  of power. Although “police power”  is
not   mentioned   in   the   Constitution,   we   may
rely upon it as a concept to bring out  the
difference between “a fee” and “a tax”. The
power   to   tax   must   be   distinguished   from   an
exercise   of   the   police   power.   The   “police
power”  is different from  the “taxing  power”
in   its   essential   principles.   The   power   to
regulate, control and prohibit with the main
object   of   giving   some   special   benefit   to   a
specific class or group of persons is in the
exercise   of   police   power   and   the   charge
levied on that class to defray the costs of
providing   benefit   to   such   a   class   is   “a
fee”. Therefore, in the aforestated judgment
in Kesoram case1 it has been held that where
regulation is the primary purpose, its power
is   referable   to   the   “police   power”.   If   the
primary purpose in imposing the charge is to
regulate, the charge is not a tax even if it
produces   revenue   for   the   Government.   But
where   the   Government   intends   to   raise
revenue   as   the   primary   object,   the
imposition   is   a   tax.   In   the   case   of
Synthetics     Chemicals   Ltd.   v.   State   of
U.P.3  it has been held that regulation is a
necessary concomitant of the police power of
the   State   and   that   though   the   doctrine   of
police   power   is   an   American   doctrine,   the
power to regulate is a part of the sovereign

power   of   the   State,   exercisable   by   the
competent   legislature.   However,   as   held   in
Kesoram case1 in the garb of regulation, any
fee or levy which has no connection with the
cost   or   expense   of   administering   the
regulation   cannot   be   imposed   and   only   such
levy   can   be   justified   which   can   be   treated
as   a   part   of   regulatory   measure.   To   that
extent, the State’s power to regulate as an
expression   of   the   sovereign   power   has   its
limitations.   It   is   not   plenary   as   in   the
case of the power of taxation.”

188.   The   Court   further   held   that   since   the   Regulation

provides for imposition of fee on  advalorem  basis which

is a circumstance to show that the impugned levy is in

the   nature   of   tax   and   not   in   the   nature   of   a   fee.   In

paragraph 18 following was stated;

"18..Further,   under   the   Regulations,   the
Corporation   while   prescribing   fees   has
levied fees on ad valorem basis which is one
more   cirumstance   to   show   that   the   impugned
levy is in the nature of tax and not in the
nature   of   a   fee.   Further,   the   qunatum   of
levy   indicates   that   it   is   a   tax   and   not   a
fee. The  analysis of  the various  provisions
of   the   Act   and   the   impugned   Regulations
shows that the impugned levy is in exercise
of   power   of   taxation   under   the   said   Act   to
augment the revenues primarily and not as a
part of regulatory measure.” 

189.   Shri   Ravindra   Srivastava,   learned   senior   counsel,

appearing for the State has submitted that no exception

can   be   taken   to   the   adoption   of  advalorem  basis   for

imposition   of   transit   fee   by   means   of   Fifth   Amendment

Rules. He submits that when a State is competent to levy

fee, what shall be the yardstick of such levy depends on

facts of each case and the State can find its own basis

for   determining   the   extent   of   fee.   He   has   relied   on

three­Judges   Bench   judgment   in  P.M.   Ashwathanarayana

Sefty and others vs. State of Karnataka and others, 1989

Supp.(1) SCC 696. He submits that this Court in the above

case   was   considering   the   levy   of   Court   fee   under

Karnataka   Court   Fee   Valuation   Act,   1958.   The   Court   fee

was leviable on  advalorem  basis and the Court proceeded

to   examine   the   issue   as   to   whether   Court   fee   can   be

levied on  advalorem  basis. This Court in the above case

has also held that a fee may shed its complexion as a fee

and assume that of a tax. In paragraph 40 of the judgment

following was held:

“40.  A   fee   which   at   the   inception   is
supportable as one might shed its complexion
as a fee and assume that of a tax by reason
of   the   accumulation   of   surpluses   or   the
happening of events which tend to affect and

unsettle   the   requisite   degree   of

190.   The   Court   also   addressed   the   issue   as   to   whether

advalorem  principle   which   is   appropriate   to     taxation

would be inapplicable in the context of an impost which

is   meant   as   a   contribution   towards   the   of   costs   of

service.   The   Court   held   that   in   view   of   the   inherent

complexity   of   these   fiscal   adjustments,   courts   give   a

larger discretion to the legislature in the matter of its

preferences   of   economic   and   social   policies.   The   Court

further held that the question of the measure of tax or a

fee should be  advalorem  or  ad quantum  is again a matter

of fiscal policy. The Court ultimately held that although

advalorem principle which may not  be  an ideal basis for

distribution   of   a   fee   but   no   unconstitutionality   or

infirmity   can   be   incurred.   However,   the   Court   has   held

that 'fee' meant to defray expenses of services cannot be

applied     towards   objects   of   general   public   utility.   In

paragraph 96 following is stated:

“96.  The   power   to   raise   funds   through   the
fiscal  tool of  a  fee is not to be confused
with   a   compulsion   so   to   do.   While   “fee”

meant to  defray expenses  of services  cannot
be applied towards objects of general public
utility   as   part   of   general   revenues,   the
converse   is   not   valid.   General   public
revenues   can,   with   justification,   be
utilised   to   meet,   wholly   or   in   substantial
part, the expenses  on the administration  of
civil   justice.   Many   States   including
Karnataka   and   Rajasthan   had,   earlier,
statutory   upper   limits   fixed   for   the   court
fee. But later legislation has sought to do
away   with   the   prescription   of   an   upper
limit.  The insistence on  raising court fees
at   high   rates   recalls   of   what   Adam
Smith­“Wealth of Nations” said:

“There   is   no   art   which   one
government   sooner   learns   of   another
than   that   of   drawing   money   from   the
pockets of the people.””

