TMI Blog2008 (9) TMI 1012X X X X Extracts X X X X X X X X Extracts X X X X ..... n, Advocate for the petitioner in WP(C) Nos. 5491 /2001, 1794/2001 and 5776/2001, Mr. G.N. Sahewalla, Senior Advocate assisted by Mr. P. Bora, Mr. Aslam, Mr. D. Senapati, Advocates in WP(C)Nos. 7082/2001 and 8748/2001, Ms. M. Hazarika, Senior Advocate assisted by Ms A. Ajitsaria, Advocate for the petitioner in WP(C) No. 8462/2001 and Mr. G Choudhury, Advocate for the petitioner in WP(C) No. 2301/2001. Mr. AK Phookan, learned Advocate General, Assam appeared for the State respondents, whereas, Assam State Agricultural Marketing Board (hereafter referred to for short as 'Board') was represented by Mr. Gaurav Banerjee, Senior Advocate assisted by Mr. Saumitra Saikia, Mr. Arunav Choudhury and Ms. Panchali Choudhury, Advocates. 4. A measure of the facts in brief indicating the nature of the petitioners' transactions and the incidence of the levy of cess under the impugned legislations, before venturing into the thick of the impeachment need be made. 5. The petitioner in WP(C) No. 5491/ 2001, Assam Flour Roller Mills Association is a registered association of roller flour mills situated throughout the North Eastern Region of the country and represents to espouse the col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r alia is engaged in the business of manufacturing, marketing and selling of coconut oil under its registered brand or trade marks Shalimar Coconut Oil , Rajat Coconut Oil and Shalimar Mustard Oil and spices under the brand name Shalimar Chef Spices . It is a registered dealer under the Assam Value Added Tax Act, 2003 and holds a valid trade licence from the Guwahati Municipal Corporation, Guwahati. It manufactures coconut oil either in its own factory or through its technical collaborators or franchisee manufacturers and the product is factory packed in small containers and stored in its warehouses located amongst others at Kolkata and Hyderabad. As per the requirement of its Guwahati branch, the stocks held by the petitioner are transferred to Self' at Guwahati or to its various godowns located at Rehabari or Beltola of the State capital. As per the business requirements, the goods like 'Shalimar Coconut Oil 'and 'Shalimar Chef Spices' are dispatched to various distributors, retail sellers and wholesalers located in the North East. It has maintained that none of its above products is sold or marketed by it and purchased within the State of Assam or is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, it has asserted that the aforementioned agricultural produces are purchased from various markets outside the State of Assam, namely, West Bengal, Bihar, Uttar Pradesh etc., whereafter those are dispatched by traders of other States on commission basis to the members of the petitioner association. While purchasing those produces at different markets beyond the State of Assam, the members pay market cess to the concerned market committees of those markets and thereafter the consignments are dispatched to Assam by road and rail at the risk and cost of each consignee. The consignments are insured in the name of the consigners till the actual delivery thereof is made to the consignee. The association has pleaded that as the agricultural produces involved are ascertained goods and in a deliverable state, the sale thereof are completed at the places of their purchase in the States of West Bengal, Bihar etc. and, therefore, the cess thereon under the Act is not leviable. 11. The State Legislature of Assam enacted the Assam Agricultural Produce Market Act, 1972 and the State Government in exercise of its power conferred under Section 49 thereof, framed a set of Rules namely, Assam Agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate Government in exercising rule making power Under Section 49 of the Act has widened the scope of presumption by providing number of other factors beyond its legislative competency? (ii) Whether the Assam Agricultural Marketing Board (for short the Board ) has power to collect levy and cess of the agricultural produce in the market area as per Section 21 of the Act merely on the basis of Resolution adopted by the Board? (iii) Whether the Board and its employee are justified and empowered to realize cess on the agricultural produce at different Check-Gates on the National Highway in Assam, particularly erected at Srirampur, New-Guwahati, Jagiroad, Jorhat, Titabor Dergaon for such purposes? (iv) Whether the Respondents State Government may be directed to refund the cess already realized by it? By judgment and order dated 4.4.2001, the Full Bench decided the aforesaid question Nos. (i), (ii) and (iii) in favour of the petitioner holding Rule 21(7) to be ultra vires the Act and that the Board had no authority to levy and collect cess at Srirampur Check Gate or any other Check Gate as no sale or purchase takes place at those places. 14. In the meantime, however, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ural Produce Market (Amendment) Act, 2000 whereby the Market Committees have been empowered to establish Check Gate at different points in the market area. (v) Section 15 of the Amending Act of 2000 by which Section 23 of the Principal Act has been amended. Providing, inter alia, that the expenditure as provided under Section 25 shall be subject to provisions of Section 3E. (vi) Section 18 of the (Amending) Act, 2000 inserting a new Clause (xiii) in Section 25 of the Principal Act, which contains in general terms the power of the Board to entrust any matter to the Market Committees. (vii) Sub-Section (5A) of Section 7 of the Assam Agricultural Produce Market (Amendment) Act, 2006, which provides for sale of specified agricultural produce at private market yards. (viii) Sub-Section (5B) of Section 7 of the Assam Agricultural Produce Market (Amendment) Act, 2006 which provides for establishment of private market yards and direct purchase of agricultural produce from agriculturist. (ix) Sub-Section (5C) of Section 7 of the Assam Agricultural Produce Market (Amendment) Act, 2006 which provides for establishment of consumer/farmer market (direct sale by the producer). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility relating thereto, has been provided. According to the petitioners, therefore, the market fee is being collected without their being any semblance of quid pro quo. They have alleged that the fee is being utilized for purposes not authorized by the Act and that to regularize such unauthorized expenditures Section 3B, 3D and 3E, have been incorporated by way of amendment of the principal Act. 18. They have pleaded that the establishment of the Marketing Board Fund, by inserting Clause (XL) in Section 2 of the principal Act and 3D, requiring every Market Committee to contribute 50% of its annual gross income derived from licence fee and cess to meet the expenses of the establishment of the Board, is beyond the legislative competence of the State Legislature. The petitioners have expressed an apprehension that under the cover of Section 3E, the fund collected and credited to the Marketing Board Fund, would not be expended for the development of the market but would be diverted for purposes alien to the objectives of the Act, as is already being done. The enhancement of the rate of market fee from ₹ 1 to ₹ 2 has been assailed as excessive and arbitrary in absence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m, in