Meghalaya High Court
Shri Tangkham M Sangma vs State Of Meghalaya And Ors on 30 June, 2015
Author: Uma Nath Singh
Bench: Uma Nath Singh
THE HIGH COURT OF MEGHALAYA
WP(C) No. 140 of 2014
Shri Tangkham M Sangma, son of Shri Monsing Ch.
Marak, resident of Loswer Hawakhana Tura, West Garo
Hills Meghalaya.
....... Petitioner
-Versus-
1. State of Meghalaya, represented by Secretary to the
Government of Meghalaya, District Council Affairs
Department, Shillong.
2. Commissioner and Secretary, Home Department,
Government of Meghalaya, Shillong.
3. Deputy Commissioner, North Garo Hills District,
Resubelpara.
4. Deputy Commissioner, South Garo Hills District,
Baghmara.
5. Deputy Commissioner, East Garo Hills District,
Williamnagar.
6. Superintendent of Police, North Garo Hills District,
Resubelpara.
7. Superintendent of Police, South Garo Hills District,
Baghmara.
8. GHADC, represented by Secretary Executive
Committee, GHADC, Tura.
9. Chairman, GHADC, Tura.
10. Chief Executive GHADC, Tura.
11. The Chief Forest Officer, GHADC, Tura.
....... Respondents
BEFORE HON'BLE MR JUSTICE UMA NATH SINGH, CHIEF JUSTICE HON'BLE MR JUSTICE T NANDAKUMAR SINGH 2 Advocate for the petitioner :Shri S Sen, Adv. Advocate for the Respondents :Shri ND Chullai, Senior Govt.
Advocate for respondents No. 1 to 7. Shri S Dey, Advocate, for respondents No. 8 to 11.
Date of Judgment and Order : 30.06.2015
JUDGMENT AND ORDER
Uma Nath Singh, CJ.
We have heard learned counsel for parties and perused the pleadings of writ petition.
2. The brief facts of the case as set out in the pleadings are that the petitioner established forest check gate for collection of compensatory fee from the trucks transporting minerals like coal and limestone for reclamation of un-classed forest which falls within the jurisdiction of the Garo Hills Autonomous District Council (for short „the GHADC‟ ). The GHADC has been constituted in terms of provisions of paragraph 2(two) of the Sixth Schedule to the Constitution of India framed under Articles 244(2) and 275(1) of the Constitution of India. Upon its constitution, the GHADC was given powers inter alia, to manage any forest not being a reserved forest of the Garo Hills under para 3(1)(b) of the Sixth Schedule. The GHADC thus, in purported exercise of powers under the Sixth Schedule to the Constitution of India enacted the Garo Hills District (Forest) Act, 1958 (for short „the 1958 Act‟) to provide for the management of any forest not being a reserved forest in the Garo Hills area and also for the levy and collection of forest revenue. The 1958 Act received the assent of the Governor of Assam on 18.12.1958. Section 20 (Chapter III) of the 1958 Act reads as under :
"20. Application of Chapters IV, VI, VII, VIII, IX, X and XI of the Assam Forest Regulation, 1981 - (1) The provisions of the following Chapters of the Assam Forest Regulation 1891 (Regulation No. VII of 1891), namely, Chapters IV, VI, VII, VIII, IX, X and XI and the rules made thereunder as may be amended from time to 3 time shall, mutatis mutandis apply in respect of the management of Council Forest and levy and collection of forest revenues.
2. The provisions of all rules made under the Assam Forest Regulation, 1891 (Regulation No. VII of 1891), having the force of law, and the provisions of the Garo Hills Regulation, 1882 (Regulation No. 1 of 1882), and the rules and orders issued thereunder relating to the forests and forms and registers as were in force immediately before the commencement of this Act shall mutatis mutandis apply in respect of the management of the Council Forests and such cognate matters.
Provided that all references in the Assam Forest Regulation, 1891 (Ni. VII of 1891), the Garo Hills Regulation, 1882 (Regulation No. 1 of 1882), the rules, orders and forms and registers to the State Government shall be deemed to refer to the District Council, those to the Conservator of Forest and Deputy Commissioner to the Chief Executive Member, those to the Divisional Forest Officer of Assistant Conservator of Forests to the Chief Forests Officer, the District Council and those to other forest Officers to officers of corresponding or next higher rank of the District Council."
Section 34(4) under Chapter IV of the Assam Regulation, 1981 as referred to hereinabove in Section 20 of the 1958 Act provides that the State Government may prescribe or authorize any forest Officer to prescribe, subject to the control of the State Government, the fees, royalties or other payments for the forest produce and the manner in which such fees, royalties or other payments are to be levied, in transit, or particularly in transit or otherwise.
Regulation 4(B) of the Garo Hills Regulation, 1882 defines "un-class State Forest" as any land at the disposal of the State not included in the reserved forest. The GHADC has vast areas of un-classed forest within its jurisdiction and the management of the same is exclusively vested in it under para 3(1)(b) of the Sixth Schedule to the Constitution as follows :
" 3 (1)(b) Powers of the District Councils and Regional Councils to make laws - (1) The Regional Council for an autonomous region in respect of all areas within such region and the District Council for an autonomous 4 district in respect of al areas within the district except those which are under the authority of Regional Councils, if any, within the district shall have power to make laws with respect to -
The allotment, occupation or use, or the setting apart, of land, other than any land which is a reserved forest for the purposes of agriculture or grazing or for residential or other non-agricultural purposes or for any other purpose likely to promote the interests of the inhabitants of any village or town;
Provided that nothing in such laws shall prevent the compulsory acquisition of any land, whether occupied or unoccupied, for public purposes (by the Government of the State concerned) in accordance with the law for the time being in force authorizing such acquisition; The management of any forest not being a reserved forest."
3. The petitioner claims that the forest check gates for the purpose of collection of compensatory fee were set up with the approval of the GHADC. The District Council of the GHADC was managing the forest check gates without any interference and even the State Government also realized the need for such effective management and protection of the forest. Such check gates were set up and managed either by the GHADC itself or through a private lessee. Being fully satisfied with the services, the Executive Committee of the GHADC in its meeting held on 20.08.2009, had decided to set up forest check gates including reopening of such existing gates at the important and vulnerable check points within the jurisdiction of East, West and South Garo Hills District with immediate effect. As such, the forest check gates were felt necessary for the purpose of checking of illegal transportation of timber and other forest produce like minerals and for realization of forest revenues. The decision of the GHADC was contained in the Office Order No. 73, dated 24.08.2009 and that was also issued to all the concerned authorities including various District Administrations as well as the Secretary to the Government of Meghalaya, District Council Affairs Department for necessary action. Since then, the District Council has been managing the forest check gates without any interference from any quarter. Realizing 5 the need for effective management and protection of the forest under the District Council, the State Government has also issued advisory from time to time to ensure the follow up action.
4. Further, according to the petitioner, vide a letter issued in the year 2008 by the Divisional Forest Officer, Garo Hills Division which was addressed to the Secretary, Executive Committee, the GHADC, the decision of Hon‟ble the Apex Court requiring effective management of forest was brought to the notice of the GHADC. Thus, extraction and transportation of forest produce needed to be regulated in order to protect the fragile ecology in the forest. Extraction/removal of forest produce including the minerals like coal and limestone and their transportation caused substantial damage to the forest and therefore, remedial measures are required in the form of afforestation etc. Such remedial scheme may also require huge financial backup. Therefore, in order to generate revenue for that purpose a compensatory fee was decided to be imposed on vehicles loaded with minerals like coal and limestone transported through un-classed forest for the purpose of reclaiming that forest. That is why the forest check gates were set up by the GHADC at different places in 8 (eight) forest ranges of the Garo Hills.
