TMI Blog2003 (11) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... der dated 12.03.1999 (Annexure 17 to the writ petition) and for mandamus restraining the appellants herein from interfering in the business in certified seeds either before or after processing and further in restraining the appellants from demanding and realising market fee on the transaction of unprocessed or processed certified seeds. A Division Bench of the Allahabad High Court allowed the writ petition following the decision of this Court in State of Rajasthan vs. Rajasthan Agriculture Input Dealers Association reported in AIR 1996 SC 2179 which has also been followed by the Division Bench of the said Court in Writ Petition No. 7262 of 1993 dated 18.12.1996. The High Court quashed the impugned order dated 12.03.1999 and also held that the respondents in the writ petition/appellants herein cannot charge mandi fee on the seeds in which the first respondent herein deals. Aggrieved by the judgment of the High Court in Civil (M) No. 17877 of 1999 dated 25.08.1999, a Special Leave Petition was filed under Article 136 of the Constitution of India. When the Special Leave Petition came up for hearing on 06.09.2001, leave was granted by this Court and considering the importance of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervision of the statutory Seeds Certification Agency, set up under the Seeds Act, 1966 (hereinafter referred to as the Act ). The harvest is selected carefully under supervision of the Agency. The lots which do not conform to specifications are rejected. It was further submitted that the standardized seeds so obtained are called `Foundation Seeds'. These foundation seeds are thereafter again supplied to the listed farmers variety wise with intimation to the Agency. The farmers sow these foundation seeds which are again supervised by the Agency. This crop is again germinated under strict supervision of the agency and once again the lots rejected are not taken back by farmers. After harvesting the approved standardised certified seeds, these lots are fumigated for preservation under the samples of each lot is tested in the laboratories of Seeds Certification Agency at Alam Bagh(Lucknow), Kanpur, Rudrapur (Udham Singh Nagar). The rejected lots and losses at processing are returned to farmers only after the foundation seeds are certified as conforming to specifications, the lots are subjected to treatment with insecticides (Cell phose, Quick phose) and pesticides (thiram and ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.2.1999. The representation was rejected by the appellants on 12.3.1999 and a demand has been made for payment of market fee which was again challenged by the first respondent herein by filing the present Writ Petition No. 17877 of 1999 which was allowed by the High Court on 25.8.1999. Against the said judgment of the High Court, the above appeal by way of special leave petition has been filed. The instant appeal raises the following questions of law: (i) What is the true scope and ambit of Section 2(a) and 17 iii (b) of the Krishi Utpadan Mandi Samiti Adhiniyam, 1964? (ii) Whether the market fee can be levied on the purchases of wheat by the seed processing unit to process and convert the same into certified seed by treating it chemically? (iii) Whether there is any difference in wheat and wheat seed before it is chemically treated and converted into certified seed and thus becomes unfit for human consumption? (iv) Whether it is necessary, to notify seed of cereals which can itself be used as seed when the object of the legislature was to notify only those seeds which are different from produce itself? On the above pleadings, we heard Mr. Rakesh Dwivedi, lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchaser and shall be liable to pay the market fee and development cess to the Committee: Provided that notwithstanding anything to the contrary contained in any judgement, decree or order of any court, the trader selling the produce shall be liable and be deemed always to have been liable with effect from June 12, 1973 to pay the market fee to the Committee and shall not be absolved from such liability on the ground that he has not realised it from the purchaser: Provided further that the trader selling the produce shall not be absolved from the liability to pay the development cess on the ground that he has not realised it from the purchaser; (4) in any other case of sale of such produce, the purchaser shall be liable to pay the market fee and development cess to the Committee: Provided that no market fee or development cess shall be levied or collected on the retail sale of any specified agricultural produce where such sale is made to the consumer for his domestic consumption only: Provided further that notwithstanding anything contained in this Act, the Committee may at the option of, as the case may be, the commission agent, trader or purchaser, who has ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed of wheat and that Wheat includes its seed. Otherwise also the appellant is imposing market fee on wheat and not its certified seed as manufactured by the first respondent. Concluding his arguments, learned senior counsel, submitted that since the Wheat purchased by the first respondent is neither chemically treated nor the same unfit for the human consumption and hence market fee was rightly imposed. Per contra, Mr. Dushyant A. Dave, learned senior counsel appearing for the first respondent, submitted that the respondent is not dealing in sale and purchase of food grains or wheat but deals only in certified seeds and the stocks stored by them were not of wheat but the certified seeds of wheat. It was further submitted that the first respondent purchases breeder seeds from Agricultural Universities and that seeds of Wheat is not included in the Schedule to the Adhiniyam. It was further argued that the first respondent intakes only the standardised and certified seeds from the farmers and the undersize, oversize and seeds found unfit by Seed Certificate Agency are returned to the farmers and the certified seeds so purchased are thereafter chemically treated at the processing p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not meet the standards. The final filed report also states the estimated quantity of produce of every field and farmer which the Company can purchase(Rule 6(k) and 23(e)) 4.8 If the farmers seed crop has been found satisfactory and indicated as such in the final field report prepared by the State Seed Certificate Agency inspector it is purchased by the company and the seed stored in company godowns. 4.9 The seed is then processed under the supervision of an inspector of the State Seed Certification Agency who takes samples and sends them to the Government Seed Testing Laboratory. (Rule 6(g) 6(e)) 4.10 After testing the Government Seed Testing Laboratory gives a report which shows that either the seed meets the Minimum Seed Standards or it does not.