Bombay High Court Upholds Constitutional Validity Of Goa Green Cess Act For 'Reduction Of Carbon Footprint'

The Act is called The Goa Cess on Products and Substances Causing Pollution (Green Cess) Act, 2013 or the Green Cess Act 2013.

A division bench of Justices MS Sonak and Bharat P Deshpande dismissed a clutch of petitions filed by various companies including Goa Carbon Limited and Vedanta Ltd that challenged the Act citing the State’s lack of legislative competence to enact such a statute.

The court frowned at the petitioner’s argument that the cess collected from them didn’t specifically benefit the companies. Therefore, it wouldn’t be a ‘fee,’ but a ‘tax’ beyond the legislative competence of the state.

“The contention that such measures benefit only the members of the general public and not the Petitioners upon whom such levy is imposed, cannot be accepted. The responsibility for reducing the carbon foot print or, in any case, combating the deleterious effects of such increase, is primarily on the Petitioners. Therefore, if the State levies a cess or a fee upon the Petitioners for taking measures to reduce the carbon footprint or to deal with the deleterious effects of its increase, the Petitioners cannot say that they receive no benefits.”

According to the court the two primary issues before it was whether the Act, in pith and substance, related to fields of public health and sanitation, agriculture and protecting plants against pests, water, land, fisheries and gas enumerated in Entries 6, 14, 17, 18, 21 and 25 of List II, Seventh Schedule to the Constitution.

Whether the Act relates to the field of “environment” or “environmental pollution”, which, according to the petitioners, is not covered by any of the fields in Lists II and III, Seventh Schedule to the Constitution but falls exclusively within the residuary Entry i.e. Entry 97 of List I (Union List) of the Seventh Schedule to the Constitution.

The petitioners further contended that levy under the Act is not a “fee” as contemplated by Entry 66 of List II but instead, the levy is a “tax” beyond the legislative competence of the State.

At the outset the bench said entries in the legislative list should be construed liberally and not with a pedantic approach.

“…bearing in mind the width of the expression "with respect to" employed in Article 246 of the Constitution, we find it different to accept the argument that the impugned Act is not a legislation “with respect to” the entries relating to public health, sanitation, water, land, gas as referred to in entries 6, 17, 18 and 25 of List II of Seventh Schedule to the Constitution.”

The bench noted that according to the preamble, the Act was meant to levy cess on the products and substances which upon handling, utilization or combustion causes pollution. It uses the “Polluter pays principle.” The Act’s objective to augment resources to reduce carbon footprint has direct nexus with subjects like public health, sanitation, water, gas or land.

Greater effective means to combat increased carbon footprint or even disincentivising increased carbon footprint would clearly promote public health (part of the State list), the bench observed.

The court distinguished the Environment Protection Act 1986, The Air Pollution Act 1981 and The Biodiversity Act 2002 enacted by the parliament from the Green Cess Act enacted by the State.

It held that those Acts related to regulation and control while the subject Act gave the State to the power to impose a “fee”.

“Further, the enactment of legislation under the power to regulate and control by the Parliament does not denude the State from exercising powers to impose tax or fee even though the legislation to impose tax or fee may incidentally overlap.”

Significantly, the court refused to accept the petitioners' contention that the moment a legislation is enacted to implement any [International] treaty agreement or convention, the State legislature is completely denuded from enacting any legislation on the said subject, even though such subject continues to remain in the State List Seventh Schedule to the Constitution and such legislation, in no manner conflicts or contradicts the Parliamentary legislation.

Appearances – Sr Adv Darius Khambata along with Adv Ninad Laud

Advocate General DJ Pangam for the State

Cate Title – South Port Limited vs State of Goa

Case Number - WRIT PETITION NO.475 OF 2014

Click Here To Read/Download Judgement