5. The petitioner herein was also granted lease to collect compensatory fee from the trucks loaded with minerals like coal and limestone for reclamation of un-classed forest falling within the jurisdiction of the GHADC, Tura at Dainadubi, Chokpot and Baghmara on the following terms and conditions :
"1. The concerned lease holder should deposit an amount of Rs. 1,00,000/- (Rupees one lakh) only per month at the end of every month positively failing which this order will be cancelled without further notice.
2. That the rate to be collected is fixed at Rs. 300/- (Rupees three hundred) only from each truck loaded with coal and limestone from the areas as listed above.
3. That the money receipt of the same should be issued to the concerned truck driver.6
4. That the receipt books for collection of such fees will be supplied by the GHADC on payment of Rs. 200/- (Rupees two hundred) only per book and the counterfoils of the used up Receipt Books should be returned to the office of the Chief Forest Officer, GHADC, Tura at the end of every month.
5. That the period for such collection is allotted on trial basis for 3(three) months with effect from the date of issue of this order.
6. On expiry of the allotted period of 3(three) months on trial basis, fresh order shall be made in accordance with the prevalent rules and regulation of the GHADC, Tura to the interested person(s).
7. That the collection of such fees etc. should not disturb the smooth movement of other vehicles in any way.
8. That 2 (two) personnel from the forest Department shall be deputed to check and monitor the operation of the collection points and to check the records maintained thereof and to report the same to the authority on monthly basis."
6. Thus, the petitioner set up a forest check gate at Nagulpara and Dainadubi in East Garo Hills District in the complex belonging to one Smti Nikse Areng of Dainadubi which is situated on the National Highway
62. The complex had been constructed after obtaining all the clearances from the competent authorities such as Deputy commissioner, North Garo Hills District, Superintendent of Police, North Garo Hills District, Ministry of Road Transport and Highways, Government of India, PWD (Roads), Williamnagar Circle, Ministry of Road Transport and Highways. It is also stated that the complex is situated away from the Highway and is connected with an approach road which has also been constructed on obtaining requisite permissions from the competent authorities. It is also stated in the writ petition that in terms of notification issued by the GHADC a prescribed receipt was to be issued for every such collection and two personnel from the Forest Department of District Council were to be deputed to check and monitor the operation of the collection points and to check the record maintained thereof. These forest personnel were also deputed to report the details to the authorities on monthly basis. 7 The lease was essentially for three months but was made extendable for full term upon fulfilment of the requirements. The petitioner set up the forest check gate at Nangalpara with the prior approval of the District Council and built up the necessary infrastructure by investing substantial amount of money and the same was operationalized after completing all the formalities. The petitioner was strictly adhering to the stipulation contained in the order dated 20.12.2013. The petitioner was regularly depositing the monthly lease amount of Rs. 1 lakh. That is why being fully satisfied with the performance of the petitioner, the GHADC by office Order No. 222, dated 04.03.2013 extended the lease for a period of three years with effect from 20.03.2014 to 19.03.2017 on the same terms and conditions as contained in the Order dated 20.12.2013.
7. The Deputy Commissioner, North Garo Hills District vide his letter dated 03.03.2014 convened a meeting on 05.03.2014. The meeting was attended by all the concerned including the writ petitioner and the officers of the GHADC. In the said meeting, the discussion was made to close down the entire unauthorized check gates causing illegal collection without any authority of law. However, the petitioner states that it was also decided not to interfere with the lawful collections.
8. In this background, on 11.03.2014, the District Administration of North Garo Hills carried out operation to close down all the unauthorized collection booths, but strangely without any rhyme or reason or even without issuing a show cause, the forest check gate allotted to the petitioner on lease was also simultaneously closed down. Being aggrieved, the petitioner by way of instant writ petition has assailed the action of closure of forest check gate allotted to him on the ground of being arbitrary and illegal. The forest check gate was set up to facilitate the collection of compensatory fee from the trucks loaded with minerals like coal and limestone for reclamation of un-classed forest falling within the jurisdiction of the GHADC.
8
9. While reiterating the aforesaid averments in the petition, learned counsel for the petitioner contends that on the application of the petitioner, the lease for collection of compensatory fee was granted in the auction proceedings held as per the advertisement published in the newspaper. It is also a submission that vide para 9 of the Sixth Schedule to the Constitution, a licence or lease like the one in question for the purpose of protecting, or extraction of minerals, can be provided.
10. As per further submissions of learned counsel for the petitioner, the forest check gate set up by him as a lessee has been closed without any show cause notice, thus, it is violative of Articles 14 and 16 of the Constitution of India. Such an act of respondents is liable to be declared illegal and unconstitutional. Pursuant to Notifications dated 04.12.2013 and 20.12.2013, the petitioner built up necessary infrastructure to facilitate collection of compensatory fee and has been regularly paying the monthly lease amount. However, because of the abrupt and illegal closure of the check gate by the District Administration, his interest has been seriously prejudiced and rights infringed. Thus, such an act of District Administration (respondents herein) is without any authority of law.
11. In reply to writ petition filed on behalf of Opposite Parties No. 8, 9, 10 and 11, the Secretary, Executive Committee of the GHADC, Tura, has submitted that under Article 244(2) and Para 3(1)(b) of the Sixth Schedule to the Constitution of India, the Garo Hills District (Forest) Act, 1958 was enacted by the GHADC. It received the assent of Governor of Assam on 18th December, 1958. The Act was enacted to provide for management of any forest not being a reserved forest in the autonomous district of Garo Hills for levy and collection of forest revenue. The Notification dated 04.12.2013 in favour of the petitioner was issued by the GHADC whereby, the petitioner Shri M Sangma was authorized to collect compensatory fee from the trucks loaded with minerals like coal 9 and limestone for reclamation of un-classed forests which fall under the jurisdiction of the GHADC Tura with certain terms and conditions.
12. It is also stated that the office of the GHADC issued the office order No. 222, dated 04-03-2014 in continuation of the office order No. 180, dated 20-12-2013, whereby petitioner was allowed to collect compensatory fees from trucks loaded with minerals like coal and limestone for reclamation of un-classed forest. There is a vast area of un- classed forest under the jurisdiction of the GHADC and from that area various forest products including minerals are being constantly extracted and transported outside the autonomous district. This exercise is posing a continuous threat to the ecological balance, therefore, it was necessary to regulate such activities in order to protect the fragile ecology of that area. The Executive Committee of the GHADC has also decided to introduce forest regulatory measures. Transportation of forest produce including minerals etc causes substantial damage to forest, and that is why imposition of compensatory fee was required.
13. The State respondents, through affidavit filed by the Deputy Commissioner, North Garo Hills District, has alleged that the GHADC by permitting collection of fee in the name of compensatory fee instead of taking action by seizing trucks which are transporting coal and limestone etc. is in directly encouraging destruction of forest in the entire Garo Hills on payment of compensatory fee. The authorities of the GHADC without claiming to have allowed installation of check gate to control illegal movement/transportation of forest produce including coal and limestone has in reality allowed the installation of the check gate which is functioning as toll gate for collection of fee from every truck loaded with coal and limestone. Thus, there is no sanction of law in setting up the check gate and collection of toll. Collection of money from trucks loaded with forest produce and other minerals like coal and limestone cannot be termed as effective measures and regulations for protecting the forest. In fact, this act of the GHADC has caused imbalance to ecological system of 10 the area near National Highway 62. It is also submitted by the Deputy Commissioner that the check gate is located in the complex of one local native Smti Nikse Arengh, and No Objection Certificates were obtained from the authorities only in the name of that lady and not in the name of the petitioner, for the purpose of raising construction on approach road of proposed complex having Pollution Testing Station and the GHADC Toll- cum-Coal Market Tax Counter facilities and not for setting up of forest check gate as alleged by the petitioner.
