Assam Roller Flour Mills Association and Ors. Versus State of Assam and Ors.
VAT / Sales Tax
2008 (9) TMI 1012 – GAUHATI HIGH COURT – TMI
GAUHATI HIGH COURT – HC
Dated:- 12-9-2008
WP No. 5491/2001
CST, VAT & Sales Tax
–
Jasti Chelameswar, C.J. And Amitava Roy, J.
JUDGMENT
Amitava Roy, J.
1. This batch of writ petitions register an identical challenge to the constitutional validity of Section 3D, 3E, Clause (ii) and (iii) of Explanation-1 to Section 21 as well as Section 21(1), 21(2), 21(3), 21A, 23 and 25(xiii) of the Assam Agricultural Produce Market Act, 1972 as amended by Assam Agricultural Produce Market (Amendment) Act, 2000 and the Assam Agricultural Produce Market (Amendment) Act, 2006 with the consequential relief of refund of the cess collected thereunder by the respondents together with the interest @ 15% thereon for the period 13.08.2001 to 08.12.2005 and till such time the same is exacted from the petitioners.
2. The contextual facts though var
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asure 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 collective interest of such mills and thus claim to be competent to air their grievances to protect and enforce the constitutional and legal rights of their members who are engaged in producing flour (Maida), Semolina (Suji), Atta, Whole meal Atta and Wheat bran by manufacturing those in their respective units. The wheat for manufacturing the aforesaid products, is purchased by the members of the association from several states in North India namely, Punjab, Haryana and Uttar Pradesh. The products purchased are made by paying market cess to the Marke
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s not sell “Supari” (dried bettlenut) and as Panmasala and the Gutka manufactured by it is not an agricultural product within the meaning of the Assam Agricultural Produce Market Act, 1972 as amended (hereafter referred to as the 'Act') and no cess under the Act is leviable thereon. Further, the said goods are transferred to its unit at Jorhat from those at Kanpur or Ahmedabad and since the same are purchased by it at those places, no cess under the Act can be levied at Jorhat or any other place in Assam.
7. The petitioner in WP(C) No. 1794/ 2001and 5775/2006, M/s. Shalimar Chemical Works Limited is a company registered under the Companies Act, 1956 with its registered office at Kolkata in the state of West Bengal and branch offices amongst others at Guwahati in the District of Kamrup, Assam. It has maintained that it inter alia is engaged in the business of manufacturing, marketing and selling of coconut oil under its registered brand or trade marks “Shalimar Coconut Oil”, “R
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purchased within the State of Assam or is delivered within it pursuant to any agreement with any other party. Inspite thereof, the respondent Board has been imposing and collecting market cess at Boxirhat and/or Sri Rampur Check Gate as soon as the goods enter the state of Assam in course of transit by road while proceeding to the petitioner's office/godown at Rehabari and Beltola at Guwahati from its factory and Head office at Hyderabad/Kolkata. The petitioner has further alleged that the respondents collect cess from it for the second time at its office at Rehabari and its godown at Beltola while the goods are in the process of transportation to their various dealers and distributors within the State.
8. The petitioner in WP(C) No. 7082/ 2001, M/s Gopiram Chetram though has projected itself to be a proprietorial concern with its place of business at Chirang Bazar at Tinsukia it has not disclosed the particulars of its business and the transactions relating thereto for which the
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State of Assam and manufactured oil not being a notified item under the Act, the demand and realization of cess is illegal and unauthorized.
10. The petitioner in WP(C) No. 2301/ 2001, M/s. Potato and Onion Merchant Association, Guwahati is an association of members engaged in the import and whole sale business of Potato, Onion and Garlic. While contending that the association represents the collective interest of its member traders, 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
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bought or sold within such area. The State Government, according to the petitioners enlarged the scope of the transaction by designing Rule 21(7) so much so, that it was beyond the scope of the parent legislation.
As, this led to random collection of cess by the respondent Board, vires of Rule 21(7) of the Rules was challenged by M/s. Assam Roller Flour Mills Association [petitioner in WP(C) No. 5491/2001] in WP(C) No. l453/ 1998 before this Court. By judgment and order dated 29.09.1999, the petition was partly allowed adjudging Rule 21(7) to be ultra vires. The learned Single Judge, however, left the other counts of impugnment undecided.
12. Being aggrieved, the petitioner, namely, Assam Roller Flour Mills Association, preferred Writ Appeal No. 378/1999 in respect of the reliefs unattended. The respondent Board as well as State Government also preferred separate appeals being Writ Appeal No. 392/1999 and 39/2000 respectively challenging the determination, vis-a-vis, the vires of Ru
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a-vires inasmuch as the State 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 b
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overnor on 16.1.2007 and was published in the issue dated 20.1.2007 of the Assam Gazette Extra Ordinary.
