Green Cess for Green India: Laws & Judgments


Sustainability is not an option in today’s scenario and march towards achieving a green planet cannot be done by lip service but by words backed by actions in forms of stringent laws with efficient enforcement and justice delivery mechanisms. Laws not only to curb pollution but also to impose taxes, cost fines and deterrence to those who pollute and disturb ecological balances.

The Constitution of India clearly states that it is the duty of the State to protect and improve the environment and to safeguard the forests and wildlife of the country. It imposes a duty on every citizen to protect and improve the natural environment including forests, lakes, rivers, and wildlife. The Department of Environment was established in India in the year 1980 to ensure a healthy environment for the country. This later became the Ministry of Environment and Forests in 1985. Besides, this India has general and specific laws on environmental subjects. The Environmental Protection Act, 1986, which came into force soon after Bhopal Gas Tragedy.

Ten years later from the milestone of the aforementioned Act, the courts began to have dedicated Green Benches constituted under the direction of the Hon’ble Supreme Court. The constitution of dedicated courts to hear environmental issues it is a giant leap in judicial activism towards commitment speedier justice for environmental issues of greener India. Nearly 17 years after, its formation, the Supreme Court rechristened ‘forest bench’, which deal with cases relating to environment and forests as ‘Green Bench’. The Forest Bench began its journey by passing the first order on December 12, 1996 and since then has come a long way in dealing with violators. On April 16,1996, a division bench of the Supreme Court comprising Justices Kuldip Singh and S. Saghir Ahmed directed the Chief Justice of the Calcutta High Court to constitute a special division bench to hear environment-related petitions. Another in Chennai followed the constitution of the Calcutta bench. On September 2, 1996, while passing an interim order in the Tamil Nadu tanneries case, a full bench of the Supreme Court comprising Justices Kuldip Singh, Falzanuddin and K. Venkataswami asked the Chief Justice of the Chennai High Court to constitute a special Green Bench to deal with environmental matters.

The seriousness towards Indian initiatives to make the earth sustainable can also be ascertained from the proposed Bill of National Renewable Energy Act, 20xx provides for production of energy through promotion of renewable energy resources according to the conditions of environment, macro-economic conditions and climate to reduce the carbon emissions as well as to reduce dependency on the fossil fuels. This proposed law provides for constitution of State Green Fund and National Renewable Energy Fund. Till now, Electricity Act, 2003 governed the renewable energy sector, 2003, which in itself is undergoing amendments. With the government’s target of 175 GW of renewables energy installed capacity by 2022, the Act would empower Ministry of New and Renewable Energy to reorganize projects in this direction.

Recent judicial pronouncements regarding issues on States impositions of Green cess, a tax earmarked for special purposes, across different States is also underlining green activism towards achieving goals of greener India. Although many of the cases and appeals are challenges of the stakeholders affected commercially by such imposition. Taxes however, constitute important medium to discharge responsibility for achieving goals of greener India. Imposition of Green tax is one such option to make citizens and stakeholders participate in protecting environment. Article 265 of the Constitution of India provides that taxes cannot be imposed or collected except by the authority of law. Today, in this part of the article, we would be focusing on the laws and recent judicial pronouncements highlighting issues relating to Green Cess, towards green activism in Indian scenario.

1. Laws relating to Sustainable Development and the Principle of Polluter must Pay

Debate on Green cess or any environmental subject would remain incomplete without talking on sustainable development or Principle of Polluter must pay. Some of the salient principles of sustainable development, as derived from Brundtland Report compiled to pursue the goal of sustainability and other international documents are:

  • Inter-Generational Equity;
  • Use and Conservation of Nature Resources;
  • Environmental Protection;
  • The Precautionary Principle;
  • The Polluter Pays principle,
  • Obligation to assist and cooperate;
  • Eradication of Poverty and Financial Assistance to the developing countries.

The Polluter Pays principle is most essential features of sustainable development. The Precautionary Principle in the context of the municipal law means:

(i)    Environment measures by the State Government and the statutory Authorities must  anticipate, prevent’ and attack to the causes of environmental degradation.

(ii)   Where there are threats of serious and irreversible damage lack of scientific certainly   should not be used as the reason for postponing, measures to prevent environmental depredation.

(iii)   The “Onus of proof” is on the actor or the developer/industrial to show that his action is  environmentally non-threatening.

The Polluter Pays principle has been held to be a sound principle by the apex Court in Indian Council for Enviro-Legal Action vs. Union of India[1]. The Court observed, “We are of the opinion that any principle evolved in this ‘behalf should be simple practical and suited to the conditions obtaining in this country“. The Court ruled that “Once the activity carried on is hazardous or inherently dangerous, the person carrying on such activity is liable to make good the loss caused to any other person by his activity irrespective of the fact whether he took reasonable care while carrying on his activity. The rule is premised upon the very nature of the activity carried on“.