14. Moreover, No Objection Certificate dated 31.08.2012 was cancelled by respondent No. 2 vide letter dated 14.03.2014. It is also a submission on behalf of the State that permissions were obtained from the authorities who do not have jurisdiction to grant such permission for collection. The GHADC has neither the authority to operate the coal market or to levy any tax on coal in view of the fact that it is getting a share of royalty collected by the State Government. The GHADC also does not have power to collect compensatory fees from trucks loaded with minerals, like coal and limestone. It is only on the basis of number of complaints lodged by different truck associations, the District Administration issued a show cause notice dated 03.10.2013 to the petitioner which was not even replied to by him. Therefore, the Deputy Commissioner declared all such check gates operating without proper sanction from the Government as illegal and directed closure of the same. Despite that, the petitioner kept on violating the said order, and therefore, by letter No. NGHD/JUDL/8/2012/2479 dated 12.12.2013, the Deputy Commissioner directed that the petitioner cannot operate any toll gate at Dainadubi, North Garo Hills along National Highway 62 without Government sanction or obtaining permission from different Government Departments. The petitioner did not file any reply thereto. Again by another letter namely, NGHD/8/2012/86 dated 06.01.2014, the Deputy Commissioner directed that the petitioner cannot operate check gate at Dainadubi along National Highway 62 for collection of compensatory fee 11 from the trucks loaded with coal and limestone without Government sanction and without obtaining necessary permission. That letter was also not replied to or complied with. Thus, the Deputy Commissioner, respondent No. 3 herein having given sufficient opportunities by way of show cause issued to writ petitioner proceeded to take action.
15. On due consideration of rival submissions, we do not find merit in the writ petition to grant indulgence:
As regards the justification in law for the levy and collection of compensatory fee, the reasons as provided in the pleadings as well as the arguments of learned counsel for the petitioner are (i) that he is paying the lease money regularly; (ii) that he was granted the lease under the orders of the GHADC which is competent to impose levy of compensatory fee under para 3(1)(b) of the Sixth Schedule to the Constitution of India; (iii) that the lessee has spent a substantial amount in establishing the Forest Check gate and (iv) that there was no interference by officials of State Government earlier with the collection of impost.
On the contrary, the State has asserted that the matter is covered by para 9 of the Sixth Schedule to the Constitution of India whereunder only the State Government is empowered to levy compensatory fee etc on transportation of forest produce particularly the minerals like coal and limestone etc. Para 9 of the Sixth Schedule to the Constitution of India is thus, reproduced for the ready reference as under
:
"9. Licences or leases for the purpose of prospecting for, or extraction of, minerals. - 1) Such share of the royalties accruing each year from licences or leases for the purposes of prospecting for, or the extraction of, minerals granted by [the Government of the State] in respect of any area within an autonomous district as may be agreed upon between [the Government of the State] and the District Council of such district shall be made over to that District Council.
2) If any dispute arises as to the share of such royalties to be made over to a District Council, it shall be 12 referred to the Governor for determination and the amount determined by the Governor in his discretion shall be deemed to be the amount payable under sub- paragraph (1) of this paragraph to the District Council and the decision of the Governor shall be final."
16. Thus, it is evident that for grant of lease for extracting mines, the State Government is the competent authority, irrespective of the fact that the area falls within an Autonomous District. But the State Government and Autonomous District Council (ADC) both share the royalties as per the agreement between them and in case of any dispute relating to share of royalties, the matter is to be referred to the Governor whose decision is to be accepted as final.
17. Thus the State Govt. alone has power to grant lease for extraction of minerals under para 9 to the Sixth Schedule to the Constitution. But that nevertheless, the State Govt. is required to consult an Expert Body like Central Empowered Committee (CEC) constituted by Hon‟ble the Apex Court vide order dated 09.05.2002 passed in the case of TN Godavarman Thirumulpad v. Union of India, reported in (2013) 8 SCC 198 (which has now the jurisdiction over the whole of the country). The CEC was constituted as an interim body till statutory agency as required under Section 3 of the Environment (Protection) Act, 1986 was constituted. For ready reference, the order dated 09.05.2002 is reproduced as under :
" 1. After hearing the learned amicus curiae, counsel for the parties and taking into consideration the suggestions placed before us by the learned Attorney General, we pass the following order :
1.1 It is submitted that till the Central Government constitutes a statutory agency as contemplated by Section 3 of the Environment (Protection) Act, 1986, it is necessary and expedient that an authority be constituted at the national level to be called the Central Empowered Committee (hereinafter "the Empowered Committee") for monitoring of implementation of the Hon'ble court's orders and to place the non-compliance cases before it, including in respect of encroachment removals, implementations of working plans, compensatory afforestation, plantations and other conservation issues.
1.2 The Empowered Committee shall comprise of a Chairman to be nominated by the Ministry of 13 Environment and Forests (MoEF) in consultation with the amicus curiae. It will have one nominee of the MoEF, and two NGOs (also to be nominated in consultation with the amicus curiae). Shri MK Jiwrajka will be its Member-Secretary. The persons so appointed (other than the nominee of the Ministry) shall not be removed without leave of the Court.
1.3 Pending interlocutory applications in these two writ petitions as well as the reports and affidavits filed by the States in response to the orders made by the court shall be examined by the Committee, and their recommendations will be placed before the Hon'ble Court for orders.
1.4 Any individual having any grievance against any steps taken by the government or any other authority in purported compliance with the orders passed by this Hon'ble Court will be at liberty to move the Committee for seeking suitable relief. The Committee may dispose of such applications in conformity with the orders passed by the Hon'ble Court. Any application which cannot be appropriately disposed of by the Committee may be referred by it to this Hon'ble Court.
1.5 The Committee shall have the power to :
1.5.1. Call for any documents from any persons or the Government of the Union or the State or any other official.
1.5.2. summon any persons and receive evidence from such persons on oath either on affidavit or otherwise.
1.5.3. seek assistance/presence of any persons(s)/official(s) required by it in relation to its work.
1.6. The Committee may decide its own procedure for dealing with applications and other issues. The Union of India shall provide suitable and adequate office accommodation for the Committee. The expenditure incurred on the working of the Committee including salary/remuneration (to the extent not payable by the Government) to the members and supporting staff, may be met out of income accruing to the Special Investigating Team (SIT). Necessary procedure for this may be formulated by the committee in consultation with SIT.
1.7. the Committee is empowers to co-opt one or more persons as its members or as special invitees for dealing with specific issues. While dealing with issues pertaining to a particular State, wherever feasible, the Chief Secretary and Principal Chief Conservator of Forests of the State shall be co-opted as special invitees.
1.8. The Committee shall submit quarterly reports to the Hon'ble Court. It will be at liberty to seek clarifications/modifications needed by it from the Hon'ble court.