191.   In   the   aforesaid   case,   the   Court,   however,   had

struck   down   Entry   20   in   Schedule   I   of   the   Bombay   Act

where advalorem Court fee was imposed without the benefit

of   upper   limit   of   Rs.15,000/­   which   was   prescribed   in

respect   of   other   suits   and   proceedings.   The   Court   held

the   aforesaid   imposition   as   arbitrary   and   upheld   the

judgment striking down the above provision. Paragraph 90

to   93   of   the   judgment   are   relevant   and   are   extracted


“90.  In   the   appeal   of   the   State   of

Maharashtra arising out of the  Bombay Court
Fees   Act,   1959,   the   High   Court   has   struck
down   the   impugned   provisions   on   the   ground
that   the   levy   of   court   fee   on   proceedings
for   grant   of   probate   and   letters   of
administration   ad   valorem   without   the   upper
limit prescribed for all other litigants—the
court fee in the present case amounts to Rs
6,14,814   —is   discriminatory.   The   High   Court
has also held that, there is no intelligible
or   rational   differentia   between   the   two
classes of litigation and that having regard
to the fact that what is recovered is a fee,
the purported classification has no rational
nexus   to   the   object.   The   argument   was
noticed by the learned Single Judge thus:

Petitioners   next   contend   that   the   impugned
clause   discriminates   as   between   different
types   of   suitors   and   that   there   is   no
justification   for   this   discrimination.
Plaintiffs   who   go   to   civil   courts   claiming
decrees  are  not  required  to  pay  court  fees
in excess of Rs 15,000. This is irrespective
of the amounts claimed over and above Rs 15
lakhs.   As   against   this,   persons   claiming
probates have no such relief in the form of
an upper limit to fee payable.

91.  This   contention   was   accepted   by   the
learned   Single   Judge   who   has   upheld   the
appeal. Indeed, where a proceeding for grant
of   probate   and   letters   of   administration
becomes   a   contentious   matter,   it   is
registered   as   a   suit   and   proceeded   with
accordingly.   If   in   respect   of   all   other
suits   of   whatever   nature   and   complexity   an
upper limit of Rs 15,000 on the court fee is
fixed, there is no logical justification for
singling   out   this   proceeding   for   an   ad

valorem   impost   without   the   benefit   of   some
upper   limit   prescribed   by   the   same   statute
respecting   all   other   litigants.   Neither
before the High Court — nor before us here —
was   the   impost   sought   to   be   supported   or
justified   as   something   other   than   a   mere
fee,   levy   of   which   is   otherwise   within   the
State’s   power   or   as   separate   “fee”   from
another distinct  source. It is  purported  to
be collected and sought to be justified only
as court fee and nothing else.

92.  The   discrimination   brought   about   by
the   statute,   in   our   opinion,   fails   to   pass
the constitutional muster as rightly pointed
out   by   the   High   Court.  The   High   Court,   in
our opinion rightly, held:

“There is no answer to this contention,
except   that   the   legislature   has   not
thought   it   fit   to   grant   relief   to   the
seekers   of   probates,   whereas   plaintiffs
in civil suits were thought deserving of
such   an   upper   limit.   The   discrimination
is   a   piece   of   class   legislation
prohibited   by   the   guarantee   of   equal
protection of laws embodied in Article 14
of the Constitution. On this ground also
item 10 cannot be sustained.”

93.  We approve this reasoning of the High
Court and the decision of the High Court is
sustained   on   this   ground   alone.   In   view   of
this   any   other   ground   urged   against   the
constitutionality of the levy is unnecessary
to be examined.”

192.  The Court thus struck down a provision of the Court

fee where  there was no  maximum  cap  on  advalorem  basis.

There   was   no   maximum   cap   in   the   Fifth   Amendment   Rules

although minimum fee was prescribed. Even in some of the

cases   of   fee  advalorem   principle  may   be   applied   but   we

are of the considered opinion that in case of transit fee

where the object and purpose is regulation of transit of

forest produce adoption of  advalorem  principle  for levy

of transit fee was not appropriate and such levy changed

the character of fee into a tax which has rightly been so

held by the High Court. We are, thus, of the view that

the   High   Court   has   given   cogent   and   valid   reason   for

striking down the Fourth and Fifth Amendment Rules which

decision was rendered by the High Court after elaborate

and proper consideration of material brought before the

Court   after   analysing   the   purpose   and   object   of   the

imposition of transit fee. We, thus, affirm the judgment

of   the   High   Court   striking   down   Fourth   and   Fifth

Amendment Rules.

Transfer Petitions

193.     This   Court   wide   its   order   dated   19.11.2012   had

already directed the transfer petitions to be heard along

with   SLP(C)NO.11367   of   2007.   The   Transfer   Petitions,

thus, deserve to be decided in terms of the Civil Appeal

arising out of SLP(C)No.11367 of 2007.

Contempt Petitions

194.   The   seven   Contempt   Petitions   have   been   filed   in

which   notices   have   not   yet   been   issued.   All   the   Civil

Appeals   being   decided   by   this   order,   the   contempt

petitions deserve to be dismissed. 

XVIII. Interim orders passed against the judgment of 
the Allahabad High Court

295.   In   this   batch   of   appeals   in   some   appeals   interim

order   were   passed.   In   some   of   the   appeals,   no   interim

order   was   passed.   This   Court   noticing   the   divergent

orders passed in the batch of appeals, passed a detailed

interim   order   on   29.10.2013   which   was   to   the   following


“1) The State shall be free to recover transit fee
for   forest   produce   removed   from   within   the   State
of   U.P.   at   the   rate   stipulated   in   the   3rd
amendment   to   the   Rules   mentioned   in   the   earlier
part of this order.

2)   Any  such  recovery   shall   remain  subject  to   the
ultimate   outcome   of   present   petitions   pending   in
this Court.

3)   In   the   event   of   writ   petitioners/private

parties   succeeding   in   their   cases,   the   amount
deposited/recovered from them shall be refunded to
them with interest at the rate of 9% p.a. from the
date the deposit was made till actual refund.

4)   The   State   shall   maintain   accurate   amount   of
recovery   made   and   the   nature   and   the
quantum/quantity   of   the   produce   removed   by   the
private parties concerned.

5) Even in the 2nd batch of cases arising out of
Writ   Petition   No.   975   of   2004   whereby   the   High
Court has struck down the 4th and 5th amendment to
the   Rules,   the   State   shall   be   free   to   make
recoveries in terms of the 3rd amendment in regard
to   the   forest   produce   removed   from   within   the
State  of   U.P.  The  operation  of  the   orders  passed
by   the   High   Court   shall   to   that   extent   remain

6)   This   modification   shall   not   apply   to   exempted
goods   or   industrial   by   products   like   Klinker   and
fly ash.”