its affidavit, has questioned the maintainability of the writ petitions on the ground that the same precipitate disputed questions of facts bearing on the actual place of sale or purchase, state of the goods involved, nature of consumption thereof etc., which this Court in the exercise of its extra ordinary jurisdiction ought not delve into. Further, the challenge to the levy and collection of cess by the market committees and a declaration that the same is illegal and unauthorized is impermissible in their absence as party respondents in the present proceedings. While contending that the Act has been enacted to provide better regulation of sale transactions involving of agricultural products and to establish organized markets therefore in the State of Assam, as well as matters connected therewith, it has been averred that the Board is conceived of as a supervisory body to exercise superintendence and control over the market committees, whose duty it is to enforce the provisions thereof. The answering respondent has clarified that there are at present twenty four such Market Committees in the State established under Section 7 of the Act for the declared market areas. The Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly irrelevant for the levy of cess under the Act, which is permissible once a transaction involving an agricultural produce satisfies the prerequisites of being 'bought or sold in the notified market area. 21. The State has claimed that the Act, 2006, had been enacted in alignment with the draft model legislation titled the State Agricultural Produce Marketing (Development and Regulation Act) 2003 (hereafter for short referred to as the 'Model Act 2003'), codified by a Committee set up by the Ministry of Agriculture, Government of India. The model legislation was drawn up to ensure nation wide integration of agricultural market facilities, establishment of competitive agricultural markets in private and corporate sectors, creation of an environment conducive to emphasise investments in marketing related infrastructural facilities, modernization and strengthening of existing markets etc. Act 2006, according to the answering respondent, has been enacted to promote the development of agricultural markets under the relevant schemes of the Government of India and to streamline the functioning of the Board and the Market Committees to make them more effective and purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Market (Regulation) Act, 1998 (for short hereafter referred to as the 'Model Act 1998'), following the recommendations of the High Powered Committee on agricultural marketing and study of the marketing Regulations and Acts of different States, to remove disparities therein and to bring forth their useful implementation. The answering respondent insisted that the purpose of the Model Act, was to provide guidelines for the different States to make appropriate provisions in the respective enactments, so as to facilitate a balanced development of the Agricultural Marketing System all over the country through coordinated implementation of the relevant legislations. Inconformity with the said guidelines, the Government of Assam occasioned amendments to the Principal Act for which Act 2000 was enacted. In the meantime, the Board being aggrieved by the judgment and order dated 04.04.2001 of the Full Bench of this Court, had preferred a Special Leave Petition before the Apex Court, registered as Civil Appeal No. 3969/2001, wherein, by order dated 13.08.2001, the operation of the impugned decision was stayed. The Board has asserted that the plea of illegal and unauthorized realiza ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the transactions taking place therein, is being duly catered to. The Board has urged that the Agricultural Development Fund provides specifically for schemes or items, as may be prepared for the development of agricultural produce and is conceived of to effectuate the purposes of Act. The development of agricultural produce market includes creation of appropriate infrastructure, connoting service to all concerned involved in the transactions therein. According to the Board, as the end objective of the legislation is to protect the growers of agricultural produce from exploitation in the hands of dealers and to prevent distress sale at a lower price, provisions for transport of agricultural produce, dissemination of information about improved, techniques in cultivation, supply of agricultural essentialities etc., comprehended within the scheme of the Agricultural Development Fund, cannot be stated to be beyond the purview of the Act. The answering respondent also defended the hike in the rate of the cess on agricultural produce bought or sold in the market from rupee 1 to rupees 2 on account of rise in the price index since the enactment of the principal Act. While denyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in WP(C) No. 5776/2006 (Shalimar Chemical Works Limited v. Assam Agricultural Marketing Board etc.), in addition, has asserted that the petitioner therein has been conducting its business on specified agricultural produces without, applying for any licence which is otherwise mandatory under Section 13(2) of the Act as amended. While denying the petitioner's plea that it is not involved in the purchase and sale of specified agricultural produces within the specified market area, the Board has contended that agricultural produce as defined in Section 2(1) (i) of the Act not only includes the produce, but also contemplates processed and non processed varieties thereof. Coconut oil being included in the schedule of the agricultural produce under the heading Oil seeds it is susceptible to cess thereunder. Similarly, all items under the heading Condiment and Spices enumerated in the schedule include not only the produces specified, but also the processed and non processed versions thereof. The answering respondent therefore has maintained that the petitioner's plea against imposition of cess upon Shalimar and Rajat Coconut oil manufactured by it as well as on Shalimar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om Re. 1/- to ₹ 2/-, the same in fact is being realized at the earlier rate. While emphasizing that check gates in terms of Section 21A of the Act have been erected in different places in the market areas to check evasion of cess in the State of Assam, the Board has averred that realization is in cash and is duly accounted for. The allegation of forcible collection of cess or harassment meted out to the drivers of the trucks has been categorically denied. Though copious pleadings have been exchanged by the parties in reiteration of their assertions as above, narration of the factual elaborations has been avoided for the sake of brevity. 27. Mr. Mishra, has strenuously urged in the above backdrop of contentious pleadings that the impugned provisions are repugnant to avowed objects of the Act and are therefore liable to be adjudged unconstitutional and null and void. The learned Senior counsel argued that the collection of cess at the check gates by the Inspectors of the Board are wholly unauthorized though the seals of different Market committees irrespective of the situs of realization are used as a stamp of validity of the imposition. As the Market committees in the sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 99 , Zaverbhai Amaidas v. State of Bombay. 