Telangana High Court Dismisses Cement Companies' Plea Against Increase In Fees For Transporting Forest Minerals

A recent judgment handed down by the Telangana High Court addressed a legal battle between Cement Companies of the State and the State government over increased fees for transporting forest minerals.

The dispute centered around an amendment to Rule 5 (5) of the Andhra Pradesh Forest Produces Rules, 1970. This amendment significantly increased the permit fee for major minerals, minor minerals, and granite from Rs.500 per 100 permits to Rs.10 per tonne, almost tripling the price.

The Division Bench of Chief Justice Alok Aradhe and Justice Anil Kumar Jukanti noted:

“The mandate contained in the Section 29 of the Act, 1967 which enables the rule making authority is the foundation on which the rule withstands the assault and challenge. A reasonable latitude is permissible to the rule making authority and an increase in the charges cannot lead to the inference that the same is confiscatory in nature and is a tax in disguise. Such a conclusion would defeat the very purpose and object of levy.”

The cement companies, as petitioner, filed a writ petition challenging the amendment. They asserted that the increase was arbitrary, unconstitutional, and amounted to an excessive tax disguised as a fee. They argued that the levy, being compensatory in nature, lacked any element of quid pro quo; essentially, there was no proportionate service provided in return for the substantial fee.

In its defense, the state government maintained that the increased charges were justifiable. It was contended that after 40 years an increase in the rate was made, and thus it was to be proportionate to prevalent standards. The State highlighted its authority to regulate the transit of timber and forest produce under Section 29 of the Andhra Pradesh Forest Act, 1967. The government argued that the enhanced fees were necessary to monitor mining activity, protect forest resources, and regulate the movement of forest materials. They further asserted that the permit fee was purely regulatory.

The Court, in analyzing the case, drew upon several previous Supreme Court judgments relevant to distinguishing between regulatory and compensatory fees. The Court underscored that a regulatory fee does not demand a quid pro quo relationship. Taking into account the Act, the Rules, the amended Rule 5, and relevant precedents, the High Court ultimately ruled in favor of the government.

“The State Government enacts rules/regulations keeping in view the prevailing circumstances and also to meet the changing circumstances. Fixing of charges for permits is done by choosing appropriate methods (per tonne, per cubic metre, per lorry etc.) and also by taking into consideration various other factors. Fixing of charges, per permit to different classes of forest produce is based on varied and innumerable factors, which the State Government has to take note of, ordinarily, it does so and it has enough freedom to do so.”

Thus, the writ petition filed by the cement Companies was dismissed.

WRIT PETITION Nos.1809 of 2011 and batch

Counsel for petitioners: Karthik Ramana Puttamreddy, Madas Bharath Chandra, Bodduluri Srinivasa Rao

Counsel for respondents: Senior Counsel and Addl Advocate General Imran Khan

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