No Blanket Exemption From Royalty Payable For Earth Excavated And Reused At Project Site: Gauhati High Court

The Gauhati High Court has declined to interfere with a forest royalty demand, holding that where the competent authority has undertaken inspection, verification of records and afforded opportunity to the contractor, the demand does not warrant interference under Article 226 merely because the factual determination is disputed. [2026 LiveLaw (Gau) 89]Justice Kardak Etex, pressing over the case observed, “The contention of the petitioner that no royalty is payable for earth excavated and re-used within the same site cannot be accepted as a blanket proposition in the facts of the present case. The applicability of the said principle depends upon proper verification of source-wise excavation and utilisation, supported by contemporaneous measurement records and engineering data. In the present case, the respondents have recorded that the claim of internal utilisation is not fully substantiated by documentary evidence in respect of the entire quantity.”“Such disputed factual issues cannot be effectively adjudicated in exercise of jurisdiction under Article 226 of the Constitution of India, which is primarily concerned with the decision-making process and not with re-appreciation of technical data, measurement records, or substitution of factual conclusions arrived at by the competent authority.”The writ petition challenged the communications issued by the Divisional Forest Officer, Nagaon Division, demanding Rs. 1.46 crore towards forest royalty, price of minor minerals, GST, income tax and penalty in respect of earth used in execution of the EPC contract for four-laning of NH-37 from Rangagara to Kaliabor Tiniali.The petitioner's case was that royalty had already been paid on earth procured from outside sources and that 1,08,482.04 CuM of earth had been excavated from within the project Right of Way and re-used within the same project site. It contended that no royalty was payable on such earth and that the assessment was carried out without proper verification.The Court noted that prior to issuance of the first demand, the authorities had called upon the petitioner to furnish details regarding utilisation of earth and payment of royalty, sought clarifications, conducted field inspection and verified the records furnished by the petitioner as well as NHIDCL.The Court referred to Section 15 of the Act of 1957 and the Rules of 2013. It observed that Rule 5 of the Rules of 2013 specifically governs procurement of minor minerals for Government projects and that Rules 63 and 64, on the other hand, deal with cases of illegal or unauthorised mining.The Court pointed out that it is well settled that in large infrastructure projects involving cutting, filling, embankment and multiple structures, determination of earthwork quantity is a technical exercise which has to be based on verified records. “Where such records are found insufficient or inconsistent, the competent authority is entitled to proceed on the basis of field inspection and available material for the purpose of determining royalty liability,” the Court added.Rejecting the challenge to the statutory action, the Court further observed, “The statutory scheme under the Act of 1957 read with the Rules of 2013 clearly empowers the State authorities to regulate extraction and utilisation of minor minerals and to ensure payment of royalty in accordance with law. Rule 5 specifically casts obligation upon contractors executing Government projects to obtain necessary permits and comply with royalty requirements. In the present case, the respondents, upon scrutiny, found that the petitioner had failed to produce complete documentation in respect of substantial quantity of earth and accordingly proceeded to determine liability under the statutory framework.”“The invocation of Rule 63 and Rule 64 of the Rules of 2013 also cannot be said to be without jurisdiction. The authority has proceeded on the basis of non-substantiation of lawful procurement and utilisation of mineral quantities. Once such satisfaction is recorded on the basis of inspection and record verification, the statutory consequences under Rule 64 are attracted. Whether the petitioner is able to disprove such finding is a matter of factual adjudication, but the exercise of power cannot be faulted at the threshold,” the Court added.The Court also rejected the contention that the principles of natural justice had been violated, observing that the petitioner had been given notice prior to inspection, called upon to furnish details, permitted to submit its reply and that the reply had been considered before reiteration of the demand.Holding that the impugned communications did not suffer from any illegality, arbitrariness or want of jurisdiction warranting interference under Article 226, the Court dismissed the writ petition while clarifying that the petitioner would not be precluded from availing such remedies as may be available in law before the appropriate forum for adjudication of disputed factual issues...

No Blanket Exemption From Royalty Payable For Earth Excavated And Reused At Project Site: Gauhati High Court

Bhavya Singh

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Bhavya Singh

No Blanket Exemption From Royalty Payable For Earth Excavated And Reused At Project Site: Gauhati High Court

Bhavya Singh

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Bhavya Singh

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