Karnataka High Court
Arsh Timber Merchant vs The State Of Karnataka on 12 September, 2025
Author: S.Sunil Dutt Yadav
Bench: S.Sunil Dutt Yadav
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NC: 2025:KHC-D:11965
WP No. 101854 of 2021
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT DHARWAD
DATED THIS THE 12TH DAY OF SEPTEMBER, 2025
BEFORE
THE HON'BLE MR. JUSTICE S.SUNIL DUTT YADAV
WRIT PETITION NO. 101854 OF 2021 (GM-TEN)
BETWEEN:
1. ARSH TIMBER MERCHANT
BY ITS PROPRIETOR,
BASHIRAHMAD NANESAB SHIGGAON,
AGE. 52 YEARS, OCC. BUSINESS,
R/O KAMBARAGATTI PLOT, MUNDGOD,
TQ. MUNDGOD & DIST. UTTARA KANNADA-581349.
2. NEHA TIMBER AND FURNITURE'S
BY ITS PROPRIETOR, SAYEDSAQIB S INAMADAR,
AGE. 55 YEARS, OCC. BUSINESS,
R/O Y B ROAD, MUNDGOD,
TQ. MUNDGOD & DIST. UTTARA KANNADA-581349.
...PETITIONERS
(BY SRI. I.Y. PATIL, ADVOCATE)
AND:
1. THE STATE OF KARNATAKA,
REPRESENTED BY ITS SECRETARY,
FOREST DEPARTMENT, M.S. BUILDING,
AMBEDKAR VEEDHI, BENGALURU-01.
Digitally
signed by
VINAYAKA B V
2. THE DEPUTY CONSERVATOR OF FORESTS,
Location: High
Court of
Karnataka,
SIRSI DIVISION, SIRSI,
Dharwad
Bench TQ. SIRSI, DIST. UTTARA KANNADA-581401.
3. THE DEPUTY CONSERVATOR OF FORESTS,
HALIYAL DIVISION, HALIYAL, TQ. HALIYAL,
DIST. UTTARA KANNADA-584329.
4. THE DEPUTY CONSERVATOR OF FORESTS,
YALLAPUR DIVISION, YALLAPUR, TQ. YALLAPUR,
DIST. UTTARA KANNADA-581359.
5. THE DEPUTY CONSERVATOR OF FORESTS,
KARWAR DIVISION, KARWAR, TQ. KARWAR,
DIST. UTTARA KANNADA-581359.
...RESPONDENTS
(BY SRI. V.S. KALASURMATH, AGA)
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NC: 2025:KHC-D:11965
WP No. 101854 of 2021
HC-KAR
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF
CERTIORARI QUASHING THE CONDITION NO.24 IN IMPUGNED E-
TENDER CUM AUCTION NOTIFICATION BEARING NO.A4/DTS/DEC
SALE/ CR-2020-21 DATED 15/03/2021 ISSUED BY THE RESPONDENT
NO.2, VIDE ANNEXURE-B AND CONDITION NO.23 IN IMPUGNED E-
TENDER CUM AUCTION NOTIFICATION BEARING NO.B5/DTS/
FEBRUARY-2021/MSTC/CR-/2020-21 DATED 25/02/2021 ISSUED BY
THE RESPONDENT NO.3, VIDE ANNEXURE-C1, AND CONDITION NO.23
IN IMPUGNED E-TENDER CUM AUCTION NOTIFICATION BEARING
NO.A4:DTS: MARCH-2021 SALE: CR:-3 2020-21 DATED 01/03/2021
ISSUED BY THE RESPONDENT NO.4, VIDE ANNEXURE-D1 AND
CONDITION NO.23 IN IMPUGNED E-TENDER CUM AUCTION
NOTIFICATION BEARING NO.A6/ DEPOT/E-AUCTION/CR-15/2020-21
DATED 22/02/2021 ISSUED BY THE RESPONDENT NO.5, VIDE
ANNEXURE-E & ETC.
THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING
IN 'B' GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
CORAM: THE HON'BLE MR. JUSTICE S.SUNIL DUTT YADAV
ORAL ORDER
(PER: THE HON'BLE MR. JUSTICE S.SUNIL DUTT YADAV) The present petition has been filed seeking to set-aside the condition No.24 as well as condition No.23 of the Auction Notice insofar it relates to collection of Forest Development Tax1.