196.   By a subsequent order dated 26.04.2016, this Court

further modified the interim order dated 29.10.2013. The

order dated 29.10.2013 was modified on 26.04.2016 to the

following effect:

“(1) Insofar as forest produce as defined in
sub­clause(a)   of   Clause(4)   of   Section   2   is
concerned, the State shall be free to recover
transit   fee   within   the   State   of   U.P.   at   the
rate stipulated in the fifth amendment to Rule
5 as aforesaid;

(2) Insofar as forest produce originating from

State of U.P. and covered by sub­clause (b) of
Clause   (4)   of   Section   3   is   concerned,   the
State shall be free recover transit fee at the
rate stipulated in the fifth amendment to the
aforesaid Rule 5.

(3)   Insofar   as   forest   produce   covered   under
sub­clause(b) of Clause(4) of Section 2, which
does not originate from State of U.P. but is
merely   passing   through   the   State,   the   State
shall   be   free   to   recover   transit   fee   in
respect   of   such   forest   produce   at   the   rate
stipulated   in   the   fourth   amendment   to
aforesaid Rule 5.

(4) Any such recovery shall remain subject to
the   ultimate   outcome   of   present   petitions
pending in this Court.

(5)   In   the   event   of   writ   petitioners/private
parties succeeding in their cases, the amount
deposited/recovered   27   from   them   shall   be
refunded to them with interest @ 9% per annum
from the date of deposit till actual refund.

(6)   The   State   shall   maintain   accurate   amount
of   recovery   made   and   the   nature/quantity   of
the   produce   removed   by   the   private   party   is

 (7) These modified directions shall come into
effect   on   and   from   1   st   May   2016.   (8)   This
modification shall not apply to exempted goods
or   industrial   by­products   like   Klinker   fly

197.   This   Court   directed   that   State   shall   be   free   to

recover transit fee within the State of U.P. at the rate

stipulated in the Fifth Amendment to Rule 5.

198.  The Court also held that such recovery shall remain

subject to the ultimate outcome of present cases pending

in this Court. With further condition that in the event

of writ petitioners/private parties succeeding in their,

the amount deposited/recovered from them be refunded with

interest @9%.

199.   We   having   upheld   the   judgment   of   the   High   Court

dated 11.11.2011 striking down Fourth and Fifth Amendment

Rules   further   steps   needs   to   be   taken   as   per   interim

direction   dated   26.04.2016   which   came   into   the   effect

from 01.05.2016. It is made clear that in so far as prior

to   01.05.2016   recovery   was   permitted   as   per   Third

Amendment   Rules   which   has   been   upheld,   there   is   no

question   of   considering   any   claim   of   refund   of   any

transit   fee   prior   to   01.05.2016.   The   transit   fee   is   an

indirect   tax   and   the   State   is   entitled   to   consider   the

claim of refund provided the Entry Tax has not passed on

to the consumer which may result into unjust enrichment.

Thus we permit the State to consider any claim of refund

of transit fee on the condition that State shall permit

refund   only   after   being   satisfied   that   there   is   no

passing of the transit fee to the ultimate consumer and

refund may not result in unjust enrichment.


200.   The Writ Petitions were filed by the respondents

to the Civil Appeals in the High Court of Madhya Pradesh

praying  for  quashing  the   Notification  dated  28.05.2001

issued by the State of Madhya Pradesh fixing the amount

of Transit Fee for issuance of Transit Pass in exercise

of   power   under   Rule   5   of   the   M.P.   Transit   (Forest

Produce) Rules, 2000 (hereinafter referred to as 'Rules,

2000'). Writ Petitioners have also prayed for declaring

Section   2   (4)(b)(iv)   and   Section   41   of   Indian   Forest

Act, 1927(hereinafter referred to as 'Act, 1927')     as

unconstitutional   and  ultra  vires  to   the   extent   they

relate   to   minerals.   Rule   5   of   Rules,   2000   as   well   as

Notification   dated   28.05.2001   was   also   sought   to   be

declared   as  ultra  vires  to   the   powers   of   the   State

Government   under   Act,   1927.   In   the   Writ   Petition   the

writ petitioners raised the following contentions: 

201.   The Regulatory Fee with regard to transit fee on

minerals is totally illegal and without jurisdiction in

as much as the field is covered by the MMDR Act 1957.

Regulatory Fee imposed by the State of Madhya Pradesh is

a direct encroachment on the regulatory measures which

are   covered   within   the   Act,   1957.   Mineral   Concession

Rules,   1960(hereinafter   referred   to   as   'Rules,   1960')

read   with   Mineral   Transit   Pass   Regulations,

1996(hereinafter   referred   to   as   'Regulations,   1996'),

which   specifically   provides   for   issue   of   transit   pass

and   charging   of   fee   covers   the   field   and   State

Government cannot frame any rule of the present nature

effecting   the   transportation   of   mineral.   Rule   5   of

Rules, 2000 as well as Notification dated 28.05.2001 are

contrary to Section 41 of Act, 1927. The Act, 1927 being

a   pre­constitutional   statute   enacted   by   the   dominion

legislature   and   Act,   1957   being   a   parliamentary

enactment   will   have   overriding   effect   over   the

provisions of the earlier statute. The State Government

has put the fee on Transit Pass qua tonnage which makes

it colourable piece of exercise of power. 

202.   The   State   contested   the   Writ   Petition   by   filing

counter­affidavit and contended that the Act, 1927 has

been designed to protect and increase the forest wealth

and   Notification   dated   28.05.2001   has   been   issued   in

exercise   of   power   under   Rule   5   of   Rules,   2000,   which

were   framed   under   Section   41   of   the   Act,   1927.   The

Regulatory Fee is not charged on extraction of mineral

and there is no encroachment on the provisions of Act,

1957.   The   Regulatory   Fee   is   charged   only   on   the

transportation of minerals. The method chosen by State

Government to levy the fee on the basis of quantity of

minerals   would   not   change   the   nature   and   character   of

the levy. The power of regulation and control under Act,

1957   is   totally   different   from   the   imposition   of

Regulatory Fee on Forest Produce by the State. 

203.   The   Division   Bench   of   the   High   Court   by   its

judgment dated 14.05.2007, although repelled the several

arguments   of   petitioner   which   we   shall   shortly   notice

hereinafter   but   declared   the   Notification   dated

28.05.2001   as   beyond   the   scope   of   Section   41   of   Act,


204.   Learned   senior   counsel   in   support   of   the

appellants   contends   that   the   Act,   1927,   the   Transit

Rules, 2000, and Act, 1957 operate in different fields

and   spheres   and   the   mere   incidental   trenching   or

overlapping   of   the   provisions   of   the   State   enactment

will   not   render   the   State   enactment   unconstitutional.

