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Tulsiram Raghuram and ors. Vs. Krishi Utpadan Mandi Samiti, Atarra and anr. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberSpecial Appeal No. 118 of 1975
Reported in(1976)5CTR(All)121
AppellantTulsiram Raghuram and ors.
RespondentKrishi Utpadan Mandi Samiti, Atarra and anr.
Excerpt:
- - the use of the expression brought in clearly indicates that the goods must be introduced in the market yards from outside......into rice and then sold to the customers. at the time of sale by the producers of both paddy and rice market fee is paid in accordance with the uttar pradesh krishi utpadan mandi adhiniyam (hereinafter referred to as the act) and the rules framed there under. the case set up by the petitioners was that paddy and rice are the same agricultural produce and once market fee has been paid on the sale of paddy, it cannot again be levied when the same paddy after de-husking and conversion into rice is sold by the petitioners.2. there is no dispute that under section 6 of the act the entire area of atarra municipal board has been to be the atarra market area and by a notification under section 7 of the act the area falling within the atarra municipality has been declared to be principal market.....
Judgment:

K. N. Seth, J. - The appellants filed a petition under Article 226 of the Constitution challenging the levy and collection of market fee by the Krishi Utpadan Mandi Samiti on the sale of rice. The petitioners are residents of Atarra and hold licences from the Krishi Utpadan Mandi Samiti, Atarra, for carrying on the business of sale and purchase of agricultural produce within the market area of the Mandi Samiti. They purchase paddy and rice which are specified agricultural produce from the producers. The paddy is de-husked and converted into rice and then sold to the customers. At the time of sale by the producers of both paddy and rice market fee is paid in accordance with the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam (hereinafter referred to as the Act) and the rules framed there under. The case set up by the petitioners was that paddy and rice are the same agricultural produce and once market fee has been paid on the sale of paddy, it cannot again be levied when the same paddy after de-husking and conversion into rice is sold by the petitioners.

2. There is no dispute that under section 6 of the Act the entire area of Atarra Municipal Board has been to be the Atarra Market area and by a notification under section 7 of the Act the area falling within the Atarra municipality has been declared to be principal market yard of the Atarra market area. The producers bring paddy and rice into the market area which are purchased by the petitioners and market fee as prescribed by the Mandi Samiti is paid by the producers on these transactions. After purchasing paddy the petitioners get the husk removed in various rice mills established within the market area of Atarra. The petitioners contended that the Mandi Samiti is not empowered to levy and collect fee from the petitioners on the sale of rice effected by them.

3. Section 17(ii) (b) empowers Mandi Samiti to levy and collect market fees on transactions of sale and purchase of specified agricultural produce in the principal market yard and sub-market yards from such persons and at such rates as may be prescribed, but not exceeding one half of one per centum of the price of the specified agricultural produce sold or purchased there in Rule 66(1) framed under the Act provides that 'the market committee shall have the power to levy and collect fees on the specified agricultural produce brought and sold in the Market yards at such rates as may be specified in the by laws but not exceeding one half of one percentum of the price of the specified agricultural produce.' The fee is payable by the seller. Sub-rule (2) provides that no market fee shall be levied more than once on any consignment of the specified agricultural produce brought for sale in the market yard if the market fee has already been paid on it in any market yard of the same market area and in respect of which a declaration has been made and a certificate has been given by the seller in Form No. V. There is no dispute with regard to the sale of rice which is purchased by the petitioners from the producers in the form of rice. On the sale by the producers to the petitioners fee at the prescribed rate is paid by the producers and a declaration is made and a certified issued in Form No. V prescribed by the rules. On the sale of that rice by the petitioners no fee is leviable of rule 66(2).

4. The dispute is confined to the sale of rice by the petitioners obtained after de-husking the paddy which they purchase from the producers and on which fee had been paid at the time when the paddy was brought and sold to the petitioners in the market area. It was contended by the petitioners that paddy and rice are one and the same commodity and once fee has been levied on the sale of paddy, fee cannot be levied again on the sale effected by the petitioners of the rice which was nothing but husked paddy. The dispute whether paddy and rice are the same agricultural produce has been set at rest by the decision of the Supreme Court in M/s. Ganesh Trading Co. vs. State of Haryana (A.I.R. 1974 S.C. 1362) : (1974 CTR S.C. 6) wherein it has been held that when paddy is de-husked and rice is produced there is a change in the identity of the goods. The contention of the petitioners on this score must be rejected.

5. It was next urged that the Mandi Samitis are empowered to levy and collect fees on the specified agricultural produce which are brought and sold in the market yards. Mere sale in the market yards is not enough to attract the levy of fees. The goods must first be brought into the market yard before the transaction of sale takes place there. If the goods are already present within the market yard, no fee is leviable on the sale of such goods. The contention appears to be sound. After the purchase of the paddy by the petitioners brought in and sold by the producers in the market yard, the goods do not go out of the market yard. The paddy is husked in the mills situate within the market yard and the rice so obtained is sold by the petitioners within the market yard. The element of bringing in of the agricultural produce is totally absent in such a transaction. Under the rule the right to levy fee is not on all transaction of sale of agricultural produce within the market yard but on the sale of those specified items of agricultural produce which are introduced into the market yard from out side. The rule as it stands does not envisage levy of fee on the sale of produce which are present in the market yard when the transaction takes place. It is true that section 17(iii)(b) empowers the Mandi Samitis to levy and collect market fee on all transactions of sale and purchase of specified agricultural produce in the principal and sub-market yards and places no limitations on the source and again of the goods. Rule 66(1) however, places a limitation on the authority of the Mandi Samitis to levy and collect fee only on that class of specified agricultural produce which are brought in the market yards and then sold there. The use of the expression brought in clearly indicates that the goods must be introduced in the market yards from outside. It is not open to the respondents to justify the levy in question on the strength of the scope and ambit of section 17 when rule 66(1) confines the power of levy and collection to a restricted class of specified agricultural produce. The Mandi Samitis have no legal sanction to levy and collect fee in respect of rice which has not been brought inside the market yards from outside.

6. Under the provisions of U.P. Rice and Paddy (Levy) Order, 1964, issued under section 3 of the Essential Commodities Act, the petitioners are required to sell 70 per cent of the total rice to the State Government compulsorily. By virtue of section 3 the provisions of the Act did not apply to any purchase or sale by the Central or the State Governments. The Mandi Samitis were thus not entitled to levy and collect fee from the petitioners on the sale of rice to the Government. This was the legal position prior to June 12, 1973. The Uttar Pradesh Krishi Utpadan Mandi (Sanshodhan) Act, 1973. (Presidents Act No. 13 of 1973). Which was preceded by U.P. Ordinance No. II of 1973, deleted section 3 of the Act. The Ordinance was enforced from June 12, 1973, and from that date section 3 of the Act now stood deleted. The provisions of the Act are now applicable to any purchase or sale made by the Central Government or the State Government after the aforesaid date. The liability for payment of market fee has now been placed on the purchasers in view of the amendment introduced in section 17(iii) of the Act. Thus after June 12, 1973, the petitioners have no liability to pay any market fee on the sale of rice and that liability has been placed on the purchasers irrespective of the fact that the purchaser was the Government or any other person or agency.

7. In the result the appeal is allowed. The order of the learned single Judge partly dismissing the petition is set aside. The petition is allowed in toto. The Mandi Samiti is directed not to levy and collect any fee from the petitioners on the sale of rice in pursuance of the notices issued to them. The petitioners are entitled to their costs.


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