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Shankarlal Satyanarayan Oil Mills and Etc. Vs. State of Maharashtra and ors. - Court Judgment

LegalCrystal Citation
SubjectOther Taxes
CourtMumbai High Court
Decided On
Case NumberWrit Petn. Nos. 448, 458, 650, 651 and 994 of 1983 and etc. etc.
Judge
Reported inAIR1985Bom169; 1985MhLJ259
ActsMaharashtra Agricultural Produce Marketing (Regulation) Act, 1964 - Sections 31, 34A, 34B and 36
AppellantShankarlal Satyanarayan Oil Mills and Etc.
RespondentState of Maharashtra and ors.
Appellant AdvocateG.B. Lohiya,;S.C. Mehadia,;R.S. Agrawal,;L. Mohta,;C.G. Agrawal and;B.N. Mohta, Advs.
Respondent AdvocateM.A. Garud,;V.S. Sohani,;S.Z. Deshbhratar,;D.B. Mirza,;M.P. Badar,;Prakash Bhaiya,;Ram Lambat,;S.J. Jichakar,;V.V. Naik,;A.A. Desai,;Ahmad,;M.M. Gadkari,;B.T. Patil and;A.M. Tayade, Advs.,;S.P. Patey,
Excerpt:
.....is based on two decisions of the supreme court which do not deal with raw cotton and cotton seed but with other agricultural commodities like paddy and rice. it is urged that the division bench had failed to notice that collection of supervision charges stands on altogether different footing from levy and collection of market fees. it is contended that the division bench had failed to notice this distinction and if it had been brought to its notice, it would not have restrained the market committees from recovering and collecting supervision charges for the same reason for which it has prohibited levy and collection of market fees in respect of cotton-seed......correct since while s. 31 empowers the market committee to levy and collect fees known as market fees, supervision charges are chargeable and collected under ss.34-aand 34-b of the act. it is contended that the division bench had failed to notice this distinction and if it had been brought to its notice, it would not have restrained the market committees from recovering and collecting supervision charges for the same reason for which it has prohibited levy and collection of market fees in respect of cotton-seed. it is therefore, urged that the decision of the division bench in the said writ petition, at least in so far as it relates to supervision charges, is prima facie not correct and cannot be binding on us. we are, therefore, called upon to consider the challenge with regard to the.....
Judgment:

Ginwala, J.

1. Since common questions of fact and law are involved in these petitions, they can conveniently be disposed of be a common judgment.

2. The petitioners in all these petitions are either traders dealing in cotton seed or manufacturers who produce oil out of cotton seed. The respondents are the State of Maharashtra, the Maharashtra State Co-operative Marketing Federation Ltd. (Marketing Federation for short) and various Agricultural Produce Market Committees constituted under the provisions of the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963 ('the Act' for short). The Marketing Federation has been appointed by the State Government as its agent in exercise of its power under the Maharashtra Raw Cotton (Procurement, Processing and Marketing) Act, 1971 (Raw Cotton Act for short) for carrying on trade of purchasing or processing of raw cotton and selling ginned cotton and cottonseed on its behalf. The petitioners purchase their requirement of cotton seed from the Marketing Federation since the Raw Cotton Act creates monopoly of trading in cotton in the State Government. The various Market Committees levy and collect market fees and supervision charges from the petitioners in respect of the cotton seed they purchase from the Marketing Federation. Recovery of these fees and charges by the various Market Committees is under challenge in these writ petitions. Identical challenges were made against such recoveries in bunch of writ petitions being W. P. Nos. 913 of 1983, etc. Four grounds were urged in support of these challenges. Firstly it was contended that cotton seed is not an agricultural produce within the meaning of the Act. The second contention was that the provisions of the Act by virtue of sub-sec (2) of S.6 thereof do not apply to those who purchase cotton seed for the purpose of manufacturing oil therefrom as is being done by some of the petitioners. Third contention was that under S.31of the, market fee can be levied and collected only in respect of agricultural produce marketed in the market area and since cotton seed is sold by the Marketing Federation in its Zonal offices, it cannot be said to be marketed in the market area. The last contention was that the levy and collection of market fees and supervision charges on cotton is purchased by the Marketing Federation, is in contravention of the second proviso of S. 31 of the Act which prohibits recovery of such fees and charges on the same agricultural produce. A Division Bench of this Court by its judgment delivered on 22/23rd Feb. 1984 : AIR1985Bom160 , rejected the first three contentions but has upheld the fourth contention. It has held that the transaction of sale of cotton seed cannot be subjected to the market fee and supervision charges by the Market Committees in case the Kapas from which it is ginned is already subjected to the said levy and charges. It quashed the notice of demand which has been issued by the Market Committees in those petitions and restrained them from recovering the market fees and/or supervision charges in the circumstances stated by it and they were directed to refund the levy and charges if collected within a period of six months from the date of judgment.