The   view   of   the   High   Court   that   Notification   dated

28.05.2001 is invalid and beyond the scope of Section 41

of Act, 1927 is erroneous. The Transit Pass is computed

on the basis of weight/volume of the Forest Produce so

as   to   maintain   the   consistency   and   transparency   in

computation of transit fees. The computation or measure

of levy will never change the nature of the levy which

in the present case is regulatory in nature. 

205.   The High Court having held that the rules framed

by the State under Section 41 of the Act, 1927 operates

in different fields and spheres from the MMDR Act, 1957

and the State government has the legislative competence

to frame the rules, holding that the computation of fee

on the basis of weight/volume of the Forest Produce is

illegal, cannot he sustained. He further contended that

the  High   Court   has  issued  direction  for  refund  of  the

fees   collected   by   the   State   in   pursuance   of   the

Notification dated 28.05.2001 and it is submitted that

the direction of the High Court to refund the fees is

contrary   to   the   law   settled   by   this   Court   that   in

indirect taxes the burden is already transferred to the

consumers and therefore, direction to refund the tax so

collected,   the   burden   of   which   has   already   been

transferred, will lead to unjust enrichment of assessee.

206.   Learned counsel appearing for the writ petitioner

have   refuted   the   contention   of   the   State   and   has

reiterated the submissions. Respondent­petitioners have

further   raised   the   submissions,   which   were   pressed

before the High Court. It is submitted that even though

the   respondent­petitioners   has   not   filed   any   Special

Leave   Petition   challenging   the   judgment   of   the   High

Court   dated   14.05.2009,   they   are   entitled   to   urge   the

grounds   which   were   pressed   before   the   High   Court   in

support of the Writ Petition.

207.  It is submitted that petitioner does not mine coal

but buys it from Northern Coal Fields Ltd. or from other

coal fields. Petitioner also reimburses the royalty etc

on the coal purchased from different coal fields as per

the   provisions   of   Act,   1957.   The   impugned   demand   is

illegal and without jurisdiction as the field is fully

occupied   by   rules   made   thereunder.   The   Transit   Fee   of

Rs. 7 per tonne fixed by Notification dated 28.05.2001

is Transit Fee on minerals which is illegal and without


208.   We   have   considered   the   submissions   raised   by

learned counsel for the parties and perused the record.

Before   we   proceed   to   consider   the   submission,   it   is

necessary   to   notice   the   finding   given   by   the   Division

Bench   of   the   High   Court   in   the   impugned   judgment   on

various contentions raised before it. The Division Bench

of the High Court considered the submission of learned

counsel for the writ petitioners that Act, 1957 occupies

the field and the State had no jurisdiction to frame any

rules regarding transit of minerals. After noticing the

various   judgments   of   this   Court,   the   Division   Bench

concluded   that   two   enactments   i.e.   Act,   1927   and   Act,

1957   operate   in   different   areas.   The   Division   Bench

specifically  rejected  the  argument  of  writ  petitioners

that Section 2(4)(b)(iv) and Section 41 of the Act, 1927

be declared ultra vires. The Division Bench of the High

Court also noticed the judgment of this Court in Sudhir

Ranjan Nath (supra) and Sitapur Packing Wood Suppliers

(supra). In para 63 of the judgment following was held: 

“63...We have referred to two judgments
of   the   Apex   Court   and   we   are   of   the
considered   opinion   on   that   both   the
enactments  operate in different areas.   The
operational   sphere   being   different   we
conclude   and   hold   that   the   submission   that
Section   2   (4)(b)(iv)   and   Section   41   should
be   declared   ultra   vires   is   sans   substratum
and we repel the same.”

209.   The   Division   Bench   of   the   High   Court   further

rejected   the   submission   of   the   writ   petitioners

impugning the Rule 5 of Rules, 2000 framed under Section

41 of the Act, 1927. In para 71  72 following has been


“71.   On   a   perusal   of   the   aforesaid   form   it
is   perceptible   that   there   is   mention   of
locality of storage, name and address of the

owner,   description   of   produce   and   quantity,
name   of   place   of   transportation,   route   and
barrier   at   which   forest   produce   would   be
produced   for   check.   On   a   perusal   of   the
aforesaid   form   it   is   manifest   that   it
pertains to forest produce at large. Fee can
be   levied   but   the   fee   must   have   nexus   with
the   transit   for   checking   in   the   context   of
forest goods. Hence, we are not inclined to
accept  the contention of  the learned  senior
counsel for the petitioners that framing  of
the   said   rule   under   Section   41(2)   is   not

“72....At   this   juncture   we   may
repeat   at   the   cost   of   repetition
that   the   purpose   of   Section   41   of
the 1927 Act, and the purpose of the
MMDR Act are quite different...”

210.   The High Court thus 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


211.  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. In

para   74   of   the   judgment,   following   has   been   held   by

the High Court:

“74...Hence,   we   have   no   doubt   in   holding
that the  notification issued  is contrary  to
the   provisions   of   Section   41   of   the   Forest
Act   and   in   fact   such   issuance   of
notification   cannot   be   said   to   be   in
consonance   with   the   said   provision.   It
transgresses   Rule   5   because   Rule   5
stipulates   that   the   State   Government   or   an
officer   authorised   by   it   from   time   to   time
shall   fix   the   rate   of   fee   for   issue   of
transit   pass   as   per   the   provisions   of   Rule

