M/S K P R Timber Traders vs. State Of Karnataka

Held

The Court held that the impugned invoices, which demanded and collected the Forest Development Fee, were issued after the Division Bench of the High Court had already ruled in the case of Sri B. Rudragouda & Others that the State Government lacked the authority to levy such a fee. The Court noted that this aspect was not disputed by the learned Additional Government Advocate for the respondents. Consequently, the Court quashed the impugned invoices. The Court further stated that if any demand for this fee was made subsequent to the Division Bench's decision dated October 4, 2017, the petitioner would be entitled to a refund of the amount paid. The ratio decidendi is that a levy declared illegal by a higher bench of the same court cannot be enforced, and subsequent demands based on such an illegal levy are void.

Facts

The petitioner, M/s. K.P.R. Timber Traders, challenged the levy and collection of 'Forest Development Fee' at the rate of 12% of the sale consideration amount under Section 98-A(1) of the Karnataka Forest Act, 1963. The petitioner argued that this fee was being demanded and collected on timber and other forest produce auctioned/sold by the Forest Department in various government depots in Karnataka. The petitioner relied on a previous judgment by a Division Bench of the same High Court dated October 4, 2017, in the case of Sri B. Rudragouda & Others vs. State of Karnataka & Others, which held that the State Government lacked the authority to levy such a fee. The impugned invoices were issued after this Division Bench decision.

Key Issues

1. Whether the State Government and its authorities can levy, demand, and collect 'Forest Development Fee' at the rate of 12% of the sale consideration amount under Section 98-A(1) of the Karnataka Forest Act, 1963, in respect of timber and other forest produce auctioned/sold by the Forest Department in government depots in Karnataka, in light of the Division Bench judgment in Sri B. Rudragouda & Others? Petitioner's contention: The petitioner argued that the State Government has no authority to levy the Forest Development Fee, citing the Division Bench judgment of the High Court in Sri B. Rudragouda & Others, which declared such a levy invalid. The petitioner emphasized that the impugned invoices were issued subsequent to this binding precedent. Revenue/State's contention: The learned Additional Government Advocate for the respondents did not dispute the aforesaid aspect of the matter, implicitly conceding that the levy was impermissible in light of the prior Division Bench ruling.