2. Learned AGA submits that in light of order passed by the Division Bench of this Court in the case of B. Rudragouda Vs. State of Karnataka & Others2, the Court had set-aside the action of collecting FDT holding that the same is illegal and also 1 For short 'FDT' 2 AIR 2018 KAR 19 -3- NC: 2025:KHC-D:11965 WP No. 101854 of 2021 HC-KAR directed for refund of the same. It is however stated that the order of the Division Bench has been stayed by the Apex Court in SLP Nos.4329-4386/2018, insofar it relates to refund of FDT is concerned.
3. Perused the order passed by a co-ordinate Bench of this Court in WP No.105808/2024. Relevant observation made at paragraphs 4 to 11 reads as under:
"4. The petitioner is seeking to quash the levy of Forest Development Tax (FDT)/Fees at 12% as per sale intimating letter of period of auction issued by respondent No.3, vide Annexure-D along with seeking a declaration to declare that levying of FDT/Fee under section 98A of the Karnataka Forest Act by respondents to be contrary to law and for a writ of mandamus for a direction to the respondents to refund the 12% FDT/Fees collected.
5. The petitioner is engaged in doing business in wooden products i.e., purchase of wood from respondents and resale the wood to local sawmills and manufacturing wooden articles such as sofa set, dining table, doors and other wooden products. The petitioner purchased fire wood from the respondents by several invoices. The levy of tax of Forest Development Tax at 12% is what is questioned by the petitioner on the ground that it is contrary to law and also contrary to the judgment rendered by this Court in the case of B.Rudragouda vs. State of Karnataka and others, reported in AIR 2018 KAR 19.
6. Learned counsel for the petitioner relies on the judgment of this Court in B.Rudragouda (supra), whereby this Court has held section 98A of the Karnataka Forest Act to be ultra vires to the Constitution of India. Learned counsel also relies upon the judgment in the case of National Mineral Development Corporation -4- NC: 2025:KHC-D:11965 WP No. 101854 of 2021 HC-KAR Limited vs. State of Karnataka and another, reported in 2015 SCC Online Kar 8620, wherein it was held that the petitioners therein lease holders/quarry owners in the forest area are not liable to pay FDT.
7. In the case of B.Rudragouda (supra), it came to be held that levy of forest development fee by naming it as FDT was illegal and accordingly directed to refund. Therefore the petitioner on the basis of the above judgment, seeks for refund of the FDT/Fee.
8. Learned HCGP representing the respondent State sustains the order passed by the authorities and contends that the judgment in the case of B.Rudragouda (supra) has been challenged before the Hon'ble Apex Court in SLP (Civil) Nos.4329-4386/2018 and an interim order against refund order of FDT was granted. Therefore contended that the out come of the matters before the Hon'ble Supreme Court would decide the matters herein.
9. In the present case the petitioner is challenging the collection of FDT on purchase of timber/wood. It is not in dispute that in the case of B.Rudragouda (supra), the collection of FDT referable to Chapter-XI-A of the Act inserting section 98-A and B of the Act came to be declared as ultra vires. Though it is challenged before the Hon'ble Apex Court, the decision is not stayed and the interim order is granted only against refund.
10. In view of the above, this writ petition is disposed of holding demand, collection and refund of FDT would be subject to final outcome of W.A.No.743/2021 and connected matters pending before this Court and C.A.Nos.3974-4068/2016 and C.A.Nos.3214-3271/2018, pending before the Hon'ble Supreme Court.
11. The respondents would be at liberty to take further action only after disposal of the said matters by issuing fresh demand of tax or take action so far as the petitioner is concerned, wherever the FDT is already collected by the respondents."
4. In light of the said stand of the co-ordinate Bench of this Court stated supra, it would be appropriate to dispose off -5- NC: 2025:KHC-D:11965 WP No. 101854 of 2021 HC-KAR this petition on the same terms. Accordingly, the petition is disposed off taking note of the law laid down by the Division Bench of this Court in the case of B. Rudragouda supra. It is further clarified that the respondents may require to be taken further action relating to refund, after disposal of the aforesaid SLPs by the Apex Court and after following the procedure upon eventual outcome of the matter before the Apex Court.
Sd/-
(S.SUNIL DUTT YADAV) JUDGE JTR List No.: 1 Sl No.: 17