Holding

The Court held that the transit fee is a valid regulatory fee under the Forest Act, that crushed stone, marble, limestone, coal and similar minerals remain forest produce, that the 1957 Mines and Minerals Act does not repeal the 1927 Forest Act, and that the Fourth and Fifth Amendment Rules are unconstitutional as they convert the fee into a tax.

Summary

The Supreme Court examined a batch of appeals concerning the levy of transit fees on forest produce under the Indian Forest Act, 1927. It held that crushing stone boulders into grits, marble slabs, limestone, coal and related minerals does not change their character as forest produce, and that the Forest Act and its 1978 Rules remain valid despite the Mines and Minerals (Development and Regulation) Act, 1957. The Court found that the Fourth and Fifth Amendment Rules, which raised the fee on an ad‑valorem basis, transformed a regulatory fee into a tax and were therefore unconstitutional. It also upheld the validity of the Madhya Pradesh notification fixing a modest transit fee, rejecting the High Court’s view that it exceeded the State’s power. Consequently, the appeals of the States were allowed, the High Court judgments striking down the fees were set aside, and the writ petitions were dismissed.

Issues considered

The validity of the transit fee levied under the Indian Forest Act, 1927 on various forest produce including crushed stone, marble, limestone, coal and related minerals.
Whether the crushing or processing of forest produce creates a new commodity exempt from the transit fee.
The interpretation of the phrase "brought from" in Section 2(4)(b) of the Forest Act.
The scope of the Forest Act, 1927 vis‑à‑vis the Mines and Minerals (Development and Regulation) Act, 1957 and whether the latter impliedly repeals the former.
The constitutional validity of the Fourth and Fifth Amendment Rules to the 1978 Transit Rules, particularly the shift to an ad‑valorem fee structure.
The effect of a Section 4 notification without a subsequent Section 20 notification on the levy of transit fees.
The legal status of roads declared protected forests under the 1960 notification.
The independence of Rule 3 from Rule 5 in the 1978 Transit Rules.

Legislation cited

Forest (Conservation) Act, 1980s. Section 2
Indian Forest Act, 1927s. 20, s. 2(4)(b), s. 38A(b), s. 38A(c), s. 4, s. 41, s. 5, s. 80A
Madhya Pradesh Transit (Forest Produce) Rules, 2000s. Rule 5
Mines and Minerals (Development and Regulation) Act, 1957s. 2, s. 23C, s. 4
Uttar Pradesh Act 23 of 1965s. Section 5
Uttar Pradesh Transit of Timber & Other Forest Produce Rules, 1978s. Rule 3, s. Rule 4, s. Rule 5, s. Rule 6

Subjects

forest producetransit feeIndian Forest ActMines and Minerals Actregulatory fee vs taxdefinition of forestimplied repealad valorem feerule interpretationprotected forestsection 2(4)(b)section 41

Judgment

[2017] l 1 S.C.R. 591

STATE OF UTTARAKHAND & ORS. A
v.
M/S. KUMAON STONE CRUSHER
(Civil Appeal No. 14874 of2017)
SEPTEMBER 15, 2017 B

[A. K. SIKRI AND ASHOK BHUSHAN, JJ.]
Forest Act, 1927:
s.41 - Levy of transit fee on forest produce by three States-
Uttar Pradesh, Uttarakhand and Madhya Pradesh - Validity of - C
Notification dated 28.05.2001 prescribing fee for issuing pass for
transit afforest produce - Held: Levy of transit fee is valid -
Notification dated 28.05.2001 issued by the Stale of Madhya
Pradesh cannot be said to be beyond the scope of 1: 5 of 2000
Rules and s. 41 of the 192 7 Act - State of Madhya Pradesh was D
fully justified in fixing rate of transit fee at the rate of Rs. 71- and
Rs.41- per tonne which was well within the power of the Stale ulr. 5
of 2000 Rules - High Court committed error in quashing the order
dated 28.05.2001 - Notification prescribing fee is valid - Uttar
Pradesh Transit of Timber & other Forest Produce Rules, 1978 -
Madhya Pradesh Transit (Forest Produce) Rules, 2000. E
Transit fee - Levy oj; on transit afforest produce - Stones,
stone boulders converted into stone grits, stone chips and stone
dust, if looses its character of.forest produce and transit fee is
/eviable - Held: Crushing of stones, stone boulders into stone grits,
stone chips and stone dust does not result into a new commodity F
different .fi"om forest produce - Crushed materials continue to be
sione and retain their nature afforest produce and transit fee is
leviable.
Transit fee - Levy of on transit of forest produce - Marbles
blocks, marble slabs, marble chips, if.forest produce and /eviability G
of transit fee on the said goods - Held: Marbles blocks, marble
slabs, marble chips are all forest produce - Transit Fee 011 marble
slabs and tiles cannot be denied - State did not commit any error in
demanding the Transit Fee on transit of the said goods.

H
591
592 SUPREME COURT REPORTS [20 l 7] 11 S.C.R.

A Flay ash, clinker. synthetic gypsum, ifforest produce - Held:
Flay ash. clinker. ;ynthetic gypsum are not forest produce - However,
Gypsum is naturally found and ob1ained in the nalllral form, hence,
is a forest produr;e.
Coal with its various varieties, limestone, hydrated lime, quick
B limestone, slake lime: and veneer and p~ywood waste, ifforesl
produce - Held: Formation of coal is due to large tracts of forest
getting buried unrfer the ground due to natural processes, thus, is a
forest produce - Since the essential character of the other products
dues nut change. thus, all are forest produce.
c Mines and Minerals (Development and Regulation) Act,
IY57 - 1957 Act if impliedly repeals the 1927 Act - Held: Forest
Act, 1927 and the Rules }i"amed 11/s. 41 are neither overridden nor
impliedly repea/4d, altered or amended by the 1957 Act and the
Rules framed thereunder - On looking into the pith and substance
of both !he legisl41tions, it is clear that both the legislations operate
D in different spheres and fields - Forest Act deals with forest and
forest wealth with a different object and the 1957 Act deals with
mines and mineral wealth - it cannot he said that in view of the
1957 Act especially as amended by Act 38 of 1999, the provisions
of' 1927 A,;·t and' 1978 Rules have become void, inoperative and
E stand repealed - Constitution of India - Arts. 254 and 372.
s. 2(4)(b) - Words "brought jrom" ins. 2(4)(b) - Interpretation
of - Held: Words "brought fi'om" in s. 2(4J(b) means brought ji-om
forest Ji'om wherd forest produce has originated - Words 'brought
from forest' cannot be read as "brought through forest" - For an
F item to be treated as forest produce, its origin may be in any forest
within the State of UP. or in a forest outside the State of UP.
s. 38A(b) - Forest - Meaning of - Held: Definition of forest
cannot be confined only to reserved forests, village forests and
protected forests 41s enumerated in 1927 Act - Forest shall include
G
all statutorily recognised forests, whether designated as reserve,
protected or othenwise and also shall include any area regarded as
forest in the Government record irrespective of the ownership.
s. BOA - Whether goods or forest produce passing thro11gh
the roads as notified by notijication dated 10.02.1960 can he treated
to be passing thm11gh a protected forest - Held: Roads notified by
H
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 593
CRUSHER

notification dated 10.02.1960 uls. 80A cannot be read lo mean that A
such roads have been declared as protected forest - Notification
can only be read to mean that both sides of the road have been
declared as protected forest on which Chapter JV of the 1927 Act
shall be applicable - ft cannol be said that merely because both
sides of roads are declared protected forests, the roads itself have
B
become protected forests - Thus, 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.
ss. 4 and 20 - Non-issuance of s. 20 Notification after s. 4
Notification of 1927 Act - Submission that State of UP although c
issued notification u/s 4 of 1927 Act propo.iing to constitute a land
as forest but no final notification having been issued uls. 20 of
1927 Act, the land covered by a notificatio11 issued u/s. 4 cannot be
regarded as forest so as to levy transit fee on the forest produce
transiti11g through that area - Held: Ajier the issue of the 11otification D
u/s. 4 no j'orest JJroduce can be re1noved there.,fron1, except in
accorclance 1vith such rules as 1nay be n?ocie b.v the State Govern1nent
in this behalf- Regulation by the State thus comes into operation
after the issue of notification uls. 4 and thus, the submission that
si11ce 110 final notification 11/s. 20 has been issued they cannot be
regulated by Rules 1978 cannot be accepted - After issuance of E
notification u/s. 4 of 1927 Act, removal afforest produce therefram
shall be governed by the Rules fi'amed by the State - The fact that
no notification u/s. 20 has been issued does not mean that restriction
put by the State Government by Rules are not applicable.
Uttar Pradesh Transit of Timber & other Forest Produce Rules, F
1978:
rr. 3, 5 - r. 3 wherein transit of forest produce is permissible
on(v with a transit pass and r. 5 providing for fees payable for
different passes - r 3 if independent ~l r. 5 - Held: Rule 3 is not
independent of r. 5 - Transit of forest produce is permissible only G
with a transit pass - Transit fee is payable on all kinds of transit
passes and cannat be confined only to transit passes as referred lo
in r. 4(1)(b) on(11.
Faurth and Fifth Amendment Rules to 1978 Rules by which
transit fee "was increased - Validity al- Held: Transit fee charged H
594 SUPREME COURT REPORTS [2017] l l S.C.R.

A . under 1978 Rules is reg11lato1y fee in character -- For regulutory
fee, State is n~t to prove any quid pro quo - Regulatory fee can be
charged, even if. no services are rendered by the State in lieu offee
realized - In 1ase of transit fee where the object and purpose is
regulation oftransit afforest produce adoption of advalorem
B principle for levy of Transit fee was not appropriate and such levy
changed the character of fee into a tax as held b_v the High Court -
High Court rightly struck down Fourth and Fifih Amendment Rules
to 1978 Rules ~1s being excessive and confiscatory in narure - High
Court nghrly h~ld that increase in transit fee 1>as excessive and the
character of the fee has changed from simple regulatory fee to a
C ji!e lvhich is ji:Jr raising revenue - On j(1cts, interin1 order lvas passed
by the Supreme Court for recovery offee as per third amendment ·-
State tu consider the claim of refimd provided transit fee has not
passeli on to th'e consun1er lvhich n1a;' result into unjust e11ric/1111e11t.
Disposing of the matters, the Court
D HELD: 1. I The crushing of stones, stone boulders into
stone grits, stone chips and stone dnst docs not result into a new
commodity diO'crent from forest produce. The crushed materials
continue to be stone and retain their nature of forest produce.
Coal with its various varieties, limestone, hydrated lime, quick
E limestone, slake lime, veneer and plywood waste arc all forest
produce. Marble blocks, marble slabs, marble chips arc all forest
produce. Flay ash, clinker, synthetic gypsum are not forest
produce. Gypsum, however, is a forest produce.
II. The Fbrcst Act, 1927 and the Rules framed under Section
F 41 are neither overridden nor impliedly repealed, altered or
amended by Mines and Minerals (Dcvclopmc,nt and Regulation)
Act, 1957 and the Rules framed thereunder. Both the legislations
operate in different spheres and fields.
Ill. The words "brought from" as occurring in Section
G
2(4)(b) of 1927 Act means brought from forest from where forest
produce has o~iginated. The words 'brought from forest' cannot
be read as "brought through forest". 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.

H
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 595
CRUSHER

IV. The forest has to be u uderstood according to its A
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.
B
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 us protected forest on which Chapter IV of
the 1927 Act shall be applicable. C
VI. Ruic 3 of the Uttar Pradesh Transit of Timber & other
Forest Produce Rules, 1978 is not independent of Ruic 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(l)(b) only. D

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 E
has been issued docs not mean that restriction put by the State
Government by Rules arc not applicable.
VIII. The Division Bench of the High Court rightly struck
down Fourth and Fifth Amendment Rules to 1978 Rules as being
excessive and confiscatory in nature. F
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 Ruic 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/- G
ai1d Rs.4/- per tonne which was well within the power of the State
under Ruic 5 of 2000 Rules framed under the 1927 Act. [Para
221] [710-D-H; 711-A-F]

H
596 SUPREME COURT REPORTS [2017] I l S.C.R.

A Whether by manufacturing process/chemical treatment, the forest
produce looses its character of forest produce:
2.1 As regards 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
B stone boulders, stone grits, stone chips and stone dust arc
obtained which ldoes not transform into any ne" commodity, except
that the stone in smaller pieces and shapes arc obtained. The
Allahabad High Court, in its judgment in *Kumar Stone Works
decided on 27.04.2005 has given a detailed reasoning for not
accepting stoqc grits, stone chips and stone dust as a new
c commodity. It held that the character of :Forest Produce is not
lost by such crushing of the stone. High Court of Uttarakhand
took a contrary view in its judgment dated 01.07.2004 in
**K11111ao11 .'>to11e Crusher. The judgment of Kumar Sto11e Works is
approved and judgment in K11111ao11 Sto11e Crusher is set aside.
D [Paras 61, 69[ [641-B-C; 644-H]
2.2 The general principle of interpretation of tariff entries
according to ariy 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. [Para
E 72] [645-G-H]
2.3 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 transit of the said goods. [Para 73]
2.4 The statutory context of Forest Produce as defined in
F Act, 1927 has to be taken in its botanical and 1;cientific sense. On
forest produce which are exempted by notification issued under
Proviso to Ruic 3 of 1978, no transit fee is leviablc. One of such
notification dated 29.03.2010 has been brought on record. [Paras
72, 74] [645-H; 646-A, B-C[
G *Kumar Stone Works and others '" Stale of' UP and
others 2005 (3) AWC 2177 - approved.
**Mis Kumaon Stone Crusher vs. State of U.P & Ors.
Writ Petition No. 1124 (M-B) of 2001, Judgment
dated 01.07.2004 - disapproved.
H
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 597
CRUSHER

Suresh Lohiya v. State of Maharashtra and another A
(1996) 10 sec 397 : (1996] 5 Suppl. SCR 130; CST v.
Lal Kunwa Stone Crusher (P) Ltd. (2000) 3 SCC 525 :
[2000] 2 SCR 276; Tej Bahadur Duhe (Dead by Lrs.)
v. Forest Range Officer F. S. (S. W), Hyderabad (2003)
3 SCC 122; Karnataka Forest Development
B
Corporation Ltd. v. Cantreads Private Limited and
others (1994) 4 SCC 455; Income Tax Officer. Udaipur
v. Arihant Tiles and Marbles Private Limited (2010) 2
SCC 699 : [2009] (16) SCR 21; Akbar Badnidin Giwani
v. Collector of Customs, Bombay (1990) 2 SCC 203:
[1990] 1 SCR 369 - referred to. c
Whether coal (and its ''arious varieties), lime stone, dolomite, fly
ash, clinker, gvpsum, veneer and plywood arc forest produce:
3.1 Coal is formed from plant substances preserved from
complete decay in a normal environment and later altered by
various chemical and physical agencies. There arc four stages in D
coal formation: peat, lignite, bituminous and anthracite. The stage
depends upon the conditions to which the plant remains arc
subjected after they were buried-the greater the pressure and
heat, the higher the rank of coal. Higher-ranking coal is denser
and contains less moisture and gases and has a higher heat value E
than lower-ranking coal. [Para 75] [646-C-E]
3.2 The formation of coal itself is due to large tracts of forest
getting buried under the ground due to natural processes snch
as floods and sedimentation. Further, a major portion of the coal
reserves of the country arc situated beneath forest lands and F
clearance for mining of the same from Forest lands. Coal, thus, is
clearly a forest produce. [Para 76] [646-E-F]
3.3 Hard coke and soft coke arc made from coal. Coke can
be formed naturally as well as by synthetic method. Hard coke,
soft coke, coal.briquettes arc all different variations of cual which G
do not shed their natural chanictcristic and arc itll forest produce.
[Para 77] [646-F-G]
3.4 Limestone is expressly mentioned in definition of forest
produce, slake lime/quick lime/hydrated lime arc all produce of
limestone. Further, produce known quicklime is produced by H
598 SUPREME COURT REPORTS [2017] ll S.C.R.

A heating of lim~stone, 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, $pon being carbonated, the produce will revert to
its natural state of being limestone. Hence, the said process docs
not change the nature of the product, as the basic ingredient is
B
essentially lime$tone, and merely upon heating and addition of
water, the nature of the produce i.e. limestone, docs not change.
Hence, limestone is a forest produce.[Para 78][646-G-H; 647-A]
3.5 Dolomite is a sedimentary rock. Dolomite is formed by
the post depositional alteration of lime mud and limestone by
c magnesium-rich ground water. Dolomite and limestone arc very
similar stones and arc forest produce. [Para 791 [647-81
3.6 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. [Para 80] (647-C)
D
Veneer and waste plywood
4.1 The veneer is nothing but thin sheets of wood which
arc cut from existing logs & planks, which is then again glued
upon 11lanks of wood. The essential nature of the product of veneer
E is merely sliced/cut up wood. Hence, it continues to be a forest
produce. [Para ~11 (647-DI
4.2 The waste plywood that is remains of plywood and
veneer arc nothing but cut-up logs. The process of manufacturing
involves placing logs and wood into a specialized machine, which
cuts out thin sheets of wood from the log. That when the logs
F
reaches a certain diameter of thickness, the same can no longer
be suitable for c)l:traction by the machines and unutilizcd wood is
left behind in the process of slicing as well. Essential character
of the product docs not change, hence, it comes within the
definition of timber and forest produce. [Para 82] (647-E-F]
G
Forest Act, 1927 and MMDR Act, 1957:
5.1 The l l>27 Act which has been continued in force by
virtue of Article 372 is to continue until altered or repealed or
ame·nded by a competent legislature. To find out as to whether
the 1927 Act and Rules, 1978 framed thereunder survive even
H
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 599
CRUSHER

after enforcement of 1957 Act, Article 254 is not to be looked A
into but it is to be found as to whether the above pre-constitutional
Jaw is altered or repealed or amended by a competent legislature.
To find out this competent legislation as contemplated by sub-
clause (I) of Article 372 in the context of pre-constitutional law
the nature and content of pre-constitutional law has to be found
B
out. There cannot be any dispute that 1927 Act was enacted to
consolidate the law relating to forests, the transit of forest-produce
and the duty Ieviablc on timber and other forest-produce.
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 c
or amend the said law. Various amendments in the 1927 Act were
made by the Slate of U.P. in different provisions of 1927 Act in
exercise of its legislative power as conferred by List II. By the
Constitution (Forty-second Amendment) Act, 1976, with effect
from 03.01.1977 Entry 19 was omitted from List II and transferred
D
in List III as Entry 17A. Entry l7A is "Forests". Thus, with effect
from 03.01.1977, both the Parliament and the State legislature
arc competent legislature within the meaning of Article 372 sub-
clause (I). (Paras 93, 96, 97] (650-D-F; 652-D-GJ
5.2 The question of repeal by implication arises when two
statutes become inconsistent to the extent that competence of E
one is not possible without disobedience to other. 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. 1957 Act
was enacted in reference to Entry 54 of List I to provide for the F
regulation of mines and the development of minerals whereas
the subject of the legislation under the 1927 Act was the forest,
transit of forest-produce uud the duty leviable on timher aud other
forest-produce. [Paras 101, 104] (655-E; 656-F-G]
5.3 It is sine qua non that both the sets of laws must deal G
with "the same subject matter". Jn the instant case, under the
Forest Act "transit of forest-produce" 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 of "Regulation of
H
600 SUPREME COURT REPORTS [2017] l l S.C.R.