4. Thus the fee is to be fixed for issue of
a   transit   pass   and   a   transit   pass   by   no
stretch   of   imagination   can   have   any   nexus
with   the   unit   of   minerals   in   fact   if   we
allow ourselves to  say, it  is said  to be a
gymnastic   in   the   rule   making   process   to
impose a fee on the minerals in the guise of
collection   of   fee   on   transit   pass.   In   fact
it is a fee pertaining to minerals and not a
fee   on   issue   of   transit   pass.   As   we   have
scanned   the   anatomy   of   the   provisions   of
both the enactments rules framed there under
and   analysed   the   purport   and   import   of   the
notification,   the   true   nature   and   character
of   levy   surface   something   different.   The
exact nature  of levy  cannot be marginalised
by   making   a   sweeping   statement   that   is   a
measure of levy and the unit of minerals has
been chosen as a rational basis as there is
transportation   by   rope   ways   by   land   and   by
other means.   The units chosen really tries
to   enter   into   the   arena   of   regulation   and
control.   It   may   innocuous   look   to   be   a
measure or standard of fee on transit but in
essentiality it is a trespass into the area
of   regulation   and   control.   As   has   been
stated earlier the 1957 Act is a regulatory
Act and meant for minerals and minerals area

development but such imposition of fee as we
are   disposed   to   think   on   the   basis   of
foregoing   analysis   creates   a   dent   and
concavity   in   the   regulation   and   control.
That apart the  standard or  measurement does
not   have   any   nexus   with   the   essential
character   of   the   levy.   Therefore   the
notification   runs   counter   to   the   rule
because   that   was   not   the   intendment   of   the
Rule   and   further   that   cannot   be   the
intendment of the language in which sections
41 and 76 of the 1927 Act have been couched.
Quite   apart   from   the   above,   once   we   have
held that Section 41 of the 1927 Act and the
provisions  of 1957  Act operate  in different
spheres and judged  by those parameters, the
notification   has   to   be   lanceted   and
accordingly we so hold.”

212.     Whether   the   above   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.” Thus, 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.   For   example,

for   ready   reference,   we   extract   the   Form   A   of   the

Rule, which is to the following effect:


[See Rule 6(2)]
Book No. Counter foil Transit Pass Page No.
1 Locality of Storage:-

(a) Range

(b) Division
2 Name and address of owner of forest produce-
3 Description of produce and quantity-

4            Property mark etc.-
5 Name of place to which the produce is to be

6 Route by which produce is to be transported-
7 Barrier at which forest produce will be produced
for check
8 Date of expiry of pass-

Note:­ Second foil will be similar to the Counterfoil.

 Signature of checking officer

           Signature of issuing officer

213.     Column   three   provides   for   description   of   produce

and quantity. 

Rule 5 of Rules, 2000 provides for as follows: 

s“5.   Rates   of   fee   for   issue   of   transit
pass:­The   State   Government   or   an   officer
authorised by the State Government from time
to time, shall fix rates of fee for issue of
transit   pass   as   per   the   provisions   of   Rule


214.  The Rule provides for fixing of rates of fee for

issue   of   Transit   Pass.   The   word   'rate'   has   been

defined in Advanced Law Lexicon by P. Ramanatha Aiyar,

in the following words:

“Rate   means   a   rate,   cess   or   assessment   the
proceeds   of   which   are   applicable   to   public
local purposes and leviable on the basis of
a   valuation   of   property,   and   includes   any
sum   which,   although   obtained   in   the   first
instance by a precept, certificate  or other
instrument   requiring   payment   from   some
authority   or   officer,   is   or   can   be
ultimately raised out of a rate.” 

215.  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. 

216.   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. We thus are of

the   view   that   the   High   Court   committed   error   in

setting aside the Notification dated 28.05.2001.  This

Court   in  State   of   U.P.   Vs.   Sitapur   Packing   Wood

Supplier   (Supra)  which   judgment   has   already   been

noticed by Division Bench of High Court has considered

the rules framed by State of U.P. under Section 41 of

1927   Act.   Rule   5   of   the   U.P.   Transit   of   Timber   and

Other Forest Produce Rules, 1978, provided for payment

of transit fee on the forest produce calculated on the

rates as mentioned therein. High Court had upheld the

competence of the State in providing fee as set out in

Rule 5 which was noticed by this Court in paragraph 7

of the judgment, which is to the following effect:­

"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 provided in lieu
of   the   fee   to   any   person   much   less   to   the
person from whom the transit fee is charged.
In   the   view   of   the   High   Court,   reasonable
relationship between the levy of the fee and
the   services   rendered   had   not   been

217.   High   Court   although   upheld   the   competence   of   the

State to provide fee but held that fee is not supported

by principles of quid pro quo. On that ground transit fee

was held to be invalid.   The view of the High Court was

reversed and this Court held that charging of transit fee

was valid. Following was held in paragraph 10 and 11:­

"10. 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   the
transit   fee   is   invalid   in   absence   of   quid
pro quo....

11. 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

218.  It is also relevant to note that although the High

Court   in   its   judgment   has   held   that   both   1957   Act   and

1927   Act   operate   in   different   fields.   However,   it   had

also   made   observations   that   imposing   fee   by   fixing

tonnage   and   cubic   meter   as   unit   had   entered   into

regulation and control, which is in the realm of the MMDR

Act. In paragraph 74, following has been observed:­

"74....Though a stance has been taken that it
is   a   regulatory   fee   and   the   State   has   to
undertake   many   works   for   routes   and
environment   and,   therefore,   it   is   to   be
regarded   as   regulatory   fee   but   as   we

perceive, imposing fee by fixing tonnage and
cubic   meters   as   unit,   it   enters   into   the
'regulation   and   control'   which   is   in   the
realm of the MMDR Act, for it has impact on
the mining activity and the primary purpose,
as is patent, is to regulate the mineral. It
is   not   for   the   purpose   of   regulating   the
transit of minerals but to have a regulatory
measure   of   control   of   minerals.   The
difference between issue of transit pass for
a   fee   has   been   galvanised   into   a   fee   on
mineral   unit   which   has   a   controlling   effect
on the development of minerals.”

219.   We   have   already   found   that   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.

220.   In result, in view of the foregoing discussion, we

are   of   the   view   that   High   Court   committed   error   in

quashing   the   order   dated   28.05.2001.   The   Civil   Appeals

filed   by   the   State   of   Madhya   Pradesh   deserves   to   be




221.   In view of the foregoing discussion, we arrived at

following conclusions:

I. (a) The   crushing   of   stones,   stone   boulders   into

stone grits, stone chips and stone dust does not result

into a new commodity different from forest produce. The

crushed materials continue to be stone and retain their

nature of forest produce.

(b) Coal with its various varieties, limestone, hydrated

line,   quick   limestone,   slake   line,   veneer   and   plywood

waste are all forest produce.

(c) Marble   blogs,   marble   slabs,   marble   chips   are   all

forest produce.

(d) Flay   ash,   clinker,   synthetic   gypsum   are   not   forest

produce. Gypsum, however, is a forest produce.

