M/S K.K. Associates vs State Of Himachal Pradesh & Ors.

Jyotsna Rewal Dua, Judge

Petitioner was operating a toll plaza sanctioned in its favour by the respondents for Financial Year 2023-24. According to the petitioner, due to incessant rains & natural disaster that struck the region in the year 2023, traffic movement across its toll plaza virtually became naught for several months. Under the applicable Toll Announcements petitioner requested the respondents for refund of actual revenue loss suffered by it. Respondent No. 2 – Commissioner, State Taxes & Excise turned down petitioner’s request. Petitioner, in this writ petition has prayed for quashing of impugned order dated 22.01.2025 (Annexure P-20) whereby respondent No. 2 rejected his representation dated 22.04.2024 (Annexure P-14) for refund of revenue loss at Baddi – Barotiwala Toll Barrier due to natural disaster.

2(i) On 14.03.2023 respondent-Excise and Taxation Department granted permission to the petitioner Firm – being highest bidder to collect toll at Baddi-Barotiwala Unit for Financial Year 2023-24 for lease amount of Rs. 21,72,00,009/-. In terms of the Toll Announcements 2023-24, 20% of the bid money/lease amount was payable in advance and balance was to be paid in 10 monthly installments. Petitioner had been paying all installments in time.

2(ii) From June – July, 2023 onwards, the area in question as also the entire State witnessed heavy rains, cloud bursts, floods etc. due to which major bridges connecting Baddi i.e. where the toll plaza was set up, to Pinjore-Baddi-Nalagarh road collapsed, including bridges at Kiratpur, Maranwala, Pinjore, Lohgarh railway crossing, Charnia bridge and Balad River Bridge. Damages to these bridges completely hampered the traffic inflow towards the site of petitioner’s toll plaza. The National Highway Authority of India had also been compelled to suspend collection of toll over its jurisdictional roads at several places in the State of Himachal Pradesh. All major roads connecting and entering revenue district Baddi-Barotiwala-Nalagarh (BBN) were compromised as major bridges at Maranwala, Pinjore, Lohgarh Railway Crossing and Charnia Bridge on Pinjore-Baddi National Highway-105 connecting operational area of petitioner’s toll plaza were either washed away or rendered unusable for movement of traffic. The District Administration allowed only private vehicles to ply on the road that too in case of emergencies.

2(iii) Damages to the bridges, adverse weather conditions caused huge revenue losses to the petitioner at its toll plaza. Petitioner entered into correspondence with the State Taxes & Excise Department, Himachal Pradesh requesting exemption from paying monthly toll fee. The representations were moved on 11.07.2023, 26.07.2023 & 10.08.2023. Representations yielded no help from the respondents-Authority. Petitioner’s business took nose dive in terms of revenue collection as traffic at toll collection points virtually became nil. Petitioner highlighted its plight again in representation dated 31.08.2023 making request to the respondents to suspend monthly toll fee in view of adverse weather conditions prevailing in the state. Hearing no response from the respondents, petitioner instituted CWP No. 6161 of 2023. Vide interim order dated 06.09.2023 passed in the said writ petition, Hon’ble Division Bench of this Court directed the respondents not to take any coercive action against the petitioner till the next date of hearing including blacklisting & forfeiting its security. Respondents were given liberty to decide petitioner’s representation and in the meanwhile petitioner was directed to continue to deposit the amount proportionately. The aforesaid writ petition was dismissed as withdrawn on 18.09.2023. Keeping in view the provisions of the Himachal Pradesh Tolls Act, 1975 and the Toll Announcements for the Financial Year 2023-24 which imposed liability upon the petitioner to deposit the bid amount, the petitioner deposited the monthly toll fee but represented the respondents-Department on 11.10.2023 seeking refund for the loss of revenue at Baddi-Barotiwala toll barrier due to natural disaster. This was in lieu of the fact that the petitioner-firm had coughed up the requisite lease amount including penalty levied thereupon for the period of its lease after making lots of efforts for getting the requisite money through other sources.

Petitioner followed the aforesaid representation by its letter dated 17.11.2023 making full disclosure of loss of revenue till October, 2023. According to the petitioner it had suffered revenue loss of Rs. 5,03,04,100/-. Petitioner’s term for operating the toll plaza lapsed on 31.03.2024.

2(iv) Petitioner’s request/representation dated 22.04.2024 for refund of revenue loss at Baddi-Barotiwala toll barrier was processed by the respondents-Department. In this regard, in response to office letter of Deputy Commissioner, State Taxes & Excise, Revenue District BBN Baddi, the Additional Commissioner, State Taxes & Excise, South Zone, Shimla vide office letter dated 14.06.2024 directed for addressing following observations:-

Petitioner also responded to the aforesaid four observations vide its letter dated 02.08.2024. Since no further action was taken by the respondents on petitioner’s prayer for refund of revenue loss, petitioner instituted CWP No. 11255 of 2024. The said writ petition was disposed of on 04.10.2024 with direction to respondent No. 2 (therein)/competent authority to consider and decide petitioner’s representation seeking refund of revenue loss in accordance with law within four weeks.