A Mines and Development of Minerals". Provisions relating to
transport or storage arc only incidental and ancillary in nature.
But the main ppint of difference ls the subject matter of legislation
under the 1957 Act "Regulation of Mines and Development of
Minerals". [Para 105) (656-H; 657-A-BJ
B 5.4 When the minerals are forest-produce by definition
under the 1927 Act under Section 2(4), validity of which is not
challenged, fo~est-produce and its transit is altogether a different
subject mattet than the subject matter governed by 1957 Act.
The object of the two legislations is different. The regulation is
different. The Forest Act comprehensively d<:als with forest and
c forest wealth with a different object and the 1957 Act deals with
mines and mineral wealth. [Para 106] (657-C-D]
5.5 The l927 Act provides comprehensive provisions with
regard to reserved forest, village forest and protected forest.
The forests arc directly linked with environment and ecological
D balance hut because of large human development, exploitation
of forests and other natural resources and deforestation, the
international ciimmunity has been alarmed, several international
conventions and treaties were made including Kyoto Protocol
and Paris Convention to which India is a signatory. [Para ll l)
E [657-G-H; 658-A]
5.6 The subjects of 1927 Act and 1957 Act arc thus distinct
and separate. The 1957 Act was on development and regulation
of mines and minerals. Mines and minerals arc also found in
forests. The definition of forest-produce as contained in Section
F 2 sub-section (4) of the Act includes peat, surface oil, rock and
minerals (including lime-stone, laterite, mineral oils, ancl all
products of mines or quarries). The State has been empowered
to regulate transit of forest-produce under Section 41 of the Act.
Regulation of transit of forest-produce is a larger activity covering
transit of different kinds of forest-produce including minerals.
G 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
H
legislative powers. [Paras 115, 116] (658-E-HJ
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 601
CRUSHER

5.7 In t~ event any overlapping is found in two Entries of A
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. Thus, even it is assumed
that, in working of two legislations which pertain to different
subject matters, there is an incidental encroachment in respect
B
of small 11rea 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, on looking
into the pith and substance of both the legislations, it is clear that
they operate in different field and it cannot be accepted that 1957
Act impliedly repeals the 1927 Act in so far as Section 41 and c
l 978 Rules are concerned. Thus, it cannot be said that in view of
the 1957 Act especially as amended by Act 38 of I 999, the
provisions of_ 1927 Act & 1978 Rules have become void,
inoperative and stand repealed. [Paras 120, 121] (661-H; 662-A-
C]
; D
Hingir-Rampur Coal Co., Ltd. and others v. The State of
Orissa and others AIR 1961 SC 459: (19611 SCR 537;
State ()f Orissa v. MA. Tulloch muf Co. (19641 (4) SCR
461; B. V. Patankar and Ors. "· C.G Sastry AIR 1961 SC
272: (1961] SCR 591; Pa11kajakshi (Dead) Through Legal
Representatives and others v. Cha11drika and Ors. (2016) 6 E
SCC 157: (2016] 3 SCR 1018; Ku/want Kaur and others v.
Gurdial Singh Mann (Dead) by Lrs. and Ors. (200 I) 4 SCC
262 : [2001] 2 SCR 525; Mu11icipal Council, Pulai through
the Commissioner ofM1111icipal Council, Palai v. TJ. Joseph
AIR 1963 SC 1561 : [1964] SCR 87; Deep Cha11d v. State F
of UP imd Ors. AIR 1959 SC 648: (1959( Suppl. SCR 8;
Slate of Kera/a and Ors. v. Mar Appraem Kuri Company
Li111i1ed and Am: (2012) 7 SCC 106 : (20121 4 SCR 448:
Kartar Singh v. State ofPunjab (1994) 3 SCC 569: [19941
2 SCR 375; A.S. Krishna and others"· State a/Madras AIR
1957 SC 297: [19571 SCR 399; Union oflndia and Ors. v. G
Shah Govedhan L. Kabra Teachers' College (2002) 8 SCC
228 : [2002] 3 Suppl. SCR 220- referred to.
Principles of Statutory Interpretation hy.Justice G.P Singh
14" Edu - referred to.
H
602 SUPREME COURT REPORTS [2017] 11 S.C.R.

A Interpretation of Section 2(4)(bl of 1927 Act
6.1 The meaning of words 'brought from' as used in Section
2(4)(b) has bcc~mc very significant in the instant case since it is
a case of large number writ petitioners that the goods which they
arc transiting did not originate from any forest area rather they
B have been take!) from non-forest area, hence, there is no liability
to pay transit f¢e. [Para 122] [662-D]
6.2 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'
c 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 >rord '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
D moved out that is from the place of their original location. The
forest is birth place, the origin of the items mentioned in sub-
clauses (1) to (iv) of sub-clause(b). of Section 2(4). The 'found in'
means that the iiem which has origin from the forest, is found in
the forest while 'brought from' means that items having origin in
E forest have moved out from the forest. [Para 124] (663-B-D]
6.3 The 1978 Rules framed under Section 41 of the 1927
Act also rctlect that rule making authority has also understood
the meaning of word 'brought from' in the above sense. As per
Ruic 3 no forest produce shall be moved to or from or within the
F State of ll.P. exqept or without a transit pass in the form in the
Schedule A. The Schedule A of the Rules contains the form. The
Item No.l of the form also clearly refers lo 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. [Parns 125, 126] (663-
G E-G]
6.4 The word "brought from" as occurring in Section 2(4)(b)
indicate forest to be source or original depository of the forest
produce. Thus, the word 'brought from' has to be understood in
the abovt' mann~r. However, it is clarified that the origin of forest
H
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 603
CRUSHER

produce may be in any forest situate within the State of U.P. or A
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.
B
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 qf forest produce within the meaning of s. 2(4)(b).
[Para 128] [665-C-E]
Kumar Stone Works and others v. State of U.P. and c
othe1:~ 2005 (3) AWC 2177 - referred to.

Yeshwant Many Dodamani and Ors. 1962 CRLJ 832 -
approved.
Advanced Law Lexicon by P. Ramanatha Aiyar 3'• D
Edn. - referred to.
Meaning of 'Forest'
7. The Forest Conservation Act, 1980 is a Parliamentary
enactment which has been specifically enacted to provide for the
conservation of the forest and for matters connected therewith. E
The definition of forest cannot be confined only to reserved
forests, village forests and protected forests as enumerated in
1927 Act. Thus, forest shall include all statutorily recognised
forests, whether designated as reserve, protected or othenvise.
The term "forest land", occurring in Section 2, will not only include· F
"forest" as understood in the dictionary sense, but also any area
recorded as forest in the Government records irrespective of
the ownership. The definition of forest as contained in Section
38A(b), 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. Thus, the interpretation of forest G
as given by the Division Bench in its judgment dated 11.11.2011
has to be approved and the 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. (Paras 130, 131, 133(
[665-E, G; 666-D-E, 667-C-D]
H
604 SUPREME COURT REPORTS [2017] ll S.C.R.

A Mis. Ajay Trading (Coal) Co.& Ors. vs. State UP &
Ors. Writ Petition No.963 of 2011 Judgment dated
11/21.11.2011 - approved.
Mis Gupta Builders vs. Stale of Ut1ara11chal & Ors. Writ
Petition No. 993 of 2004 Judgment dated 26.06.2007 -
B disapprov~d.
I
Whether Notifilcation dated I 0.02.1960 declares Roads as
Protected Forest
8.1 Section 80A which has been referred in the notilkalion
is a provision which has been inserted by U.P. Act 18 of 1951
c with effect from 06.10.1951. Under Section 80A the State
Government may, by notification declare that any of the provisions
of Act shall upph 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
D miscellaneous Chapter. Section SOA 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. Notifica~ion elated 10.02.1960 declared that provisions
of Chapter IV of lhe Act shall be applied. Thus land mentioned in
the schedule is declared as protected forest. Section 80A
E delineates the legislative scheme of declaring protected forests
on banks of cam!ls or the sides of roads. The State while issuing
notification under Section SOA can only effectuate, the object and
purpose of Section SOA as enacted by the State legislature. [Paras
137-139] [669-D-E, F-H; 670-A]
F 8.2 The notification dated 10.02.1960 has to be read in the
light of the substantive provisions contained under Section SOA.
When Section 80A empowers the State to declare any land on the
banks of canals pr the sides of roads as proteded 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
G
both the sides o( the roads which have been mentioned in the
Schedule arc 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
H provisions of the Act. Maintenance of forests on both sides of
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 605
CRUSHER

canals is with the object and purpose of environment protection. A
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 mad itself has been declared as protected forest. The object
B
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 c
by the State for the roads itself. The maintenance and regulation
of roads are governed by different statutes and principles of law.
T_he submissions that merely because both sides of roads arc
declared protected forests, the roads itself have become
protected forests, is rejected. Thus, merely passing through the
D
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. [Para 140] [670-B-G)
Whether Rule 3 is independent of Rule 5
9.1 Ruic 3 is couched in negative term pro"viding that E
" ...... no forest produce shall be moved into or from or within the
State of Uttar Pradesh except as provided without a transit Pass
in the form in Schedule A ...... ". Thus transit of forest produce is
permissible only with a transit pass. Ruic 4(1) contains provisions
regarding officers and persons who issue passes. Ruic (5)
provides for fees payable for diffcrcnt passes. Referring to F
Chawki or depot established under Ruic 15 and specified under
proviso {ii) to clause {b), sub-rule (1) of Ruic 4, it was submitted
that transit passes us referred to under proviso (ii) to clause {b)
of sub-rule (1) of Ruic 4 are only to be charged with transit fees.
The fee has to be paid for different passes at chawki or depot G
where it shall be produced for examination and payment of transit
fees. All forest produces arc to be produced at chawki or depot
for payment of transit fee. Reading of Ruic 5 docs not indicate
any intention that only one category of passes as referred to in
Ruic 4{l)(b) arc lc\iablc with transit fee. The words''. .. spcciflcd
under proviso(ii) to clause{b), sub-rule(!) of Rnlc 4 only refer to H
•
606 SUPREME COURT REPORTS (2017] l l S.C.R.

A 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 classc$ of passes." Thus, Marginal Note clarifies that
transit fee is pqyable at all kinds of passes and submission is
incorrect that Ieviablity of fee is only on one category of passes
B
as referred to in Rule 4(l)(b). Marginal note hns been held to be
an internal aid t" statutory interpretation of a statute. [Paras 141,
143, 144) (670-G-H; 671-A; 672-C, F-H; 673-A]
9.2 In event the interpretation as put by the petitioner is
accepted that fee under Rule 5 is chargeable only on passes
c obtained under ~ule 4(l)(b) only, the easiest manner to avoid
payment of tran$it 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
D power to issue pl)sses that has nothing to do with payment of fee
which is separately provided in Ruic 5 and is applicable to all
kinds of passes. When all transit passes have to be in same form
and in triplicate jt cannot be seen how it can be read that only on
one category of passes fee is leviablc and Ruic 5 is not applicable
and is completcl~ independent of Ruic 3. The submission that
E transit fee is payable only with regard to passes issued under
Ruic 4(1)(b) which arc required to be checked under Ruic 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
F proviso to Rule 3. Thus, the interpretation of Ruic 3, 4, 5 & 6 in
respect of pay abUity of transit fee on transit passes issued under
1978 Rules cannot be accepted. [Paras 146-148] (673-G-H; 674-
A, CJ
Non-issuance of Section 20 Notification after Section 4 Notification
G of 1927 Act
IO.I Section 5 as inserted by Uttar Pradesh Act 23 of 1965
with effect from 25.04.1965 clearly provides that after the issue
of the notification under Section 4 no forest produce can be
removed thcrefrol;n, except in accordance with such rules as may
H
be made by the Slate Government in this behalf. The regulation
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 607
CRUSHER

by the State thus comes into operation after the issue of A
notification under Section 4 and thus, the submission that since
no final notification under Section 20 has been issued they cannot
be regulated by Rules 1978 cannot be accepted. [Para 150] [675-
D]
10.2 The High Court has thus even though had struck down B
Fourth and Fifth Amendment Rules but clearly permitted the State
to recover transit fee in accordance with the rate as was applicable
prior to Fourth Amendment Rules. Thus, no infirmity is found in
the State's recovery of transit fee at the rate of Third Amendment
Rules. There being express order by the High Court on C
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, the question as to whether by striking
clown Fourth and Fifth Amendment Rules, Third Amendment Ruic
docs not revive need not be gone into in the instant case. Jn D.
view of the order of the High Court dated 11.11.2011, the State
was fully competent to recover the transit ·rec as per Third
Amendment Rule, which direction of the High Court is affirmed.
[Para 155] [677-C-E]
State of West Bengal v. Keshoram Industries and Ors. E
(2004) lO SCC 201 : [2004) 1 SCR 564; Synthetics
and Chemicals Ltd etc v. State of U. P. and Ors. (1990)
1 SCC 109 : [19891 l Suppl. SCR 623; Firm A.T.B
Mehtab Majid and Co. v. State af Madras and anathe1;
AlR 1963 SC 928: [1963) Suppl. SCR 435; B. N. Tiwari
v. Union of India, AIR 1965 SC 1430 : [1965) SCR ·F
421; State of U. P. and others v. Hirendera Pal Singh
(2011) 5 SCC 305: [2010) 15 SCR 854; Supreme Court
Advocate-on-record Association v. Union of llldia 2016
(5) sec 1 - referred to.
Validity of Fourth And Fifth Amendment Rules G
11.1 Transit fee charged under 1978 Rules is regulatory
fee in character. For regulatory fee, State is not to prove any quid
. pro quo. Regulatory Fee can be charged, even if, no services ure
rendered by the State in lieu of fee realised. [Paras 164, 1751
[683-F-G; 689-AJ H
608 SUPREME COURT REPORTS (2017] I l S.C.R.

A 11.2 By the Uttar Pradesh Transit of Timber and other
Forest Product (Third Amendment) Rules, 2004 fee prescribed
in Rule 5 was lncreased, for example per lorry load of timber or
other forest pr0duce in place of Rs.5/- per tonne of capacity fee
of Rs.38/- pet tonne of capacity is shown. In the Fourth
Amendment Rules, 2010 dated 20.10.2010, the fee which was
B
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 ofKhair, Sal and Sagaun (Teak), Shisham, Sandal Wood
and Red Sanders. In the Fifth Amendment Rules,2011 dated
04.06.20ll, Rule 5 was amended where the basis of levy of fee
c 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), Silisham, Sandal Wood and Red Sanders. (Para
168] [685-F-G]
11.3 Initially when Transit Fee Rules were framed in 1978,
D Transit Fee on per lorry load of timber was Rs. 5 per tonne of
capacity. By 3" amendment with effect from 14.06.2004 Rs. 5/-
was increased a1s Rs. 38 per tonne of capacity. By 4" amendment
rules, the Trans1it Fee was increased as Rs. 200/- per cubic meter
with regard to timber, Khair, Sal & Sagaun, Sisham, Sandal wood
and Red Sande~s and with regard to other timber Rs. 75 per cubic
E meter. The same amount was lcviablc on other forest produce.
By Third Amendment Rules which was enforced from 14.06.2004
thllt is after 26 years of enforcement of Transit Ruic, the Transit
Fee was increased 7 times. Whereas by Fourth amendment which
was imposed with effect from 20.10.2010. Transit Fee was
F increased more than 16 times. As per Fifth amendment rules,
Transit Fee W3'S based on ad-valorem 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 ad-valore111 was at the
rate of 5 per cent but with regard to coal, lime stone, sand, stone,
G bajri & other minerals ad-valorcm is at the rate of 15 per cent.
High Court after considering the impact of Fifth Amendment has
held that by Fift'/l Amendment the increase in Transit Fee is more
than ten times. The Fifth Amendment Ruic was issued in six
months of issuance of Fourth Amendment Ruic. In the affidavit
H
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 609
CRUSHER

filed before the High Court the State has pleaded that every year A
expenditure increases 10% to 20%, When every year expenditure
increases only 10 to 20%, what was necessity to increase the
transit fee several times by 5'" Amendment, remains unexplained.
[Paras 169-172] [686-G-H; 687-A; 688-A-D)
11.4 As regards issue whether there is a broad correlation B
between increase in the fee and expenses incurred in regulation
of forest produce, although the State is not liable to prove any
1111id pm q110 is 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 realised. [Para 178] c
[690-EJ
11.5 The issue 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 D
has been adverted to before this Court. The submission that the
J{igh Court has not adverted to the relevant material produced
by the State which was filed before the Court by means of a counter
affidavit, is not correct since the High Court noticed the figures
which were placed by the State in its affidavit regarding amount E
of collection of Transit Fee and the expenses incurred by the
State ou the establishment and other miscellaneons expenses.
[Para 179) (690-F-H]
11.6 The submission is correct that the expenditure which
is claimed by the State in the impugned judgment of the High F
Court is the expenditure not coufincd to regulation of transit but
other expenditures of the forest dcpartmcut 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. The High
Court thus held, after considering the material brought by the G
State for increase In 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. The High
Court returned the finding that "the revenue to be generated by
H
610 SUPRIEME COURT REPORTS [2017] 11 S.C.R.

A the transit fee, would thus be at least IO times more than the
cost in collection of fees." (Paras I82, 185, 186] (692-G-H; 693-
A; 694-D-E]
11. 7 In case of transit fee where the object and purpose is
regulation of transit of forest produce adoption of advalorem
B principle for le\ly of transit fee was not appropriate and such levy
changed the character of fee into a tax which bas rightly been so
held by the High Court. Thus, 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
C Court after elaborate and proper consideration of material brought
before the Court after analysing the purpose and obj'cct of the
imposition of t11ansit fee. Thus, the judgment of the High Court
striking down fourth and Fifth Amendment Rules is affirmed.
[Para 192] [698"H; 699-A-B]
The Commissioner. Hindu Religious Endowments,
D Madras v. Sri Lakshmindra Thirtha Swamiar of Sri
Shirur Mutt, AIR 1954 SC 282 : [1954] SCR 1005;
Coq1oration of Calc111ta and Anr. v. Liberty Cinema AIR
1965 SC U07 : (1965] SCR 477; Stole of Tripura and
others v. S1~dhir Ronjan Noth (1997) 3 SCC 665: [1997]
E 2 SCR 291; Secunderobad Hyderabad Hotel Owners'
Assn. v. Hyderabad Municipal Corpn. ( 1999) 2 SCC
274 : (1999] 1 SCR 143; R 345; Sreenivasa General
Traders and Others v. State of Andhra Pradesh and
Others (1983) 4 SCC 353 : (1983) 3 SCR 843; Delhi
Race Club Limited v. Union of India and Others (2012)
F 8 SCC 680: [2012] 8 SCR l; Calcutto Municipal Co11m.
And others v. Shrey Mercantile (P) Ltd. and others,
(2005) 4 sec 245 : (2005] 2 SCR 584; P. M.
Ashwatha/iarayana Sefty and others v. State of
Karnatako and others (1989) Supp. l SCC 696 -
G referred to.
Interim orders passed against the judgment of the Allahabad High
Court
12.1 This Court noticing the divergent orders passed in
the batch of appeals, passed a detailed interim order on
H
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 611
CRUSHER

29.10.2013. By a subs,·quent order dated 26.04.2016, this Court A
further modified the interim order dated 29.10.2013.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. The Court also held that such recovery shall remain
subject to the ultimate outcome of instant cases pending in this
B
Court. With further condition that in the event of writ petitioners/
private parties succeeding in their cases, the amount deposited/
recovered from them be refunded with interest @9%. [Paras 195-
198] [699-E-F; 700-C-D; 701-B-D]
12.2 Having upheld the judgment of the High Court dated
11.11.2011 striking down Fourth and Fifth Amendment Rules c
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 <1ucstion of considering any claim of refund of any transit fee D
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 transit
fee ha·s not passed on to the consumer which may result into
unjust enrichment. Thus the State is permitted to consider any
daim ofrefund of transit fee on the condition that State shall permit
refund only after being satisfied that there is no passing of the E
transit fee to the ultimate consumer and refund may not result in
unjust enrichment. [Para 199] [701-D-F]
Civil Appeals of State of M.P. filed against the judgment dated
14.05.2007
F
13.1 The submission that Act of 1957 occupies the field
and the State had .no jurisdiction to frame any rules regarding
transit of minerals is rejected. 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 G
prejudice to the generality of the foregoing provision such rules
may 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
H
612 SUPREME COURT REPORTS (2017] ll S.C.R.