II. The   Indian   Forest   Act,   1927   and   the   Rules   framed

under   Section   41   are   neither   overridden   nor   impliedly

repealed,   altered   or   amended   by   Mines   and   Minerals

(Development   and   Regulation)   Act,   1957   and   the   Rules

framed thereunder. Both the above legislations operate in

different spheres and fields.

III. The   words   “brought   from”   as   occurring   in   Section

2(4)(b) of 1927 Act means brought from forest from where

forest   produce   has   originated.   The   words   'brought   from

forest' cannot be read as “brought through forest”. We,

however, clarify that for an item to be treated as forest

produce, its origin may be in any forest within the State

of U.P. or in a forest outside the State of U.P.

IV. The   forest   has   to   be   understood   according   to   its

dictionary meaning which covers the statutory recognised

forest and also shall include any area regarded as forest

in the Government record irrespective of the ownership.

The   meaning   of   forest   cannot   be   restricted   only   to

reserve forests, protected forests and village forests.

V. The roads notified by notification dated 10.02.1960

under Section 80A of 1927 Act cannot be read to mean that

such   roads   have   been   declared   as   protected   forest.   The

notification   dated   10.2.1960   can   only   be   read   to   mean

that   both   sides   of   the   road   have   been   declared   as

protected   forest   on   which   Chapter   IV   of   the   1927   Act

shall be applicable.

VI. Rule 3 of 1978 Rules is not independent of Rule 5 of

1978   Rules.   Transit   fee   is   payable   on   all   kinds   of

transit   passes   and   cannot   be   confined   only   to   transit

passes as referred to in Rule 4(1)(b) only.

VII.   After  issuance  of  notification  under Section 4  of

1927   Act,   removal   of   forest   produce   therefrom   shall   be

governed by the Rules framed by the State in view of U.P.

Act   23   of   1965   by   which   original   Section   5   has   been

substituted in its application in the State of U.P. The

fact   that   no   notification   under   Section   20   has   been

issued   does   not   mean   that   restriction   put   by   the   State

Government by Rules are not applicable.

VIII. The Division Bench of the Allahabad High Court

by its judgment dated 11.11.2011 has rightly struck down

Fourth and Fifth Amendment Rules to 1978 Rules as being

excessive and confiscatory in nature.

IX.  The   notification   dated   28.05.2001   issued   by   the

State of Madhya Pradesh in exercise of power under Rule 5

of 2000 Rules cannot be said to be beyond the scope of

Rule   5   of   2000   Rules   and   Section   41   of   1927   Act.   The

State   of   Madhya   Pradesh   was   fully   justified   in   fixing

rate of transit fee at the rate of Rs.7/­ and Rs.4/­ per

tonne which was well within the power of the State under

Rule 5 of 2000 Rules framed under the 1927 Act.

222.  In view of the foregoing discussion, we decide this

batch of cases in following manner:

(1) All   Civil   Appeals   filed   by   the   State   of   U.P.   and

State   of   Uttarakhand   challenging   the   judgments   of   the

High   Court   of   Uttarakhand   dated   01.7.2004,   20.03.2005,

26.06.2007   and   subsequent   judgments   following   the

aforesaid   three   judgments   are   allowed.   The   impugned

judgments   are   set   aside   and   the   writ   petitions   stand


(2) All   the   Civil   Appeals   filed   by   the   State   of   U.P.

against   the   judgment   dated   11.11.2011   and   subsequent

judgments   following   judgment   dated   11.11.2011   are


(3) The   Civil   Appeals   filed   by   the   writ   petitioners

against   the   judgment   of   the   Allahabad   High   Court   dated

27.04.2005   and   the   subsequent   judgments   following   the

judgment   dated   27.04.2005   as   well   as   the   Civil   Appeals

filed by the writ petitioners against the judgment dated

11.11.2011   and   other   subsequent   judgments   following   the

judgment   dated   11.11.2011   are   disposed   of   in   terms

of   our   conclusion   as   recorded   in   paragraph   221(I   to


(4)   The   transfer   petitions   are   disposed   of   in   terms   of

our   conclusion   as   recorded   in   paragraph   221(I   to   VIII)

and   Writ   Petition(C)   No.203   of   2009   (M/s.   Pappu   Coal

Master  Ors. vs. State of U.P.  Anr.) is also disposed

of   in   terms   of   our   conclusion   as   recorded   in   paragraph

221(I to VIII)

(5) The  writ  petitioners  from whom  the  transit  fee  was

realised with effect from 01.05.2016 in accordance with

the   Fifth   Amendment   to   1978   Rules   shall   be   entitled   to

claim for refund along with interest @ 9% which shall be

considered by the State or any officer authorised by the

State. The claim of refund shall be allowed only if the

assessee alleges and establishes that he has not passed

on   the   burden   to   any   other   person,   since   it   is   well

settled that the power of the Court is not meant to be

exercised for unjustly enriching a person.

(6) All the Contempt Petitions are dismissed.

(7) All the Civil Appeals filed by the State of Madhya

Pradesh   against   judgment   dated   14.05.2007   are   allowed.

The   judgment   of   the   Division   Bench   of   the   High   Court

dated   14.05.2007   is   set   aside   and   the   writ   petitions

stand dismissed.

223.  Parties shall bear their own costs.


( A.K. SIKRI )


SEPTEMBER 15, 2017.









C.A.NO.2047 of 2006

Order   in   this   appeal   has   been   reserved   on
03.08.2017.   This   appeal   does   not   relate   to   entry   tax
rather   the   leviability   of   Trade   Tax   under   the   U.P.
Trade   Tax   Act,   1948.   This   appeal   is   de­tagged   to   be
listed after two weeks.

SLP(C)Nos.13656 and 15721 of 2012

Order   in   these   petitions   has   been   reserved   on
03.08.2017.  These  are  de­tagged  to   be  listed  before  a
Bench of which Hon'ble Mr. Justice Ashok Bhushan is not
a member.  


( A.K. SIKRI )


SEPTEMBER 15, 2017.