The “Polluter Pays” principle as interpreted by the apex Court means that the absolute liability for harm to the environment extends not only to compensate the victims of pollution but also the cost of restoring the environmental degradation. Remediation of the damaged environment is part of the process of sustainable development and as such polluter is liable to pay the cost to the individual sufferers as well as the cost of reversing the damaged ecology. The Polluter pays principle is also known as Extended Producer Responsibility. This is a concept that was probably first described by Thomas Lindhqvist for the Swedish government in 1990. EPR seeks to shift the responsibility of dealing with waste from government to the entities producing it. In effect, it internalized the cost of waste disposal into the cost of the product. The principle in general does not prohibit in passing the cost to the consumer. Thus, precautionary principle and the polluter pays principle have been accepted as part of the law of the land. Indian Constitution gurantees protection of life and personal liberty under Article 21 of the Constitution along with the Articles 47, 48A and 51A(g) of the Constitution described are as under:

Article 47. Duty of the State to raise the level of nutrition and the standard of living and to improve public health. The State shall regard the raising of the level of nutrition and the standard of living of its people and the improvement of public health as among its primary duties and in particular, The State shall endeavor to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health.

Article 48A(g) Protection and improvement of environment and safeguarding of forests and wild life. The State shall endeavor to protect and improve the environment and to safeguard the forests and wild life of the country.

Article 51A (g) To protect and improve the natural environment including forests, takes, rivers and wild life, and to have compassion for living creatures.

Apart from the Constitutional mandate to protect and improve the environment there are post independence legislations as mentioned initially: The Water (Prevention and Control of Pollution Act, 1974, The Air (Prevention and Control of Pollution) Act, 1981 and the Environment Protection Act, 1986.

2. Green Activism through Green Cess levied in States of India

(i)            Goa Green Cess Act, 2013

Goa green cess Act on products and substances causing pollution, namely the Goa Cess on Products and Substances Causing Pollution (Green Cess) Act, 2013 (“Goa Green Cess Act”) came into force on July 2013. This Act was enacted by the State Legislature on products and hazardous substances that cause pollution on environmental resources of Goa under the concept of polluter must pay principle and to provide for reduction of carbon footprints left due to such activities. The cess of 0.5% on sale value of petroleum products and 2% cess on coke and its derivatives has been levied. The Goa Green Cess Act also mandates to set Environmental and Energy Audit Bureau to identify sensitive areas of energy and environmental conservation and recommend measures for reduction of carbon footprints. The penalty provided is not restricted in terms of fine alone but empowers the authority to restrict such violators in handling the products. The Act provides for no interference of the civil court in matters dealt by it.

(ii)          Delhi & Green Cess

Of recently, Supreme Court has imposed the Environment Compensatory Charge (ECC) in range of Rs. 700 to Rs. 1300/- on commercial vehicles in transit in National Capital. However, the Green Cess levied has exemptions to vehicles carrying essential commodities like Foodstuff, passengers, and emergency including ambulances. As per the directions of the Court, the toll tax would be collected by the toll operators and passed to the Delhi Government. The weekly account receipts has to be furnished to the Supreme Court and there are 127 such entry points in Delhi NCR for the purposes of tax. The slab of tax is Rs. 700 for one light duty vehicle and two axle trucks whereas Rs. 1300 for three to four axle trucks. The toll tax operators would also be required to install radio frequency identity system at their own cost. The tax is being imposed on pilot basis for four months from November 1, 2015 to February 29, 2016. The State government of UP, Rajasthan and Haryana are required to cooperate with Delhi Government in this regard and place alternate route diversions in this regard for commercial vehicles convenience as well.

(iii)        Go Green Gujarat

Major industries got relief from the Gujarat High Court which has held that the Green Cess Act, 2011 enacted to generate funds to promote clean energy, was unconstitutional and declared it as void. However, the Supreme Court stayed the Gujarat High Court judgment quashing the State legislation as unconstitutional. The Act came into force from 2011-12, where by the government aimed to generate funds to promote clean energy by introducing a Green Cess on every unit of conventional electricity generated in Gujarat. Under the Gujarat Green Cess Act, 2011, Green Cess not exceeding twenty paise per unit was levied on generation of electricity other than renewable energy for creation of a Green Energy Fund for protecting environment and promoting the generation of electricity through renewable sources in the State of Gujarat. This would also include electricity generated by captive power plants of companies.

(iv)           Green Cess levied in Hill Station

National Green Tribunal imposed an environment cess of Rs. 1,000 and Rs. 2, 500 per visit respectively for every petrol and diesel tourist vehicle from Manali going to the Rohtang Pass, on the ground that the tourist surge to the hill station posed a threat to its fragile ecology.


The commercial ecological conflict is not new especially when unsustainability standards of operations are part of practice. The government has already announced a 0.5% Swachh Bharat cess applicable on all services presently liable to service tax, with effect from November 15, 2015. With this, the effective service tax rate would be 14.5%. This levy will translate into a tax of 50 paisa on every Rs 100.00 worth of taxable services, the proceeds of which will be exclusively used for Swachh Bharat initiatives. States like Andhra Pradesh is also planning similar taxes in its green India initiatives. So, India in its effort to make green India is opting for tax soaps for common man and other stakeholders but the burden of cleaning earth is so huge that escape doesn’t lie by any of us, if we want to ensure the sustainability of the earth. However, since cess are created for special purposes and can cause inflationary pressures so they may be a cause of concern too but once and Goods and Services tax is implemented, these are likely to be subsumed, so the same may be momentary for tax payers and States.


[1] J.T. 1996 (2) 196

Published :
November 19, 2015
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