A 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 Ruic 3 no Forest Produce
shall move into or outside or within the State of Madhya Pntdesh
except in the tnanncr as provided without a Iransit Pass in Form
B
A, B and C. The Forms of Transit Pass arc part of the rules. The
Ruic provides for fixing of rates of fee for issue of Transit Pass.
[Paras 212, 214) (706-G-H; 707-A-C; 708-A]
13.2 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
c having upheld both Section 41 of the Act, 1927 as well as Rule 5
of Rules, 2000, there is no reason as to how the notification issued
under Rule 5 ~an be held to be beyond the powers of the State.
When the State is empowered to fix the rate of fee, it has latitude
under the statute to adopt a basis, for fixation of rates of fee. It
D cannot be said that under the statute fee can be charged only to
meet the expenses which arc incurred for printing or preparation
of passes. The High Court has taken a incorrect Yicw of the
matter while coming to the conclusion that Notification dated
28.5.2001 is beyond the power of the State under Ruic 5 of Rules,
2000. Rule 5 clearly empowers the State to th the rate of fee and
E the rate of fee can be fixed on the basis of quantity/volume of the
Forest Produce. Thus the High Court committed error in setting
aside the Notification dated 28.05.2001. (Paras 215, 216( (708-
C-F.1
13.3 Although the High Court in its judgment has held that
F both 1957 Act and 1927 Act operate in different fields. However,
it had also made observations that imposing foe by fixing tonnage
and cubic mctfr as unit had entered into regulation and control,
which is in thq realm of the MMDR Act. It has been found that
the 1927 Act and 1957 Act operate in different fields. State has
G 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 obserntions of
the DiYision Bench thus cannot be approved. In view thereof,
the High Court committed error in quashing the order dated
H 28.05.2001. (Puras 218, 219, 220] (709-E; 710-A-C)
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 613
CRUSHER

State of UP. v. Sitapur Packing Wood Suppliers (2002) A
4 SCC 566: [2002) 3 SCR 345; T.N. Godavarman
Thirumulkpad v. Union of India and others (1997) 2
SCC 267 : [1996) 9 Suppl. SCR 982; State of West
Bengal >'. Kesoram Industries and Ors. (2004) lO SCC
201 : [2004] 1 SCR 564; Synthetics and Chemicals
B
Ltd etc v. State of U. P. and Ors. (1990) 1 SCC 109:
[1989) l Suppl. SCR 623; Mineral Area Development
Authority v. Steel Authority of India & Ors. (2011) 4
SCC 450 : [2011) 4 SCR 19; Jindal Stainless Ltd.(2)
and Am: v. State of Haryana and Ors. (2006) 7 SCC
241 : [2006) 3 SCR 1095; Jindal Stainless Ltd. & A111: c
v. State of Haryana & Ors. 2016 (1) SCALE 1 -
referred to.
Advanced Law Lexicon by P Ramanatha Aiyar -
referred to.
Case Law Reference D
(2002) 3 SCR 345 referred to Para 21
[1996) 9 Suppl. SCR 982 referred to Para 56
[2004) 1 SCR 564 referred to Para 56
[1989) l Suppl. SCR 623 referred to Para 56 E
[2011) 4 SCR 19 referred to Para 56
[2002) 3 SCR 345 referred to Para 57
[2006] 3 SCR 1095 referred to Para 57
2016 (1) SCALE 1 referred to Para 57
[1996] 5 Suppl. SCR 130 referred to Para 62 F
[2000] 2 SCR 276 referred to Para 64
(2003) 3 sec 122 referred to Para 65
(1994) 4 sec 455 referred to Para 67
2005 (3) AWC 2177 approvecl Para 69 G
[2009] 16 SCR 21 referred to Para 69
[1990] 1 SCR 369 referred to Para 72
[ 1961] SCR 537 referred to Para 87
[1964] 4 SCR 461 referred to Para 89
H
614 SUPREME COURT REPORTS [2017) l l S.C.R.

A [1961] SCR 591 referred to Para 94
[2016] 3 SCR 1018 referred to Para 95
[2001] 2 SCR $25 referred to Para 95
[1964] SCR 87 referred to Para 100
[1959] Suppl. SCR 8 referred to Para 102
B
[2012] 4 SCR 448 referred to Para 103
[1994] 2 SCR 375 referred to Para 117
[1957f SCR 39P referred to Para 118
[2002] 3 Suppl. SCR 220 referred to Para 119
c 1962 CRLJ 83Z approved Para 128
[1996] 9 Suppl. SCR 982 referred to Para 130
[2003] 6 Suppl. SCR 674 referred to Para 145
[19631 Suppl. SCR 435 referred to Para 153
[1965] SCR 421 referred to Para 153
D
120101 15 SCR 854 referred to Para 153
(2016) 5 sec 1 referred to Para 153
[1954] SCR 10q5 referred to Para 157
[1965] SCR 477 referred to Para 159
E [1997] 2 SCR 29 referred to Para 160
[1999] 1 SCR 143 referred to Para 162
[2002] 3 SCR 345 referred to Para 163
[1983) 3 SCR 8.i3 referred to Para 176
[2012) 8 SCR 1 referred to Para 177
F [2005 J 2 SCR 584 referred to Para 187
[I 9891 Suppl. 1 sec 696 referred to Para 189
CIVIL APPELLATE JURISDICTION : Civil Appeal No. l 4874
of20!7
From the Judgment and Order dated l.7.2004 of the High Court
G
of Uttaranchal at Nainital in Writ Petition No. l l 24 (M/B) of200 l.
WITH
T.P(C) Nos.76. 77, l 8 an<l 44 of20!2
Contempt Petition (C) No.199-20 l of20 l 4 in SLP(C) Nos. 31530-
H 31532 of20l I
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 615
CRUSHER

W.P.(C) No. 203 of2009 A
C.A. Nos. 2797, 2821, 5652, 2739-2762, 2734, 2737, 2o2U, 2706,
2862-2863, 2732 and 2819 of2008
SLP(C)Nos.13656and 15721 of2012
C.A. Nos. 1007, 1008 and 1010 of20ll B
Conmpt. Pet.(C)No.585-587 of2016 In SLP(C) No. 31530-31532
of20ll
Conmpt. Pet. (C) No. 251 of 2008
C.A. No. 2047 of2006
c
C.A.Nos.14446, 14448, 14922, 14924, 14923, 14920, 14921, 14452,
14453, 14464, 14465, 14468, 14469-14476, 14485, 14486, .14492, 14493,
14495, 14497-14509, 14510-14523, 13122-13129, 13300, 13301, 133.13-
13319, 13320, 13346-13358, 13360-13378, 13386-13395, 13405-13408,
13411-13426, 13448-13463, 13488, 13427. 13518, 13542, 13559, 13575, D
13578-13580,13602-13605,13621,13430-13446, 13465-13487, 13489-
13517, 13627, 13428, 13385, 13397' 13520-13533, 13645, 13675-13699,
13714-13718. 13409, 13536; 13741, 13786, 13787, 13788, 13792-13813,
13816-13828,13829,13830,13745-13759,13935,l3936,13537-13541,
13937, 14076-14078, 13760-13770, 14080-14100, 14101-14117, 14118-
14132, 14134-14145, 13544, 14146, 13606, 14157-14176,14178-14190, E
14192-14193, 14194-14206, 13545, 14207-14225, 14227-14247, 14266,
14249-14264, 14268, 13622, 13626,13637, 13646, 13700, 14270-14271,
14274-14275,14277-14278,14282,14147-14148,14284-14291, 14294-
14306, 14307, 14309, 1431!, 14315-14322, 13771-13780, 14328-14339,
14348-14355,14357-14364, 14368-14374,14376, 14378, 14381,14382-
14392, 14393-14404, 14406-14407, 14292, 13558, 14409-14410, 14414- F
14423, 14426-14444, 14447, 14449-14451,13574, 14454-14463, 14466-
14467,13576,14272, 13781,14477.13379,14177, 14191, 14248,14226,
13535, 13106-13116, 13302-13312, 13546-13557, 13560-13571, 14273,
13577, 13464, 13447, 13321-13344, 13581-13600, 13607-13620, 13623-
13624, 13543, 13628-13636, 13638-13644, 13601, 13647-13674, 13701- G
13713,13721-13740,13359,14276,!4279,l3118,13121,13938,14265,
13939-14074, 14267, 14269, 14079, 14133, 14478-14484, 13130, 14487-
14491, 14280, 14494, 14293,14308,14496, 14524, 14310,14075,14532,
14525-14531, 13719-13720, 13345, 14281, 13105, 14283, 14534-14536,

H
616 SUPREME COURT REPORTS [2017] l l S.C.R.

A 14537, 13519, 13131, 14538, 13117, 14312-14314, 14323-14326, 13398,
13410.13429, 14919, 13119,13380-13384, 14327, 14340-14347. 13396,
14356. 14365-14)67, 14375, 14377, 14380, 14405, 14408, 14411, 14412-
14413. 14424-14425. 14445, 13399-13404and13104 of2017
Neeraj Kishan Kaul, Sr. Adv.,M. R. Shamshad, Mishra Saurabh,
Pankaj Bhatia. Kailash Chand, Syed Shahid l~ussain Rizvi, Mis. AP & J
Chambers, Jatinder Kumar Bhatia. Sharmila Upadhyay, Abhishek
Chaudhary, E. C. Agrawala, Piyush Sharma. Pawanshrce Agrawal,
Pavan Kumar, R.N. Parcck, Ms. Rachana Srivastava. Ms. Monika, Ms.
Sukrit R. Kapoo11, Ms. Nithya Madhusoodhanan. Arun K. Sinha, Ms.
Mukti Chowdhary, Manish Kumar Saran, Aniruddha P. Mayee, Samir
c Ali Khan, K. Y. Srcckumar. Shamik Shirishbhai Sanjanwala. Sunil
Kaunda!, Kamlcndra Mishra. Abhijit Sengupta, Arvind Kumar, E. R.
Sumathy. Garvesh Kabra, K. V. Bharathi Upadhyaya. Nirnimcsh Dube,
Ms. Mridula Ray Bharadwaj, K. K. Mohan. Baij Nath Patel. Ms. Sweta,
Ms. Romila, C.D. Singh, Prateck Rusia, Jitcndra lvlohan Sharma, Ajit
D Sharma, Kamal Mohan Gupta, Ravindra S. Garia, Kaushal Yadav, N.
Annapoorani, Ms, Anita Bafna, T. Harish Kumar. Pravccn Jain, Prashant
Kumar, Pavan ij.umar, Rahul Kaushik, Ms. Aruna Gupta, M. A.
Chinnasamy, Shri~h Kumar Misra, Gaurav Dhingra, Pramod Dayal, Ms.
Abha Jain, Jaivir' Singh, Gaurav Jain, Anupam Mishra, Shiv Prnkash
Pandey, Ms. Pragati Ncckhra, R. P. Gupta, Jitcndra Kumar, R. D.
E Upadhyay, Ms. Al)ha R. Shanna.A nil Kumar Jha,AftabAli Khan, Neenij
Shckhar, Nisbit Agrawal. T.A. Rehman, Vi pin Kumar Jai, Pahlad Singh
Sharma, Santosh Kumar Tripathi. Pankaj Bhatia, Nipun Goel, Dhruv
Surana, Ashish Choudhary, Ms. Bharti Tyagi, Ashok Kumar Singh. R.
C. Kaushik,Arjun Garg, Manish Yadav,Ambhoj Kumar Sinha, Dccpak
F Khurana, Umcsh Kumar Khaitan. Ms. Tulika Prakash, Vikas Mehta,
Dcepak Joshi, S<inyat Lodha, S. K. Dhingra, Gp. Capt. Karan Singh
Bhati. Ms. Aishwnrya Bhati. Jaidccp Singh, T. Gopal, Amit Verma, Ms.
Ritu Apoorva, Ms. Tanuja Patra, Ms. Hina Khan, Vishwaject Singh,
Ms. Vanita Bhargava, Ajay Bhargava, Jccvan B. Panda, Ms. Abhisaar
Bairagi, Mis. Khaitan & Co .• Ms. Manjeet Kirpal, T. G. Narayanan
G Nair, Abhishck Chaudhary. Kamlendra Mishra. Mis. Vivck Gupta,
Jitcndra Mohan Sharma, Gaurav Dhingra, Raj Singh Rana. Mis. M. Y.
Kini & Associates, Rameshwar Prasad Goyal, Anil Kumar Jha, Sanjay
KumarTyagi, E. <;:. Vidya Sagar, Ms. S. Usha Rcddy,Adarsh Upadhyay,
A. N. Arora, Jail), Aniruddha P. Maycc, Pradccp Misra, Dr. Harshvir
H
STATE Ol'UTTARAKHAND & ORS. v. M/S. KUMAON STONE .617
CRUSHER

Pratap Sharma, K. S. Rana, Ms. Shefali Mitra, Gaurav Agarwal, Bharat A
Sangal, Ms. S.S. Reddy, Ms. Vidushi Garg, Ms. Isha Gupta, Ms. Vernika
Tomar, Ms. Anindita Deka, U.A. Rana, Himilnshu Mehta, Avirat Kumar,
Mis. Gagrat and Co, Advs. for the appearing parties.
The Judgment of the Court was delivered by·
ASHOK BHUSHAN, J. 1. Delay con~oncd. Leave granted.· B

2. This batch of cases relates io levy .of transit fee. Transit fee
levied by three States, i.e., State ofUttar Pradesh, State ofUttarakhand
ahd State of Madhya Pradesh is in question.
3. In exercise of power under Section 41 oflndian Forest Act , C
1927 (hereinafter referred to as" l 927 Act) rules have b.een 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 ofUttarakhand by 2001 Rules. State ofMadhaya D
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,
Uttarakband High Court and High Court of Madhya Pradesh challenging
the levy of transit fee, validity of transit fee Rules and for other reliefs. E
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 Comt has
allowed the writ petitions by a common judgment dated 14.05.2007. The
State of Uttarakhand and State of Uttar Pradesh lias filed SLPs, in
F
.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. G
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 ofUttarakband challenging various judgments ofUttar,akband
High Court by which writ petitions filed by the different writ petitioners
H
618 SUPREME COURT REPORTS [2017] l l S.C.R.

A for quashing the levy of transit fee were allowed. The second group of
appeals consists o~ appeals filed by the State of U.:P. challenging the
judgment of Allahpbad High Court dated 11.11.20 l l and few other
judgments by whiclit writ petitions filed by the writ petitioners have been
allowed. Third gr11up of appeals has been filed by the writ petitioners
B 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
C 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 Cowts,
i.e., Uttarakhand, Allahabad and Madhya Pradesh.
D 7. The parties shall be hereinafter referred to as described in the
writ petitions filed before the High Court.
FACTS
I. CIVIL APPEALS ARISING OUT OF JUDGMENTS OF
E UTTARAKHAND HIGH COURT.
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 juclgments.
F
(1) Judgment «Jated 01.07.2004 in Writ Petition No. 1124 (M-
B) of 2001, M/s Kumaon Stone Crusher vs. State of U.P.
& Ors.
(Giving rise to Civil Appeal (arising out of SLP No. 19445
G 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. Mis Kumaon Stone Crusher filed a writ petition praying for
H
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 619
CRUSHER [ASHOK BHUSHAN, J.]

quashing the order dated 14.06.1999 issued by Conservator of Forest A
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
bankofSharda River, which is a Forest-Produce, Transit Fee is charged
B
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 Fores! Produce
and no Transit Fee can be charged and recovered thereafter.
I 0. The Division Bench vide its judgment dated 01.07 .2004 allowed c
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. N0.310
OF 2005, M/s. Kumaon Pea Gravel Aggregated D
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)]
E
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 F
customers, Transit Fee is charged by State ofUttarakh.and 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.
G
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

H
620 SUPREME COURT REPORTS (2017) 11 S. C.R.

A ceases to be a Forest Produce. High Court allowed the writ petition
holding that no 'Ilransit Fee can be realised. It was further observed that
even if, same is t~ated as Forest Produce, Transit foe can not be realised
twice on the same material under 1978 Rules. Both State ofU.P. and
Uttarakhand had filed Civil Appeals against the aforesaid judgment.
B (3) Judgment dated 26.06.2007 in Writ Petition No. 993 of
2004, Mis 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
c Pass and Transit Fee for boulders, sand and bajri, farther 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 stom:s, boulders, sand &
D bajri and supplylng 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 (Com:ession) Rules, 1963
(hereinaJler refenred'to as 'Rules, 1963') has been adopted by the State
E of Uttarakhand, as Uttaranchal Minor Minerals (Concession) Rules,
200 l(hereinaftet referred to as 'Rules, 200 I'). Uttaranchal Forest
Development Corporation issues Form MM- I I 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
F the Mines and Minerals (Development & Regulation) Act, I 957
(hereinafter refe!lfed to as 'MMDR Act, 1957'), no Transit Fee can be
levied on the wril petitioner. The High Court allowed the writ petition
holding that Trat11sit Fee under Rules, 1978 can not be applicable on the
transit of minor minerals. The levy of Transit Fee was held to be illegal.
G 16. Following the aforesaid judgment dated 26.06.2007 several
other writ petiticms were decided giving rise to different other Civil
Appeals, which are Civil Appeal No. I 0 I 0 of 2011, Civil Appeal(arising
out of SLPNo. 18094 of201 l) and Civil Appeal (arising out ofSLPNo.
26285 of2011 ).
H
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 621
CRUSHER [ASHOK BHUSHAN, J.]

II. CIVIL APPEALS ARISING OUT OF JUDGMENTS OF A
ALLAHABAD HIGH COURT '-
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 B
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 c
numbering more then 100 have been decided. We shall notice these two
judgments first before referring to facts of other cases.

CIVIL APPEAL NOS.2739-2762 OF 2008
D
. (KUMAR STONE WORKS & Ors. VS. STATE OF U.P. & ORS.)
(arising out of judgment datc,d 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, E
morrum, coal, lime stone, dolomite etc. The writ petitioners have also
challenged the validity ofnotification dated 14.06.2004 by which 1978
Rules were amended increasing the transit fee from Rs.5/- to Rs.38/-
per tonne oflorry 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 F
bas noticed details of few of the writ petitions facts of only leading
petition which need to be briefly referred:
20. Writ Petition No.975 of2004, which was stated to be leading
writ petition:
G
Petitioners have been granted mining lease by the District ·
Magistrate, Sonebhadra, for excavation of boulders, rocks, sand and
morrum in the District ofSonebhadra 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
H
622 SUPREME COURT REPORTS [2017] l l S.C.R.

A in the forest area. After excavation they transport the goods from the
site to the destiJllation by truck. The petitioners convert the stone and
boulder into Gitt!. It was further pleaded that while transporting the goods,
they do not pa$ through the forest area and they are not using any
forest road for tlie pw·pose of transportation of their goods. They pay
royalty to the St~te Government under the provisions of the U.P. Minor
B
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 arc carrying out mining operations in the forest land.
With regard to some of the petitioners it was alleged that they are carrying
c 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
D 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 Stqte of U.P. vs. Sitapur Packing Wood S11pp/iers, 2002
( 4) SCC 566. Tl)c Court upheld the 2004 Amendment. The High Court
also held that th~ words "brought from forest" as occurring in Section
2(4)(b) of the 1927 Act, necessarily implies that it passes through the
E 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 arc passing through forest, hence, petitioners cannot deny liability
to pay transit foe. The increase of transit fee to Rs.38/- can neither be
F 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
G
State of U.P.& Ors. vs. Mis. Ajay Trading (Coal)Co.& Ors.
(arising out of the judgment dated 11/21.11.2011) in Writ Petition
No.963 of 201J - M/s. Ajay Trading (Coal)Co.& Ors. vs. State
U.P. & Ors.)
H
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 623
CRUSHER [ASHOK BHUSHAN, J.]