Civil Appeal No(s).14874/2017 @ Petition(s) for Special
Leave to Appeal (C)No(s)19445/2004





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C.A. No. 13428/2017 @ SLP(C) No. 21930/2009
C.A. No. 13385/2017 @ SLP(C) No. 12318/2009
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C.A. No. 13645/2017 @ SLP(C) No.5760/2012
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CONMT.PET.(C)No.199-201/2014 In SLP(C)No.31530-31532/2011
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C.A. No. 14248/2017 @ SLP(C) No. 20675/2008
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C.A. No. 13321-13344/2017 @ SLP(C) No.2788-2811/2014
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C.A. No. 14079/2017 @ SLP(C) No. 27326/2012
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C.A. No. 14280/2017 @ SLP(C) No. 29725/2009
CONMT.PET.(C)No.585-587/2016 In SLP(C)No.31530-31532/2011
C.A. No. 14494/2017 @ SLP(C) No.30535/2012
C.A. No. 14293/2017 @ SLP(C) No.27511/2011
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C.A. No. 14532/2017 @ SLP(C) No.30185/2012
C.A. No. 13719-13720/2017 @ SLP(C) No.34637-34638/2014
C.A. No. 13345/2017
CONMT.PET.(C) No. 251/2008 In C.A. No. 2797/2008
C.A. No. 14281/2017 @ SLP(C) No. 27771/2009
C.A. No. 13105/2017
C.A. No. 14283/2017 @ SLP(C) No. 31868/2009
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C.A. No. 14537/2017 @ SLP(C) No.37683/2012
C.A. No. 13519/2017 @ SLP(C) No. 33180/2010
C.A. No. 13131/2017
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C.A. No. 1010/2011
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C.A. No. 14919/2017 @ SLP(C) No. 6956/2008
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C.A. No. 14327/2017 @ SLP(C) No. 1398/2012
C.A. No. 14340-14347/2017 @ SLP(C) No. 34909-34916/2011
C.A. No. 13396/2017 @ SLP(C) No.4461/2013
C.A. No. 14356/2017 @ SLP(C) No. 36272/2011
C.A. No. 14365-14367/2017 @ SLP(C) No. 134-136/2012
C.A. No. 14365-14367/2017 (III-A)
C.A. No. 14375/2017 @ SLP(C) No.1684/2012
C.A. No. 14377/2017 @ SLP(C) No.2433/2012
C.A. No. 14379/2017 @ SLP(C) No. 1874/2012
T.P.(C) No. 18/2012
C.A. No. 14380/2017 @ SLP(C) No. 1198/2012
C.A. No. 14405/2017 @ SLP(C) No. 1074/2012
C.A. No. 14405/2017
T.P.(C) No. 44/2012
C.A. No. 14408/2017 @ SLP(C) No. 652/2012
C.A. No. 14411/2017 @ SLP(C) No. 738/2012
C.A. No. 14412-14413/2017 @ SLP(C) No. 146-147/2012
C.A. No. 14424-14425/2017 @ SLP(C) No. 877-878/2012

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C.A. No. 13399-13404/2017 @ SLP(C) No.8204-8209/2013
C.A. No. 13104/2017
C.A. No. 2047/2006

Date : 15-09-2017 These matters were called on for
pronouncement of judgment today.



For Appellant(s) Mr. M. R. Shamshad, AOR
Mr. Mishra Saurabh, AOR
Mr. Pankaj Bhatia, Adv.

Mr. Kailash Chand, AOR
Mr. Syed Shahid Hussain Rizvi, AOR
M/s. AP J Chambers, AOR
Mr. Jatinder Kumar Bhatia, AOR
Mr. Sharmila Upadhyay, AOR
Mr. Abhishek Chaudhary, AOR
Mr. E. C. Agrawala, AOR
Mr. Piyush Sharma, AOR
Mr. Pawanshree Agrawal, AOR

Mr. Pavan Kumar, Adv.

Mr. R.N. Pareek, Adv.

Ms. Rachana Srivastava, AOR
Ms. Monika, Adv.

Ms. Sukrit R. Kapoor, Adv.

Ms. Nithya Madhusoodhanan, Adv.

Mr. Arun K. Sinha, AOR
Ms. Mukti Chowdhary, AOR
Mr. Manish Kumar Saran, AOR
Mr. Aniruddha P. Mayee, AOR
Mr. Samir Ali Khan, AOR
Mr. K. V. Sreekumar, AOR
Mr. Shamik Shirishbhai Sanjanwala, AOR
Mr. Sunil Kaundal, Adv.

Mr. Kamlendra Mishra, AOR
Mr. Abhijit Sengupta, AOR
Mr. Arvind Kumar, AOR
Mr. E. R. Sumathy, AOR
Mr. Garvesh Kabra, AOR
Mr. K. V. Bharathi Upadhyaya, AOR
Mr. Nirnimesh Dube, AOR
Ms. Mridula Ray Bharadwaj, AOR
Mr. K. K. Mohan, AOR

Mr. Baij Nath Patel, Adv.

Ms. Sweta, Adv.

Ms. Romila, Adv.

Mr. C.D. Singh, Adv.


Mr. Prateek Rusia, Adv.

Mr. Jitendra Mohan Sharma, AOR
Mr. Ajit Sharma, AOR
Mr. Kamal Mohan Gupta, AOR
Mr. Ravindra S. Garia, AOR
Mr. Kaushal Yadav, AOR
Mr. N. Annapoorani, AOR
Ms. Anita Bafna, AOR
Mr. T. Harish Kumar, AOR
Mr. Praveen Jain, AOR
Mr. Prashant Kumar, AOR
Mr. Pavan Kumar, AOR
Mr. Rahul Kaushik, AOR
Ms. Aruna Gupta, AOR
Mr. M. A. Chinnasamy, AOR
Mr. Shrish Kumar Misra, AOR
Mr. Gaurav Dhingra, AOR
Mr. Pramod Dayal, AOR
Ms. Abha Jain, AOR
Mr. Jaivir Singh, Adv.

Mr. Gaurav Jain, Adv.

Mr. Anupam Mishra, Adv.

Mr. Shiv Prakash Pandey, AOR
Ms. Pragati Neekhra, AOR
Mr. R. P. Gupta, AOR
Mr. Jitendra Kumar, AOR
Mr. R. D. Upadhyay, AOR
Mr. C. D. Singh, AOR
Ms. Abha R. Sharma, AOR
Mr. Anil Kumar Jha, AOR
Mr. Aftab Ali Khan, AOR
Mr. Neeraj Shekhar, AOR

Mr. Nishit Agrawal, Adv.

Mr. T.A. Rehman, Adv.

Mr. Vipin Kumar Jai, AOR
Mr. Pahlad Singh Sharma, AOR
Mr. Santosh Kumar Tripathi, AOR

Mr. Pankaj Bhatia, Adv.