2. IA No. 295 is disposed of in the aforesaid terms."14
18. Thereafter, in supersession of all the previous orders regarding constitution and functioning of the CEC, Hon‟ble the Apex Court passed the following order on 14.12.2007 in the case of TN Godavarman which is reported in (2013) 8 SCC 204 :
"1.2 The Committee shall exercise the following powers and perform the following functions :
(i) to monitor the implementation of this Court's orders and place reports of non-compliance before the Court and the Central Government for appropriate action;
(ii) to examine pending interlocutory applications in the said writ petitions 9as may be referred to it by the Court) as well as the reports and affidavits filed by the States in response to the orders passed by the Hon'ble Court and place its recommendations before the Court for orders;
(iii) to deal with any applications made to it by any aggrieved person and wherever necessary, to make a report to this Court in that behalf;
(iv) for the purposes of effective discharge of powers conferred upon the Committee under this order, the Committee can :
(a) call for any documents from any persons or the Government of the Union or the State or any other official;
(b) undertake site inspection of forest area involved;
(c) seek assistance or presence of any person(s) or official(s) required by it in relation to its work;
(d) co-opt one or more persons as its members or as special invitees for dealing with specific issues;
(e) co-opt, wherever feasible, the Chief Secretary or his representative and Principal Chief Conservator of Forests of the State as special invitees while dealing with issues pertaining to a particular State;
(f) to suggest measures generally to the State, as well as Central Government, for the more effective implementation of the Act and other orders of this Court;
(v) to examine and advise/recommend on any issue referred to the Committee.
2. The Ministry of Environment and Forests shall provide suitable and adequate office accommodation for the Committee and shall bear all the expenses of the working of CEC.
3. The jurisdiction of the Committee shall extend to the whole of India".
19. By a subsequent order dated 02.11.2012, Hon‟ble the Apex Court in the case of TN Godavarman while accepting various reports of the CEC directed it to consider the representation of Banshankari Mining Corporation and to submit the report to the Court. Thus, the CEC being 15 an expert body has been entrusted with further responsibility since 2002 when it was constituted. In 2013, vide order dated 18.04.2013, Hon‟ble the Apex Court in another case namely, Samaj Parivartan Samudaya & Ors. v. State of Karnataka and Ors, reported in (2013) 8 SCC 154 while rejecting the challenge to the credibility and continuance of the CEC as absolutely unfounded, accepted the reports of the Committee. The Court also directed the CBI to complete the pending investigation into illegal mining activities. It was also held that in terms of Section 3(d) of the Mines and Minerals (Development and Regulation) Act, 1957 all activities regarding mining within the meaning of expression „Mining Operations‟ on forest land would require clearance under the Forest (Conservation) Act.
20. In the case of Centre for Public Interest Litigation and Ors. v. Union of India, reported in (2012) 3 SCC 1, it has been held that the environment laws enacted by the Parliament and State Legislatures deal with specific natural resources i.e. forest, air, water, coastal zones etc. Thus, the Parliament and State Legislature alone are competent to legislate on the subject connected with forest. In para 76 of the judgment, it has been held as under :
"76. The ownership regime relating to natural resources can also be ascertained from international conventions and customary international law, common law and national constitution. In international law, it rests upon the concept of sovereignty and seeks to respect the principle of permanent sovereignty (of peoples and nations) over (their) natural resources as asserted in the 17th Session of the United Nations General Assembly and then affirmed as a customary international norm by the International Court of Justice in the case of Democratic Republic of Congo v. Uganda. Common law recognizes States as having the authority to protect natural resources insofar as the resources are within the interest of the general public. The State is deemed to have a proprietary interest in natural resources and must act as a guardian and trustee in relation to the same. Constitutions across the world focus on establishing natural resources as owned by, and for the benefit of, the country. In most instances where constitutions specifically address 16 ownership of natural resources, the sovereign State, or, as it is more commonly expressed, "the people", is designated as the owner of the natural resources".
21. As such, the position of State qua propriety interest in natural resources is only in the nature of a guardian or trustee. The Courts have given an expansive interpretation to the concept of natural resources and have from time to time issued directions by relying upon the provisions contained in Articles 38, 39, 48, 48-A and 51-A(g) of the Constitution for protection and proper allocation/distribution of natural resources and have repeatedly insisted on compliance with constitutional principles in the process of distribution, transfer and alienation to private persons.
22. In the case of Goa Foundation v. Union of India & Ors, reported in (2014)6 SCC 590, it has been held that since Goa is heavily dependent upon iron ore mining for its revenue and employment, therefore, mining cannot be totally prohibited in that State. However, while interpreting Article 21, it was held that lessees shall deposit 10% of the sale proceed from iron ore towards Goa Iron Ore Permanent Fund in the interest of sustainable development and intergenerational equity as the damage caused cannot be rectified by regulation/monitoring alone. The CEC was directed to submit a comprehensive scheme within six months in that regard. The Court also propounded, the principle that „the polluter shall pay‟.
As noticed above, the Sixth Schedule to the Constitution has been framed under Articles 244(2) and 275(1), and under proviso 1 to Article 275(1) the grants-in-aid are extended by the Central Government to State Governments (in the instant case, Govt. of Meghalaya) and not to Autonomous District Councils to meet the costs of schemes. Therefore, in order to spend the grants-in-aid received from the Central Government, it is only the State Government which can frame the Scheme. Thus, in terms of judgment in Goa Foundation case also, and for the purpose of collection of imposts in the nature of compensatory fee, on the issue raised herein, only the State Government can draw a comprehensive scheme.
17
23. Though the GHADC has claimed the competence to impose and collect compensatory fee under Article 244(2) and para 3(1)(b) of the Sixth Schedule to the Constitution of India, but the fact remains that para 12(A) of the said Schedule provides that in case of repugnancy of law or regulation made by an Autonomous District Council with the law enacted by the State Legislature, the latter shall prevail and thus, the law made by District Councils or Regional Councils to the extent of being repugnant to the law made by the State legislature shall be void. Para 12(A) is also reproduced as under :
"12.A. Application of Acts of Parliament and of the Legislature of the State of Meghalaya to autonomous districts and autonomous regions in the State of Meghalaya - Notwithstanding anything in this Constitution,-
(a) If any provision of a law made by a District or Regional Council in the State of Meghalaya with respect to any matter specified in sub-paragraph (1) of paragraph 3 of this Schedule or if any provision of any regulation made by the District council or a Regional Council in that State under paragraph 8 or paragraph 10 of this Schedule, is repugnant to any provision of a law made by the Legislature of the State of Meghalaya with respect to that matter, then, the law or regulation made by the District council or, as the case may be, the Regional council whether made before or after the law made by the Legislature of the State of Meghalaya, shall, to the extent of repugnancy, be void and the law may by the Legislature of the State of Meghalaya shall prevail;
(b) The President may, with respect to any Act of Parliament, by notification, direct that it shall not apply to an autonomous region in the State of Meghalaya, or shall apply to such district or region or any part thereof subject to such exceptions or modifications as he may specify in the notification and any such direction may be given so as to have retrospective effect."
Besides, para 21 of the Sixth Schedule to the Constitution provides for amendment of the Schedule as under :
"21. Amendment of the Schedule - (1) Parliament may from time to time by law amend by way of addition, variation or repeal any of the provisions of this Schedule and, when the Schedule is so amended, any reference to this Schedule in this Constitution shall be 18 construed as a reference to such Schedule as so amended.
2. No such law as is mentioned in sub-paragraph (1) of this paragraph shall be deemed to be an amendment of this Constitution for the purposes of article 368".
