In George Leslie v. State of Kerala, AIR 1970 Ker 21 the term ‘Kuttikanam’ was explained.
It was held, ‘Kuttikanam’ is neither a fee nor a tax. A tax or fee is levied in the exercise of sovereign power. ‘Kuttikanam’ means Government’s share of the value of the reserved trees. It was further held by Mathew J, ‘Kuttikanam’ being Government’s share of the value of the trees owned by Government, it has the power to fix the value of the trees.
The “reasoning and conclusions reached by Mathew J” were agreed with by SC in State of Kerala v. Kanan Devan Hills, (1991) 2 SCC 272. It was held, Government may, in the absence of any provision to the contrary in the title deed, sanction the sale of timber which is the property of Government to the holder of the land on which such timber is standing, on payment of ‘Kuttikanam or Seigniorage‘ or such other rates as may be specified by Government in each individual case [See, Tata Finlay, (2001) 5 SCC 684].
In respect of all matters, where the question arises whether “‘Seigniorage’ can be claimed by State in respect of trees which are planted”, Kanan Devan Hills has to be applied [See, Kanan Devan, AIR 1998 Ker 267]. The question is of implementation. An assessment of ‘Seigniorage’ without the application of an identifiable test is nothing but perverse and arbitrary. The absence of any identifiable standard would naturally give rise to the scope for arbitrary assessment at the hands of different authorities.
There are several definitions out of which one can be picked up to satisfy the definition of ‘Kuttikanam’ according to some authority and another definition to fit in with the concept of ‘Seigniorage’ according to another authority. It is absolutely necessary to define the word ‘Seigniorage’ so that there can be no doubt or confusion in the mind of either the authority or of the ‘Seigniorage’ payer with regard to the ‘Seigniorage’.
Recently on 05.09.2017, Supreme Court in State of Kerala v. Tata Tea Ltd., [Civil Appeal Nos. 7481 of 2008] felt it ‘necessary to decide whether ‘Seigniorage’ is constitutionally valid‘. I briefly assisted Senior Advocate, Mr. Jaideep Gupta.
On 25.10.2017, Nariman And Kaul JJ remanded the matter to High Court.