16. On the prayer made by the petitioners in the pending petitions for updating the challenge in view of the Act, 2006, the same was allowed. WP(C) No. 2301/2007, then joined the fray. It would be expedient to note at this stage the relief's prayed for in the writ petitions which as alluded hereinabove are identical:
a writ in the nature of mandamus or any other appropriate writ or directions or orders should not be issued to strike down the following provisions of the enactment inserted by the Assam Agricultural Produce Market (Amendment) Act, 2000 and Assam Agricultural Produce Market (Amendment) Act, 2006.
(i) Sub-Sections (3D) and (3E) of Section 8 of the Assam Agricultural Produce Market (Amendment) Act, 2000, whereby a provision has been made for all the Market Committees to contribute 50% of its annual gross income under the Act to meet the expenses of establishment of
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he (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) Sub-Section (5D) of Section 7 of the Assam Agricultural Produce Market (Amendment) Act, 2006, which provides for grant/renewal of registration.
(xi) Section 10 of the Assam Agricultural Produce Market (Amen
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Association:
And upon cause or causes being shown and upon perusal of records may be pleased to make the Rule absolute and further declare that in total absence of quid pro quo the realization of the Cess by the Board and the Market Committees are illegal and the realization of Cell to be stopped forthwith and/or may pass such further or other order/orders as Your Lordships may deem fit and proper in the facts and circumstances of the case.
17. The petitioners in unison, have with reference to Section 3D, 3E, 21, 21(A), 23 and 25 of the Act, have contended that the same are subversive of the objectives thereof. According to them, the market fee levied by the Market Committee, is sought to be treated as the income of such committees, a concept violative of the very purpose of the Act. Though, under the legislation, the fee realized, is required to be spent for the purposes contemplated by the Act, the purport whereof, is to provide necessary infrastructure and facilities thereby neces
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at 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 any service being rendered to the traders and farmers involved in the transactions.
Apropos Section 21 of the Act, the petitioners have contended that the legal fictions introduced thereby, are not only out of context but have no nexus whatsoever with the sale or purchase of the agricultural produce in the market area. Though, no sale or purchase takes place within the area of Assam, the respondent Board has been levying and collecting market fee at the check gates on the basis of these legal fictions, which are thus ultra vires the Act. The validity of Section 21Ahas been impugned contending that in absence of any
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llecting cess by establishing check gates at the entry points on the National Highway of the State without any authority of law and further to perpetuate such illegalities for all times to come. Section 21(2), authorizing the Board to set up composite check posts on behalf of the any or all marketing committee(s), has been questioned to be contrary to the other provisions of the Act and the general scheme thereof. According to the petitioners, Sub-section 5(A), 5(B), 5(C) and 5(D) of Section 7 are also antithetical to the framework of the principal Act, which does not envisage setting up of principal market yard by a private person or a group of persons. Relief's prayed for, have consequentially been oriented on the above assailments.
19. The State of Assam, 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, natur
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generates one of the major sources of revenue by way of cess on agricultural products bought and sold in the declared market areas and the traders including the petitioners, have been purposefully resorting to wasteful litigations on one pretext on the other to evade the said impost.
20. It has been averred that the Act, 2000, has occasioned amendments to facilitate a balanced development of the agricultural marketing system all over the country and to streamline the functioning of the Board, vis-a-vis, the market committees and to regulate their activities pertaining to agricultural marketing in order to make them more effective. This has also been made with a view to provide better benefits to the market functionaries in general. The answering has respondent maintained that Section 21A had been inserted to specifically provide for establishment of check gates at different points to prevent evasion of cess. While affirming that Section 21 of the Act (as amended), has introduced a de
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at the Board and the Market Committees have been functioning satisfactorily to achieve the contemplated purposes thereof. It has been emphatically averred that the market fee is levied in the market area only once and there is no multiple levy thereof. It has been contended in this context that payment of market fee to a Market Committee of a different State, is wholly 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 a
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stablish a direct nexus between the realization of fees and the service rendered to the establishment envisaged by the Act. The answering respondent has emphasised that the cess collected, is being utilized wholly for authorized purposes as prescribed by the Act.