From the reading of the aforesaid provisions, it is clear that an amendment of the Schedule can be carried out by Law of the Parliament, and the law amending any provision shall not be deemed to be a constitutional amendment for the purpose of Article 368. A Constitution Bench of Hon‟ble the Apex Court in Edwingson Bareh v. State of Assam & Ors, reported in (1966) 2 SCR 770 : AIR 1966 SC 1220 vide para 13 has clarified the position as :
"It is plain that under para 21, Parliament can make a law amending by way of addition, variation or repeal any of the provisions of the Sixth Schedule and when such an amendment is made, reference to the Sixth Schedule in the Constitution shall naturally be construed as a reference to such Schedule as so amended. In other words, Parliament is clothed with legislative competence of the widest amplitude in relation to any changes it likes to make in any of the provisions contained in the Sixth Schedule. Para 21(2) has provided that any changes sought to be introduced by parliamentary legislation under the power conferred on Parliament by sub-para (1) thereof shall not be deemed to amount to an amendment of the Constitution for the purposes of Article 368. There can thus be no doubt that if Parliament wants to make any changes in any provisions of the Sixth Schedule, it is entitled to do so; and that obviously means that the change which has been introduced by the impugned notification might as well have been made by Parliament. The question which calls for our decision is can the same change be validly introduced by the Governor in exercise of the powers conferred on him by para 1(3) or not?."
There are other similar and analogous provisions also for amendment of some articles of the Constitution by the Law of Parliament. Two such provisions are Article 341(2) and Article 342(2) which are reproduced as :
"341(2) Parliament may by law include in or exclude from the list of Scheduled Castes specified in a notification issued under clause (1) any caste, race or tribe or part of or group within any caste, race or tribe, but save as aforesaid a notification issued under the said clause shall not be varied by any subsequent notification.19
342(2) Parliament may by law include in or exclude from the list of Scheduled Tribes specified in a notification issued under clause (1) any tribe or tribal community or part of or group within any tribe or tribal community, but save as aforesaid a notification issued under the said clause shall not be varied by any subsequent notification."
It may not be out of place to refer to Article 100 of the Constitution also which provides for voting in Houses, power of Houses to act not-withstanding vacancies and quorum. Article 100 reads as under :
" Voting in Houses, power of Houses to act notwithstanding vacancies and quorum - (1) Save as otherwise provided in this Constitution, all questions at any sitting of either House or joint sitting of the Houses shall be determined by a majority of votes of the members present and voting, other than the Speaker or persons acting as Chairman or Speaker .
The Chairman or Speaker, or person acting as such, shall not vote in the first instance, but shall have and exercise a casting vote in the case of an equality of votes.
(2) Either House of Parliament shall have power to act notwithstanding any vacancy in the membership thereof, and any proceedings in Parliament shall be valid notwithstanding that it is discovered subsequently that some person who was not entitled so to do sat or voted or otherwise took part in the proceedings.
(3) Until Parliament by law otherwise, the quorum to constitute a meeting of either House of Parliament shall be one-tenth of the total number of members of the House.
(4) If at any time during a meeting of a House there is no quorum, it shall be the duty of the Chairman or Speaker, or person acting as such, either to adjourn the House or to suspend the meeting until there is a quorum."
Thus, only one-tenth of total members of the House are required to constitute a quorum, for enacting a law. In view of the aforesaid provisions as referred to hereinabove and discussed, we are of the considered view that the powers for enacting law entrusted to the Autonomous District Council are not of the same nature as available with the Parliament and State Legislatures. The source of legislative competence of the Autonomous Councils is only the Sixth Schedule which can be amended by the law enacted by the Parliament. 20
24. Besides, the petitioner was not granted permission by any competent authority of the State for raising construction nor does it appears that he infact has raised any construction. The petitioner was only operating from the premises of a local native and using the forest check gate virtually as the toll gate for the purpose of collection. He also did not respond to the notices issued by the local administration, therefore, after granting him repeated opportunity by way of the show cause notice to him the Deputy Concerned closed down the forest check gate run by the petitioner.
25. As regards the justification for collection of compensatory fee, we do not find the existence of element quid pro quo or a reasonable nexus between payer of compensatory fee and the services rendered by GHADC which could entitle its lessee, the petitioner, to collect the impost. There is no data placed on record to show that the GHADC has rendered any services to the payers to justify the levy of compensatory fee through the forest check gate. While elucidating the legal position on the basis of various judgments of Hon‟ble the Apex Court as well as the Hon‟ble High Courts, a Division Bench of Punjab and Haryana High Court comprising of Hon‟ble Mr Justice JS Khehar, (now the Hon‟ble Judge of the Supreme Court of India) and one of us (Uma Nath Singh, CJ.) has discussed the subject of payment of compensatory fee in great detail in CWP No. 6676 of 1999 (Food Corporation of India v. State of Punjab and another) decided on 22.06.2009 as under :
"A Constitution Bench of Hon'ble the Apex Court in the case of The Hingir-Rampur Coal Co., Ltd. and others versus the State of Orissa and others (AIR 1961 SC 459 ), has held that there is no generic difference between a tax and fee and both are compulsory exaction, but a tax is imposed for public purpose and need not be supported by any consideration of service rendered in return, whereas, fee is levied essentially for services rendered and as such, there is an element of quid pro quo between the person who pays the fee and the public authority who imposes it. The Constitution Bench of Hon'ble the Apex Court has further articulated its dicta about the character of 21 fee in the judgment in the case of Kewal Krishan Puri and another versus State of Punjab and another (1980 (1) SCC 416). While dealing with the concept of quid pro quo, the Constitution Bench has held as under:
"....A fee is a charge for a special service rendered to individuals by some governmental agency. The levy of fees thus must be proved to be a quid pro quo for the services rendered to them. But for the payer of the fee, the State cannot be concerned on whom the ultimate burden of the fee falls. Also the service does not mean any personal or domestic service, but it means service in relation to the transaction, property or the institution in respect of which he is made to pay the fee. The literal meaning of the phrase quid pro quo is one for the other, meaning thereby you charge the fee for the service. But the element of quid pro quo may not be possible, or even necessary to be established with arithmetical exactitude but even broadly and reasonably it must be established with some amount of certainty, reasonableness or preponderance of probability that quite a substantial portion of the amount of fee realised is spent for the special benefit of its payers. Each case has to be judged from a reasonable and practical point of view for finding out the element of quid pro quo...."
The aforesaid judgment was later discussed and further elucidated in a Three Judge Bench judgment of the Apex Court in the case of Sreenivasa General Traders and others versus State of Andhra Pradesh and others (1983 (4) SCC
353). While dealing with the test to determine as to whether an impost is a tax or fee, this was held that element of quid pro quo in the true sense was not an essential element for fee, though a reasonable relationship between levy and fee and services rendered must be present. The Court also held that the decision in Kewal Krishan Puri's case does not lay down any legal principle of general applicability. The observation made therein seeking to quantify the extent of co-relation between the amount of fee collected and the cost of rendition of service, was held to be an obiter as is evident from the observations as:
"at least a good and substantial portion of the amount collected on account of fees, may be in the neighbour-hood of two-thirds or three-fourths, must be shown with reasonable certainty as being spent for rendering services in the market to the payer of fee, appears to be an obiter. It was not intended to lay down a rule of universal application but it was a decision which must be confined to the special facts of that case".22
A Full Bench of this Court in the case of Subhash Chander Kamlesh Kumar versus State of Punjab and others (1990 (2) PLR-666) while dealing with the nature and degree of quid pro quo (one thing in return for another) between the fee realised and the costs of the services rendered, has held as:
"......that the true test for a valid fee is whether the primary and essential purpose is to render specific service to a specified area or class, it being of no consequence that the State may ultimately and in directly benefit by it. Quid pro quo is not always a sine qua non of a valid fee and what is required to be shown is that by and large there is quid pro quo. The corelationship between services expected is of a general character and a broad, reasonable and casual relationship in enough to satisfy the requirement of law. The prayer of the fee represents collectively the class of persons i.e., users of the market, including growers and those engaged in business to whom the benefit is directly intended by the establishment of a regulated market and not the actual individual i.e., the trader. If there is quid pro quo in the sense explained above for such a class of persons, the test of valid fee is satisfied."