Assistant Commissioner, State Taxes & Excise, BBN Baddi as also the Deputy Commissioner, State Taxes & Excise, BBN Baddi processed the case of the petitioner for refund of revenue loss at Baddi-Barotiwala toll barrier due to natural disaster. An inquiry was conducted into the matter and report was furnished on 20.12.2024 determining the revenue loss to petitioner to the tune of Rs. 3,15,80,010/- and recommended its refund to the petitioner.

The inquiry report was forwarded with recommendations for its acceptance by the Deputy Commissioner, State Taxes & Excise, BBN Baddi to the Additional Commissioner, State Taxes & Excise, SZ, Shimla. The same was further forwarded to the Commissioner, State Taxes & Excise, H.P. on 23.12.2024 who vide impugned order dated 22.01.2025 rejected petitioner’s prayer for refund holding that petitioner is not entitled to any relief. It is in the aforesaid background that petitioner has preferred this writ petition.

Learned Additional Advocate General defending the impugned order contended that petitioner’s prayer cannot be considered in view of Section 10 of the H.P. Tolls Act, 1975. Revenue loss caused to a toll lessee can be refunded only if he has paid excess lease amount, not otherwise. Petitioner being bound by the Act as also the Toll Announcements, cannot wriggle out from the same and seek compensation for the revenue loss. Petitioner had neither deposited the lease amount in excess of the bid money nor any revenue loss was even caused to the petitioner at the toll plaza as the Superintendent of Police, District Baddi had reported normal movement of traffic in the area in question. It was also stated that the petitioner had failed to set up toll plazas at alternate sites permitted by the respondents.

Learned Senior Counsel for the petitioner argued for refunding the amount determined as revenue loss to the petitioner alongwith interest @ 15% p.a. It was contended that such recourse was permissible under the Act read with Toll Announcements. Several documents placed on record were referred to highlight that petitioner had actually suffered revenue loss and further that these documents and ground reality had simply been brushed aside by the respondents by placing uncalled for & undue reliance upon a communication of Superintendent of Police, District Baddi, to hold that traffic was not hampered at petitioner’s toll plaza. The letter addressed by Superintendent of Police Baddi was even otherwise wrongly interpreted by the respondents for denying refund of revenue loss to the petitioner. Due to natural disaster, traffic becoming virtually still due to collapse of bridges connecting petitioner’s toll plaza, petitioner sustained very heavy revenue losses which are liable to be refunded to him in view of Toll Announcements & the Act. Petitioner was not legally authorized to set up toll plaza on other routes. Prayer was made to allow the writ petition.

The Commissioner, State Taxes & Excise, Himachal Pradesh has rejected petitioner’s application for refund of loss of revenue on the grounds:-

4(i) First that the refund of loss of revenue claimed by the petitioner does not fall within the ambit of Section 10 of the Himachal Pradesh Tolls Act, 1975 (in short ‘the Act’). The said provision reads as under:-

In terms of the impugned order the refund can be claimed under Section 10 of the Act only in those cases where the lessee has paid lease money in excess of the amount due from him. Since the petitioner has not paid any amount in excess of the lease amount/bid money, he cannot be refunded the lease amount towards revenue loss.

Before discussing Section 10 of the Act and the reasoning assigned by the Commissioner, State Taxes & Excise it would also be appropriate to extract hereinafter relevant provisions of Announcements – Allotment For Lease of Right to Collect Toll by Auction-cum-Tender under the H.P. Tolls Act, 1975 applicable from 01.04.2023 to 31.03.2024 (period involved in this writ petition):-

