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It is, therefore, necessary to amend section 98A(1) retrospectively and declare that the word “a body” included and, has always included, even leaseholders of mines and quarries situated in forest area even if they did not constitute themselves collectively, as a federation, company or society or an association of persons. Significantly, the Hon’ble High Court has accepted this view that the expression “a body” will include any autonomous or private body in which the State Government did not have any control in any manner whatsoever. The proposed amendments are intended to declare that all lease-holders of mines and quarries in forest area come within the definition of “a body” and are liable to collect and pay Forest Development Tax or Forest Development Fee as this levy is critical for the development and regeneration of forests. The proposed amendments will cure the infirmity and remove the defect which was found in the existing provisions. The Bill also contains a validation clause that is dealt with later. Tax and Fee: 7 In Guru Siddappa v State of Karnataka AIR 1981 Kar 216, the Division Bench of the Karnataka High Court had held that the Forest Development Tax (FDT) levied on the purchase price of forest produce was within the legislative competence of the State under Entry 54 of List-II and constitutionally valid. Although the unamended section 98A(1) refers to the levy of a tax, the impost is 1964: KAR. ACT 5] Forest 353 more in the nature of a fee. The amount collected by way of forest development tax is earmarked for development and regeneration of forest and does not go to the general revenue of the State to be spent for general public purpose. This is also made clear by section 98B of the Act which specifies that the Forest Development Tax (FDT) and interest that is levied and collection under section 98A will form part of the Karnataka Forest Development Fund. The Forest Development Tax (FDT) and other amounts specified in section 98B(2), although credited to the Consolidated Fund of the State, is later appropriated and transferred to the aforesaid Karnataka Forest Development Fund. 8 In State of Maharashtra v Salvation Army AIR 1975 SC 846, the Supreme Court held that an impost which initially was in the nature of a fee would subsequently assume the characteristics of a tax. The converse is equally true. The decision of the Karnataka High Court was rendered in 1981 and Forest Development Tax (FDT) was treated as a tax coming within Entry 54 of List-II. 9 Since the Forest Development Tax (FDT), as a fee, will be levied at the time of disposing by way of sale or otherwise of forest produce, the fee is being levied in exercise of the powers of the State Legislature under Entry 66 of List-II of Schedule VII of the Constitution. In Corporation of Calcutta v. Liberty Cinemas AIR 1965 SC 1107. Hon’ble Supreme Court held that the fee can also be under an enactment relatable to the imposition of a tax. In any event, the State Government has the authority to levy such fee under Entry 47, List III. Validation: 10 .1 The State Government has levied and collected more than Rupees 3500 crores as Forest Development Tax (FDT) after the impugned notification was issued in 2008. All the petitioners in the above judgment conceded that they were disputing the levy only upto 2011. However, it is proposed to validate such collections both by the lease holders of mines and quarries situated in forest area and by the Monitoring Committee, from the purchasers of minerals till date. The present Bill seeks to achieve the objects as mentioned above and also to provide for the validation of the levy and collection of Forest Development Tax (FDT). Clause 6 of the Bill, inter alia, provides that any demand and/or any action taken under the provisions of the Act as in existence prior to this amendment Bill shall be deemed to have taken or levied under the new law after the Forest [1964: KAR. ACT 5 354 amendment. This will validate the demand made by deeming it to have been made under the amended law and thus protect the revenue of the State. This Bill thus cures the infirmity and removes the defect found in the existing provisions and makes adequate provisions in the validation clause for a valid imposition of the Forest Development Tax and Forest Development Fee. 10.2 The State Government proposes to recompute the Forest Development Fee as per prescribed rules or guidelines. If the demand as computed as per new rules or guidelines is lesser than the amount of Forest Development Fee demanded under the erstwhile section 98A or any notification issued thereunder, the lesser amount will be payable as Forest Development Fee. 10.3 A provision is also proposed to exempt or reduce Forest Development Tax (FDT) or Forest Development Fee by Government by notification prospectively or retrospectively in public interest by any specific clause of person or in respect of any specified forest produce. Penalty: 11 It is made clear that no penal proceedings will be commenced as a consequence of the retrospective amendments that are proposed in the Bill. This will also ensure compliance with Article 20(1) of the Constitution. Rate of Tax or Fee: 12 Demand were raised at the rate of 12% on the disposal of minerals, although section 98A(1) prescribed a rate of 8% tax on forest produce other than those mentioned in the erstwhile proviso and Table thereto. The Karnataka Forest (Amendment) Act, 2015 imposed a levy of 12% but omitted to amend the rate retrospectively. It is now made clear that 8% shall be retrospectively increased to 12% from 16thAugust, 2008 onwards. Indeed, demands have been made at this rate from16thAugust,