Mr. Nipun Goel, Adv.

Mr. Dhruv Surana, Adv.

Mr. Ashish Choudhary, Adv.

Ms. Bharti Tyagi, AOR
Mr. Ashok Kumar Singh, AOR
Mr. R. C. Kaushik, AOR
Mr. Arjun Garg, AOR
Mr. Manish Yadav, Adv.

Mr. Ambhoj Kumar Sinha, AOR
Mr. Deepak Khurana, Adv.

Mr. Umesh Kumar Khaitan, AOR

Ms. Tulika Prakash, AOR

For Respondent(s) Mr. Neeraj Kishan Kaul, Sr. Adv.

Mr. Vikas Mehta, AOR
Mr. Deepak Joshi, Adv.

Mr. Sanyat Lodha, Adv.

Ms. Mukti Chowdhary, AOR
Mr. S. K. Dhingra, AOR
Gp. Capt. Karan Singh Bhati, AOR
Ms. Aishwarya Bhati, Adv.

Mr. Jaideep Singh, Adv.

Mr. T. Gopal, Adv.

Mr. Amit Verma, Adv.

Ms. Ritu Apoorva, Adv.

Ms. Tanuja Patra, Adv.

Ms. Hina Khan, Adv.

Mr. Vishwajeet Singh, Adv.

Ms. Vanita Bhargava, Adv.

Mr. Ajay Bhargava,Adv.

Mr. Jeevan B. Panda, Adv.

Ms. Abhisaar Bairagi, Adv.

M/s. Khaitan Co., AOR
Ms. Manjeet Kirpal, AOR
Mr. T. G. Narayanan Nair, AOR
Mr. M. R. Shamshad, AOR
Mr. Shiv Prakash Pandey, AOR
Mr. Abhishek Chaudhary, AOR
Mr. Kamlendra Mishra, AOR
Mr. Jatinder Kumar Bhatia, AOR
M/s. Ap J Chambers, AOR
Mr. Pahlad Singh Sharma, AOR
Mr. Vivek Gupta, AOR
Mr. Jitendra Mohan Sharma, AOR
Mr. Gaurav Dhingra, AOR

Mr. Raj Singh Rana, AOR
M/s. M. V. Kini Associates, AOR
Mr. Garvesh Kabra, AOR
Mr. Rameshwar Prasad Goyal, AOR
Mr. E. C. Agrawala, AOR
Mr. Anil Kumar Jha, AOR
Mr. Sanjay Kumar Tyagi, AOR
Mr. E. C. Vidya Sagar, AOR
Ms. Sharmila Upadhyay, AOR
Ms. Bharti Tyagi, AOR
Ms. S. Usha Reddy, AOR
Mr. Adarsh Upadhyay, AOR
Mr. A. N. Arora, AOR
Ms. Rachana Srivastava, AOR
Ms. Abha Jain, AOR

Mr. Aniruddha P. Mayee, AOR
Mr. Pradeep Misra, AOR
Dr. Harshvir Pratap Sharma, Adv.

Mr. K. S. Rana, AOR
Mr. S.K. Dhingra, Adv.

Ms. Shefali Mitra, Adv.

Mr. Gaurav Agarwal, Adv.

Mr. Raj Singh Rana, Adv.

Mr. Bharat Sangal, AOR
Ms. S.S. Reddy, Adv.

Ms. Vidushi Garg, Adv.

Ms. Isha Gupta, Adv.

Ms. Vernika Tomar, Adv.

Ms. Anindita Deka, Adv.

Ms. Pragati Neekhra, AOR
Mr. U.A. Rana, Adv.

Mr. Himanshu Mehta, Adv.

Mr. Avirat Kumar, Adv.

Gagrat And Co, AOR

Hon'ble Mr. Justice Ashok Bhushan pronounced the

judgment of the Bench comprising Hon'ble Mr. Justice A.K.

Sikri and His Lordship.

(1) All Civil Appeals filed by the State of U.P. and State

of Uttarakhand challenging the judgments of the High

Court of Uttarakhand dated 01.7.2004, 20.03.2005,26.06.2007

and subsequent judgments following the aforesaid three

judgments are allowed. The impugned judgments are set

aside and the writ petitions stand dismissed.

(2) All the Civil Appeals filed by the State of Uttar Pradesh

against the judgment dated 11.11.2011 and subsequent

judgments following judgment dated 11.11.2011 are dismissed.

(3) The Civil Appeals filed by the writ petitioners against

the judgment of the Allahabad High Court dated 27.04.2005

and the subsequent judgments following the judgment dated

27.04.2005 as well as the Civil Appeals filed by the writ

petitioners against the judgment dated 11.11.2011 and

other subsequent judgments following the judgment dated

11.11.2011 are disposed of in terms of our conclusion as

recorded in paragraph 221(I to VIII).

(4) The transfer petitions are disposed of in terms of our

conclusion as recorded in paragraph 221(I to VIII) and

Writ Petition(C) No.203 of 2009 (M/s. Pappu Coal Master

Ors. vs. State of U.P. Anr.) is also disposed of in terms

of our conclusion as recorded in paragraph 221(I to VIII)

(5) The writ petitioners from whom the transit fee was

realised with effect from 01.05.2016 in accordance with

the Fifth Amendment to 1978 Rules shall be entitled to claim

for refund along with interest @ 9% which shall be

considered by the State or any officer authorised by the

State. The claim of refund shall be allowed only if the

assessee alleges and establishes that he has not passed on

the burden to any other person, since it is well settled

that the power of the Court is not meant to be exercised

for unjustly enriching a person.

(6) All the Contempt Petitions are dismissed.

(7) All the Civil Appeals filed by the State of Madhya

Pradesh against judgment dated 14.05.2007 are allowed. The

judgment of the Division Bench of the High Court dated

14.05.2007 is set aside and the writ petitions stand



C.A.NO.2047 of 2006

Order in this appeal has been reserved on

03.08.2017. This appeal does not relate to entry tax rather

the leviability of Trade Tax under the U.P. Trade Tax Act,

1948. This appeal is de-tagged to be listed after two weeks.

SLP(C)Nos.13656 and 15721 of 2012

Order in these petitions has been reserved on

03.08.2017. These are de-tagged to be listed before a

Bench of which Hon'ble Mr. Justice Ashok Bhushan is not a



(Signed order / reportable judgment is placed on the file)

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