Conditions 2.8.1 & 2.8.2 of the Toll Announcements provide for refund of any amount of lease money paid by the lessee in the event of any loss sustained by the toll lessee on account of law & order situation, natural calamity or by acts of God and force majeure. In such cases, either suo motu or on an application made to him the Deputy Commissioner/Assistant Commissioner, State Taxes & Excise with the prior approval of Commissioner, State Taxes & Excise is empowered to refund the ascertained amount of loss. Condition 2.8.2 of the Toll Announcements provide for mechanism for claiming such loss. The toll lessee has to file claim before Deputy Commissioner/Assistant Commissioner, State Taxes & Excise alongwith all relevant documents. The claim has to be preferred within one year from the date on which the cause of action accrues. The Deputy Commissioner, In-charge/Assistant Commissioner In-charge, State Taxes & Excise after making appropriate inquiry in the matter if comes to the conclusion that toll lessee has indeed sustained loss on account of circumstances mentioned in condition 2.8.1, he would send the case alongwith his recommendations to the Commissioner, State Taxes & Excise for prior approval of refund. It is thus apparent that condition 2.8.1 provides for refund of ascertained amount of lease money to the lessee by the respondents-Department in certain given situations. On receipt of such claims for refund, the procedure as contemplated in condition 2.8.2 is required to be followed. For determining the loss sustained by the toll lessee on account of situations contemplated in condition 2.8.1 the competent authorities are to send cases alongwith their recommendations to the Commissioner, State Taxes & Excise. Thus, it cannot be said that the petitioner is not entitled to refund of lease amount even if his case is covered by condition 2.8.1. The argument put forth by the learned Addl. Advocate General that petitioner had entered into contract with open eyes with the respondents-Department works both ways. If the contract is binding for the petitioner it is binding for the respondents as well. If the petitioner has paid the lease money to the respondents in terms of the contract, he can also seek its refund in terms of the conditions of the Toll Announcements provided his case for refund of revenue loss is covered under the conditions and the amount liable to be refunded is determined and quantified. Reliance placed by Commissioner, State Taxes & Excise, Himachal Pradesh – respondent No. 2 upon Section 10 of the Act in rejecting the claim of the petitioner for refund of the lease amount without considering the aforesaid conditions of Toll Announcements was not justified. Section 10 cannot be read in isolation. It is to be read in conjunction with conditions 2.8.1 & 2.8.2 of the Toll Announcements. In case interpretation given to Section 10 by Commissioner, State Taxes & Excise - respondent No. 2 is to be accepted this would mean that almost in no case the toll lessee would be entitled for refund of revenue loss even if his case is admitted to be covered under condition 2.8.1 of Toll Announcements as it would be a very rare scenario where toll lessee would deposit lease amount/bid amount in excess to the amount due from him in terms of the contract. There cannot be a situation where toll lessee would deposit amount in excess to bid/lease money. Such excess deposit, if made by a toll lessee would be a mistake on his part and he can certainly claim the amount back not as a refund but as his legal right. It is also to be seen that in terms of first proviso to Section 10 of the Act, refund is admissible to the lessee in the event of loss sustained on account of law & order situation, natural calamity or by acts of God or force majeure. The second proviso to Section 10 limits the period for seeking refund to one year from the date of accrual of cause of action. The provisos to Section 10 are in sync with conditions 2.8.1 & 2.8.2 of the Toll Announcements. Conjoint and purposeful interpretation of Section 10 read with conditions 2.8.1 & 2.8.2 can lead to the only inference that it is not necessary for the lessee to have deposited bid amount in excess to the agreed lease amount in order to claim refund for the loss sustained on account of law & order situation, natural calamity or by acts of God and force majeure.

4(ii) Second reason for rejecting petitioner’s claim for refund of the revenue loss, assigned by the Commissioner, State Taxes & Excise, H.P., is a letter dated 12.09.2023 of the Superintendent of Police, Police District Baddi. On the basis of the contents of this letter the Commissioner, State Taxes & Excise has observed that that there was no major traffic hampering due to rains in Police District Baddi, therefore, condition 2.8.1 cannot even be invoked by the petitioner.

The letter dated 12.09.2023 addressed by the Superintendent of Police, Police District Baddi was in response to the letter dated 06.09.2023 of Commissioner, State Taxes & Excise, H.P. The contents of the letter dated 12.09.2023 are as under:-

The conclusion derived by the Commissioner, State Taxes & Excise from the above letter is wholly erroneous. In terms of the said letter: (i) Majorly no traffic was hampered/affected due to rains in Police District Baddi; (ii) Members of the truck union Baddi had intimated no decline in the number of vehicles that exited from Baddi to other States during the months of July - August, 2023, though they used alternate routes due to damage of the toll barrier bridge, Baddi; (iii) Traffic was diverted via Barotiwala to Baddi for smooth regulation.

Significantly, letter dated 12.09.2023 addressed by the Superintendent of Police, Police District Baddi was not put to the petitioner. Petitioner’s response to this letter was not called for. The letter was straightaway relied upon by the Commissioner, State Taxes & Excise for passing the impugned order. Even if infraction of principles of natural justice, denial of opportunity to the petitioner to respond to letter dated 12.09.2023 is ignored then also the said letter itself acknowledges damage to toll barrier bridge Baddi and for this reason diversion of traffic via Barotiwala to Baddi by the District Administration. The letter records that vehicles belonging to Baddi Truck Union had to use alternate routes due to damage of toll barrier bridge, Baddi. This is the entire case of the petitioner that there had been extensive damages to the bridges connecting Pinjore-Baddi-Nalagarh. That there had been traffic diversions bypassing petitioner’s toll plaza. That because of traffic diversions, petitioner suffered loss of revenue at its toll plaza Baddi. The contents of the letter have not been appreciated in correct perspective by the Commissioner, State Taxes & Excise. In fact, report prepared by Assistant Commissioner (Excise) & Deputy Commissioner (Excise), BBN Baddi (Annexure P-18) also refers to complete washing away of major bridges connecting Baddi from adjoining areas due to heavy rains. Relevant portion of the report reads as under:-