2. Bengal Immunity Co. Ltd v. State of Bihar and Ors. 3. Ch. Tika Ramji and Ors. v. State of Uttar Pradesh and Ors. 4. Deep Chand and Anr. v. State of Uttar Pradesh and Ors. 5. Sri Krishna Coconut Co. and Ors. v. East Godavari Coconut and Tabacco Market Committee. 6. Deputy Commercial Tax Officer, Saidapet, Madras and Anr. v. Enfield India Ltd. Co-operative Canteen Ltd. 7. S. Sundaram Pillai and Ors v. P. Lakshminarayana Charya and Ors. 8. Agricultural Market Committee v. Shalimar Chemical Works Ltd. 9. Kaiser-I-Hind Pvt. Ltd. and Anr. v. National Textile Corporation (Maharashtra North) Ltd. and Ors. 10. Union of India and Ors. v. Shah Goverdhan L. Kabra Teachers 'College; 11. K. Prabhakaran, v. P. Jayarajan. 12. State of Rajasthan and Anr. v. Rajasthan Chemists Assn. 28. The learned Senior counsel next maintained that in the framework of the Act, the Market committees having been identified and vested with the authority to enforce the provisions thereof by executing all acts for the management and control of the market areas contemplated therein, the empowerment of the Board by Section 21(2) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akash Agarwal and Ors. v. Gri Raj Kishori and Ors. 8. Belsund Sugar Co. Ltd. v. State of Bihar and Ors. 9. Indian Stainless Ltd (2) Anr v. State of Haryana and Ors. Various excerpts from Constitutional law by Seervai-4th Edition were also referred to. 29. Mr. Mishra with reference to the pleadings of the Board argued that it is apparent therefrom that it (Board) dominantly discharges governmental functions and applies the cess collected for purposes not contemplated by the Act and on that count as well, the conferment of power on it to realize the levy is subversive of the principal enactment. Reiterating that no service at all is being rendered by the Board as required by the Act, Mr. Mishra has urged that the check gates established in the purported exercise of power under Section 21A are unauthorized as well in absence of any approval by the State government. With specific reference to the pleadings in WP(C) No. 5776/2006, the learned Senior counsel argued that as coconut oil and powdered spices are not specified agricultural produces listed in the schedule to the Act, no cess thereon is leviable. Moreover, as the transactions vis-a-vis the petitioner M/s Shalim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. In reply, Mr. Banerjee, has argued that considering the judicially countenanced scope of challenge to the validity of a statute, mere possibility of an abuse of powers conferred thereby is not a sustainable ground to construe the same as ultra vires the Constitution. Not only if two views are plausible, the one in favour of its constitutionality is to be upheld, some play in the joints for a fiscal law as in the instant case has to be conceded. A wrongful act, even if committed in exercise of powers conferred by a statute does not necessarily invalidate the legislation, he urged. The learned Sr. Counsel emphasized that considering the nature of the impeachment made in the case in hand, no specific assailment to the constitutional validity of any of the provisions of the Act as amended is discernible. As the Act 2000 had been enacted before the Full Bench had rendered its verdict, no legislative malice is attributable as well. Mr. Banerjee maintained that in any view of the matter, with the amendments heralded by the Act 2000, the rendering of the Full Bench has no decisive bearing on the issues now raised. The decisions of the Apex Court in Amrit Banaspati Co. Ltd. v. Union of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Bank's Staff Union (Madras Circle) v. Union of India and Anr. (2005) III LLJ 854 SC , Star Paper Mills Ltd. v. State of UP and Ors. (2006) 10 SCC 201 , Government of Andhra Pradesh and Anr. v. Corporation Ban , Mohd. Akram Ansari v. Chief Election Officer and Ors. (2008) 2 SCC 95 , Agricultural Market Committee v. Shalimar Chemical Works Ltd. AIR 1997 SC 2502 , Virender Singh Hooda and Ors. v. State of Haryana and Anr. AIR 2005 SC 137 , Bihar S.A. Product Marketing Board. v. Shankar Makhana Bhandar and Ors. . It was further urged that the Act 2000 is conceived on the Model Act 1998, Section 3A to 3J whereof obliges the Board to discharge the functions referred to therein. As no challenge to Section 3A to 3C of Act 2000 has been raised, impugnment of Sections 3D and 3E which form the integral segments of the wholesome scheme outlined by Section 3A to 3J is per se untenable. The learned Sr. Counsel repelled the assailment on the ground of want of quid pro quo contending that the petitioners are estopped from pursuing it in the instant proceedings, the Full Court having implicitly rejected the same leaving it unanswered in the earlier round of litigation. Mr. Banerjee argue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Advocate General Kewal Krishan Puri and Anr. v. State of Punjab and Anr. [1979] 3 SCR 1217 , Bhagwan Das Sood v. State of H.P. and Ors., Shalimar Chemical Works Ltd. AIR 1997 SC 2502 , S.D. Soni v. State of Gujarat 1991 CriLJ 330 , Dahiben Widow of Ranchhodji Jivanji and Ors. v. Vasanji Kevalbhai (Dead) and Ors. AIR 1995 SC 1215, Orient Paper Industries Ltd. v. State of M.P. and Ors., (2006) 12 SCC 468. 34. We have bestowed our anxious consideration to the challenging pleadings and the assiduous arguments advanced. A few fringe facets of the lis need be unavoidably attended to clear the deck for the adjudication of the major issues. While the fundamental essential of clear and unambiguous pleadings projecting a challenge to the constitutionality of a statute is a well accepted imperative, the burden being on the person, who asserts such a vitiating infirmity, to substantiate the same as has been ruled by the Apex Court in Amrit Banaspati Co. Ltd (Supra), the facts furnished by the petitioners herein, are not wholly scarce failing to provide the edifice of the assailments. Considering the various fronts of impugnments encompassing amongst others the aspects of repugnanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rwise available to him in law. 36. We propose hereafter to deal with the various contentions bearing on the amendments of the Act. The Act as its preamble discloses is a legislation to provide for better regulation of buying and selling of agricultural produce and the establishment of market for agricultural produce in the State of Assam and for matters connected therewith. The objects and reasons of this enactment as published in the issue dated 21.07.1992 of the Assam Gazette are extracted as hereunder: The object of a market is to facilitate the marketing activities by providing fair opportunities both to the buyers and the sellers to strike bargain and to complete transaction. The promotion of this object should therefore be the duty of the traders as well as of the agriculturists. Where one is unable for one reason or the other to discharge his responsibilities and the other anxious to exploit his rival's ignorance and helplessness it is avowed duty of the State to intervene and control unfair business and facilitate the fair one. The State can effectively intervene by regulation of market practices under, which those using the markets are required to behave and perf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the said area; or (ii) if in pursuance of