Tolls Collected By NHAI On National Highways Fall Exclusively Under Union List: Supreme Court

"Any toll which is essentially a charge or fee collected for the use of a National Highways by the National Highway Authority of India is squarely covered within the Union List." Supreme Court, in a significant constitutional ruling, held that the collection of toll fees by the National Highways Authority of India for the use of national highways falls exclusively within the legislative competence of the Union Government.

A bench comprising Justice B.V. Nagarathna and Justice Ujjal Bhuyan observed that the expression 'Tolls' in the State List must be restricted to charges not collected by the central government under its specific constitutional powers.

The petitioner approached the Supreme Court challenging an August 2025 judgment passed by the Madurai Bench of the Madras High Court. The dispute centered on the legislative competence of the Union government to levy tolls on national highways, with the petitioner arguing that the subject of "Tolls" exclusively belonged to the State legislatures. The High Court had dismissed this challenge, prompting the present special leave petition before the apex court.

The primary question before the court was whether the power to collect tolls on national highways is governed by Entry 59 of the State List (List II) or by the Union List (List I). The court was also called upon to determine the interplay between these competing constitutional entries using the doctrine of pith and substance.

Interplay Of Constitutional Entries Explained

The court began its analysis by examining the distribution of legislative powers under Article 246 of the Constitution of India, read with the Seventh Schedule. The bench noted that Entry 23 of List I specifically deals with "Highways declared by or under law made by Parliament to be national highways." The court further observed that this must be read in conjunction with the Union's ancillary taxing powers.

Union's Power To Levy Fees On National Highways

Expanding on the Union's legislative domain, the bench highlighted Entry 96 of List I, which empowers the central government to levy "Fees in respect of any of the matters in this List, but not including fees taken in any court." The court reasoned that since national highways fall under the Union List, the authority to collect fees for their use is a natural extension of the Parliament's exclusive legislative power.

Doctrine Of Pith And Substance Applied

Resolving the apparent conflict with Entry 59 of List II, which simply reads "Tolls", the court invoked the doctrine of pith and substance to determine the true nature of the highway levy. The bench emphasized that the specific power of the Union to legislate on national highways and collect associated fees overrides the general entry regarding tolls assigned to the states.

"Having regard to the pith and substance of Entry 23 read with Entry 96 of List I of the Seventh Schedule of the Constitution of India, we find that any toll which is essentially a charge or fee collected for the use of a National Highways by the National Highway Authority of India is squarely covered within the Union List."

Scope Of State's Power To Collect Tolls Restricted

Addressing the scope of the State legislature's power, the court clarified that Entry 59 of List II is not rendered redundant but must be read harmoniously with the Union's paramount powers. The bench ruled that the state's authority to levy tolls cannot encroach upon the specific domain carved out for the National Highways Authority of India.

"Consequently, the expression 'Tolls' in Entry 59 List II must be restricted to those tolls or charges which are not collected by the Union Government in terms of List I of the Seventh Schedule of the Constitution of India," the court stated.

Finding no reason to interfere with the legal analysis adopted by the Madras High Court, the Supreme Court dismissed the special leave petition. The ruling firmly settles the constitutional validity of toll collection by central authorities on national highways, ensuring that state legislatures cannot claim competence over NHAI toll plazas.

Date of Decision: 25 March 2026