The above report also quantifies the damages suffered by the petitioner. This report has also not been considered appropriately by the Commissioner, State Taxes & Excise, in accordance with law. Damage to the bridges linking Pinjore – Baddi – Nalagarh has been established. Damage to the bridge at petitioner’s toll plaza has also been demonstrated. Traffic diversion bypassing petitioner’s toll plaza has also been proved on record. The Commissioner, State Taxes & Excise has wrongly brushed aside the report, only taking into consideration the letter of Superintendent of Police Baddi.

4(iii) The report regarding refund of revenue loss at petitioner’s toll plaza prepared by Assistant Commissioner, State Taxes & Excise as extracted above quantifies the actual revenue loss suffered by the petitioner and recommends its refund. The procedure adopted is in sync with conditions 2.8.1 & 2.8.2 [extracted in para 4(i) above]. As per these conditions in the event of loss sustained by the toll lessee on account of law & order situation, natural calamity or by acts of God and force majeure, the affected toll lessee will file a claim before the Deputy Commissioner/Assistant Commissioner, State Taxes & Excise within a period of one year from the date of accrual of cause of action. The concerned Officers of State Taxes & Excise would make proper inquiry into the matter. If upon inquiry they conclude that the toll lessee has really sustained loss on account of circumstances mentioned in condition 2.8.1 they will send their recommendations to the Commissioner, State Taxes & Excise for approval of the same.

In view of the report of the Assistant Commissioner, State Taxes & Excise dated 18.12.2024 (Annexure P-18) it is obvious that petitioner – toll lessee had sustained revenue loss on account of natural calamity etc. The reasons assigned by the toll lessee for suffering loss due to damages caused to major bridges connecting Baddi with Panchkula & Nalagarh have been affirmed in the report. Actual damage sustained by the toll lessee has also been quantified in the report. However, the Commissioner, State Taxes & Excise discarded the report of officials of State Taxes & Excise by wrongly and heavily relying upon as also misinterpreting a single letter of Superintendent of Police, Police District Baddi.

4(iv) During hearing of the case, learned Additional Advocate General pointing out para -5 of preliminary submissions of the reply submitted that petitioner had failed to establish toll barriers at Kalu Jhanda, Khudabaksh Chowk, Bagguwala & Sansiwala bridge, therefore, petitioner himself is responsible for suffering revenue loss if any as claimed by it.

Learned Senior Counsel for the petitioner takes an objection and validly so that as per condition No. 1.4 of the annual toll Announcements for the Financial Year 2023-24 petitioner had been granted toll unit at a specified location of Baddi – Barotiwala and not at any other place, therefore, petitioner could not have set up its toll unit at any other place.

Learned Senior Counsel for the petitioner also urged that revenue loss suffered by the petitioner as quantified by the Assistant Commission, State Taxes & Excise in its report dated 18.12.2024 is liable to be refunded to it alongwith interest @ 15% from the due date. For seeking interest, reliance has been placed upon following condition 2.3.18:-

Learned Senior Counsel for the petitioner justifiably raised the above issue as in the event of any delay on part of the petitioner in paying the lease installment, 15% interest would have been applicable and charged from the petitioner, therefore, this condition should be applied vice versa also i.e. in case respondents fail to discharge their monetary obligation of refund under the Toll Announcements, petitioner would be entitled to interest @ 15% p.a.

In view of above discussion, this writ petition is allowed. The impugned order dated 22.01.2025 (Annexure P-20) passed by the Commissioner, State Taxes & Excise, Himachal Pradesh – respondent No. 2 is set aside. Petitioner is held entitled to refund of revenue loss suffered by it at 15% interest p.a. The quantification of the petitioner’s revenue loss as determined in the report dated 18.12.2024 (Annexure P-18) by Assistant Commissioner & Deputy Commissioner, State Taxes & Excise has not been verified by the Commissioner, State Taxes & Excise in terms of condition 2.8.2 of Toll Announcements for the Financial Year 2023-24. Therefore, Commissioner State Taxes & Excise – respondent No. 2 is directed to verify the quantification of the actual loss as determined in report at Annexure P-18 in accordance with law within a period of two weeks from today. The amount quantified as revenue loss suffered by the petitioner be released in its favour with interest @ 15% p.a. from the due date within further period of two weeks from the date of verification of the claim.

Pending miscellaneous application(s), if any, also stand disposed of.