the agreement of sale or purchase, the agricultural produce is weighed in the said area; or (i) if in pursuance of the agreement of sale or purchase, the agricultural produce is delivered in the said area to the purchaser or to some other person on behalf of the purchaser. Though, Explanation-I of unamended Section 21 clarified that for the purpose thereof, all notified agricultural produce taken out or proposed to be taken out of a market area would, unless the contrary is proved, be presumed to be bought or sold within the said area, Rule 21(7) was construed to have unauthorizedly widened the scope of the aforementioned explanation and thus ultra vires the Act. Exception was also taken to the levy and collection of cess by the Assam Agricultural Marketing Board (for short the 'Board') under the Act. As per Section 21 thereof, in absence of any statutory empowerment in that regard, a vociferous demur was raised as well on realization of cess on agricultural produce at the different check gates on the National Highways in Assam, particularly set up at Sri Rampur, New Guwahati, Jagiroad, Jorhat, Titabor and Dergaon. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the petitioners. The Apex Court declined to reevaluate the facts pertaining to collection of cess for the pre amendment period at the check gates. It also sustained the petitioners' plea that as no appeal had been preferred by the Board against the finding of absence of its power to levy and/or collect cess under Section 21 of the Act, no interference therewith was warranted. The Apex Court noticing the pendency of the fresh impugnments following the amendments closed the appeal with the observation that any amount which might have been collected by the Board during the pendency thereof would be subject to the out come of the writ petitions, questioning the validity of the amendments by Act, 2000 and 2006. The whole gamut of the issues presently raised therefor, need a scrutiny anew in the consequential changed perspective. 40. The Act, 2000 which received the assent of the President of India on 29.12.2000 and published in the issue dated 30.1.2001 of the Assam Gazette Extra Ordinary, inter alia, amended Section 21 of the Act following which it wore the following complexion: 21. Every market Committee shall levy and collect a cess on the agricultural produce bought or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bhagawati, J as he then was in his concurring view enunciated that a legal fiction pre supposes the correctness of the state of facts on which it is based and all the consequences which flow from that state of facts have got to be worked out to their logical extent. However, due regard to the purpose for which it has been created has to be maintained. 42. The Apex Court in Sri Krishna Coconut (Supra), negated the plea raised on behalf of the appellant that the expression bought or sold appearing in Section 11(1) of the Madras Commercial Crops Markets Act, 1933 denoted purchase and sale by the same person of the goods involved in the notified area for fee to be levied. Observing that such a plea if entertained would defeat the purpose of the Act, it was held that the transactions aimed must be viewed in the sense in which the legislature intended those to be considered i.e. one transaction resulting in buying on one hand and selling on the other to another. The legislative intendment therefore was accorded a primacy to elicit the true import of a statutory provision. 43. In Deputy Commercial Tax Officer (supra), the Apex Court, in essence, propounded that a legislature, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntive provision in any sense of the term but is merely to explain the meaning and the intendment of the Act and to provide necessary clarification in case of obscurity or vagueness of the enactment so as to make it consistent with the dominant object which it seems to subserve. Their Lordships viewed that where some gap is left in a legislation, in order to suppress the mischief and advance the object thereof, explanation can help or assist the Court in interpreting the true purport and intendment of the enactment. On the same issue, the Apex Court in Government of Andhra Pradesh and Anr. v. Corporation Bank (supra), recalled its view in Bihta Co-operative Development Cane Marketing Union Ltd. v. Bank of Bihar and Ors., that ordinarily an explanation is meant to clear up any ambiguity in the main section but cannot be construed to widen the ambit thereof. However, if on a true reading of the explanation it appears to the Court in a given case that its effect is to widen the scope of the main section, the legislative intent ought to be actualized. In all such cases, the Court has to find out the true intention of the legislature and, therefore, there is no single yardstick to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase as known in law. Having regard to the marked proliferation of such transactions in the recent times, the fiction understandably at the first instance seeks to relieve the Market Committee or the Board as the case may be of the seemingly impracticable task of stalking each and every transaction effected in the notified area and instead furnishes an option to the person concerned to dislodge the presumption of deemed sale or purchase. The legal fiction obligates the traders/dealers to be scrupulously vigilant and law compliant. Indubitably, they are obliged to pay the cess, if realizable in law. There is no scope to presume that the levy would be exacted even if not payable. The eventualities comprehended in the three clauses of Explanation I are plausible consequences and/or corollaries relatable to a transaction of sale or purchase of a specified agricultural produce in a notified area and are not in our view transgressive of the contours of the purpose for which the legal fiction had been envisioned. The fiction is neither extra territorial nor ipso facto repugnant to the legally acknowledged features of sale and/or purchase. It is also not sui generis in its form or charact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act contending that neither any expenditure for agricultural development is contemplated by the legislation nor is it within the realm of services to be rendered thereunder and such expenditures being relatable to other sovereign functions are wholly unauthorized. The enhancement of the rate of the market fee from Re. 1/- to ₹ 21/- has been questioned to be excessive and arbitrary in the face of the failure to render any services to the traders and farmers as mandated by the Act. According to the petitioners, this quantum leap has been necessitated by the requirement of contribution towards Agricultural Development Fund for augmenting the agriculture sector wholly unrelated to the services to be extended under the enactment. While generally denying the above assertions, the respondent Board in its affidavit has contended that the plea founded on quid pro quo having been raised before the Full Court but left unanswered, the same ought not to be entertained a fresh being barred by the doctrine of res judicata. It maintained that the arrangement for contribution by the market committees to the Board for its maintenance subsisted in the principal Act since its enactment and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evelopment Fund is being utilized for purposes relatable to sovereign functions and is thus beyond the purview of the Act has been denied. Emphasizing that the key purpose of the Act is to ensure that a agricultural grower should be able to market his or her produce not being subjected to distress sales for which all necessary effective steps are to be taken, the Board has averred that the enhancement of rate of levy from Re. 1/- to ₹ 2/- is justified on the basis of the rising price index over the years for which it is in pressing need of funds for the works required to be administered by it under the Act. According to the Board, the escalation in price of the commodities is of financial benefit to the licencees and the marginal raise in the rate is not at all oppressive. 