3. Since in the present petitions recovery of market fees and supervision charges are assailed on identical grounds, these petitions would have to be allowed following the decision of the Division Bench in the above said writ petition. However, the respondents in the present have submitted before us that the view taken by the Division Bench requires reconsideration.

4. It is submitted by the respondents that the question as to whether raw cotton and cotton seed could be taken to be the same agricultural produce within the meaning of second proviso of S. 31, is not correct since it is based on two decisions of the Supreme Court which do not deal with raw cotton and cotton seed but with other agricultural commodities like paddy and rice. Effort was made before us to distinguish the said decisions of the Supreme Court on facts and to show that the ratio of those decisions was not applicable to the facts obtaining in the present petitions. However, we are not impressed by the submissions and in our view the Division Bench has rightly held that the market fees on purchase of cotton seed from the Marketing Federation, when market fee was already paid when raw cotton out of which the cotton-seed has come out, was purchased by it.

5. It was, however, submitted before us by the respondents that the decision of the Division Bench in the above said writ petitions with regard to the collection of supervision charges is on the face of it not correct. It is urged that the Division Bench had failed to notice that collection of supervision charges stands on altogether different footing from levy and collection of market fees. It is submitted that the decision of the Division Bench proceeds on the assumption that the market fees and supervision charges are levied and collected under S. 31 of the Act would also apply to supervision charges. It is pointed out that this assumption is not correct since while S. 31 empowers the Market Committee to levy and collect fees known as market fees, supervision charges are chargeable and collected under Ss.34-Aand 34-B of the Act. It is contended that the Division Bench had failed to notice this distinction and if it had been brought to its notice, it would not have restrained the Market Committees from recovering and collecting supervision charges for the same reason for which it has prohibited levy and collection of market fees in respect of cotton-seed. It is therefore, urged that the decision of the Division Bench in the said writ petition, at least in so far as it relates to supervision charges, is prima facie not correct and cannot be binding on us. We are, therefore, called upon to consider the challenge with regard to the supervision charges dehors the decision of the Division Bench.

6. We find considerable force in these submissions made on behalf of the respondents. We have carefully gone through the judgment of the Division Bench and we notice that it has not dealt with the question of imposition and collection of supervision charges differently from levy and collection of market fees. It seems that the Division Bench, with respect, carried the impression that market fee and supervision charges stand on the same footing and are imposed and recovered under the same provision, namely S. 31 of the Act and hence supervision charges would also be governed by the second proviso to that section. With great respect we find that this is not so as we would presently point out. We, therefore, find that the judgment of the Division Bench has been rendered per incuriam in so far as it relates to supervision charges since the relevant statutory provisions have not been noticed.

7. Sections 34- A and 34- B which deal with imposition and collection of supervision charges or cost of supervision and which had been inserted in the Act by the Amending Act of 1972 are in the following terms:

'34-A.(1) The State Government may, by general or special order, direct that the purchase of agricultural produce, the marketing of which is regulated in any market or market area under this Act, shall be under the supervision of such staff appointed by the State Government as it may deem to be necessary; and subject to the provisions of this Chapter, the cost of such supervision shall be paid to the State Government by the person purchasing such produce in such market or market area.

(2) The cost to be paid by a purchaser shall be determined from time to time by the

State Government and notified in the market or market area (in such manner as the State Government may deem fit), so however that the amount of the cost does not exceed five paise per hundred rupees, of the purchase price if the agricultural produce which is purchased by such purchaser.

34-B. (1) The cost of supervision shall be collected by a Market Committee shall be paid to the State Government in the prescribed manner within a period or fifteen days from the close of the month in which such cost is collected.'

At the same time we may also reproduce S. 31 under which a Market Committee is empowered to levy and collect fees from every purchaser of agricultural produce marketed in the market area. It is as follows :

'31. It shall be competent to a Market Committee to levy and collect fees in the prescribed manner at such rates as may be decided by it (but subject to the minimum and maximum rates which may be fixed by the State Government by notification in the Official Gazette in that behalf), from every purchaser of agricultural produce marketed in the market area :

Provided that, when any agricultural produce brought in any market area for the purposes of processing only or for export is not processed or exported therefrom within thirty days from the date of its arrival therein, it shall until the contrary is proved, be presumed to have marketed in the market area, and shall be leviable for the levy of fees under this section, as if it had been so marketed :

Provided further that, no such fees shall be levied and collected in the same market area in relation to agricultural produce in respect of which fees under this section have already been levied and collected therein (or in relation to declare agricultural produce purchased by persons engaged in industries carried on without the aid of any machinery or labour in any market area.)'