A Division Bench of this Court in the case of Health Aid Foods Specialists Private Limited versus State of Punjab (2002 (19) PHT 238 (P&H)), has also discussed the question as to whether the cess is a fee or tax. The question was answered by holding that the cess, fee and tax constitute a common species. There is no generic difference between one or the other. They all are a compulsory exaction of money by public authorities. The basic difference lies in the fact that while a tax need not be supported by any consideration of service, a fee is levied essentially for services rendered. In case of fee, there is essentially an element of quid pro quo between the person who pays and the public authority which collects. It is not always absent in the case of tax. However, it is not an essential pre requisite.
A Constitution Bench of Hon'ble the Apex Court in the case of State of West Bengal versus Kesoram Industries Limited and others (2004 (10) SCC 201), has held that it is the object and essential purpose of the Act, which would determine the character of levy and not the ultimate or incidental results or consequences like effect on the price of the commodity. A Three Judge Bench of Hon'ble the Apex Court in the case of State of H.P. And others versus Shivalik Agro Poly Products and others (2004 (8) SCC 23
556), has also held that there is no generic difference between a tax and fee, which both are a compulsory exaction of money by public authorities. As regards the fee, this has been held that there is no co-relationship between the levy and the services rendered which should be of general character and not of mathematical exactitude.
During the course of arguments, we were also taken through some latest judgments of Hon'ble the Apex Court rendered in the cases of (1) Sonachandi Oal Committee and others versus State of Maharashtra (2005 (2) SCC 345); (2) State of Bihar and others versus Shree Baidyanath Ayurved Bhawan (2005 (2) SCC 762), and (3) State of H.P. and others versus Shivalik Agro Poly Products and others (2004 (8) SCC 556). In Sonachandi's case, the Hon'ble Court has held that the service to be rendered is not a condition precedent and only a reasonable relationship between the levy and fee and the services rendered is sufficient. In Shree Baidyanath Ayurved Bhawan's case, a Three Judge Bench of Hon'ble the Apex Court has held that the fee for grant of licence is regulatory and not compensatory, hence quid pro quo for the same is not necessary, therefore, in the absence of quid pro quo, such fee would not violate Articles 301 of the Constitution. Again, in Shivalik Agro's case, a Three Judge Bench of Hon'ble the Apex Court has taken the view that the co-relationship between the levy and the services rendered should be one of general character and not of mathematical exactitude. Thus, the view taken in Kewal Krishan Puri's case has undergone a major change regarding the ratio of services to be rendered in lieu of the payment of fee.
Hon'ble the Apex Court in the case of Jindal Stripe Limited and others versus State of Haryana and others ((2004) 134 STC 303), while dealing with the question of facilities to be provided towards the imposition of compensatory tax, deemed it fit to refer the matter to a larger Bench by passing the following order:
"......24. The decisions in Bhagatram's case and Bihar Chamber of Commerce's case (1996) 9 SCC 136 now say that even if the purpose of imposition of the tax is not merely to confer a special advantage on the traders, but to benefit the public in general including the traders, that levy can still be considered to be compensatory. According to this view, an indirect or incidental benefit to traders by reason of stepping up the developmental activities in various local areas of the State can be legitimately brought within the 24 concept of compensatory tax, the nexus between the tax known as compensatory tax and the trading facilities not being necessarily either direct or specific.
25. Since the concept of compensatory tax has been judicially evolved as an exception to the provisions of article 301 and as the parameters of this judicial concept are blurred particularly by reason of the decisions in Bhagatram's case and Bihar Chamber of Commerce's case (1996) 9 SCC 136, we are of the view that the interpretation of article 301 vis-a-vis compensatory tax should be authoritatively laid down with certitude by the Constitution Bench under article 145 (3). In the circumstances let all these matters be placed before the honourable Chief Justice for appropriate directions..."
In the case of Vijayalashmi Rice Mill and others versus Commercial Tax Officers, Palakol and others (2006 (6) SCC 763), Hon'ble the Apex Court has held that a cess is ordinarily a tax which generates revenue to be utilized for a specific purpose. In paras 27 & 28 of the judgment, Hon'ble Court has held as:
"...27. In our opinion, the cess in question is in substance a fee as it is being levied for rendering to the rural public the service of rural development for the purposes stated in para 9 of the Act. Clearly roads, bridges and storage facilities have to be built in rural areas for the progress, and naturally this will require generating funds. Thus, even if no specific service is rendered to any particular individual from whom the fee has been realised, the cess in question is nevertheless a fee, for the reasons already mentioned above. Services are being rendered to the people in the rural areas as mentioned in Section 9 of the Act.
28. No doubt, as stated above, there has to be a broad correlation between the total amount of fees generated by the impugned cess and the total value of the services rendered, but there is no specific averment in the writ petition that there is no such broad correlation. It is true that if say, Rs.100 crores revenue is generated every year by this cess, it is not necessary that this entire amount of Rs.100 crores must be spent for the purposes mentioned in Section 9, and it will suffice if a substantial part of this Rs.100 crores is spent for such purposes. At the same time, we would like to clarify that if say, Rs.100 crores is generated by the cess in question and only Rs.1 crore or Rs.50 lakhs is spent for the purpose mentioned in Section 9, obviously there would not be in such a case a broad correlation between the fees being realised and the services rendered. ..."25
The issue raised in the case of Jindal Stripe Ltd. was addressed threadbare by a Constitution Bench of Hon'ble the Supreme Court in the case of Jindal Stainless Limited and another versus State of Haryana and others (2006 (7) SCC 241) and the Hon'ble Court passed a detailed judgment while dealing with the questions relating to taxing and regulatory powers; difference between a tax and fee, and also the scope of Articles 301, 302 & 304 viz-a-viz compensatory taxes. The relevant portions of the judgment, on reproduction, read as:
"16. To sum up: the pre-1995 decisions held that an exaction to reimburse/ recompense the State the cost of an existing facility made available to the traders or the cost of a specific facility planned to be provided to the traders is compensatory tax and that it is implicit in such a levy that it must, more or less, be commensurate with the cost of the service or facility. Those decisions emphasised that the imposition of tax must be with the definite purpose of meeting the expenses on account of providing or adding to the trading facilities either immediately or in future, provided the quantum of tax is based on a reasonable relation to the actual or projected expenditure on the cost of the service or facility. However, the post-1995 decisions in Bhagatram case (Jindal Strips Ltd. (1) v. State of Haryana (2003) 8 SCC 60 and in Bihar Chamber of Commerce (Sharma Transpport v. Govt. of A.P. now say that even if the purpose of imposition of the tax is not merely to confer a special advantage on the traders but to benefit the public in general including the traders, that levy can still be considered to be compensatory. According to this view, an indirect or incidental benefit to traders by reason of stepping up the developmental activities in various local areas of the State can be brought within the concept of compensatory tax, the nexus between the tax known as compensatory tax and the trading facilities not being necessarily either direct or specific.
xx xx xx xx
37. The concept of compensatory tax is not there in the Constitution but is judicially evolved in Automobile Transport (Bhagatram Rajeevkumar v. CST 1995 Supp (1) SCC 673 as a part of regulatory charge. Consequently, we have to go into concepts and doctrines of taxing powers vis--vis regulatory powers, particularly when the concept of compensatory tax was judicially crafted as an exception to Article 301 in Automobile Transport . Difference between exercise of Taxing and Regulatory Power 26
38. In the generic sense, tax, toll, subsidies, etc. are manifestations of the exercise of the taxing power. The primary purpose of a taxing statute is the collection of revenue. On the other hand, regulation extends to administrative acts which produces regulative effects on trade and commerce. The difficulty arises because taxation is also used as a measure of regulation. There is a working test to decide whether the law impugned is the result of the exercise of regulatory power or whether it is the product of the exercise of the taxing power. If the impugned law seeks to control the conditions under which an activity like trade is to take place then such law is regulatory.