50. In its additional affidavit, the Board has insisted that in addition to the creation, development and maintenance of market and market infrastructures, it has been extending suitable benefits to the growers and farmers from time to time amongst others by providing free distribution of pesticides, fertilizers, agro-equipments requiring huge investments. It has also promoted its information network for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the levy of fees should be correlated to the expenses incurred by the agency rendering the services. Their Lordships ruled that the two essential elements of fee are that firstly it must be levied in consideration of certain services which the individuals accept either willingly or unwillingly and secondly the amount collected must be earmarked to meet the expenses of rendering the services and must not find its way to the general revenue of the State to be spent for general public purposes. Their Lordships, however, were categorical in underlining that though the fee as far as practicable be commensurate with the services rendered no mathematical accuracy ought to be insisted upon. 52. A constitution Bench of the Apex Court in Kewal Krishan Puri (supra), was in seisin of the challenge to the validity of certain provisions of the Punjab Agricultural Produce Markets Act, 1961, and the Rules framed by the State of Punjab and Haryana thereunder as well as the validity of the fixation of market fees from time to time. While dwelling on the characteristic attributes of fee their Lordships initiated the narration by defining it to be a charge for a special service rendered to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of augmenting the agricultural produce, its facility of transport in villages and to provide other facilities meant mainly or exclusively for the benefit of the agriculturists is not permissible on the ground that such services in the long run go to increase the volume of transactions in the market ultimately benefiting the traders also. Such an indirect and remote benefit to the traders is in no sense a special benefit to them. (6) That the element of quid pro quo may not be possible, or even necessary, to be established with arithmetical exactitude but even broadly and reasonably it must be established by the authorities who charge the fees that the amount is being spent for rendering services to those on whom falls the burden of the fee. (7) At least a good and substantial portion of the amount collected on account of fees, may be in the neighbourhood of two-thirds or three-fourths, must be shown with reasonable certainty as being spent for rendering services of the kind mentioned above. 53. While analyzing the various provisions of the legislations involved, the Court emphasized that the fee levied is not on the agricultural produce in the sense of imposing any kind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the income from various kinds of taxes etc. By the same analogy of reasoning, the Apex Court ruled that any expenditure from the market development fund formed of the receipts of the Marketing Board by way of contributions from the market committees out of their income by way of licence fee, market fee etc. could not be expended in respect of the purposes enlisted in Clause (x), (xi), (xiii) and (xvii) of Section 26. For ready reference, the above clauses are extracted herein below. ...(x) Propaganda, demonstration and publicity in favour of agricultural improvements; (xi) Production and betterment of agricultural produce; (xiii) Imparting education in marketing or agriculture; (xviii) With the previous sanction of the State Government, any other purpose which is calculated to promote the general interests of the Board and the committee; or the national or public interest. Their Lordships, however, did not strike down the above provisions as constitutionally invalid but restricted the operation of the two sections in the light of the determination made. 54. On the aspect of the statutory compulsion on the market committees to part with 30% of their income in fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices rendered. 55A. A three Judge Bench of the Apex Court while examining the assailment on the legislative competence of the State of Kerela in enacting the Abkari (Amendment) Act, 1967 and the Rules framed thereunder had to dilate on the question as to whether the supervisory charges contemplated thereunder could be sustained as a fee in absence quid pro quo. It was observed that the element of quid pro quo was increasingly felt not to be a sine qua non of a fee. The observations in Kewal Krishan Puri (Supra) to the contrary, according to their Lordships, were not intended to mean or lay down a rule of universal application. 56. Another Bench of the same strength in Sreenivasa General Traders (Supra), while responding to the challenge to the constitutional validity in the increase in the rate of market fee under the Andhra Pradesh (Agricultural Produce and Livestock) Markets Act, 1966, also in substance entertained the latter view, opining that the observations on the issue of quid pro quo in Kewal Krishan Puri (Supra), were not to be construed as Euclid's theorem or as provisions of a statute and must be appreciated in the context in which they appear. Holding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ublic interest. According to their Lordships, quid pro quo in the strict sense is not the one and only true index of a fee. 58. On a scrutiny of the scheme of the Haryana Rural Development Fund Act, 1983, the constitutional validity whereof was challenged, the Division Bench of the Apex Court in Om Prakash Agarwal and others (Supra), returned a finding that the purposes enumerated in the legislation for which the funds comprising the levy were to be expended, rendered the cess partake the character of tax. Their Lordships held that there was no co-relation between the amount paid by way of cess by the dealer and the services rendered to him adjudicating the levy to be a tax in the guise of a fee. Noticing that the State Government had failed to demonstrate the validity thereof tracing it to its legislative competence, the levy was quashed. 59. The question posed before a constitution Bench of the Apex Court in Belsund Sugar Co. Ltd., (Supra), was whether Bihar Agricultural Produce Market Act, 1960, could apply to the transaction of purchase of sugarcane by the sugar mills and also of sugar and molasses despite the fact that such exploits were already being regulated by the Bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lating the market fee and the services to be rendered. 