High Court upholds Goa’s green cess law

The petitioners argued that “environment” falls within the residuary entry and that Parliament has the sole prerogative to legislate over it

The Bombay High Court at Goa has upheld the Goa Cess on Products and Substances Causing Pollution (Green Cess) Act, 2013, and dismissed pleas of companies handling coal and other hazardous chemicals and petroleum products against the law.

The court said the petitioners cannot say they receive no benefits if the state levies a fee for measures to reduce the carbon footprint. (HT PHOTO)

Companies such as South West Port Limited, a subsidiary of Jindal South West, Vedanta Limited, Goa Carbon Limited, and Zuari Agro Chemicals Limited were among those who challenged the constitutional validity of the law.

The petitioners argued the nature of the levy and the primary object of the law is “environment” and “environmental pollution”. They added that “environment” is a distinct field of legislation, which does not feature on any of the three lists in the Constitution’s Seventh Schedule related to the division of power between the Union and states.

The petitioners argued that “environment” falls within the residuary entry and that Parliament has the sole prerogative to legislate over it.

“The State had no legislative competence to enact the impugned Act, which was consequently ultra vires, unconstitutional, null and void,” advocate Darius Khambhata, who appeared for South West Port, argued in the court.

The court on Thursday said that “entries in the legislative lists are not sources of the legislative power but are merely topics or fields of legislation and that they must receive a liberal construction inspired by a broad and generous spirit and not in a narrow pedantic sense.”

A bench of Justices M S Sonak and Bharat Deshpande said they find it difficult to accept the argument that the law is not legislation with respect to the entries relating to public health, sanitation, water, land, and gas as referred to in the state list of Seventh Schedule.

The Green Cess Act was enacted “to provide for levy and collection of cess on the products and substances including hazardous substances, which upon their handling or consumption or utilisation or combustion or movement or transportation cause pollution”.

It cites the concept of the “polluter pays principle” and provides for measures to reduce the carbon footprint. The law provides for the levying of fees not exceeding two percent of the sale value of the products causing pollution. The cess was mainly imposed on companies handling coal, and chemicals such as naphtha used as a raw material to manufacture fertilisers.

The state government defended the law arguing it was introduced to reduce the carbon footprint. It insisted the state has the legislative competence to levy fees to augment the revenue for expenditure and measures to reduce the carbon footprint.

The court said the petitioners cannot say they receive no benefits if the state levies a cess or a fee for measures to reduce the carbon footprint or to deal with the deleterious effects of its increase. “...we cannot appreciate the petitioners’ contention that though their activities contribute to the increase of the carbon footprint, the measures taken by the state to prevent the increase of the carbon footprint or to combat the deleterious effects of such increase in carbon footprint, confers no particular benefit to the petitioners.”

The court said reduction of the carbon footprint would lend greater acceptability to such activities and also reduce the petitioners’ primary liability and responsibility to take measures or settle claims based on the principle of polluter pays.