Payment for regulation is different from payment for revenue. If the impugned taxing or non- taxing law chooses an activity, say, movement of trade and commerce as the criterion of its operation and if the effect of the operation of such a law is to impede the activity, then the law is a restriction under Article 301. However, if the law enacted is to enforce discipline or conduct under which the trade has to perform or if the payment is for regulation of conditions or incidents of trade or manufacture then the levy is regulatory. This is the way of reconciling the concept of compensatory tax with the scheme of Articles 301, 302 and 304. For example, for installation of pipeline carrying gas from Gujarat to Rajasthan, which passes through M.P., a fee charged to provide security to the pipeline will come in the category of manifestation of regulatory power. However, a tax levied on sale or purchase of gas which flows from that very pipe is a manifestation of exercise of the taxing power. This example indicates the difference between taxing and regulatory powers (see Essays in Taxation by Seligman).
Difference between "a tax", "a fee" and "a CompensatoryTax" Parameters of Compensatory Tax"
"39. As stated above, in order to lay down the parameters of a compensatory tax, we must know the concept of taxing power.
40. Tax is levied as a part of common burden. The basis of a tax is the ability or the capacity of the taxpayer to pay. The principle behind the levy of a tax is the principle of ability or capacity. In the case of a tax, there is no identification of a specific benefit and even if such identification is there, it is not capable of direct measurement. In the case of a tax, a particular advantage, if it exists at all, is incidental to the State's action. It is assessed on certain elements of business, such as manufacture, purchase, sale, consumption, use, 27 capital, etc. but its payment is not a condition precedent.
It is not a term or condition of licence. A fee is generally a term of a licence. A tax is a payment where the special benefit, if any, is converted into common burden.
41. On the other hand, a fee is based on the "principle of equivalence". This principle is the converse of the "principle of ability" to pay. In the case of a fee or compensatory tax, the "principle of equivalence" applies. The basis of a fee or a compensatory tax is the same. The main basis of a fee or a compensatory tax is the quantifiable and measurable benefit. In the case of a tax, even if there is any benefit, the same is incidental to the government action and even if such benefit results from the government action, the same is not measurable. Under the principle of equivalence, as applicable to a fee or a compensatory tax, there is an indication of a quantifiable data, namely, a benefit which is measurable.
42. A tax can be progressive. However, a fee or a compensatory tax has to be broadly proportional and not progressive. In the principle of equivalence, which is the foundation of a compensatory tax as well as a fee, the value of the quantifiable benefit is represented by the costs incurred in procuring the facility/services, which costs in turn become the basis of reimbursement/recompense for the provider of the services/facilities. Compensatory tax is based on the principle of "pay for the value". It is a sub-class of a "a fee". From the point of view of the Government, a compensatory tax is a charge for offering trading facilities. It adds to the value of trade and commerce which does not happen in the case of a tax as such. A tax may be progressive or proportional to income, property, expenditure or any other test of ability or capacity (principle of ability). Taxes may be progressive rather than proportional. Compensatory taxes, like fees, are always proportional to benefits. They are based on the principle of equivalence. However, a compensatory tax is levied on an individual as a member of a class, whereas a fee is levied on an individual as such. If one keeps in mind the "principle of ability" vis-à-vis the "principle of equivalence", then the difference between a tax on one hand and a fee or a compensatory ax on the other hand can be easily spelt out. Ability or capacity to pay is measurable by property or rental value. Local rates are often charged according to the ability to pay.
Reimbursement or recompense are the closest equivalence to the cost incurred by the provider of the services/facilities. The theory of compensatory 28 tax is that it rests upon the principle that if the Government by some positive action confers upon individual(s), a particular measurable advantage, it is only fair to the community at large that the beneficiary shall pay for it. The basic difference between a tax on one hand and a fee/compensatory tax on the other hand is that the former is based on the concept of burden whereas compensatory tax/fee is based on the concept of recompense/reimbursement. For a tax to be compensatory, there must be some link between the quantum of tax and the facility/services. Every benefit is measured in terms of cost which ahs to be reimbursed by compensatory tax or in the form of compensatory tax. In other words, compensatory tax is a recompense/reimbursement.
43. In the context of article 301, therefore, compensatory tax is a compulsory contribution levied broadly in proportion to the special benefits derived to defray the costs of regulation or to meet the outlay incurred by some special advantage to trade, commerce and intercourse. It may incidentally bring in net revenue to the Government but that circumstance is not an essential ingredient of compensatory tax.
44. Since compensatory tax is a judicially evolved concept, understanding of the concept, as discussed above, indicates its parameters."
45. To sum up, the basis of every levy is the controlling factor. In the case of "a tax", the levy is a part of common burden based on the principle of ability or capacity to pay. In the case of "a fee", the basis is the special benefit to the payer (individual as such) based on the principle of equivalence. When the tax is imposed as a part of regulation or as a part of regulatory measure, its basis shifts from the concept of "burden" to the concept of measurable/quantifiable benefit and then it becomes "a compensatory tax" and its payment is then not for revenue but as reimbursement/recompense to the service/facility provider. It is then a tax on recompense.
Compensatory tax is by nature hybrid but it is more closer to fees than to tax as both fees and compensatory taxes are based on the principle of equivalence and on the basis of reimbursement/recompense. If the impugned law chooses an activity like trade and commerce as the criterion of its operation and if the effect of the operation of the enactment is to impede trade and commerce then article 301 is violated.
Burden on the State
46. Applying the above tests/parameters, whenever a law is impugned as violative of Article 301 of the Constitution, the Court has to see whether the impugned enactment facially or patently indicates 29 quantifiable data on the basis of which the compensatory tax is sought to be levied. The Act must facially indicate the benefit which is quantifiable or measurable. It must broadly indicate proportionality to the quantifiable benefit. If the provisions are ambiguous or even if the act does not indicate facially the quantifiable benefit, the burden will be on the state as a service/facility provider to show by placing the material before the Court, that the payment of compensatory tax is a reimbursement/recompense for the quantifiable/measurable benefit provided or to be provided to its payer(s). As soon as it is shown that the Act invades freedom of trade it is necessary to enquire whether the State has proved that the restrictions imposed by it by way of taxation are reasonable and in public interest within the meaning of Article 304(b) (see para 35 (of AIR) of the decision in Khyerbari Tea Co.
Limited v. State of Assam, AIR 1964 SC 925.
a. Scope of articles 301, 302 and 304 vis-à-vis compensatory Tax.