60. In Jindal Stainless Ltd. (Supra), a constitution Bench of the Apex Court while differentiating between a tax, fee and compensatory tax expounded that a fee is based on the principle of equivalence which is converse of the principle of ability , the gravamen of tax. Their Lordships defined compensatory tax to be a sub-class of fee based on the principle of pay for value . It was held that compensatory tax like fee is proportional to benefits. Their Lordships declared that the theory of compensatory tax rests upon the principle that if the Government by some positive action confers upon individual(s) a particular measurable advantage, it is only fair to the community at large that the beneficiary shall pay for it. It was pointed out that the basic difference between a tax on one hand and a fee/compensatory tax on the other hand is that the former is based on the concept of burden whereas the latter on the concept of recompense/reimbursement. Their Lordships held that when tax imposed is, as a part of regulation or regulatory measure its basis shifts from the concept of burden to the concept of measurable/quantifiable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned, the Board and the Market Committees are thus obliged in law to render the services for the benefit of the transactors in the markets in particular though while doing so, the interest of all concerned in general may as well stand served. 62. We have dealt with the issue of quid pro quo notwithstanding the reservation expressed on behalf of the respondents that the same is barred by the doctrine of res judicata. Firstly, as the same was not one of the points for determination formulated by the Full Bench and, therefore, implied rejection thereof is not inferrable in law and secondly, the same has been considered to be an issue of moment calling for an adjudication on merits. This issue is as well of great significance touching the validity or otherwise of the realizations and would have a decisive bearing on the petitioners' claim for refund. 63. Unlike, in Kewal Krishan Puri (Supra), there is no overwhelming material in the instant case as unimpeachable evidence of uninhibited expenditure for the purposes extraneous to the heads of services identified to be rendered by the Board and the Market Committees. The relevant provisions of the legislation involved in Kewal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arketing of the State as well as to keep them conversant with the agricultural market information network, utilization of rural godowns for future benefits of the farmers, advancement of auction method of sale etc. Names and particulars of the grower societies registered with the Board have also been furnished to evince the steps taken by it to promote growers knowledge in the market and market practice etc. 65. Judged by the touchstone evolved in Kewal Krishan Puri (Supra), to decipher the purpose for which expenditures can be validly made so as to constitute services to satisfy the mandate of quid pro quo, we are of the view that the two clauses of Section 25 being Clause (i) and (xi) are beyond the purview thereof for which the market committee fund cannot be permissibly applied. Clause (vi) and (vii) of Section 3E and (xii) and (xiii) of Section 25 are in general terms and must obligatorily align to the test laid down in Kewal Krishan Puri (Supra). In terms of the above decisions as well we do not propose to strike down Section 3E and Section 25(xiii) as constitutionally invalid but would restrict the operation thereof so as to be consistent with the purposes as would cater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. It is in this contingency that the State law, if reserved for consideration of the President and has received his assent that it would prevail over the earlier law made by the Parliament or any existing law in the State concerned. For the repugnancy comprehended in Article 254(2) therefore the above factors must co-exist. 67. The Apex Court in Zaver Bhai (Supra), while dwelling on the essential features of the above Constitutional provision propounded that the important thing to consider is whether the legislation is in respect of the same matter which forms the subject matter of the earlier legislation and if those are different and distinct though of a cognate and allied character, Article 254(2) would have no application. 68. Reiterating the above view, the Apex Court in Tika Ramji, (Supra), quoted with approval the following extract of the dictum of Dixon J, rendered in Ex. Parte Mc L. Eal (1930) 43 CLR 472 (p): When the Parliament of the Commonwealth and the Parliament of a State each legislate upon the same subject and prescribe what the rule of conduct shall be, they make laws which are inconsistent, notwithstanding that the rule of conduct is identical which ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an artificial amount as turnover for the purpose of tax on sale of goods which must be leviable with reference to something relatable to the taxing event and not dehors the same. Upholding the challenge, the Apex Court observed that by substituting the assumed quantity of goods or price which is not the subject matter of the contract of completed sale for the purpose of measuring tax, the legislature assumed existence of contract of sale of drugs by legal fiction which had not taken plea and thus the same could not be considered to be a sale in the manner stated in the Act which alone could be the subject of tax under Entry 54 in List II. This authority apparently has been pressed into service to emphasise that the incidence for tax i.e. the sale could not presumably have been assumed through a legal fiction if such an event in fact had not occurred. Considering the provisions of the Act in the present lis which occupies the center stage of the discourse i.e. Section 21 and more particularly Explanation I thereof, there is no reason to detain ourselves on this issue. The Act, neither is nor is claimed to be an enactment on the same legislative domain as the Act 1930. The Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of presentation of all relevant materials bearing on the repugnancy between the proposed State enactment and the earlier law made by the Parliament and the exigency of such State law facilitating the consideration thereof by the President before embarking upon the affirmative action regarding his assent to the demand made by the State for such law. The Apex Court enounced that the phrase reserved for consideration cannot be reduced to an idle formality and the assent of the President would require a serious consideration of the materials placed before him. 72. An identical plea raised in Engineering Kamgar Union v. Electro Steels Castings Ltd. (2004) II LLJ 815 SC , was not entertained by the Apex Court as the same had not been pleaded in the writ petition or the Special Leave Petition by the petitioners therein. Their Lordships referred to Section 114(e) of the Indian Evidence Act, 1872 recognizing a presumption that all official acts must have been performed regularly and that the State act involved therein had been amended having regard to the provisions of the Central Act and after obtaining the Presidential assent as required. 73. The learned Counsels for the parties p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zation of the Board is wholly discordant with the scheme of the Act and the Rules. 