23. By judgment dated 11.11.2011, two batches of writ petitions A
were decided. First batch consisted of Writ (Tax) No.327 of2008(NTPC
Limited & another vs. State of U .P. and others) and other connected
matters and second batch consisted of Writ (Tax) No.963of2011 (Mis.
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 B
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 oflndia 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 c
from non-forest 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 FifthAmemlment Rules, 1978.
25. The second group of writ petitions of which Writ (Tax) No.963 D
of 20ll(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./Privatc Lt. Co./Proprictor Firm Manufacturers
and Traders of goods made of forest produce, the miners, as transporters
of forest produce who challenged the applicability oflndian Forest Act, E
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 gr'ounds, some common and some different.
F
26. The Division Bench by its judgment dated 11.11.20 l l 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
G
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 11.11.20 l l reiterating their claim
that they are not liable to pay transit fee on various grounds as raised in H
i"
624 SUPREME COURT REPORTS [2017] ll S.C.R.

A 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
B
and claims as rais~d in few cases of each group:
Group( A) T~is 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
c categories of petitioners who are only transporting the minerals from
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, bo.ulders etc. are
D minerals which are covered under MMDRAct, 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
E 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 /softcokp /cinder (rejected coke). Petitioners claim that coal
is not forest produce and it is governed by various Parliamentary Acts
F 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
G 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 oflimestone, calcium hydroxide,
marble, calcium oxide, dolomite, pawdis, etc. Petitioners claim that the
aforesaid items arc not forest produce. They further pleaded that they
H are using State and National highways as well as PWD roads and not
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 625
CRUSHER [ASHOK BHUSHAN, J.]

using any forest road. They further pleaded that twice transit fee· is A
cl_iarged, firstly on raw material and secondly on the finished products
by Fourth and Fifth Amendnient.
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 B
area in U .P. They are not transporting any forest produce rather are
transporting finished goods. Petitioners are purchasing timber which is
coming into the country. ·
Group(E) This group consists of petitioners dealing in fly ash,
.clinkers and gypsum. Petitioners claim to obtain the aforesaid material c
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 of2004, Ml
s. kumaon Stone Crusher, decided on 0 l .07 .2004. Group 'B' consisting D
?f petitioners who are dealing in coal/hard coke/coal briquettes/soft coke/
cinder(rejectedcoke), etc. C.A. No.2706 of2008 (M/s. Krishna Kumar
Jaiswal vs. State ofU.P. & Ors., is one ofslich writ petitions which was
dismissed by the High Cowi on 27.04.2005.
29. In group 'B' reference is made to Civil Appeals arising out of E
SLP(C)Nos.34909-34916 of 2012 (M./s. Anand Coal Agency & Ors.
etc.etc. v.s. State ofU.P. & Ors. etc.etc.). The writ petitioners-appellants
are involved in trading of coal. Petitioners gel 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 ofU.P. by road and
do not use forest roads. The coal is transported only by National highways F
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 Act.
30. Another case in this 'Context is Civil Appeal arising out cif
SLP(C)No.981 of2012 (Lanco Anpara Power Ltd. vs. State ofU.P. & G
Ors.). The writ petitioner-appellant is a Company carrying on the business
in generation, distribution and sale of electricity in the State ofU.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 H
626 SUPREME COURT REPORTS [2017] I l S.C.R.

A produce as referred to in Section 2(4)(b)(iv) is that the genesis of the
produee in question must be traceable lO 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
B SLP(C) No. 36472 of201 I (Agra Stone Traders Association & Ors. vs.
State of U .P. & Ors., the writ petitioners-appellants are engaged in the
business of purfhasing and selling of marbles. marbles goods, marble
chips, stone chi!Js. stone powder. dolomite, limestone chips and pawdis
from the State of Rajasthan, Madhya Pradesh, Karnataka, Andhra
Pradesh, Orissa. etc. from various wholesale shopkeepers. industries/
c factories situated in the above said States. After purchasing tbe 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 arc not directly transported from mines
nor the same are in original form of mines and minerals. The petitioners
D have all neccss~ry passes and invoices from different States. However,
when petitioner$' vehicles enter into the State ofU.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 (Mis.
E Aditya Birla Chemicals (India) Limited vs. State of U.P. & Ors.). The
writ petitioner-appellant is a public limited company who is engaged in
the business of J!nanufacture of chemicals and uses calcium hydroxide
and calcium oxjde. 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
F as limestone. that contain calcium carbonate in a lime kiln which is
accomplished by beating the material to above 825 degree centigrade.
These products were also purchased from registered traders/
manufacturers of the State of Rajastban after obtaining invoices and
passes. On such transportation the State of U.P. is levying transit fee.
G 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 petitioner-appellant carries on the business of
supplying bamboo, waste of plywood and small twigs/debarked jalawani
H
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 627
CRUSHER [ASHOK BHUSHAN, J.]

lakdi of eucalyptus and poplar trees to paper manufacturing units. The A
paper manufacturing units, to which the petitioner supplies arc situate in
the State ofHaryana, 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. B.
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 arc 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 C
SLP(C)No.5760 of2012 (Ambuja Cements Limited vs. State ofU.P. &
Ors.). The writ petitioner-appellant 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 D
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 E
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.
III. TRANSFER PETITIONS. F

35. Transfer Petition No.18 of2012 has been filed under Article
I 39A for transferring the Writ Petition No.40 of 2000 pending in the
High Court ofJudicatw·c at Allahabad. The writ petitioner is engaged in
busine~s of manufacturing and dealing in aluminium and semis. Hindalco
owns and operates the Aluminium plant at Renukoot and captive thermal G
power plant is at Renusagar. Hindalco uses both bauxite and coal in the
production of aluminium.
36. In December, 1999, the State ofU.P. demanded transit fee on
transport of minerals· (bauxite and coal). Aggrieved thereby Writ
Pctition(C) No 40 of 2000 was filed. An Interim order was passed on H
628 SUPREME COURT REPORTS (2017] ll S.C.R.

A 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 pcititioner's case is that in SLP(C) No.11367 of 2007,
Kanhaiya Singh & Anr. Versus State of U.P., the same question is
B engaging attention of this Court, hence, the Writ Petition filed by the
petitioner be transferred and heard along with the aforesaid Special Leave
Petition.
38. Transfer Petition No.44 of 2012 has bt:en filed to transfer
Writ petition(tax) No.1629 of2007 to hear it with SLP(C) No.11367 of
c 2007. The petiti<1>ner 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 Governm¢nl.
D
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. E\len though the payment of any levy is the responsibility
of contractors who are lifting the fly ash. The petitiom:r filed Writ Petition
E No.1629 of2007 ~hallenging 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 of2007.
40. Transfer Petition N o.76 of 2012 has been filed by Aditya
F Birla Chemicals (India) Ltd. for transfer ofWrit Petition no. JO 1 of2008
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
G petitioner has set lip coal based thermal power plant at Renusagar. Fly
ash is generated f~om 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
H
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 629
CRUSHER [ASHOK BHUSHAN; J.]

ofU.P. Started demanded transit fee on supply of fly ash. After filing A
the Writ petition the various developments took place including decisions
on bunch of writ petitions ofl 1.11.2011.
41. The petitioner case is that similar issues are pending in SLP(C)
No.11367 of2007 and Writ Petition be transferred and heard along with
the aforesaid Special Leave Petition. This Court in all the above three B
Tnmsfer Petitions, on 19.11.2012 passed an order to take up these matters
along with the SLP(C) No. ll367 of2007.
IV. CONTEMPT PETITIONS
42. Contempt Petition No.251 of2008 in I.A.No.7 of2008 in Civil
Appeal No.2797 of 2008, the members of applicants association are C
plying public transport truck carrying minor minerals like boulders, sand,
stone, dust, etc. Trucks do not enter into any forest area nor use 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 D
has also been impleaded in C.A .. No. 2797 of 2008. It is pleaded that
despite the knowledge of illterim 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.
E
43. ContemptPetition(C) No.199-201 of2014 in SLP(C) No.31530
of201 l 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 ofU.P., Transit fee is
demanded. It is contended that in SLP(C) filed by the applicants this F
court on 02.12.2012 stayed the recovery of transit fee. Applicants case
is that despite the knowledge ofinterim 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 G
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 of2007.
H
630 SUPREME COURT REPORTS [2017] l l S.C.R.

A V. CIVIL APPEALS AGAINST THE JUDGMENT DATED
14.05.2007 Of THE MADHYA PRADESH HIGH COURT
45. The State of Madhya Pradesh has filed appeals against a
conunon judgment dated 14.05.2007 of the High Court of Madhya
Pradesh. Civil Appeal arising out ofSLP(C)No.6956 of 2008 has been
B filed against the conunon judgment rendered in six writ petitions which
also included Writ Petition No.2309 of2002 (Northern Coalfields Limited
vs. State of Madhva Pradesh and ors.
46. The writ petitioners-Northern Coalfields Limited is engaged
in -excavation and sale of coal. The State of M.P. framed M.P. Transit
c (Forest Produce) Riules, 2000 for imposing transit fee. The writ petitioner
pleaded in the wrlit 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 ofM.F. fixing fee of Rs. 7/-per metric tonne was challenged.
D Following reliefs were sought in the writ petition:
"i) Issue am appropriate writ/writs, order/orders,
directionl4irections to quash the authorisation of
imposing transit passes on movement of coal under .MP.
Transit paS$ (Forest Rule) 2000 ANNEJ.'7JRE-PII.
E
ii) To quasi! the fixation of rates of fees for issuance of
transit passes ANNEXURE-P/2.
iii) To quash the demand for payment offees for transit
of coal ANNEJ.'7JRE-P/3
F iv) To gra/lt 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 th@ M.P. High Court. In some of the writ petitions prayer
G was also made for issuing writ of mandamus declaring Section 2(4 )(b )(iv)
and Section 41 oftille 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.

H
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 631
CRUSHER [ASHOK BHUSHAN, J.]

48. Counter-atlidavit was filed by the State contending that as A
per Section 41 of 1927 Act, the State is conferred with a power to make
rules to regulate the transit of all timber and other forest-produce.
49. The High Court after hearing the parties and considering the
submissions· by the impugned judgment quashed the notification dated
28.05.200 I by which fee ofRs.7/-was fixed. The High Court also directed B
refund of the amount in a phased manner within 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. c
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 be~alf of the
States have been referred to as on behalf of the ~talc,
VI. Submissions with regard to tfig !udgment ofUttarakhand High D
Court
52. As noted above both the State of Uttarakhand and State of
U.P. have challenged thcjudgment of Uttarakhand High Court. Shri
Dinesh Dwivedi, learned senior counsel questioning the judgment dated
01.07.2004 ofUttarakhand High Court in M/s. Kmnaon Stone Crusher E
vs. State ofUttarakhand, 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
F
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 G
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
H.
632 SUPREME COURT REPORTS [2017] ll S.C.R.

A that transit pass has its destination and after it reaches its destination,
the pass comes to an end, the transit fee can be validly charged.
53. Replying the above submission of State, learned counsel for
writ petitioners $ubmits that main challenge in the writ petitions filed by
petitioners was that no Transit Fee can be levied on finished products
B from the stone c~usher. 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 byword 'when', which denotes
c 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 furthertransit of
D such material being material not brought from forest shall not attract tax
under Section 41 of Act, 1927.
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, I 927 does not provide for
E 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 ofTransit 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
F only on endorsement and the insistence of levy ofTransit Fee at the time
of second transit is irrational and unreasonable.
55. Learned counsel forthe State ofU.P, challenging the judgment
of High Court ofUttarakhand has also raised the similar submissions as
has been raised by the learned counsel for the State of Uttarakhand.
G
VII. SUBMISSIONS RELATING TO JUDGMENTS OF THE
ALLAHABAD HIGH COURT.
56. Following are various submissions on behalf of several writ
petitioners and their reply by State:-
H
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 633
CRUSHER [ASHOK BHUSHAN. J.]

(i) (a) The products which are being transited by them or on their behalf A
arc not Forest Produce since they have undergone manufacturing process
resulting into a new commodity. All the writ petitioners supported the
judgment of Uttarakhand High Corn1dated01.07.2004 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
B
& chips etc .. They submitted that in the stone crusher. factories, boulders
and stones obtained from different mining lessees arc subjected to a
process by which different items arc formed thereby losing their character
ofForest Produce. Several other materials like lime stone, fly ash. clinker,
calcium hydro-oxide and calcium oxide, cinder, gypsum are also obtained
after undergoing a manufacturing process, which arc no longer a forest c
produce. Another group of petitioners who deal with marble stone. stone
slabs and tiles also raise similar submission that marble slabs arc 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 D
·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 non-lcviability of transit fee
·is claimed comprises of coal, bard coke, finished coal, coal briquettes,
soft-coke. 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. E
It is further submitted that in view of Mines and Minerals (Development
-& Regulation) Act, .1957 (hereinafter referred to as 'MMDRAct, l 957)
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'). F
(c) The above submissions of writ petitioners have been refuted
by learned counsel appearing for State ofU.P. and State ofUttarakhand.
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 G
& chips obtained after crushing arc 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 ai1icles
- the State has refuted the submission and it is submitted that all the articles
H
634 SUPREME COURT REPORTS [2017] ll S.C.R.

A 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
B 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 for as. fly ash, clinker and
synthetic gypsum arc concerned, the State does not claim them to be
Forest Produce and no Transit Fee shall be charged on fly ash, clinker
C 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.
D With other articles, with regard to which, it is claimed that by
manufacturing process and chemical treatment they arc 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 & .I 978 Rules is based on 1957 Act. It is
E submitted that 1957 Act is enacted by the Parliament in reference to
Entry 54 of List l 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
F 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. lt 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
G
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
H provisions of Section 41 of Forest Act, due to the repugnancy to the
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 635
CRUSHER [ASHOK BHUSHAN, J.)

provisions of 1957 Act shall stand overridden. The transit and A
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
B
and Transit Fee Rules, 1978 framed thereunder shall stand impliedly
repealed after enactment of 1957 Act, especially after insertion of Section
4( IA) 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 repugnancybetween a parliamentary statute and a statute
of State legislature arises when the two laws operate in the same field, c
they collide with each other. It is submitted that subject matters of 1927
Act and 1957 Act arc 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 I 957 D
Act deals with mines and minerals wealth. He further submits that I 957
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 w1der Section 41 shall be lost and the E
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 arc different. Their powers arc different, officers arc F
different, consequences of breach are different and both provisions
operate in different fields. It is thus submitted that the provisions of
Indian Forest Act, l 927 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.
G
(iii) (a) It is submitted that Division Bench of the Allahabad High Court
in K11111ar Stone Works and others by its judgment dated 27.04.2005
has mis-interpreted the words "brought from" as contained in Section
2(4)(h) 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
H
636 SUPREME COURT REPORTS (2017] l l S.C.R.

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 thmgs mentioned in
sub-clause (I) of sub-section (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
B
produce to be forest to be brought from forest means it is stiu1ing 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
c 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
vide its order dated 04.03.2008 in Mis. Nagarj1111a Co11structio11 Ltd.
has already expressed its disagreement with the Division Bench judgment
D in Kumar Stotte H1tJrks and others v. State of U.P. and others, 2005
(3) AWC 2177, and referred following two questions for consideration
of the larger Bench:
i. Whether the words 'brought from' used in sec/ion 2(4)(b)
of the Indian Forest Act would cover such items mentioned
E in sub-clauses (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
F correct? Let the papers be placed before !he Hon 'b/e Chief
Justice for appropriate orders."
(c) lt is submitted that the Division Bench ofAllahabad High Court
while delivering the judgment dated l l. l l .201 l although noticed that the
above questions have been referred to for consideration ofa larger Bench
G did not await the judgment of larger Bench rather chose to follow the
Division Bench judgment in K11111ar Stolle Worlcs.
( 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'.
H
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 637
CRUSHER [ASHOK BHUSHAN, J.]

It is submitted that any other interpretation would render the term to be A
in conflict with the tenn '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 B
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 c
expansive 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 D
Bench ofUttarakhandHigh Court in Mis. Gupta Builders in Writ Pe'tition
No.993 of 2004 giving rise to C.A.No. 1008 of 20ll(State of Uttar
Pradesh vs. Mis. 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.
E
(b) The above submission oflearned 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 Thiru11111/kpad vs.
U11ion ofIndia and others, 1997 (2) SCC 267, is to be followed and
the Division Bench in its judgment dated 11.11.2011 has correctly F
interpreted the word 'forest'.
(v) (a) Some of the writ petitioners have submitted that although they
arc 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 G
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.
H
638 SUPREME COURT REPORTS [2017] 11 S.C.R.

A (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 ofhis submission he refers to notification dated I 0.02.1960 issued
under proviso to sub-section (3) of Section 29 as well as Section 80A of
B
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 saI1Je has no correlation with each other. Ruic 3 and
Schedule Anowhe~e contemplates or has a column prescribing charging
c of a fee. It is submitted that transit fee is chargeable on transit pass
issued under Ruic 4(b) which is required to be checked under Ruic 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 Ruic 4(1)(b) and checked under Ruic 6(4).
D (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
E has been issued under Section 20 of 1927 Act but still the Forest
Department treats several areas in the District of Soncbhadra 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
F 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. Kesoram
b1d11stries a11d Or~-., (2004) JO SCC 201 where Constitution Bench
held that Union's power to regulate and control do~'S not result in depriving
G 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 amt Chemicals Ltd. etc. vs. State of U. P. and
H
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 639
CRUSHER [ASHOK BHUSHAN, J.]

Ors., (1990) J sec 109. It is submitted that with regard to the A
interpretation put by the Constitution Bench in State of West Bengal v.~.
Kesoram Indastries (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 A11tltority of llldia & Ors., (20Il) 4
sec 450.
B
(ix) The State ofU .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 l l.l l.2011, Third
Amendment Rules shall not revive. Third Amendment Rules are not in
existence.
c
VIII. Following arc 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 D
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
other.~, 2002(4)See 566, has upheld the validity of 1978 Rules and has
pronounced that transit fee is regulatory in nature and for regulatory fee
quid pro quo is not necessary. The High Court for its judgment has
relied on Jindal St<d11/ess Ltd.(2) and Am: Vs. Stale ofHaryana and E
Ors., 2006 (7) SCC 241, which has been overruled by 9-Judgcs
Constitution Bench in Jindal Stainless Ltd. & AllT. v. State ofHaryaua
& 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 F
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 disprop01tionate. The finding of the High Court that the State
had not provided any data to justify the increase in transit fee is incorrect G
s.i nee 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
H
640 SUPREME COURT REPORTS [2017] l l S.C.R.

A after Fifth Amendment. The value of timber and other forest-produce
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 ground.
B 58. Learmid counsel for the writ petitioners have vehemently
opposed the above submission and supported the judgment of the High
Com1 striking down the Fourth and Fifth Amendment Rules. It is submitted
that Jindal Stai1tless (2) overruled by the judgment of 9-Judges
constitution Bench docs not have much bearing in th1: facts of the present
case. The High CoUJ1 independent ofreliance placed on Jindal Stainless
c (2) has hdd that transit fee is excessive in nature and the State ofU.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 forcst-
D produce. The Hig~ Court in paragraph l 77 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 whiqh 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
E 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 dcta1il of expenditure which it has actually incurred in
regulation oftran$it of the forest-produce.
59. Learned counsel for the writ petitioners have demonstrated
F 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 adva/orem basis which is generally adopted
for levying a tax and not a fee. The charging of transit fee by Fourth and
G 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 <1 tax, which is not permissible under law.
60. Aller noticing the respective submissions of both parties, we
now proceed to consider them in the same scriatum.
H
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 641
CRUSHER [ASHOK BHUSHAN, J.]