22. The Board, while generally ratifying the pleaded stand of the State, has underlined that the object of a market, as conceptualized by the Act, is to facilitate marketing activities by providing fair opportunities both to the buyers and sellers to strike a bargain and complete the deal, the primary purpose thus being to stifle unfair business and facilitate fair transactions. The legislation, thus, authorized the State to efficaciously intervene by regulating market practices and ensuring that the buyers and purchasers perform their functions strictly inconformity with the prescribed rules of behaviour. As the sale of agricultural produce involves a number of activities, such as assembling, storing, grading, weighment, sta
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t 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, w
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ket yard of the Guwahati Sub-Division, Uparhali, is wholly unfit for human habitation with no link road. According to the answering respondent, ample facilities for development of markets in almost all the declared market areas, have been provided. It has been contended that the fees collected by way of market cess under the Act and the Rules, are regulatory in nature, hence the doctrine of quid pro quo, is not applicable, so much so that service to the individual contributors is not an essential precondition for the validity thereof. As under the Act and the Rules, the Board is required to perform various functions, which include supervision and imposition of penalty on the defaulter traders, those are regulatory in nature and its actions pursuant to the objectives of the Act, demonstrate a direct nexus between the realization of the fees and the service rendered to the infrastructure generally. The Board has reiterated that the edificial works and market developing facilities, which
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ansactions 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 denying the allegations that the amendments have been effected to render ineffective the judgment of the Full Court, the Board has insisted that the same in fact, have been introduced in compliance of the said decision. The Board has maintained that t
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Agriculture, Government of India, the purpose of the legislation being similar to the Model Act, 1998 with updated provisions for meeting the growing situational demands pertaining to creation, sustenance and administration of agricultural markets in the national perspective. The Board has insisted that the Act 2006, has been codified to promote the development of agricultural markets and the relevant agricultural schemes of the Government of India and to streamline its functioning and the Marketing Committees in order to make them more effective. The allegation that the Act 2006, had been enacted to nullify the judgment and order of the Full Bench, has been denied. The plea that this legislation is contrary to the principal Act, has also been repudiated. The Board has claimed that it being the apex authority having deep and pervasive control over all the Market Committees, Section 21 of the Act, as amended by Act, 2006, empowering it to levy and collect cess for any or all such Commi
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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 Chef Spices” is unfounded. According to the Board, the petitioner's business particulars as discernible from the writ petition establish that the goods involved are delivered at Guwahati from Hyderabad and Calcutta in terms of some agreement in existence between the consignor and the consignee and that therefore, its (petitioner) representation that such transactions are in the nature of stock transfer only is factually incorrect. It has been asserted that in its application the Act is not limited only to the market yards established thereunder, but also extendable to the entire market area declared as such. It has been clarified that t
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ea of want of separate guidelines for the operation of the check gates contending that the Act and the Rules have provided elaborate measures to deal with the relevant sections bearing thereon. The Board in order to buttress its claim of providing the necessary infrastructural facilities in different market areas has also disclosed the facts and figures relating to the incentives doled out to the growers and agriculturists including free distribution of seeds, fertilizers, agro equipments and initiatives for familiarizing and updating the growers with the essential informations relating to market transactions, market prices, market facilities, market information etc. The Board asserted that inspite of the enhancement of the rate of cess from 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
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specified for them, such collection by the officials of the Board are wholly impermissible. The learned Senior counsel referred to the Act 2006 amending inter alia Section 21 permitting the Board to collect cess in the eventualities referred to therein to submit that as the amendments enacted thereby have been given a retrospective effect on and from 03.09.1974 before the date on which the principal Act had been come into force, the same are ineffectual and inoperative. In that view of the matter as well, Mr. Mishra urged that the collection of cess by the officials of the Board in purported exercise of powers under Section 21(2) of the Act as amended is, per se, wanting in authority and tantamounts to illegal realization. Turning to the legal fictions introduced by the Explanation to Section 21 of the Act as amended, Mr. Mishra argued that the same are not sustainable in law as those seek to outreach the eventualities envisaged. As no perceptible correlation between the legal fictions
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ntral legislation, in view of Article 254(2) of the Constitution of India read with the proviso to Sub-clause (3) thereof, no sale by a legal fiction under the Act contrary to the scheme of the Central Statute is legally conceivable. Mr. Mishra sought to rest his submissions on this issue by relying on the following decisions-
1.[1955]1SCR799 , 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
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is therefore conceptually alien to the lay out of the Act. The respective roles of the committees and the Board having been otherwise clearly de-alienated in the Act and the functions of the latter being manifestly supervisory, the impugned amendments which authorize it to collect cess in the absence of provisions akin to those existing for the Market committees, are irreconcilably discordant with the framework of the Act and are thus unconstitutional. Mr. Mishra argued that the retrospective empowerment of the Board on the conditions therefore at this distant point of time demonstrates the absurdity and illogicalness of the impugned amendments rendering the same invalid. To buttress his arguments, the learned Senior counsel placed reliance on the decision of the Apex Court in AIR 2005 SC 2821 , Ashok Lanka and Anr v. Rishi Dixit and Ors.