75. Indeed the principal Act, vide notification No. AGA 393/78168 dated 27.08.1975 had made it enforceable w.e.f. 01.05.1975. The above notwithstanding, we do not feel convinced that the aforementioned amendment would be rendered invalid per se for being sought to be made effective from 03.09.1974. The Act incidentally had received the assent of the President on the very same date but in terms of the ordainment in Section 1(3) thereof was brought into force by the notification dated 27.08.1975 referred to hereinabove published in the issue of the even date of the Assam Gazette, Part DA on and from first day of May, 1975. In the above view of the matter, we feel inclined that mere reference of 03.09.1994 in Section 10 of the Act 2006 ipso facto would not invalidate Sub-section (2) of Section 21 sought to be assimilated in the principal Act. However as the Act had been brought in force w.e.f. first day of May 1975, we would read down the date 03.09.01974 as 01.05.1975 for the purpose of enforcement of the aforementioned subsection. 76. The permissibility of the retrospective empowerment of the Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank's Staff Union (Madras Circle) v. Union of India and Ors. (2005) III LLJ 854 SC , their Lordships observed that the legislature, as a body, cannot be accused of having passed a law for extraneous purpose and even assuming that the executive, in a given case, has an ulterior motive in moving a legislation, if cannot render the passing of the law mala fide. It was held that whenever an amendment is brought in force retrospectively or any provision of an enactment is deleted retrospectively, the rights of some are bound to be affected in one way or the other. Their Lordships recounted the observations of the Apex Court in Cauvery Water Disputes Tribunal, Re that the legislature can alter the basis on which a decision is given by the Court and thus change the law in general, which may affect a class of persons and events at large. It cannot, thereby, however, set aside an individual decision inter parties and affect their rights and liabilities alone. The following quotation from Harvard Law Review, Vol. 73, Page 692 was referred to: It is necessary that the legislature should be able to cure inadvertent defects in statutes or their administration by making what has been aptl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrutiny of the applications of the successful candidates. Incidentally, the lack legislative competence of enacting a validating law with retrospective effect did not surface for the consideration of the Apex Court and this decision cannot be construed to be a determination detracting from the judicially evolved precept in the other authorities referred to hereinabove. 81. In the face of precedential recognition of the legislative authority to enact a validating legislation retrospectively modifying or altering any law forming the basis of any judgment or order of a Court thereby rendering it ineffective, the assailment of the Act on this count cannot be upheld. The State legislature in doing so did not stray beyond the legislative field earmarked for the purpose and the impugned enactment perse is a validating law seeking to authorize the Board to levy and collect cess alike the Market Committees on or from the date of enforcement of the Act. Thereby the basis of the rendering of the Full Bench has been rendered non est, an eventuality which is judicially countenanced as alluded hereinabove. The plea that Act, 2006 has been enacted to nullify the judgment and order of the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd Fund . Section 3C prescribes that all payments incurred by the Board shall be defrayed out of this fund. Section 3D enjoins that ever Market Committee would pay to the Board 50% of its annual gross income derived from licence fee and cess as contribution to meet the expenses of establishment of the Board and execution of works as may be directed by the Government from time to time for carrying out the purposes of this Act and for execution of other functions assigned to the Board under this Act including the maintenance of pool of officers common to the Board and the Market Committees. Out of the amount to be deposited by the Market Committee as above, 50% thereof collected every year is to be transferred from the Marketing Board's fund to a separate account namely, 'Agricultural Development Fund' from which expenditure on schemes or items prepared for development of Agricultural Produce and Market subject to the approval of the Committees referred to therein are to be met as sanctioned by the Board. Amongst the purposes for which the Marketing Board's fund can be utilized as enumerated in Section 3E it can, inter alia be by way of grant to financially weak Marke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licence being issued to him by such committee on payment of such fee and subject to such conditions as may be prescribed. The functions of a Market committee as envisaged in Section 14 indicate amongst others, maintenance and management of the market yard, control and regulation and administration of the market in the interest of the agriculturists and traders holding licence from it. It is also required to regulate and control transactions in the market. Sections 15 and 16 equip a Market committee with the power to regulate entry of persons into the principal or sub market yards to supervise the behaviour of persons so entered as well as to take disciplinary action against the erring licensees and to enforce the conditions of the licence granted to it. 86. The power to levy cess under Section 21 following the Act, 2006 has been vested with every Market committee and also on the Board. Section 21A authorizes the Market committee as well the Board to establish check gates at different points within the Market Area. Whereas, the Market Committee can do so with the approval of the Board, the latter would require the approval of the State Government for such purpose. The collections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the account in which it had been credited. The various provisions of the Act demonstrate in unequivocal terms that the State Government, the Board and the Market Committee(s) for the respective Market area have been assigned roles complementary to each other so much so that all these entities are designed to act in tandem for an effective and purposeful implementation of the provisions thereof. Incidentally, the provisions proclaim that the Board has been entrusted with the power of supervision and control over the Market Committee(s) to be overseen by the State Government. This functional hierarchy notwithstanding, as the coordination in the trinity is the driving force to achieve the avowed purpose of the legislation, any inflexible and rigid compartmentalization of the activities of these three bodies mutually exclusive of each other is not perceptible. On the other hand, overlapping thereof and a common bond in furtherance of the preambular commitment is conspicuously decipherable. The model of the Act comprehended as a whole does not determinatively prohibit the empowerment of the Board in the matters entrusted to the Market Committee(s). The Act discloses that the cess p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n incorporated in the Rules. The State Government ought to have been vigilant, alert and prompt so as to avoid any misgivings in this regard. This omission notwithstanding, having regard to the legislative edict that the Board under Section 21(2) would levy and collect cess only in certain eventualities as envisaged for any or more of the Market Committee(s) and the exhaustive procedure laid down in the Rules visualizing the process therefore, vis-a-vis, the Market Committee(s), we do not feel persuaded to annul this provision on the count of want of adequate mechanism detailing an exclusive procedure to enable the Board to exercise such power. The legislative policy engrafted in Section 21(2) having been sustained by us, we are inclined to hold that as for all intents and purposes, the Board is levying and collecting cess for any or more of the Market Committee(s), it would do so as its agent and therefore, the provision of Rules 21, 22 and 23 till the Rules are amended appropriately, would serve as inbuilt guidelines for it (Board) in this regard. A purposeful construction needs to be adopted eschewing a myopic and pedantic approach to actualise the statutory commitments. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on for refund as contained in the Rules is an unambiguous certitude against unwarranted and illegal exaction and retention of cess not leviable under the Act. The empowerment on the Board is not in any view of the matter subversive of the authority of the Marketing Committees to levy and collect cess. It is only supplementary in nature to be invoked on behalf of such a Managing Committee of committees in the eventualities envisioned. The impeachment of Section 21(2) of the Act on the ground of misconceived and illogical authorization of the Board to levy and collect cess thus fails. 89. The above determinations on the legal issues notwithstanding, the validity of the realizations of cess from the petitioners judged in the complete factual perspective have to be independently scrutinized amongst others for deciding on the claim of refund registered by them. In view of the decision of the Full Bench and the Apex Court noted here in above, the petitioners are not entitled to any refund prior to 13/8/2001. The present adjudication logically would appertain to the period on and from that date in the touchstone of the amended law in force and the attendant facts and circumstances. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed or non-process of Agriculture, Horticulture, Animal Husbandry, Pisciculture, Sericulture and Forest as specified in the schedule to the Act. 91. The Apex Court in State of Rajasthan v. Rajasthan Agriculture Input Dealers Association (supra), while dilating on the definition of agricultural produce in Section 2(1)(i) of the Rajasthan Agricultural Produce Market Act, 1961, held that the schedule thereto serializing the items does not admit of supplementation by inferences and that the contents thereof have to be explicit and categorical. Any dispute on this count has, thus, to be addressed on the measure of the definition of Agricultural Produce provided in the Act, the schedule thereto and the above proposition expounded by the Apex Court. 91A. On the plea of absence of quid pro quo, the petitioners have been trenchant in charging the Board for having failed to establish any market yard or sub-market yard as required under the Act and to extend all necessary facilities associated therewith. According to them, the respondents have only resorted to purchase/construction of expensive guest houses and offices. They have cited the instance of Guwahati Market at Uparhali to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. By Act 2006, Sub-section (2) was added to Section 21A whereby the Board also has been conferred with the discretion of establishing composite check gate(s) for all market committees and/or any check gate at any point within a market area of any market committee whenever felt necessary with the approval of the State Government. This authorization as well is to meet specific exigencies for prevention of evasion of cess under the Act. The petitioners in this regard, have pleaded that no guidelines having been framed to interdict evasion of cess by setting up check gates, the trucks transiting the consignments from outside the State are likely to be subjected to unnecessary harassments and extortions. They have also offered an instance where a complaint has been lodged with the Board in that regard. The petitioners, however, have denounced the concept of establishing composite check gates by the Board on behalf of any or all market committees to be ultra vires the Act. The Board has countered this plea with a denial. Referring to the Model Act, 1998, more particularly Sections 21, 22 and 23 thereof it has averred in favour of its unqualified power to establish, verify and examine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to incorporate a few provisions to make the said Act more meaningful and effective, the present Amendment bill has been proposed by the department. Having regard to the underlying purpose as illustrated in Section 21A, we do not find any justifiable reason to jettison the power conferred thereby to be antithetical to the scheme and design of the Act. The petitioners have not condemned the check gates for want of approval of the Board or the State Government as the case may be or to be in contravention of any other law. No reservation either has been expressed by the State Government in this regard. The aforementioned provisions of the Model Act, 1998 on which Act 2000 had been modelled empower any officer or servant of any market committee or the Board to require any person carrying on business of the specified agricultural produce to furnish accounts, documents and informations pertaining thereto for the inspection thereof. These authorities, subject to their satisfaction of any attempt to evade payment of market fee have been empowered for reasons to be recorded in writing to seize such accounts, registers or documents. They have also been vested with the power to intercept an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n inference is possible in all cases of such detentions and collections at the check gates. Whereas the statutorily stipulated imperatives for the application of the legal fiction are not in doubt, the documents produced by the petitioners, in absence of a probe into the individual facts cannot be accepted as an irrefutable guarantee of completion of sale or purchase of all consignments of specified agricultural produce halted, scrutinized and subjected to the impost under the Act. In exercise of powers under Article 226 of the Constitution of India, this Court is not equipped to embark on this exercise. 96. The view expressed by the Apex Court in Agricultural Market Committee v. Shalimar Chemical Works limited (Supra), in the contextual facts of that case on an interpretation of Section 19 and 20 of the Sale of Goods Act, 1930, was founded on a host of unimpeachable evidence of completion of the transaction of sale before the agricultural produce involved was weighed at Hyderabad. The facts unassailably demonstrated that the goods involved were ascertainable and in a deliverable state at the time of their interception at Hyderabad. Testimony of such a type, if produced by a tra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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