IX. Whether by Manufacturing process/chemical Treatment as A
claimed bv the writ petitioners. the forest produce looses
its character of forest produce.
61. We first take the case of stone boulders which arc 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 B
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 arc 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
c
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 D
Two Judge Bench in Sures/I Loltiya vs. State of Jlfaltaraslttra and
auotlter, (1996) JO 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: E
"2. (6) 'timber' includes trees when they have fallen or have
been felled, and all wood whether cul up or fashioned or
hollowed out for any purpose or not; and
2. (7) 'tree' includes palms, bamboos, stumps. brushwood
and canes." F
63.The above judgment of this court was based on 'consideration
of definition of timber and tree' as given in Section 2 (6) & 2 (7). This
Court held that definition of timber included tree and all wood whether
cut or fashioned or hollowed out for any purposes. This Court held that
said definition oftimber cannot be read in definition of tree which includes G
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 case.

H
642 SUPREME COURT REPORTS [2017] ll S.C.R.

A 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 products, so as IQ attract the tax on their sale. The
B
case of dealer wa~ that at the time of purchase of goods sales tax has
been paid hence, goods emerging out of same arc 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:
c "'5. The view taken by the Tribunal as affirmed by the High
Court is that the goods co/1/inue to be stone and they are not
commercially different goods lo be identified differently for
the purposes of' sales tax. The decision relied on by the
minori~v view in the Tribunal in Reliable Rocks Builders &
D Suppliers v. State of Karna/aka turned on tlze concept of
consumption uf guuds fur the purpose uf bringing into
existence new goods. In that case the Court was not
concemed with an entry of the nature with which we are
concerned in the present case. Where the dealer had brought
into existence neiv co111n1ercial goods b_v co11sun1ing the
E boulders to bring out small pieces of stone, it was held that
such activity attracted purchase tax. Jn the present case,
however. stone, as such, and gitti and arTicles of stones are
all of similar nature though by si:e they may be different.
Even (l gitti, kankar, stone ballast. etc. may all be looked
F llJJOl1 as separate in comniercial character j'rom stone
boulders offered for sale in the market, yet it cannot he
presumed that Ent1:i1 40 of the notification is intended tu
describe the same as not stone at all. fn fact the term "stone"
is wide enough to include the various forms such as gitti,
kankar. stone ballast. fn that view of the matte1; we think
G 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 character of the
stone remains the same, even after, crushing the boulders into small
H
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 643
CRUSHER [ASHOK BHUSHAN, J.]

stones, dust etc. Reliance by the writ petitioner is also placed on judgment A
in (2003) 3 SCC 122, Tej Ba/1ad11r Dube (Dead by Lrs.) vs. Forest
Range Officer F. S. (S. IV.), 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 asscssee was found
transporting finished sandalwood products. He was charged with the
B
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 arc 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: c
"6. As noticed above. the original appellant 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 D
types of handles which are ultimately used in other
sandalwood handicrafts which permission was valid up to
31-12-1982 period covering the period of sei::ure. The
appellant had contended that it is pursual1t to the said
permission he had converted the sandalwood pellets into
handles to be 11sed in the other sandalwood artefacts and E
he had informed the authorities concerned about such
conversion as per Exts. P-18 to P-27. ft 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 F
sandalwood which requires a transit permit. The trial court
has agreed with this submission of the appellant. We also
notice under the Rules and the Act what is prohibited is the
transportation of sandalwood as defined in Section 2(o) of
the Act and not sandalwood products which have been
converted into such products after obtaining proper G
permission jYom the authorities. Such converted sandalwood
products 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 H
644 SUPREME COURT REPORTS [2017] 11 S.C.R.

A permit is required. On the contrary, the respondent argues
that even converted sandalwood products require transit
permit because they remained to be sandalwood as
contemplated under Section 2(o) of the Act. In the absence
of any specific rules or provisions in the Act tu this effect.
we are unable to agree with this argument. We are of the
B
opinion that once sandalwood is subjected to a certain
process from which a sandalwood product is lawji11/y
obtained. then such product ceases to be sandalwood as
understood in Section :J(o) of the Act. "
66. The above case also does not lend any support to the case of
c writ petitioners. In the above case, appellant had obtained permission of
the competent authority for converting the sandalwood into various types
of handles hence, the transportation was not found violative of rules.
67. In this context, it is necessary to refer to a Three Judge Bench
J udgmcnt of this court in Kamataka Forest Development Corporation
D Ltd. vs. Ca11treads Private Limited a11d 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 consideration. After noticing the various
dictionary meanings of caoutchouc, it was held that since processing
E does not result in bringing out a new commodity but it preserves the
same and rendered it fit for markets, it does not change its character
hence, it remained a Forest 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
F 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
G 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 ofUttarakhand dated 01.07 .2004
in K11111ao11 Stone Crusher deserves to be set aside in so far as above
H aspect is concerned.
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 645
CRUSHER [ASHOK BHUSHAN, J.]

70. Now, we come to the case of_marble slabs & tiles, chips etc. Writ A
Petitioners have placed reliance on Three Judge Bench Judgment in
Income Tax Officer, Udaipur vs. Aril1ant Tiles a11d ·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
B
'manufacture or production' so as to entitle the assessee relief under
80-1A(2)(iii). This Court held that process which was applied by the
assessec will come in the category of 'manufacture or production'. In
para 16 of the judgment following was stated:
"16. In the present case, we have extracted in detail the
process undertaken by each of the respondents before us. C
Jn the present case, we are not concerned on(v 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 D
various stages through which the blocks have to go through
before they become polished slabs and tiles. Jn the
circumsrances, 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 "production" under
Section 80-IA of the Income Tax Act. " E

71. In the above view, this Court held that assessee was entitled
for the benefit of Section 80-1 A of the Income Tax Act, 1961. The
above case was directly concerned 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 F
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 judgment does not help in the
present case.
72. This Court in Akbar Badrttdi11 Gbvtmi vs, Collector of G
Customs, Bombay, (1990) 2 SCC 203, again reiterated that the general
principle of interpretation oftariff 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
H
646 SUPREME COURT REPORTS [2017) l I S.C.R.

A Produce as defined in Act, 1927 has to be taken in its botanical and
scientific sense.
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 Qn transit of aforesaid goods.
B
74. It goQs without saying that on forest produce which arc
exempted by notification issued under Proviso to Rule 3 of 1978, no
transit foe is lcviable. One of such notification dated 29.03.2010 has
been brought on record.
X. Whether coal (and its various varieties), lime stone, dolomite,
c fly ash, clinker, gypsum, veneer and plywood arc 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,
D lignite, bituminous and anthracite. The stage depends upon the conditions
to which the plant remains arc subjected after they were buried - the
greater the pressl)re and heat, the higher the rank of coal. Higher-ranking
coal is denser and contains less moisture and gases and ha~ a higher
heat value than lower-ranking coal.
E 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 sitm\ted beneath forest lands and clearance for mining of
the same from forest lands. Coal, thus, is clearly a forest produce.
F 77. Hard ~oke and soft coke are made from coal. Coke can be
formed naturally as well as by synthetic method. Hard coke, soft coke,
coal briquettes ate all different variations of coal which do not shed their
natural characteristic and arc all forest produce.
78. Limestone is express! y mentioned in definition of forest produce,
G slake lime/quick lime/hydrated lime are all produce oflimestone. Fw·ther,
produce known quicklime is produced by heating oflimestone, upon which
limestone breaks down into Calcium oxide (quicklim1:) and carbon dioxide.
That upon adding water to the same, the quicklime is converted into
slaked lime and tl1creafter, upon being carbonated, the produce will revc11
to its natural state of being limestone. Hence, the said process does not
H
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 647
CRUSHER [ASHOK BHUSHAN, J.J

change the nature of the product, as the basic ingredient is essentially A
limestone. and merely upon heating and addition of water, the nature of
the produce i.e. limestone, does not chang~. Hence, limestone is a forest
produce.
79. Dolomite is a sedimentary rock. Dolomite is formed by the
post depositional alicration oflime mud and limestone by magnesium- B
rich ground water. Dolomite and limestone are very similar stones and
arc 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, c
fly ash, clinker and synthetic gypsum arc 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 arc cut D
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 veneer
arc nothing but cut-up logs. The process of manufacturing involves placing E
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
thickness, 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 docs not change. hence, it comes
F
within the definition of timber and forest produce.
XI. FOREST ACT 1927 & MMDR ACT, 1957
83. We now proceed to consider the impact of 1957 Act on Forest
Act, 1927 and the Transit Fee Rules 1978 framed nnder Section 41 of
1927 Act. The Indian Forest Act, 1927 is a pre-constitutional legislation G
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 oflndia, 1927 Act continues in force
until altered or repealed by a competent legislation. The 1927 Act was
H
648 SUPREME COURT REPORTS (2017] 11 S.C.R.

A enacted to consolidate the law relating to forests, the transit of forest-
produce and the cluty Jeviable on timber and other forest-produce. The
1957 Act was enacted for regulation of mines and clevdopment 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:
B '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
c mines and miner11l 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 Union. "
85. Entry 23 of List II has been made subject to provisions of
D 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 compclence regarding mineral. its regulation or transportation.
E Learned counsel for the writ petitioners have referred and relied on the
various pronounqements of this Court in referem:e 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.
F 87. The Ccmstitution Bench judgment of this Court in Hillgir-
Rm11pur Coal Co., Ltd. and otlters vs. Tlte State o/Orissa and otlters,
AIR 1961 SC 459, needs to be noted. The State ofOrissa has enacted
Orissa Mining Neas Development Fund Act, 1952 by which levy and
demand was raised. The appellant challenged the enactment on the
G 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 .... .lf 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
H
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 649
CRUSHER [ASHOK BHUSHAN, J.]

the jurisdiction of the State Legislature is excluded. In other A
words, if~o Centro/ Ac.I hos been passed which contains ~
dee/oration by Parliament as required by Emry 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 statlltes but B
because the State Legislature had no jurisdiction to pass the
law. The /imitation 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 C
Minerals(Development and Regulation) Act, 1948. This Court repelled
challenge to the 1957 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. T11llocli and Co., 1964(4)SCR 461. Orissa Mining D
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 E
declaration as contained in Section 2 which ls to the following effect:
"Section 2.Declaration as to tlte e.<rpediency 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 F
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" · G
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 th(! ext(!nt 9f that "control" be superseded or be rendered · H
650 SUPREME COURT REPORTS (2017) II S.C.R.

A 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
n1ade."

B 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 dlisappear. 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
c 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 IL The present is a case where we are concerned
with a pre-constitutional legislation which is 1927 Act which has been
D continued as per Article 372 of the Constitution. Article 372 sub-clause
(I) is as follows:
"372.Contin11ance in force of existing laws and their
adaptation.- (1) Notwithstanding the repeal by this
Constitution of the enactments referred to in Article 395 but
E subject ti,/ the other provisions of this Constitution, all the
laws in f&rce 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. "
F 93. The law which has been continued in force by virtue ofArticle
372 is to continue until altered or repealed or amended by a competent
legislature. Several pre-constitutional laws which have been continued
under Article 372 came before this Court for consideration wherein
Article 254 was also considered.
G 94. A Constitution Bench of this Court in B.V. Patattkar and
others vs. CG Sastry, AIR 1961 SC 272, had occasion to consider
Mysore House Rent and Acco.mmodation Control Order, 1948, which .
was a pre-constitution law and by Part B States (Laws) Act, 1951
extended the operation ofTransfer of Property Act, 1882 in the State of
H Mysore. In the above case arguments were raised that the House Rent
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 651
CRUSHER [ASHOK BHUSHAN, J.]

and Accommodation Control Order, 1948 as extended in Mysore from A
April, 1951 became repugnant and was repealed. It was l:!eld that the
·pre-constitutional 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 Rem Comrol Order of B
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 Representatfres c
and others vs. Chandrika and others, 2016 (6) SCC 157, a Constitution
Bench of this Court had occasion to co_nsider a pre-constitutional law,
i.e., Travancore"Cochin High Court Act in the context of Code of Civil
Procedure{Amendmen\) Act, 1976. In the above.case an earlier judgment
of this Court, namdy, Kulwant Kaur and others vs. Gurdial Singh .
Mann (Dead) by Lrs. And others, 2001 (4) SCC 262, came to be D
consid~red wherein· this Court ruid 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 Jaw for the silnple reason
that it is not a Jaw made by the legislature of a State. but is ail existing
law. continued by virtue of Article 372 of the Censtitution of India. In E
paragraph 27 following has been held:
"27. Even the reference lo Article 254 of the Constitution
was not correctly made by this Court in the said decision in
Ku/want Kaur case. Section 41 of the Punjab Courts Act is
of 1918- vintage. Obviously, therefore, it is not a law made F
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 80-A of the Government of India
Act, i915, 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 Jn d
h11n, after the Constitution of India came into force and, by
Article 395, repealed the Government of1ndia Act, 1935,
the Punjab Courts Act was conti1111ed 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 H
,--::-,
652 SUPREME COURT REPORTS [2017] ll S.C.R.

A 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
virh1e of 4rticle 372 of the Constitution of India. If at all, it
is Article 372(1) alone that would apply to such law which
B
is to cont(nue 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
c continue as a law in force. Shri Viswanathan s reliance upon
this authority, therefore, does not lead his argument any
fi1rthe1: "
96. Thus, ta find out as to whether the 1927 Act and Rules, 1978
framed thereunder survive even after enforcement of 1957 Act, we
D have not to look into Article 254 but we have to find out as to whether
the above pre-constitutional law is altered or repealed or amended
by a competent l~gislaturc. To find out this competent legislation as
contemplated by ~uh-clause ( 1) of Article 3 72 in the context of pre-
constitutional law the nature and content of pre-constitutional law has to
be found out. There cannot be any dispute that Act, 1927 was enacted
E to consolidate the law relating to forests, the transit of forest-produce
and the duty le.viable on timber and other forest-produce. 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
F in the 1927 Act were made by the State ofU .P. in different provisions of
1927 Act in exercise of its legislative power as conferred by List 11.
97. By the Constitution (Forty-second· 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 17 A is "Forests". Thus, with
G effect from 03.01.1977, both the Parliament and the State legislature
arc competent legislature within the meaning of Article 372 sub-clause
{I). 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
H
STATE OF UTTARAKHAND & 01.'rn: v. MIS. KUMAON STONE 653
CRUSHER [ASHOK BHUSHAN, J,] .

repealed by virtue of 1957 AC! and in ariy view of the matter after A
amendment of 1957 Act by Act 38of1999 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. I 999.
99. Justice G.P. Singh in Principles of Statutory Interpretation,
14'" Edition. explained the implied repeal as follows: B
"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 subject-m<11ter, and therefore;
when it does not provide a repealing provision, it gives out c
an intention not to repeal the existing legislation. When the
new Act conta.ins a repealing section mentioning the Acts
which it express~v repeals, the presumption against implied
repeal of other laws is further strengthened on the principle
expressio unius est exc/usio alterius. Further, the presumption
will be comparatively strong in' case of virlually D
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 E
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 ... " F

f 00. This Court in Municipal Cotmcil, Pillai tltrouglt tlte
,, Com111issio11er of f.f1111icipal Cdu11cil, Paiai vs. T.i. joseph in AIR
1963 SC 1561, has elaborated the concept ofimplied repeal in following
weirds:
G
"9. It is undot1btedly true that the legislature can exercise
the power of repeal by implication. But it is an equally well-
seitled principle of law that there is a presumption against·
an implied repeal. Upon the assumption that the legislature
enacts lmvs with a complete knowledge of all existing laws
pertaining to the same subjeCt the failure to add a repealing H
654 SUPREME COURT REPORTS [2017] 11 S.C.R.

A 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 (he two cannot stand together. As has been
observed by Crawford on Statutory Construction. p. 631,
para 311:
B.
"There must. be what is often called 'such a positive
repugnanay between the two provisions of the old and the
new statu/es 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
c 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 follows:
D
"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
E· the repugnancy between the two is irreconcilable. Bowen
v. Lease (5 Hill 226). It is a rule, says Sedgv,.ick, that a
general statute without negative words will not repeal the
particular provisions of a former one, unless the two acts
are irrecon~ilably inconsistent. 'The reason and philosophy
F of the rule, 'says the author. 'is, that when the mind of the
legislator has been h1rned 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
G positive previous provisions, unless it is absolutely
necessary to give the latter act such a conslniction, in order
that its.words shall have any meaning at all."
For implying a repeal the next thing to be considered is
whether the /wo statutes relate to the same subject-matter
H and have the same purpose. Crawford has stated at p. 634:
STAT!fOF UITARAKHAND & ORS. v. MIS. KUMAON STONE 655
CRUSHER [ASHOK BHUSHAN, J.)

"And, as we have already suggested, it is essential that the A
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 lai;( Consequently, the later
enactment will be construed as a continuation of the old
one. ..
B
The third question to be considered is whether the new statute .
purports to replace the old one in its entirely 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.
c
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 D
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 later. "
I 0 I. The question of repeal by implication arises when two statutes
· become inconsistent to the extent th.at competence of.one is not possible E
without disobedience to other.
I02. The pririciples for ascertainirig the inconsistency/repugnancy
between two statutes were laid down by this Court iri 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: F
"29 ......Repugnancy between two statutes may thus be
ascertained on the basis of the jollowing three principles:
(1) Whether there is direct conflict between the twa
provisions;
G
(2) Whether Parliament intended to lay down an exhaustive
code in respect of the subject-matter replacing the Act of
the State Legislature and
(3) Whether the law made by Parliament and the law 11)ade
by the State Legislature occupy the same field. " · H
656 SUPREME COURT REPORTS (2017] 11 S.C.R

A I 03. The Constitution Bench in State ofKera/a and otliers vs.
Mar Appraem Kuri Company Limited and a11otlier, 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
B Constitution, List III Entry 7 pertains to contracts including special forms
of contracts. The'1Parliament enactment, Chit Funds Act, 1982 and State
legislature Keral1ChittiesAct, 1975, the subject being under concurrent
list, in paragraph 7, 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 pre-dominate by virtue of non
C obs/ante clause of Article 254 and by reason of Article 372 sub-clause
(I). 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
D "to the extent of the repugnancy'" in Article 254(/). 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
E of a law" and the words "to the extent of the repugnancy"
used in Article 254{1) militate against an interpretatio11 that
the entir¢ State Act is rendered void as repugnant merely
upon e11a¢tment by Parliament of a law on the same subject. •·
I 04. A repeal may be brought about by subsequent legislation
F 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,
G transit of forest-produce and the duty leviable on timber and other forest-
produce.
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 forest-produce" itself is subject of primary legislation as can
H be seen from the preamble and the provisions to Section 41 & 42 of the
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 657
CRUSHER [ASHOK BHUSHAN, J.]

Act. In contrast, the 1957 Act in view of Section 2 thereof, gives control A
of the "Regulation ofMines and Development ofMinerals"to the Union.
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 B
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 in the subject matter of legislation under the 1957 Act is
"Regulation of Mines and Development of Minerals".
I 06. When the minerals are forest-produce by definition under
the 1927 Act under Section 2(4), validity of Which is not challenged,
c
forest-produce and its transit is altogether a different subject matter
than the subject matter governed by 1957 ~ct. 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. D
I 07. Much emphasis has been given by the counsel for the writ
petitioners on Section 4( I A) and Section 23C. Section 4(lA) is couched
in negative as follows: .
"No per.van shall transport or store or cduse to be transported
'or stored any mineral otherwise than in accordance with the E
provisions of this Act and the niles made thereunder."
I 08. Section 23C provides power of State Government to make
riiles for preventing illegal mining, transportation and storage of minerals.
I 09. The Rules may cover inspection, checking and search of F
· minerals at the place of excavation as well as transit of the minerals.
The Rules under Section 23C are only incidence ofregulation of minerals
which is the subject matter of the 1957 Act.
110, The 1927 Act is a comprehensive statute relating to transit of
forest-produce and the duty leviable on timber and other forest-produce.
G
111. The 1927 Act provides comprehensive provision.~ 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 arid other natural
resources and deforestation, the international community has been
H
658 SUPREME COURT REPORTS [2017] II S.C.R.