Bare perusal of these sections would make it abundantly clear that while fees are levied and collected under S. 31,cost of supervision is recovered under Ss34-A and 34-B. It is, therefore, obvious that cost of supervision recoverable from a purchaser under sub sec.(1)of S.34-A is altogether different from fees to be levied and collected from him under S.31.The purpose of levying and collecting fees on the one hand and recovering cost of supervision on the other hand from the same purchaser in respect of the same transaction of agricultural produce is different .While fee which is levied forms part of the market fund, under sub-sec .(1)of S.36 of the Act which can be expended for all or any purposes specified in S.37,cost of supervision is payable to the state Government to meet the expenses of supervision by the staff appointed by it. It would, therefore, be seen that there is no interconnection between fees and cost of supervision. Market Committee is only agent of the State Government to collect the cost of supervision, while it collects fees to meet its own expenses. It would not, therefore be possible to treat fees and cost of supervision on the same level in so far as their collection in respect of subsequent transaction of the same agricultural produce are concerned. While second proviso of S. 31 prohibits levy and collection of fees in the same market are in relation to agricultural produce in respect of which fees have already been levied and collected therein, there is no similar prohibition contained in S. 34-A or 34-B or for that matter in any provision in the Act. It is not, therefore, possible to say that cost of supervision cannot be collected in the same market area in relation to agricultural produce in respect or which the same has been already collected. There is nothing to suggest in Ss. 34-A and 34-B that cost of supervision cannot be collected in respect of repeated transactions of the same agricultural produce unlike levy and collection of fees.

8. On behalf of the petitioners it has been urged that Market Committee can collect cost of supervision only if the purchase of a particular agricultural produce is actually supervised by the staff appointed by the State Government as required by sub-sec. (1) of S. 34-A and that no such supervision is made by any such staff in respect of cotton seed from the Market Federation. Reading sub-sec. (1) of S. 34-A in its proper perspective it does not appear that a purchaser is liable to pay the cast of supervision only if a particular purchase is supervised by the staff appointed by the State Government. The scheme of S. 34-A seems to be that the State Government by a general or a special order has to direct that purchase of certain agricultural produce in any market or market area should be under the supervision of the staff appointed by it and on such direction being given, cost of such supervision incurred by the State Government has to be recovered generally from purchasers of such agricultural produce irrespective of whither his particular transaction is or is not supervised by such staff. The supervision intended under sub-sec. (1) of S. 34-A is a general supervision over purchase of specified agricultural produce and not supervision of each and every purchase. As seen above, Ss. 34-A and 34-B which fall in Chap. IV-A have been inserted by Maharashtra Act No. 26 of 1972 the objects and reasons of which are stated in the following terms:

'Objects and Reasons:

There are 198 Market Committees in the State. In order to exercise proper control and supervision over purchases and sales of various kinds of agricultural produce in numerous market yards and sub-market yards, Government had decided to establish a Directorate of Marketing with a view to enabling Government to ensure fair market practices and to eliminate mal-practices in market areas by engaging the services of graders and other necessary staff. A provision for appointing the staff necessary for such supervision, and to recover the cost of such supervision from purchasers was found necessary. Hence the Act.'

It would, therefore, appear that supervision of each and every purchase is not intended under the scheme of Chap.IV-A. A purchaser of agricultural produce would be liable to pay cost of supervision if there is a directive from the Government in respect of that agricultural produce as contemplated by sub-sec. (1) of S. 34-A irrespective of the fact whether his purchase had been or had not been supervised by the staff appointed by the State Government. No material has been placed before us by the Market Committees or the State Government to show that cotton-seed is an agricultural produce in respect of which the State Government has issued directions for the market or market areas under the control of the respondent market committees. We may only say at this stage that the respondent Market Committees would be entitled to recover ost of the supervision from the petitioners only if a direction has been given by general or special order by the State Government in respect of purchase of cotton seed in the markets or market areas under their control.

9. Relying on sub-sec. (1) of 34-D it was pointed out by the petitioners that fee and cost of supervision stand on the same level. We do not find any force in this contention. Sub-sec. (1) of S. 34-B merely says that cost of supervision would be collected in the same manner in which fee levied under S. 31 is collected. This sub-section does not say that cost of supervision should be imposed or levied in the same manner as fee. We, therefore, find that sub-sec. (1) of 34-B cannot come to the rescue of the petitioners.

10. In the result the petitions are partly allowed and the respondent Market Committees are restrained from levying and collecting fees under S31.of the Act ib respect of cotton seed if such fee is already levied and collected in respect of raw cotton of which such cotton seed is the outcome. The respondent Market Committees are directed to refund any fees which are levied and collected from the petitioners in respect of purchase of cotton-seed as above within six months from today. The respondent Market Committee would be entitled to collect cost of supervision from the petitioners in respect of their purchase of cotton seed if the State Government has issued direction in that behalf as provided in S.34-A(1) of the Act. In the circumstances of the case there shall be no order as to costs.

11. Petitions allowed in part.


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