47. As stated above, taxing laws are not excluded from the operation of Article 301, which means that tax laws can and do amount to restrictions on the freedom guaranteed to trade under part XIII of the Constitution. This principle is well settled in Atiabari Tea Co., AIR 1961 SC 232. it is equally important to note that in Atiabari Tea Co., AIR 1961 SC 232, the Supreme Court propounded the doctrine of "direct and immediate effect".
Therefore, whenever a law is challenged on the ground of violation of article 301, the Court has not only to examine the pith and substance of the levy but in addition thereto, the Court has to see the effect and the operation of the impugned law on inter-State trade and commerce as well as intra-State trade and commerce.
48. when any legislation, whether it would be a taxation law or a non-taxation law, is challenged before the Court as violating Article 301, the first question to be asked is: what is the scope of the operation of the law? Whether it has chosen an activity like movement of trade, commerce and intercourse throughout India, as the criterion of its operation? If yes, the next question is: what is the effect of operation of the law on the freedom guaranteed under Article 301? If the effect is to facilitate free flow of trade and commerce then it is regulation and if it is to impede or burden the activity, then the law is a restraint. After finding the law to be a restraint/restriction one has to see whether the impugned law is enacted by parliament or the State Legislature. Clause (b) of Article 304 confers a power upon the state Legislature similar to that conferred upon 30 parliament by article 302 subject to the following differences:
(a) While the power of Parliament under Article 302 is subject to the prohibition of preference and discrimination decreed by Article 303(1) unless Parliament makes the declaration under article 303 (2), the state power contained in article 304(b) is made expressly free from the prohibition contained in Article 303(1) because the opening words of Article 304 contain a non obstante clause both to article 301 and Article 303.
(b) While parliament's power to impose restrictions under article 302 is not subject to the requirement of reasonableness, the power of the State to impose restrictions under article 304 is subject to the condition that they are reasonable.
(c) An additional requisite for the exercise of the power under Article 304(b) by the State Legislature is that previous Presidential sanction is required for such legislation.
7. After the judgment of the Constitution Bench dated 13.4.2006 reported in Jindal Stainless Limited (2) and another v. State of Haryana and others, (2006) 7 SCC 241, the matter was placed before a Division Bench of the Hon'ble Supreme Court and while adjourning the matter, the following directions were issued in order dated 14.7.2006 (2006 (7) SCC
271):-
"Since relevant data do not appear to have been placed before the High Courts, we permit the parties to place them in the writ petitions concerned within two months. The High Courts concerned shall deal with the basic issue as to whether the impugned levy was compensatory in nature. The High Courts are requested to decide the aforesaid issue within five months from the date of receipt of our order. The judgment in the respective cases shall be placed on record by the parties concerned within a month from the date of the decision in each case pursuance to our direction."
26. Hon‟ble the Apex Court in Bangalore Development Authority v. Aircraft Employees' Cooperative Society Ltd. & Ors, reported in (2012) 3 SCC 442 has discussed the terms „tax‟ and „fee‟ by placing reliance on judgments in Southern Pharmaceuticals and Chemicals, Trichur and Others v. State of Kerala and Others, reported in (1981) 4 SCC 391; Kewal 31 Krishan Puri and Another v. State of Punjab and Another, reported in (1980) 1 SCC 416; Sreenivasa General Traders and Others v. State of Andhra Pradesh and Others, reported in (1983) 4 SCC 353; M/s Kishanlal Lakhmi Chand and Others v. State of Haryana and Others, reported in 1993 Supp (4) SCC 461; Krishi Upaj Mandi Samiti and Others v. Orient Paper & Industries Ltd, reported in (1995) 1 SCC 655 and I.T.C. Ltd and Others v. State of Karnataka and Others, reported in 1985 (Supp) SCC 476, and held that since the payment demanded by the Bangalore Development Authority was required for augmentation of water supply, electricity, transport, etc, it was not in the nature of tax or ultra vires Article 265 of the Constitution. The payers are to be benefitted ultimately by the amenities proposed to be provided by the Authority in future.
27. In the case of Delhi Race Club Limited v. Union of India and Others, reported in (2012) 8 SCC 680, the Hon‟ble Supreme Court placed reliance on the judgment in the case of State of West Bengal v. Kesoram Industries Ltd and Others, reported in (2004) 10 SCC 201 which was rendered on the basis of judgment in Hingir-Rampur Coal Co. Ltd v. State of Orissa, reported in AIR 1961 SC 459. It has been held that the distinction between terms, „tax‟ and „levy‟ would depend upon the context and purpose and the availability of direct or indirect benefits. A general nexus between the persons bearing the burden of levy of fee and the services rendered out of the fee collected is enough to uphold the validity of the fee charged.
28. Admittedly, it is the case of the State Government that for grant of lease for extraction of minerals, the licensee has to pay 32 royalties which are shared between the State Government and the Autonomous District Council. While defining the word „royalty‟ in Entertainment Network (India) Ltd v. Super Cassette Industries Ltd, reported in (2008) 13 SCC 30, Hon‟ble the Apex Court has held that royalty means remuneration paid to an author in respect of the exploitation of a work usually referring to payment on a continuing basis rather than a payment consisting of lumpsum in consideration of acquisition of rights. It may also be applicable in the case of performers. The Legislature for all intent and purport equates compensation with royalty in the context of the Copyright Act. Royalty is a genus and compensation is species. Therefore, royalty is different from collection of compensatory fee and there is no bar in collecting such impost but it is only the State Government and not the Autonomous District Councils which can impose and collect the fee in respect of damage to forest by extraction and transportation of minerals like coal and limestone etc.
29. We have already noticed hereinabove, that the Central Empowered Committee has been constituted by the Hon‟ble Supreme Court with all India jurisdiction and for extraction of mines from the forest land of any kind, it is mandatory to take clearance under Forest (Conservation) Act. The State is only the guardian and trustee of natural resources and the people of the country are the owner. Thus, the State Government cannot grant lease for extracting minerals in the State of Meghalaya without meeting the aforesaid requirements, and the Autonomous District Councils have no power to collect compensatory fee thereon which may encourage illegal mining activities and which can also be investigated into by the Central Bureau of Investigation as directed 33 by the Supreme Court in T.N.Godavarman's case. It thus follows from the aforesaid discussions that the State Government, in order to reclaim the damage caused to the forest and the environment, as a result of mining activities, even if permitted under the rules, shall have to draw a comprehensive scheme and create a fund for reclamation wherefor an amount to the extent of not less than 10% of the sale proceeds of the minerals extracted under the licence or lease deed as provided in the judgment of Hon‟ble the Supreme Court in Goa Foundation's case and being in accordance with the principle that a "polluter shall pay" can be validly charged.
30. For the reasons foregoing, we dismiss the writ petition with direction that, except in cases where licence for extraction of minerals has already been granted or lease deed for that purpose has already been entered into in accordance with the directions of Hon‟ble the Supreme Court in the judgments referred to hereinabove, all other mining activities shall have to stop and in future the State shall not grant any licence or enter into a lease deed for extraction of minerals without (i) consultation with the CEC; (ii) drawing a comprehensive scheme and; (iii) creating a Fund for reclamation in the interest of sustainable development and intergenerational equity, and for the purpose of rectifying the damage caused to the forest and environment.
31. Let a copy of this judgment be issued to the Chief Secretary; the Principal Secretary (Forest), and the Principal Chief Conservator of Forests, Government of Meghalaya, for compliance.
JUDGE CHIEF JUSTICE dev