A alarmed, several international conventions and treaties were made
including Kyoto Ptotocol and Paris Convention to which India is a
signatory.
112. Article 48A also inserted by the Forty-second Amendment
Act, ! 976 which is to the following effect:
B ..48A. Pro(ection 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 5 IA of the Constitution lays down as one of the
c 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 creatures.
114. As per the National Forest Policy, 1988 issued by the Ministry
of Environment & Forests, one of the basic objectives ifthe State is to
D 'encourage efficient utilization of forest produce and maximizing
substitution of wool!' and states that "the principal aim of Forest Policy
must be to ensure C11vironmental stability and maintenance of ecological
balance including at1nospheric equilibrium, which are vital for sustenance
of all lifeforms, hl)lnan, animal and plant. The derivation of direct
E economic benefit mµst 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 forest-produce as contained in Section 2 sub-section (4) of the Act
includes peat, surface oil, rock and minerals(including lime-stone, laterite,
F
mineral oils, and all products of mines or quarries).
116. The State has been empowered to regulate transit of forest-
producc under Section 41 of the Act. Regulation of transit of forest-
produce is a larger activity covering transit of different kinds of forest-
G produce 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 constitutionatscheme of distribution oflegislative powers.

H
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 659
CRUSHER [ASHOK BHUSHAN, J.]

117. This Court has time and again emphasised that in the event . A
any overlapping is found in two Entries of Seventh Schedule or two
legislations, it is the duty ofthe 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 held:
B
"59 .... But befor.e we do so we may briefly indicate the
principles that are applied for construing the-.·elftries 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 C
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 detennfne whether it
fits in one or other of the lists. [See : Synthetics and D
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 E
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. Jn
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, F
then that Act as a whole must be held to be val id
notwithstanding any incidental trenching upon matters
beyond its competence i.e. on a matter included in the list
belonging /o the other legislature. To say differently,
· . incidental encroachment is not a/together forbidden.
118. In A.S. Krishna and others vs. State ofll'Jadras, AIR 1957
SC 297 this Court laid down following in paragraph 12:
"12. This point arose directlyfor decision befor;e •the Privy
Council in Prafulla Kumar Mukherjee v:~fhe Bank of
H

•
660 SUPREME COURT REPORTS [2017] 11 S.C.R.

A ·Commerce, Ltd. {1946 74 I.A. 23 There, the question was
whether the Bengal Money-Lenders Act, 1940, which limited
the amount recoverable by a money-lender for principal and
interest on his loans, was valid in so far as it related to
promissory notes. Money-lending is within the exclusive
competence of the Provincial Legislature under Item 27 of
B
List II, but promissory note is a topic reserved for the center,
vide List I, Item 28. ft was held by the Privy Council that the
pith and substance of the imp11gned legislation begin money-
/ending, it was valid notwithstanding that it incidentally
encroached on a field of legislation reserve for the center
c under Enter 28. After q11oti11g its approval the observations
of Sir Ma11rice Gwye,. C.J. in S11brahmanyan Chettiar v.
M11tt11swami Goundan, (s11pra) above quoted, Lord Porter
observed:
"Their Lordships agree that this passage correctly describes
D · the gro11nds on which the rule is founded, and that' it applies ·
to Indian as well as to Dominion legislation.
No do11bt experience of pas.I· diffic11lties has made the
provisions of the Indian Act more exact in some particulars,
and the existence of the Conc11rrent List has made it easier
E. to distinguish between those matters which are essential in
determining to which list particular provision sho11ld be
attributed and those which are merely incidental. But the
overlapping of subject-matter is not avoided by substituting
three lists for two, or even by arranging for a hierarchy of
jurisdictions. Subjects m11st still overlap, and where they do,
F the question m11sf be asked what in pith and substance is the
effect of the enactment of which complaint is made, and in
what list is its trne natrire and character to be found. If these
questions could not be asked, m11st beneficent legislation
wo11ld be satisfied at birth, and many of the s11~jects entrusted
G to Provincial legislation could never effectively be dealt
with."
119. Further in Union ofIndia and others vs. Shah Govedltan
L. Kabra Teachers' College, 2002 (8) SCC 228 in paragraph 7
following was laid down:
H
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 661
CRUSHER [ASHOK BHUSHAN, J.)

"7. It is further a well-settled principle that entries in the A
different lists shauld 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
tenns. While an entry is to be given its widest meaning but it
cannot be so interpreted as to override another entry or make B
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
trne nature of a legislation and the entry within Jfhich it C
would fall. In case of conflict between entries in Lisi 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 em1ctment substantially falls
within the powers expressly conferred by the Constitution
0
upon the legislature which enacted it, it cannot be held to be
invalid, merely because ii 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 E
legislation is in substance one on a mailer assigned lo the
legislature then ii must be held lo be ya/id in its entire~v even
though it might incidentally trench on matters which are
beyond its competence. In order to examine the true
character of the enaetment, the entire Act, its object, scope F
and effect, is required to be gone into. The question of
.invasion into the territory of anoiher legis/a/i()n LY to .be
determined not by degree but by substa11ce. The doctrine of
'"pith and si1bstance" 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 G
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
H
662 SUPREME COURT REPORTS (2017] II S.C.R.

A 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 he!~ 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 i~pliedly repeals the 1927 Act in so far as Section 41 and
B
1978 Rules are croncerned.
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 38of199,, the provisions of 1927 Act & 1978 Rules have become
void, inopemtiveand stand repealed, cannot be accepted.
c
.
XII. Interpretalion of Section 2(4)(bl of 1927 Act .
122. The meaning of words 'brought from' as used in Section 2
sub-section (4) sub-clause (b) has become very significant in the present
case sirn:e it is a case of large number writ petitioners that the goods
D which they are transiting did not originate from any forest area rather
they have been taken from non-forest area, hence, there is no liability to
pay transit fee. Whether forest produce as defim:d in Section 2 sub-
. section (4) sub-qlause (b) should be forest produce which originated
from forest or ev~n the forest produces which are merely passing through
a forest area shall attract the liability of transit fee is the question to be
E answered.

123. The Division Bench judgment of the Allahabad High Court
in Kumar Stone Works, although has referred to various definitions of
meaning of wore! '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
F 'brought' is prefixed. The word 'from' has been defined in Advanced
. .Law Lexicon by P. Ramanatha Aiyar, 3'" 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 4 starling point of motion, noting the point of
G departurlf, 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 "<ifter" and even/ or day does not have an (lbsolute
and i11va11iable meaning but each should receive an inclusion
or exclusion constniction according to intention with which
H
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 663
CRUSHER [ASHOK BHUSHAN, J.]

such word is used. Acme Life Ins. CO. v. White, Tex. Civ. A
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 529."
124. The word 'from' is used to denote a point of time, a place or B
· 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 C
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 ofthe items mentioned
in sub-clauses (I) to (iv) of sub-clause(b) of Section 2(4). The 'found in'
means that the item which has origin from the forest, is found in the D
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 E
produce shall be moved to or from or within the State ofU.P. except or
without a transit pass in the form in the Sche~ule A. The Schedule A of
the Rules contains the form. Item No ..I of the form is as follows:
"I. Locality of origin;
(a) name and situation of forest, F
(b) name of forest owner."
126. The above Item No. I also thus clearly refers to locality of
qrigin of the produce and form requires name and situation offorest and
name of the forest owner. Thus, locality of origin is related to a forest G
which supports the interpretation as placed by us.
127. Learned counsel for the writ petitioners have also placed
reliance oi:t a judgment of the ·Division Bench of the Karnataka High
Court in Yeslrwant MonyDodamani and Ors. (1962 CRLJ 832).
The Division Bench had occasion to consider the definition of forest
H
664 SUPREME COURT REPORTS [2017) I l S.C.R.

A produce as contained in sub-section (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
B of the forest produce in question. The learned Government
Pleader /ras very strenuously contended that the expressio11
'found in' a forest merely means 'come across' or 'discovered'
in a fores( 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
c is necessary, according to the learned Goveniment 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
D 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 "fou11d' i.e., discovered by somebody within a
E forest, ii would come within the defi11ition. 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 expressio11 at the commencement of Clause
F (a) of Sectio11 2(4). The articles listed u11der Clause (a)
become forest~produce by virtue of their own nature, whether
they 'are found in a '"forest or not, or brought fro"! a forest
or. not. On thi other hand, the articles .listed under Clause
(b) become forest-produce, not by virtu.e of their nah1re alone,
but. by virtue of the fact that they are found in or brought
G from a forest. The. term "found in 'a forest does not 11ecessarily. ·
in our opinion, require an.actual discovery of those items by
a living person before those items can become forest-produce.
In our opinion, the term "found in' actually refers to things
growing in a forest like timber trees, ji1el trees, fruits, flowers
H
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 665
CRUSHER [ASHOK BHUSHAN, J.]

etc. or min{!ral deposits or stones existing in the forest. The A
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 B .
or transport involved in the idea of a thing being brought
undoubted(v has its beginning in the forest by virtue of the
use of the expression 'from. "'
128. We are of the view that Kamataka High Court has correctly
interpreted the word "brought from" as occurring in clause (b) of Section C
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 ofU.P. or
outside the State ofU.P. Since, transit pass is necessary as per Rule 3
for moving a forest produce into or from or within the State ofU .P. Any
produce, goods entering within or the outside the -State which is the D
forest produce having originated in the forest requires a transit pass for
transiting in the State ofU.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 fon:st produce answering
the description of fores I produce within the meaning of Section 2(4)(b ).
E
XIII. Meaning of 'Forest'
I 29. Safeguarding of forest has also been recognised by our
Constitution under Article 48A which oblige the State to protect arid
improve the environment and to safeguard the forests and wild life of
the country. Article 5 lA sub-clause(g) enumerates the fundamental duty F
of every citizen oflnc\ia to protect and improve the natural environment
including the forests, lakes, rivers, wildlife.
130. The Forest Conservation Act, I 980 is another Parliamentary
enactment which has been specifically enacted to provide for the
conservation of the forest and for matters connected therewith. The G
definition of forest cannot be confined only to reserved forests, village
forests and protected forests as enumerated in 1927 Act. This Court has
l\lready held in T.N. Godavarman Thir11111ulkpad vs. Union of India
and. others, 1997 (2) sec 267, that the word "forest" must be
understood according to its dictionary meaning, in paragraph 4 following
is stated: · H
666 SUPREME COURT REPORTS [2017] 11 S.C.R.

A "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
B
the dictionwy sense, but also any area recorded as forest in
the Goverl(lment 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
c 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
D land", occwTing in Section 2, will not only include "forest" as understood
in the dictionary sense, but also any area recorded as forest in the
Government reco~s irrespective of the ownership. The restrictive
meaning of forest a$ given by the Uttarakhand High Court in Mis Gupta
Builders cannot be approved.

E 132. It is relevant to note that even before this Court's definition
iu T. N. Godavarma11 case (supra) in expansive 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
F 'forest land' in 38A(c) of 1927 Act are as fol-lows: ·
"38A(b) ''forest" means a /rack of land covered with trees,
shrubs, bu1rhes 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
G land on which such growth is likely to lwve an effect on the
supply of limber, fuel, forest-produce, or grazing facilities,
or on climate, stream-flow, protection of land from erosion,
or other such matters and shall include-

H
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 667
CRUSHER (ASHOK BHUSHAN, J.]

(i) land covered with stumps of trees of a forest; A
(ii) land which is part of a forest or was lying within a
forest on the first day of July, 1962;
(iii)such paswre land, water-logged or non-cultivable
land, lying within, or adjacent to, a forest as may be
declared to be a forest by the State Government. B
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 c
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
Mis. Gupta Builders cannot be approved. We, thus, reject the submission D
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
E
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 AdditionalAdvocate General is notification dated 10.02.1960. ·
It is useful to extract the contents of the said notification:
F
"February I 0, 196.0
No.1115/XJV-331-50,cWhereas the Governor Uttar Pradesh,
is of the opinion that the making of enquiry and record
contemplated under sub-section(3) ofsection 29 of the Indian
Forest Act 1927(Act no.XVI of027), will occupy such length
of time as in the meantime to endanger the rights of the State G
Government, now therefore, in exercise of the powers
conferred by the proviso to the aforesaid sub-section and
by the sub-section(!} of the said section,. read with section
•
H
'
668 SUPREME COURT REPORTS [2017] II S.C.R.

A 80-A 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 larldr specified in the schedule here to : A)

B
Schedule
District Serial N1n1e of Miieage to be declared as Description
No. Road, Reser,·ed or Protected of
Forest boundary
4 4
c From To
M <o M <o "
i.Meerut I . Meerut- 3 0 "
0 3l 2 0 The
Baghpat boundary of
Road the land has
been
demarcated
D on the
ground by
stone oillars
.... .... .... ... ... ... ... ... . .......
.. .. .... ... . ....... ........................"
·~

135. A per~al of the schedule indicates that in 48 Districts as
E
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 ofnotification dated 10.02.1960
F
proviso to the sub-section (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.-(]) The [State Government} may, by
notification in the [official gazette}. declare the provisions
G of this Chapter applicable to any forest-land or waste-land
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
forest-produce of which the Government is entitle.
H
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 669
CRUSHER [ASHOK BHUSHAN, J.]

(2) The forest-land and waste-lands comprised in any such A
notification shall be called a "protected forest".
(3) No such notification shall be made unless the liat11re and
extent of the rights of Government and of private persons in
or over the forest-land or waste-land comprised therein have
been inquired into and recorded at a survey or settlement, B
or in s11ch .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 forest-land or waste
land, the [State Government] thinks that such inquiry and c
record are necessary, but that they will oct11py 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, b11t so as not to abridge or affect any existing rights
of individuals or communities. " D
13 7. 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:
"BOA. The State Government may, by notification in the E
Official Gazette, declare that any of the provisions of or
under this Act, shall apply to a/l . or any land on the bankv of
canals or the sides of roads which are the property of the
State Government or a local authori(v, and thereupon such
provisions shall app(v accordingly."
F
138. Under Section 80Athc State Government may, by notification
declare that any <if the provisions of Act shall apply on the banks of
canals or the sides of roads which arc the property of the State
Government or a l.ocal authority. Section 80A is included in Chapter Xlll
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 G
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. ·
H
670 SUPREME COURT REPORTS (2017] ll S.C.R.

A 139. SeCtion 80A delineates the legislative scheme of declaring
protected forests on banks of canals or the sides of roads. The State
while issuing notification under Section 80A can only effectuate, the
object and purpos~ of Section 80A as enacted by the State legislature.
140. The nQtificationdated 10.02.1960 has to be read in the light
B 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 roa~s as protected forests State can do only which is
permitted by the State and no more. Section 80A read with notification
dated I 0.02.1960 shall only mean thatbo.th the sides of the roads which
C 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
D 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 i~ not to declare the road as protected forest so as to
apply different provlsions of 1927 Act on the roads itself. The interpretation
E put by the State that roads declared by notification dated I 0.02.1960
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
F statutes and principles oflaw. We, thus, reject the submissions oflearned
counsel for 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 I 0.02.1960, it cannot be held that the goods or forest
produce are passing through the protected forests.
G
· XV. Whether Ruic 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 ofUttar
Pradesh except as hereinafter provided without a transit Pass in the
H form in Schedule A ...... ". Thus transit of forest produce is permissible
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE . 671
. CRUSHER [ASHOK BHUSHAN, J.]

only with a transit pass. Rule 4( I) contains provisions regarding officers A
and persons who issue passes. Rule 4( I) is as follows:
Officers and "Rule 4.(1): The following officers and
Persons to persons shall have power to lvsue posses
iss11e passes under these rules:-
(a) For forest produce belongings to Government or not owned· B
by any other person. the Conservator of Forest, the Divisional
Forest Officer, the Sub-Divisional 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 C
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 is.vue passes under clause (b)
of sub-rule(I) above shall apply in the form in
0
Schedule 'B' and the Divisional Forest Officer may,
before issuing the transit pass or authorization to issue
such passes, conduct such inquiry and call fpr such
information as considered necessary;
(ii) Such authorization shall specify the period during E
which it shall remain in force, and shall also specify
the route to be adopted and check Chawki or depot
through which lo produce must pass; and
(iii) Any authorization may at any time be changed (on
request or otherwise) or cancelled by the Division
F
Forest Officer or Conservation of Forests."
142. Now we come to Rule (5) which provides for fees payable
for different passes; Rule 5 along with its Marginal note (as originally
frained) is as follows:
Fees Payable 5. At the check Chawki or depot established under G
for different nde 15 and specified°under proviso (ii) to clause(b),
ciasses of sub-nile (I) of nile 4, the forest produce along-with
passes the two copies of the pass(dup/ica'te and triplicate)
shall ·be produced for examination· under sub-rule(4)
of rule 6 and for payment of transit fee 011 the forest
H
672 SUPREME COURT REPORTS [2017) II S.C.R.

A produce calculated at the following rates;
' ..
..... '!
,corresponding receipt shall be granted in the form
'
gilven in Schedule C-(i) per lorry load of timber or
o~her forest produce ... ... Rs. 5. 00 per tonne of
J capacily(ii) per cart load of timber or other forest
produce ... ... Rs. 2.50(iii) per camel load of timber
B
or other forest produce ... ... Rs.J.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"
C 143. Referring to Chawki or depot established under Rule 15 and
specified under proviso( ii) to clause(b), sub-rule (I) of Rule 4, learned
counsel contends that transit passes as referred to under proviso (ii) to
clause(b) of sub-rule (I) of Rule 4 are only to be charged with transit
fees.
144. Rule 4 as noticed above contains provisions regarding officers
D and persons who have power to issue passes. Under Rule 4(l)(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. Ruic 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
E 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 hasto be issued by the authorized
Divisional officer. The words in Rule 5 namely " .... Chawk.i or depot
established under Rule 15 and specified under proviso( ii) to clause(b),
sub-rule (I) of Rule 4" are the words qualifying the words chawk.i or
F 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 chawk.i or depot for payment
of transit fee. Reading ofRule 5 does not indicate any intention that only
one category of passes as referred to in Rule 4( I )(b) are leviable with
G transit fee: The.words" ...specified under proviso(ii) to clause(b), sub-
rule( 1) of Rule 4 only refer to check Chawk.i 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 ofpasses and submission is incorrect
H
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 673
CRUSHER [ASHOK BHUSHAN, J.]
t .
that leviablity of fee is only on one category of passes as referred to in A
Rule 4( I )(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 14•• Edition regarding marginal note states as follows:
" ... Marginal notes appended to Articles of the
Constitution have been held to constitute part of the B
Constitution as passed by the Constituent Assembly and
therefore they have been made use of in construing the
Articles, e.g. Article 286, as farnLvhing 'prima facie '. 'some
clue as to the meaning and purpose of the Article'.
A note appended to a statutory provision or subordinate c
legislation. is mere/;: 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 ofthose rules. Further, (I note which is made
contemporaneously with the rules is part of the rule, and is
not inconsistent with the n1/e, but makes explicit what is D
implicit in the rule. "
14 5. This Court has also occasion to consider the value of marginal
note in several ca5es. In 2004 (2) SCC 579, N.C.Dhou11dial versus
Unio11 oflndiu & Ors., It was laid down in paragraph 15 that heading
or marginal note can be.relied upon to clear any doubt or ambiguity in E
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 F
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 Che/a Sunder Das v.
Shiromani Gurdwara Parbandhak Committee and Bhinka v.
Charon Singh). "
G
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( I )(b) only, the easiest manner to avoid IJayment
of transit fee is not to apply in form B for obtaining the booklet for
is·suance of pass by the person or from its authorized representative,
H
674 SUPRIEME COURT REPORTS [2017] ll S.C.R.