(Rule 21(3)) 4.11 If the seed meets the Minimum Seed Standards , the chemical treatment and baging of the seeds is made under the supervision of an inspector of the State Seed Certification Agency.(Rule 17A) 4.12 After the seed is put in bag the inspector of the Seed Certification Agency will seal and tag each bag and this seed and bag is called certified seed which goes to the market.(Rule 17 II) 4.13 The seed inspector will also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture including horticulture. Section 2 of the Act deals with definition of Agricultural produce , Certification Agency and the Seed etc. Section 2(11) defines Seed which means any of the following classes of seeds used for sowing or planting -' (i) seeds of food crops including edible oil seeds and seeds of fruits and vegetables; (ii) cotton seeds; (iii) seeds of cattle fodder; (iv) jute seeds, and includes seedlings, and tubers, bulbs, rhizomes, roots, cuttings, all types of grafts and other vegetatively propagated material, of food crops or cattle fodder; Under Section 3 of the Act, the Central Government has the authority to constitute a Committee called the Central Seed Committee to advice the Central Government and the State Governments on matters arising out of the administration of this Act and to carry out the other functions assigned to it by or under this Act. Section 4 deals with the authority of the Central Government to establish a Central Seed Laboratory or declare any seed laboratory as the Central Seed Laboratory to carry out the functions entrusted to the Central Seed Laboratory by or under this Act. Section 5 of the Act deals with power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Orders, 1970 and the Seeds Control Order, 1983. The seeds are also exempted from Sales Tax under an exemption Notification dated 19.8.1970 issued under Section 4(1)(a) of the Act (Annexure CA 3). We have already referred to the essential conditions incorporated in the Certificate of Registration. One of the essential conditions incorporated in the Certificate of Registration is that the certificate holder shall not carry on any business such as dealing in food grains, other than the business of sale of certified seeds. Under the terms and conditions of such certificate, the first respondent is not carrying any other business except the business of certified seeds and it is also not in dispute that the respondent does not hold any other licence for dealing in food grains including wheat. It was also argued by Mr. Dushyant A. Dave that the Market Committee has completely failed to appreciate the declaration of law in the case of State of Rajasthan vs. Rajasthan Agriculture Input Dealer Dealers Association (supra) affirmed by this Court on 21.8.1996. In these orders, two reasonings were adopted to hold that the transaction of seeds do not attract market fee namely (a) that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and pesticide treatment is an entirely different commodity and the same is not subject to market fee on account of its non inclusion on the Schedule of Mandi Act. Under provisions of Section 17(iii)(b)(2) of the Mandi Act if agricultural produce is purchased directly by a trader from a producer, the trader shall be liable to pay the market fee but in the present circumstances it is clear that we have purchased only certified seeds from the farmers and certified seed not being scheduled produced the same is not liable to fee at our level. In the same reference, the decision taken in the meeting dated 16.5.1998 presided by Secretary Agriculture is also important. In the abovesaid meeting, it has been decided that if trader purchases unprocessed seed before chemical treatment in that case the trader is liable to pay market fee on such purchase of unprocessed seeds. However, in the present case, the trader has not purchased unprocessed seed before chemical treatment, therefore, trader is not liable to pay fee on such purchases. Thus direction issued by Secretary Agriculture in meeting dated 16.5.1998 also support trader's stand. I.A.No.3 of 2001 is filed by the first respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 40 of the Act. The High Court took the view that when foodgrains of particular varieties were treated and subjected to chemical process for preservation, those grains become commercially known as seeds . It was ordered that no licence under the Act was required for sale of such seeds. On appeal, this Court held as under: It is undoubtedly true that foodgrains per se could be used as seeds for being sown and achieving germination, but in that form they retain the dual utility of being foodgrains as well as seeds. By process of coating and applying insecticides, other chemicals and poisonous substances to the foodgrain meant to be utilised as seeds, one of its basic character, i.e., its consumption as food by human beings or animals or for extraction for the like purpose, gets irretrievably lost and such processed seeds become a commodity distinct from foodgrains as commonly understood. That distinction was borne in mind by the High Court in allowing the writ petition of the respondents, and in our view rightly. The other decisions cited by the counsel for the appellants will not be of any assistance in deciding the factual disputes involved in the instant case. In our view, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meeting the minimum standards of genetic purity and genetic identity that the Seed is put in a bag that is sealed and tagged by the Inspector of the Seed Certification Agency. It is this seed which is allowed to be sold in the market and a certificate is issued by the Agency stating the standards of the Seed and other particulars. It was submitted by the first respondent that all the above mentioned stages of Certification are as per the provisions of the Rules and that right from the inception to the time when the Seed is sold in the market, it is done under regulation issued to govern each and every stage of seed production and certificates are only issued after the seed is found to achieve the minimum standards of genetic identity and genetic purity. It was also pointed out that no such certification standards exist for food grains sold by farmers to the Mandi Samiti. Thus the production of seeds is an integrated process and needs to be regulated at every stage, right from the inception, in order to maintain genetic identity and genetic purity. There is no nexus whether the seed has been chemically treated or not and the levy of market fees. Since the seed is a separate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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