Unsubstantiated claims of internal earth reuse do not exempt contractors from statutory royalty under Minor Mineral Rules.

The petitioner, an infrastructure company, was awarded an EPC contract by NHIDCL for the four-laning of NH-37 in Nagaon District

During execution, the Divisional Forest Officer (DFO) issued a demand on 09.03.2023 for ₹1,45,84,055/- toward royalty, mineral price, GST, and penalties for earth and minerals used

The petitioner contended that 1,08,482.04 CuM of earth was excavated from within the "Right of Way" (project site) and reused internally, making it exempt from royalty under the principle of "cut-and-fill"

The Forest Department conducted a field inspection and concluded that substantial quantities were unsupported by valid permits or transit challans, treating them as unauthorized extractions

1. Whether the demand and recovery communications issued by the Forest Department for royalty and penalties on used earth materials were arbitrary, illegal, or lacked jurisdiction

2. Whether earth excavated from within the project site and reused for the same project is subject to the levy of royalty under the Assam Minor Mineral Concession Rules, 2013

Sections 14 and 15 of the Mines and Minerals (Development and Regulation) Act, 1957, which empower State Governments to regulate minor minerals

Rules 5, 63, and 64 of the Assam Minor Mineral Concession Rules, 2013, which mandate that contractors pay royalty/dead rent in advance for minerals used in Government projects and prescribe consequences for "unauthorised mining" (extraction without valid permits), including recovery of mineral price and penalties

Promoters & Builders Association of Pune v. State of Maharashtra (2015) 12 SCC 736, which held that royalty depends on the "end-use" of the excavated earth

The court reasoned that under Rule 5 of the 2013 Rules, the petitioner had a statutory obligation to obtain mining permits and pay royalties for minerals used in the project

While the petitioner claimed exemption for "internal reuse," the Forest Department's assessment followed a structured process of record verification and field inspection that found the petitioner’s claims regarding the source and quantity of 80,282.04 CuM of earth were not substantiated by valid statutory documentation

The court found that the principles of natural justice were met as the petitioner was given notice of the inspection and an opportunity to submit representations

Furthermore, the court distinguished this case from precedents like Md. Muslim Ali, noting that here, the recovery was based on a formal statutory determination under Rules 63 and 64 rather than an arbitrary deduction

The court held that disputed factual questions concerning the exact measurement and "cut-and-fill" calculations cannot be adjudicated under Article 226. However, the court clarified that the petitioner is at liberty to approach an appropriate forum for the adjudication of these factual disputes regarding the quantification of liability

The court also noted that the petitioner failed to maintain the security deposit (demand draft) as directed by interim orders, which justified the Forest Department's appropriation of ₹50,00,000/-