A 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 wi~h payment of fee which is separatdy provided in Rule 5
and is applicable to all kinds of passes.
147. Rule 6(4) on which also emphasis has been given by learned
B counsel for the petitioner only provides that the first copy cf the triplicate
forms of pass shall form the counterfoil and second and third parts shall
be given to the person in-charge 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
C 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 ofRule 3.
148. We thus are of the view that the submissions of learned
D 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), cannQt 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
E Rule 3. We thus do not accept the interpretation of Rule 3, 4, 5 & 6 as
contended by learned counsel forthe petitioner in respect of pay ability
of transit fee on transit passes issued under 1978 Rules.
XVI. Non-issuance of Section 20 Notification after Section 4
Notification of 1927 Act
F 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
G 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:
H
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 675
CRUSHER [ASHOK BHUSHAN, J.)

"Section 5. Bar of accnial of forest rights.- After the issue A
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 011 behalf of the Government or some
person in whom s1ich right was vested when the notification B
was issued; and no fresh clearings for cultivation or for
any other p111pose 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 othenilise damaged, nor
any forest-produce removed therefrom, except in accordance
with such rules as may be made by the State Government in C
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 p
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 E
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.
Kesoranr Industries (surpa) having been referred to a Nine Judge F
Ben.ch which reference having not been answered, the interpretation
given by the Five fodge Bench of Syntlletics 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 r~st our decision on the
preposition as laid down in Kesoram Industries. Independent of
proposition as laid down by the Constitution Bench 'inKesoramlndustries G
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
H
676 SUPREME COURT REPORTS (2017] ll S.C.R.

A Amendment dated 0~.2004 could not have been resorted to for
realising the traflsit fee at the rate ofRs.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,
AJR 1965 SC 1430 and State of U.P. and others vs. Hirendera Pal
B 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 Advocate-on-record Association vs. Union of lndia,
2016(5)SCC J. This Court in the interim order dated 29.10.2013 has
c expressly direct~d that "the State shall be free to recover transit fee for
forest produce removed from within the State ofU.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
D
Amendment Rules.
154. It is, further, relevant to note that the High Court in its
judgment dated l l.l l.20ll has issued following directions in the last
paragraph ofthci judgment which contained operative portion as below:

E "188. Alli 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 4" 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 5"
F Amendment, are quashed. It will be open to the Respondents
to impose and coilect the transit fees on such forest produce
prevailing on such rates as it was being charged prior to the
411' Amendment to the Rules notified on 20./0.20IO, i.e. at
the rate of Rs.381- per tonne of capacity per lony load of
G timber or other forest produce; Rs. 191- 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.21- per
head load of timber or other forest produce. We also declare
that the imposition of transit fee on 'Sponge Iron' which is
H
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 677
CRUSHER [ASHOK BHUSHAN, J.]

not a forest produce after undergoing the process of A
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 1-.equiring transit passes and transit fees on it. The costs B
are made easy.
Petitions di/owed.
15 5. The High Court has thus even though had struc.k 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 c
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 D
question as to whether by striking down Fourth and Fifth Amendment
Rules, Third Amendment Ruic does not revive need not be' gone into in
the present case. In view of the order of the Division Bench of the High
Court dated 11 .11.2011, the State was fully competent to recover the
transit fee as per Third Amendment Rule, which direction of the High E
Court we duly affirm. · · ·
xvn; VALIDITY OF FOURTH AND FIFTH AMENDMENT
RULES
156. We now proceed to consider the respective contentions of
the parties on the Fourth and Fifth Amendment Rules. Before we proceed F
to consider the rival contentions, it is necessary to have broad over-view
of the concept.of fee and tax. Further, the nature ofregulatory 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 Co111missio11er, Hind11 Religio11s G
Endowments, Madras vs. Sri Lakshmindra Tlrirtlra Swamiar of Sri·
Slrirur Mutt, AIR 1954 SC 282, B.K. Mukherjea, J. speaking for 7-
Judge Bench has elaborately defined the tax and fee in paragraphs 43
and 44 which are quoted below: ·

H
678 SUPREME COURT REPORTS [2017] 11 S.C.R.

A "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
compu1sory exaction of money by public authority for
B public purposes enforceable by law and is not payment
for services rendered".
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
c say, it is imposed under statutory power without the
taxpayers 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
D 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 geneml 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.
F 44. Coming now lo 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
G arbitrarily assessed. Ordinarily, the fees are 11nifon11 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
H cases.
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 679
CRUSHER [ASHOK BHUSHAN, J.]

158. Further, on distinction between tax and fee following was A
stated in paragraphs 45 and 46:
"45 ... The distinction between a tax and a fee lies primarily
in the fa.ct 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 B
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 01; "Science of Public F'inance" 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 C
individual receives. As Seligman says, it is the spei:ial 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.). D
46. If, as we hold, a fee is regarded as a sort of return or
consideration for services rendered, it is absolute(v necessary
that the levy of fees should, on the face of t/1!! legislative
provision, be co-related to the expenses incurred by
Government in rendering the services. As indicated in article E
110 of the Constitution, ordinarily there are two classes of
cases where Government imposes 'fees' upoff.persons. In
the first class of cases, Government simply grants a
permission or privilege to a person to do something, which
oiherwise that person would not be competent to do and
extracts fees .either heavy or moderate from that person in F
return for the privilege that is conferred.
A most common illustration of this type of cases is
fi1rnished 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 G
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.), H
680 SUPREME COURT REPORTS [2017] ll S.C.R.

A 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 tax. "
159. In another Constitution Bench in Corporation of Calcutta
andAnr. vs. Liberty Cinema, AIR 1965 SC 1107, following was stated
B 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 prese111 case. These cases also discussed the
c 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.
D
20. The other case lo which we wish to refer in this connection
is The Hingir-Rampur Coal Co., Ltd. v. The State of Orissa
and ors1, {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 fimd with it, was called in question. It
E 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 ultimate(y
F and indirectly be benefited wo11ld 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 heller development of the mining area
and to meet the welfare of the labour employed and other
G persons residing or working in the area of the mines. Here
again there is no element of control b11t the services res11/ted
in real benefit special(v accruing to the persons on whom
the levy was imposed. These decisions of this <::ourt clearly
establish that in order to make a levy a fee for services
rendered the levy m11st confer special benefit on the persons
H
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 681
CRUSHER [ASHOK BHUSHAN, J.]

on whom it is imposed. No case has been brought to our A
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 fee."
160. The nature of transit fee came for consideration before this B
Court in State of Tripura and others vs. S11dhir 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
(s11pra) it was held that expression 'licence fee' does not necessarily c
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 ofU.P., 1997 (2) SCC 715 and Bihar D
Distille1y 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 sub-rules
(3) and (4) of Rule 3 as bad on that basis. Since we hold E
that the fees levied by the said sub-rules is regulatory in
nature, the said levy must be held to be valid and competent,
being jillly warranted by Section 41."
16 l. This Court held that transit fee is a regulatory fee in nature.
162. In Sec1111derabad Hyderabad Hotel Owners' Assn. v. F
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 no1v, well settled that a licence fee JJUlY be either G
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 H
682 SUPREME COURT REPORTS (2017] II S.C.R.

A equivalence is 1101 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 controlted. 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
B
rendered. An element of quid pro quo for the levy of such
fees is not required although such fees cannot be excessive. "
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
c 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 5of1978 Rules as well as provisions of Section 41 of Forest
D Act, 1927 were considered by this Court. This Court relying on the
judgments of this Court in State of Tripura v. Sudhir Raujan Nath,
Corpn. of Calcutta v. Liberty Ci11ema and Secunderabad Hyderabad
Hotel Owners' AJsn. 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
E in paragraphs 8, 9 and I 0:
"8. The distinction between tax and fee is well settled and
need not bf! restated herein. It is clear from the afore-noticed
provisions of the Act and the Rules that the transitory fee is
regulatory in nature. The question of quid pro quo is
F necessary when a fee is compensatory. It is well established
that for every fee quid pfo quo is not necessary. The transit
fee being regulatory, it is not necess(//y lo 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
G 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
H
Government and empower it to regulate the transit of all
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 683
CRUSHER [ASHOK BHUSHAN, J.]

timber or other forest produce for which purpose.the State .A
Government is also empowered to make the Rules. The
decision of the High Court invalidating the levy ofapplication
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
B
regulatory and not compensatory. Reference may be made
to the decision in the cose of Corpn. of Calcutta v. Liber~v
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 easel similar views have been c
expressed in Secunderabad Hyderabad Hotel Owners' Assn.
v. Hyderabad Municipal Corpn. and P. Kannadasan v. Stale
ofT.N
JO. The transit fee under Rule 5 is clearly regulatory and,
thus, it was not necessary for the State to establish quid pro D
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 conc.lusion about the
invalidity of the transit fee. The penaltv,
. however, cannot be E
' '

beyond what is permissible in the Act. That aspect, however,
is ;wt under challenge in these .appeals as the Stale
Government after the impugned judgment of the High Court
realizing its mistake amended the Rule so as to bring the
provision ofpenalty in accord with the provisions of the Act."
164. In view of the foregoing discussion, it is now well settled that F
transit fee charged under 1978 Rules is regulatory fee in character·and
further the State is not to prove qilid 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. G
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 sub-section (2) of Section 41 inserted sub-sections (2A) and (2B ).
Sub-section {2A) is as follows: ··
H.
684 SUPREME COURT REPORTS (2017] l l S.C.R.

A "(2A) The Stale Government may by notification in the Gazelle
delegate, either unconditionally or subject to such conditions
as may be specified in the notification, to any Forest-officer,
not below the rank of Conservat01; the power to prescribe
fees under clause (c) of sub-section (2). "
B 166. The ~tate of U.P. in exercise of power under Section 41
framed Rules, namely, the Uttar Prndesh Transit of Timber and other
Forest Produce Rules, 1978. Rule 3 provided for regulation of transit of
forest-produce by means of passes which is to the following effect:
"3. Reg11lation of transit of forest produce by means of
c passes. - No forest produce shall be moved into, or ji-om, or
within, the State of Uttar Pradesh except as hereinafter
provided, without a transit pass in the form in Schedule A to
these Ru/es, from an officer of the Forest Department or a
person didy authorised by or ·under these Rules to issue such
pass or otherwise than in accordance with the conditions of
D 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
E fide consumption by any person in exercise of a privilege
granted i11 this behalf by the 'State Governme/I/' or of a right
recognised under this Act, within the limits of a village in
which it is produced;
(iv.) offorest produce by contractor '.I· agency from the forests
managed by the Forest Department, in which case the
F
movement shall be regulated by the relevant conditions of
sale and terms of the corresponding agreement deed executed
by the buyer;
(v.) of such forest produce as may be exempted by the State
Government from the operation of these mies by notification
G
in the official Gazette. "
167. Rule 5 prescribes for fees payable for different classes of
passes. Rule 5(as originally framed) is as below:
"5. Fees payable for different classes of passes. - At lhe
H Check Chowki or depot established under Rule 15 and
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 685
CRUSHER [ASHOK BHUSHAN, J.]

specified under proviso (ii) to clause (b) of sub-rule (I) of A
Rule 4, the forest produce alongwith the two copies of the
pass (duplicate and trip/icate)_shal/ be producedfor
examination under sub-rule (4) of Rule 6 andfor payment
of transit fee on the forest produce calculated at the following·
··-·rates; corresponding receipt shall be granted in the form
8
given in Schedule 'C'-
(i.) per lorry load of timber or .Rs.
other forest produce 5.00 per
tonne of
capacity
(ii) per cart load of timber or other .Rs. 2.50 c
forest produce
(iii) per eamel load of timber or .Rs. 1.25
other forest produce.
(iv) per pony load of timber or .Re. 0.50
D
· other forest produce . .
(v) per head load ·of timber or .Re. 025
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 E
fi"amed 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 fee of Rs.38/- per tonne of F
capacity is shown. 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 ofKhair, Sal and Sagaun (Teak), Shisham,
·sandal Wood and Red Sanders. Then comes to Fifth Amendment G
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:
H
686 SUPREME COURT REPORTS [2017) 11 S.C.R.

A
( i) (a) per lorry Rs.200.00 (i) (a) per lorry Adva1orem at
load of timber per cubic load or timber the rate of 5%
other than of Meter of of Khair, Sal or minimum
Khair, Sal and capacity and Sagaun Rs.2000/-
Sagam1 (T~ak) (Teak)
B Shisham, Saqdal Shisham,Sandal
Wood and Red Wood and Red
Sanders Sanders

(b) per lorry load Rs.75.00 (b) per lorry Advalorem at
of timber other per cubic load of timber the rate of 5%
than of Kh,Ur, Meter of other than of or minimum
c Sal and Sagaun capacity Khair, Sal and Rs.750.
(Teak), Shisham, Sagaun (Teak),
Sandal Wood Shisham, Sandal
and Red Sanders Wood and Red
or other forest Sanders or other
produce forest produce
D except as
mentioned lll
(i)c)

( c) per lorry Adval or em at
load of other the rate of
E forest produce 15% of
coming from minimum
mines. e.g., Rs.400/-
coal, lime,
stone, sand,
Bajari, and
F other minerals.

169. Before we proceed further with the discussion it is necessary
to note the actual impact on Transit Fee ofFourth and Fifth Amendment
Rules. We have already noted that initially when Transit Fee Rules were
G framed in 1978, Transit Fee on per lorry load of timber was Rs. 5 per
tonne of capacity. By 3"' amendment with effect from 14.06.2004 Rs. 5/-
was increased as Rs. 38 per tonne of capacity. By 4" 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.
H
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 687
CRUSHER [ASHOK BHUSHAN, J.]

170. The same amount was leviable on other forest produce. The A
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:
TRANSIT FEE CHARGED
B
Vehicles Asper Asper GO. As perG 0. dt AsperGO.U
1978 u 20.10.2010 04.06.2011
Rttles 16.04.:rol (a) Ro;. 200'- per
R5. 5/- R-;.3&'-p.T Oibic M::tcr
per Ton Capacity
Ton (b)R-;. 75/- Per c
OJbic M::tcr
carmty
6 9Tonx 9TonxR-;. (a) 28.57 Gibic (a) Per lnny load Ad-
\\heeler R5. 51- 38'-=Rs. M::tcr x R5. XJJ/- of tinb;r ofKhair, Val<rcmat
=Rs. 3421- =Rs. 5714'- Sal and Sagnn1 th: rare of
451- (Teek), Slisham 5%cr D
San:lal \\OOd and rrinimun
Red Saxlaers Rs.2000'-
10.12 15Ton 15Tonx 36.50Cubic (b) Perlony load Ad-
"heeler XR.5. R5. 3&'-= M."ler x R5. XJJ/- oftinfx:r other valorcmat
51-= R5. 57fY- =Rs. 7300/- than ofKltlir, Sal ti>: rate of
R5. and Sagnn1 (Teek), 5%cr E
75'- Slislllll\ Sanlal ninimun
\\OOdand Red Rs. 750/-
Sanders mid other
forest produ:e a5
m:ntionedin (i)(c)
F
6 (b) 28.57 Cllbic (c) Per lony load Ad-
"heeler M,ux Rs. 75'- of other fcrcot Valm:mat
=R5. 2142/- produ:c cooing ti>: rate of
fiunmincs i.e. 15%cr
coal, Jim:, stone, ninimun
sand, bajri and Rs. 750/-
other mnerals. G

10.12 36.500Jbic
\\heeler .M::tcrx Rs. 75'-
=Rs. 2737/-

H
688 SUPREME COURT REPORTS (2017] l l S.C.R.

A 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 amendmel)t 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 ad-valorem basis and although the
B
minimum amowit was fixed but there was no cap on the maximum amowit.
Thus Transit Fee payable was on the value of all forest produce. Whereas
with regard to timber ad-valorem was at the rate of 5 per cent but with
regard to coal, Jim~ stone, sand, stone, bajri & other minerals ad-valorem
is at the rate of 15 per cent.
c 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 times. The Fifth Amendment Rule was issned 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
D 10% to 20%, When every year expenditure increases only I0 to 20%,
what was necessity to increase the transit fee several times by 5'"
Amendment, remains unexplained.
173. Learned senior counsel Shrl N. K. Kaul appearing for the
respondent, IndiaQ Wood Products Co. has explained the impact of
E increase of Transit Fee on the basis of ad-valorem. 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 4'" amendment
and 362.33 times from 3"' amendment on the basis of 5'" amendment of
the Rules dated 04.06.2011.
F 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
G not liable to prove any quid pro quo'!
(b) Whether the State has satisfactorily justified the increase in Transit
Fee by 4'' & S" amendment by producing relevant material?
(c) Whether by adoption of ad-valorem basis by 5'" amendment Rules
the Transit Fee no longer remains a fee and has changed into character
H ofa tax?
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 689
CRUSHER [ASHOK BHUSHAN, J.]

175. We have already noticed the pronouncement of this Court A
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
B
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 c
may be regarded as a fee. Jn the first place, it must be levied
in consideration of certain services. which the individuals
accept either willingly or unwifiingly 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 D
revenue of the state lo be spent for general public purposes."
176. Another case which needs to be noted is Sreenivt1st1 Genert1/
Traders t11ul 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: E
"31.The traditiont1l view that there must be actual quidpro
quo for a fee has undergone a sea change in thf! subsequent
decisions. The distinction between a tax and a fee lies
primarily in the fact that a tax is levied as part ofa common
burden, while a fee is for payment of a specific benefit or F
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 collecte<t
and the service intended to be rendered. In determining G
whether a levy is a fee, the true test must be whether its
primary and essenliC1l purpose is to render specific services
to a specified area or class; it may be of on consequence
that the StC1te niay ultimately and indirectly be benefited by
it. The power of any legislature to levy "fee is conditfoned H
690 SUPREME COURT REPORTS (2017) ll S.CR.

A by the fact thar it must be "by and large .. a quid pro quo }or
the services rendered. However, correlationship between the
levy and the services rendered (sic o(i expected is one of
general character and not of mathematical exactitude. All
that is necessary is that there should be a "reasonable
relatio11ship .. between the levy of the fee, and the service
B
rendered... "
177. In Delhi Race Club Limited vs. Union oflltdia and Others,
(2012) 8 sec 680, following was laid down in para 39 and 43:
"39. Dealing with such regulatory fees, this Court in Vam
c Organi<; Chemicals Lid. & Am: V.~. Stale of UP. 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 retum but al the same
D time slu,mld not be excessive. In any case, the appellal1/ 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
E or increase in fee but a broad correlation has to be established between
expenses incunied for regulation of Transit and the fee realised.
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
F 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.
G 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
F cc and the cost of enforcement by Forest Department has been noticed
H by the High Court in para 85 which is to the following effect:
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 691
CRUSHER [ASHOK BHUSHAN, J.]

A
Clal ~ ~ "° <;!1(1 mrBf ('!1IT ~ <;!1(1 m f;CJ; ~tr<
~m!T&l<r

~ Clal~ Clal fcrn:m ~ tf{ ~ mil" &l<r

~<)" B
3lftrari1 3rr<r ;,i 1HiIll "' <im
/
<;!J('f m!Bf
&l<r
m;;irur*>
2 3 4 5 6 7
2004-05 3867.00 10997.33 15.37 201.33 11213.93 c
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
I D
(Upto
July 201 l

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 E
Department and the expenses of entire establishment and no details
were given of expenses incurred for regulation ofTransit 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 ~ F
petitioners has referred to a Division Bench judgment ofAllahabad High
Court in Civil Misc. Writ Petitio11No.72465 ofiOIJ-i)f/s. Si11gh Timber
Trader a11d others v~~ State of U.P. a11d others (reported i11 2016(1)
Allahabad Daily J11dg111e11t 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. I 0.20 I 0 by which Rule 11 of the G
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, 20 lO. 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 H
692 SUPREME COURT REPORTS [2017] 11 S.C.R.

A the said writ petition for justifying the enhancemmt 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 imp11gned 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
8
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 23"' December, 2014:
'The State Government in the coulller affidavit has tried to
justify the enhancement in the fee in the following manner.
c
(a) Expenditure on enforcement/ regulation in U.P Forest
Department has increased about three times i.e. from
Rs.ll213.93 lakh in year 2004-05 to 32205.16 lakh in year
2010-11.

D Year Expenditure on regulation

(Rupees in Lakh)

Establish- Other Incidental Total
ment expenditure
E
2004-05 10997.33 15.37 201.33 11213.93
2009-10 27684.38 15.61 238.73 27938.72
2010-11 31786.85 31.09 387.22 32205.16
F

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.."
G
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
H sought to be established by the State on account oftransit fee raised and
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE . 693
CRUSHER [ASHOK BHUSHAN, J.]

those expenditures as claimed is unfounded and has rightly not been A
accepted by the High Court.
183. The High Court after considering the stand of the State has
held the following in paragraphs 141and142:
"141 .... The increase of the transit fees by the 4th Amendment
on cubic feet basis and thereafter by impugned 5th B
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 poth the counts
namely that the cost of forest produce h.as no co-relation
with the objects sought to be achieved by regulation of transit, c
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
. regulatmy 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. D
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 thereqfter item wise on ad valorem basis E
. /inked 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 F
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 made:
G
"181 .... The collections in 2010-11, 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 2010-11 on
the i:ollection of transit fees by the department was 32205.16 H
694 SUPREME COURT REPORTS [2017] l 1 S.C.R.

A lacs. It is likely lo 128 increase, as admilled by only 10-20%
every yew: The revenue 10 be generated by the transit Jee,
would thus be al least JO limes more than the cost in collection
offees. 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
B
fees, and 1/hus the large amount of the collection of transit
fees will go into the coffers of the State to ra1'.ve its revenues.
Even if entire collections are spent on maintenance of staff,
vehicles, fuel and other administrative expenses of/ores/
department, it looses its character as regulatory fees, to
c regulate transit of forest produce, with no benefit or service
directly or indirectly to facilitate the trade or transit offorest
produce. There is no averment, nor ii is argued by learned
Counsel appearing for the State that any facility or services
are to be provided or are contemplated for the trade."
D 185. The High Court thus held, after considering the material
brought by the St~tc for increase in 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
E "The revenue to be generated by the transit fee, would thus be at least
10 times more thap the cost in collection of fees."
187. A three-judges Bench in Calcutta M1111icipal Corpn. A11d
others vs. Slrrey Merca11ti/e (P) Ltd. and others, 2005 (4) SCC 245
had considered prqvisions of Calcutta Municipal Corporation (Taxation)
F 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 ofAiticle 14. The following was held in paragraph
16 by the High Court:

G
"'16.Therefore, the main difference between ··a fee" and "a
tax" is on account of the source of powe1: 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
jiwn an exercise of the police powe1: The "police power" is
H different jivm the "taxing power" in its essential principles.
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 695
CRUSHER [ASHOK BHUSHAN, J.]

The power to regulate, control and prohibit with the main A
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 easel it has been held that where
B
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 ii
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 c
Ltd. v. State of U.P.' 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 reg11/a1e is a part of the sovereign
power of the State, exercisable by the competent legislature.
D
However, as held in Kesoram easel 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 on~v such levy can be justified which can be treated as
a part of regulatory measure. To that extent, the States power
to regulate as an expression of the sovereign power has its E
limitations. It is not plena1y as in the case of the power of
taxation. "
188. The Court further held that since the Regulation provides for
imposition offee 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 F
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. F11rthe1; the G
qunatum of levy indicates that ii 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."
H
696 SUPREME COURT REPORTS (2017] l l S.C.R.

A 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
foe, what shall ~e the yardstick of such levy depends on facts of each
case and the State can find its own basis for determining the extent of
B
fee. He has relied on three-Judges Bench judgment in P.M.
Ashwathanarayana Sefty and others vs. State of Karnataka a11d
others, 1989 S11pp.(l) SCC 696. He submits that this Court in the
above case was considering the levy of Court fee under Karnataka
Court Fee Valua!ion Act, l 958. The Court fee was leviable on advalorem
c 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 followin.g was held:
"40. A fee which at the inception is supportable as one might
D shed its complexion as a fee and assume that of a tax by
reason of the accumulation of surpluses or the happening
of even/s which tend to affect and unsettle the requisite
degree of correlation. "
I 90. The <;::ourt also addressed the issue as to whether advalorem
E principl"C which Is appropriate to taxation would be inapplicable in the
context of an impost which is meant as a contribution towards the 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
Cou11 further held that the question of the measure of tax or a fee should
F 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
G 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 ofservices cannot be applied
towards objects of general public utili~v as part of general
revenues, the converse is no/ valid. General public revenues
H
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 697
CRUSHER [ASHOK BHUSHAN, J.]

can, with justification, be utilised to meet, wholly or in A
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 al B
high rates recalls of what Adam Smith-"W""" ofN"';o.,·· said:
"There is no art which one government sooner learns of
another than that of drawing money from the pockets of
the people.""
19 l. In the aforesaid case, the Court; however, had struck down c
Enll'y 20 in Schedule I of the Bombay Act where advalorem Court fee
was imposed without the benefit of upper limit of Rs.15,000/- whi~h
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 below: D
"90. In the appeal of the Stale 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 E
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 dijferentia between the two classes of litigation and
that having regard to the fact that what is recovered is a fee, F
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 G
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 c:laiming probates have no such relief in the
form of an upper limit to fee payable. H
698 SUPREME COURT REPORTS (2017] I l S.C.R.

A 91. This contention was accepted by the learned Singh
Judge who has upheld the appeal. Indeed, when
proceeding for grant ofprobate and letters of administra/iu"
becomes a contentious niatter, it is registered as a .'J·uit r.ou!
proceedeq with accordingly. If in respect of'al/ other s11i1s u:
whatever nature and complexity an upper limit of Rs 15,0UO
B
on the court fee is fixed, there is no logical justification for
singling ~ut this proceeding for an ad valorem impost withu111
the benefit of some upper limit prescribed by the same statute
respecting all other litigants. Neither before the High Court - · -
nor before 11s here - was the impos/ sought to be suppor1ed
c or justified as something other than a mere fee, levy of which
is otherwise within the Stales power or as separate ''fee"
fi'om another distinct sottrce. ft is purporred to be collected
and so11ght to be justified only as court fee and nothing
else.
D 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 right~v,
held:
"There is no answer to this contelllion, except that the
E legislature has not thought it fit to grant relief to the seekers
of probates, whereas plaintiffs in civil suits were thought
deserving of s11ch 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 /0 cannot he
F sustained. "
93. We approve this reasoning of the High Court and
the decision of the High Court is sustained on this ground
alone. ln view of this any other ground urged against rh,·
constitutionality of the levy is unnecessary to be examined ·
G
192. The Court th us struck down a provision of the Court fee·
where there was no maximum cap on advalorem basis. There was n"
maximum cap in the Fifth Amendment Rules although minimum fee w'"
prescribed. Even in some of the cases of fee adva/orem principle mav
be applied but we arc of the considered opinion that in case of transit fee
H
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 699
CRUSHER [ASHOK BHUSHAN, J.]

where the object and purpose is regulation of transit of forest produce A
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
B
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
c
193. This Court vide its order dated 19.11.2012 had already directed
the transfer petitions to be heard along with SLP(C)N0.11367 of2007.
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 D
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 E
195. 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 effect:
F
"I) 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. G

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.
H
700 SUPREME COURT REPORTS [2017) ll S.C.R.

A 4) The State shall maintain acmrate amount ofrecoverv made
and the nature and the quantumlquan1ity of the p.roduce
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
B the 4th and 5th amendment to the Rules. the State shall be
free to niake recoveries in terms of the 3rd amendment in
regard to the forest produce removed ji-0111 within the State
of UP. Tbe operation of the orders passed hy the High Court
shall to that extent remain srayed.
C 6) This modification shall no/ app(y to exempted goods or
industrial by products like Klinker and jly 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:
D "(J) Insofar as forest produce as defined in sub-clause(a}
of Clause(4) of Section 2 is concerned, the State shall be
free to recover transit fee within the State of UP. at the rate
stipulated in the fifth amendment to Rule 5 as aforesaid;
(1) Insofar as forest produce originating fi·om Stale of UP.
E and covaed by sub-clause (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 sub-c/ause(b)
of Clause(4} of Section ], which does not originate from
F Stale 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 fimrth amendment
to aforesaid Rule 5.
(4) Any such recove1:v shall remain subject to the ultimate
G 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 Jfom them
shall be refunded to them with interest @ 9% per annum
from the date of deposit till actual refimd.
H
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 701
CRUSHER [ASHOK BHUSHAN, J.]

(6) The State shall maintain accurate amount of recovery A
made and the nature/quantity of the produce removed by the
private party is concerned.
(7) These modified directions shall come into effect 011 and
from 1st May 2016. (8) This modification shall not apply to
exempted goods or industrial by-products like Klinker fly B
ash."
197. This Court directed that State shall be free to recover transit
fee within the State ofU.P. at the rate stipulated in the Fifth Amendment
to Rule 5.
198. The Court also held that such recovery shall remain subject C
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 cases, the amount deposited/recovered from them
. be refunded with interest @9%.
199. We having upheld the judgment of the High Court dated D
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 Ol.05.2016 recovery was permitted as per Third Amendment
Rules which has been upheld, there is no question of considering any E
claim of refund of any transit fee prior to OI .05.2016. The transit fee is
an indirect tax and the State is entitled to consider the claim ofrefund
provided the transit fees has hot passed on to the consumer which may
result into unjust enrichment. Thus we pennit 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 F
to the ultimate consumer and refund may not result in unjust enrichment.
XIX. CIVIL APPEALS OF STATE OF M.P. FILED AGAINST
THE JUDGMENT DATED 14.05.2007
200. The Writ Petitions were filed by the respondents to the Civil
0
Appeals in the High Court ofMadhya Pradi:sh praying for quashing the
Notification dated 28.05.2001 issued by the State of Madhya Pradesh
fixing the amount of Transit Fee for issuance ofTransit 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 H
702 SUPREME COURT REPORTS [2017] 11 S.C.R.

A Act, 1927(hereinafter referred to as 'Act, 1927') as unconstitutional
and ultra vires to the extent they relate to minerals. Ruic 5 of Rules,
2000 as well as Notification dated 28.05.2001 was also sought to be
declared as ultr41 vires to the powers of the State Government under
Act, 1927. In the Writ Petition the writ petitioners raised the following
contentions:
B
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,
c I 960(hereinafter referred to as 'Rules, I 960') read with Mineral Transit
Pass Regulations, l 996(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. Ruic 5 of Rules,
D 2000 as well as Notification dated 28.05.2001 are contrary to Section 41
of Act, I 927. Th¢ Act, J 927 being a pre-constitutional 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.
E
202. The Smte contested the Writ Petition by filing counter-affidavit
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 Ruic 5 of Rules, 2000, which were
framed underSection41oftheAct,1927. The Regulatory Fee is not
F charged on extraction of mineral and there is no encroachment on the
provisions of Act, I 957. 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
G 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
28.05.200 I as beyond the scope of Section 4 I of Act, I 927.
H
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 703
CRUSHER (ASHOK BHUSHAN, J.)

204. Learned senior counsel in support of the appellants contends A
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 B
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 C
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
· Jegislative competence to frame the rules, holding that the computation
of fee on the basis of weight/volume of the Forest Produce is illegal,
cannot be .sustained. He further contended that the High Court has issued o
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
Comt 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 E
enrichment of assessee.
206. Learned counsel appearing for the writ petitioner have refuted
the contention of the State amt has reiterated the submissions.
Respqndent-petitioners have further raised the submissions, which were
pressed before the High Comt. It is submitted that even· though the F
respondent-petitioners 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 docs not mine coal but buys it G
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 ofAct, 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 H
704 SUPREME COURT REPORTS [2017] l l S.C.R.

A dated 28.05.200.l is Transit Fee on minerals which is illegal and without
jurisdiction.
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
B Division Bench of the High Com1 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
C · judgments of this Court, the Division Bench concluded that two
enactments i.e. Acl, 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 <;'ourt in Sudhir Ranjan Nath (sJtpra) and Sitap11r
D Packing Wood Suppliers (s11pra). 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 011 that both the
enactments operate in different areas. The operational sphere
E being diffe,rent 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 Rul'~ 5 of Rules, 2000
F framed under Section41 of the Act, 1927. In para 71 & 72 following has
been held:
"71. On a perusal of the aforesaidfom1 it is perceptible that
there is mention of locality of storage. name and address of
the owner, description of produce and quantity, name of
G 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 b11t the fee must have ne.ws with
the transit for checking in the context offoi·est goods. Hence,
we are not inclined to accept the contention of the learned
H
STATE OF UTTARAKHAND & ORS. v. M/S. KUMAON STONE 705
CRUSHER [ASHOK BHUSHAN, J.]

senior counsel for the petitioners that framing of the said A
rule under Section 41(2) is not permissible."
"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 B
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 ofRules,-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 c
Section 23C of Act, 1957 have already been considered by us, while
considering the submission raised with regard to Civil Appeals arising
from the judgment of the Allahabad High Court. The above submission
having already noted and considered, it needs no repetition here. Hence,
submission raised by learned counsel for the writ petitioners on the basis
of Act, 1957 is thus rejected. D

21 I. 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 E
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 F
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 notijicatio11 cannot be said G
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
H
706 SUPREME COURT REPORTS [2017] l l S.C.R.

A and a ~ransit pass by no stretch of imagination can have
any nexus with the unit ofminerals inj(1ct ifwe allow ourselves
lo 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 o.f transit pass. ~4s lve have scannetl
B
the ana/omy of the provisions of both the enactments rules
framed there under and analysed the purport and import af
the notijication, the true nature and character of levy surface
somethi'ng different. The exact nature of levy cannot be
marginalised by making a sweeping statement that is a
c 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 offee on transit
but in essentialit)' it is a trespass into the area of regulation
D
and control. As has been slated 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 coneavity in the regulation and control. That apart the
E standard or measurement does not have any nexus with the
essential character of the levy. Therefore the notification
rims coullter lo 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
F 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 lo be /anceted and
accordingly we so hold. "
212. Whether the above view of the High Court, holding that State
G 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
H of Section 41 provides that "in particular and without prejudice to the
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 707
CRUSHER [ASHOK BHUSHAN, J.]

generality of the foregoing provision such rules may, .... (c) provide for A
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
B
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, Band 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: c
FORM A
[Sec Rule 6(2)]

Book No. Counter foil Transit Pass PaPeNo.
1 Locality of Storage:- D
(a) Range
fb) 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 E
transported-
6 Route by which produce is to be transported-
7 Barrier at which forest produce will be
produced for check·
8 Date of exoirv ofoass-
Note:- Second foil will be similar to the Counterfoil. F
Signature of checking officer
Signature of issuing officer
213. Column three provides for description ofproduce and quantity.
G
Ruic 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 4." /
H
708 SUPREME COURT REPORTS (2017] 1I S.C.R.

A 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 assessme/1/ the proceeds of which
are applicable to public focal purposes and leviable on the
B basis of 41 valuation ofpropert}> and includes any sum which,
although obtained in the first instance by a precept,
certificate or other instrument requiring /.Ja.v111ent ji·o111 son1e
authority or ojfice1; is or can be ultimatezv raised out of a
rate."

c 215. When the State is empowered to fix rates offee, 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.

D 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
E 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/ vollllllle 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. Sitap11r Packi11g Wood
F 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
G 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
H ground that the fee is not supported by the principle of quid
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 709.
CRUSHER [ASHOK BHUSHAN, J.)

pro quo. It held that no service is provided in lieu of the fee A
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 established."
217. High Court although upheld the competence of the State to B
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 I 0 and 11 :-
" / 0. The transit fee under Rule 5 is clearly regulatory and, c
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 D
of the High Court is accordingly set aside. The parties are,
however, leji to bear their own costs. "
218. It is also relevant to note that although the High Court in its
judgment bas held that both 1957 Act and I 927 Act operate in different
fields. However, it had also made observations that imposing fee by E
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 ii is a regulatory
fee and the Stale has to undertake many works for routes
F
and environment and, therefore, it is lo be regarded as
regulato1y fee but as we perceive, imposing fee by fixing
tonnage and cubic meters as unit, it enters into the 'regulation
and conrro/' which is in the realm of the MMDR Act, for it
has impact on the mining aclivizy and the primary purpose,
as is patent, is lo regulate the mineral. It is not for the purpose G
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
developnzent of niinerals."
H
710 SUPREME COURT REPORTS [2017] l l S.C.R.

A 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.
B
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 allowed.
C XX. CONCLUSIONS
221. In vi~v 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
D forest produce. The crushed materials continue to be stone and retain
their nature of forest produce.
(b) Coal with its various varieties, limestone, hydrated lime, quick
limestone, slake lime, veneer and plywood waste are all forest produce.
(c) Marble blocks, marble slabs, marble chips arc all forest produce.
E
(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
arc neither overridden nor impliedly repealed, altered or amended by
Mines and Minerals (Development and Regulation) Act, 1957 and the
F
Rules framed the~eunder. 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
G forest''. We, however, clarify that for an item to be treated as forest
produce, its origin may be in any forest within the State ofU.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
H area regarded as forest in the Government record irrespective of the
STATE OF UTTARAKHAND & ORS. v. MIS. KUMAON STONE 711
CRUSHER [ASHOK BHUSHAN, J.]

ownership. The meaning of forest cannot be restricted only to reserve A
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 I 0.2.1960 can only
be read to mean that both sides of the road have been declared as B
protected forest on which Chapter IV of the 1927 Act shall be applicable.
VI. Rule 3 of 1978 Rules is not independent of Ruic 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 Ruic 4(l)(b) only.
VII. After issuance of notification under Section 4 of 1927 Act. removal C
of forest produce therefrom shall be governed by the Rules framed by
the State in view ofU.P.Act 23of1965 by which original Section 5 has
been substituted in its application in the State ofU.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.
D
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 cxccssi vc and confiscatory in nature.
IX. The notification dated 28.05.2001 issued by the State of Madhya
Pradesh in exercise of power wider Rule 5 of2000 Rules cannot be said E
to be beyond the scope of Rule 5 of2000 Rules and Section 41of1927
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 of2000 Rules framed under
the 1927 Act.
F
222. In view of the foregoing discussion, we decide this batch of
cases in following manner:
( l) All Civil Appeals filed by the State ofU.P. and State of Uttarakhand
challenging the judgments of the High Court of Uttarakhand dated
OJ. 7.2004, 20.03.2005, 26.06.2007 and subsequent judgments following
the aforesaid three judgments are allowed. The impugned judgments G
arc set aside and the writ petitions stand dismissed.
(2) All the Civil Appeals filed by the State ofU.P. against the judgment
dated 11.11.2011 and subsequent jndgments following judgment dated
11.11.2011 arc dismissed.
H
712 SUPREME COURT REPORTS [2017] l l S.C.R.

A (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 11.11.20 l l
and other subsequent judgments following the judgment dated 11.11.2011
arc disposed of in terms of our conclusion as recorded in paragraph
B
221 (I to VIII).
( 4) The transfet petitions are disposed of in terms of our conclusion as
recorded in paragraph 221(1 to VIII) and Writ Petition(C) No.203 of
2009 (Mis. Pappu Coal Master & Ors. vs. State of U.P. & Anr.) is also
disposed of in terms ofour conclusion as recorded in paragraph 221 (I to
c VIJI)
(5) The writ petitioners from whom the transit foe was realised with
cffoct from OJ.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
D 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 Cont~mpt Petitions are dismissed.
E
(7) All the Civil Appeals filed by the State of Madhya Pradesh against
judgment dated 14.05.2007 arc 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.
F

NiJhi Jain Matters disposeJ of.