The learned Senior counsel argued that the enhancement in the rate of cess is exorbitant as well as impermissible in absence of quid pro quo. Referr
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nd 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, n
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ts referred to the following decisions of the Apex Court: –
1. [1959] 1 SCR 379 , The State of Madras. v. Gannon Dunkerley & Co. (Madras) Ltd.
2. AIR 1985 SC 1394 , Gram Panchayat of Village. v. Malwinder Singh and Ors.
3. (2004) 1 SCC 320, M.P.A.I.T. Permit Owners Assn. and Anr. v. State of M.P
4. Dharappa. v. Bijapur Coop. Milk Producers Societies Union Ltd.
Mr. Sahewalla, on the aspect of legal fiction relied on the following decisions of the Apex Court:
1. [1968] 2 SCR 421 , Deputy Commercial Tax Officer, Saidapet, Madras and Anr. v. Enfield India Ltd. Cooperative Centeen Ltd.
2. AIR 1967 SC 973, Sri Krishna Coconut Co. and Anr. v. East Godavari Coconut and Tabacco Market Committee.
3. Mancheri Puthusseri Ahmed and Ors. v. Kuthiravattam Estate Rechiver.
4. K. Prabhakaran v. P. Jayarajan.
5. Maruti Udyog Ltd. v. Ram lal and Ors.
6. Bijender Singh v. State of Haryana and Anr.
While reiterating that the Board by the amended Section 21(2) of the Act has been endowed with an
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ot 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 India and Ors. [1995] 2 SCR 25 , Government of Andhra pradesh and Ors. v. Smti. P. Laxmi Debi AIR 2008 SC 1640 were relied upon to reinforce the above proposition.
Mr. Banerjee argued that Section 21 of the Act as amended is neither extra territorial nor prescriptive of an irrebuttable presumption of sale. He insisted that a plain read
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sactions is clearly fallacious. He further argued that as retrospectivity of a validating law is legally permissible to remove the basis of any legislation on which an earlier decision of a Court is founded, the retroactive operation of Section 21(2) of the Act as sanctioned by Act 2006 is unassailable. It was therefore urged that its retrospective effect on and from 3/9/1974 does not defile the validity thereof as the principal Act in fact existed on the statute book on that day. In the alternative, he insisted that as Section 21(2) would even otherwise be enforceable from the date of commencement of the principal Act, the plea against the vires thereof on this count is obviously flawed. The learned Sr. Counsel to sustain his arguments relied on the following decisions. East End Dwellings Co., Ltd. v. Finsbury Borough Council (1951) 2 AER 587, British India Corporation Ltd. v. Market Committee, Dhariwal and Anr. [1983] 2 SCR 159 , State of TN and Anr. v. P. Bala Krishnan and Ors., Bij
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ent 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 argued that the plea questioning the hike in the rate of cess is also untenable as the related amendment only enacts an outer limit of the enhancement though in fact realization at the pre-amendment rate is in vogue till date. Without prejudice to the above, the learned Sr. Counsel argued that as the cess collected under the Act is in the nature of a composite fee, with regulatory and service constituents, no quid pro quo necessitating service to the individual payers is envisaged in law to render the levy valid and, therefore the grouse raised in this regard is misconceived. Referring to Section 21(2) of the Act as amended, Mr. Banerjee urged that conditions precedent for the Board to validly realize the cess are sufficient safeguards
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m refund of the cess collected from them. Mr. Phukan insisted that as no assailment on Explanation (1) to Section 21 of the Act has been laid, challenge to Explanation (2) and Explanation (3) is per se not tenable. While endorsing the retrospective amendments of the Act, the learned Advocate General repudiated the contrasting arguments pleading that as the present proceedings are not in the nature of public interest litigation, no contention as raised therein by an insignificant group of traders administering their business without complying with the prescriptions of the legislation ought to be entertained. The following decisions were cited by the 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, Ori
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ot feel persuaded to non-suit the petitioners on this count. True it is that a presumption of constitutionality of an enactment ought to be the starting premise and that if two views are possible, the one in favour of its sustenance ought to be preferred, it is at best a caveat to inform the process of assaying the grounds of impeachment thereof. While respectfully subscribing to the observations recorded in Government of Andhra Pradesh and Ors. v. Smti P. Laxmi Devi AIR 2008 SC 1640 , reiterating the view expressed in Amrit Banaspati Co. Ltd. [1995] 2 SCR 25 , wherein a greater latitude was acknowledged for legislations on fiscal or tax measures, we construe it expedient having regard to the multifaceted challenges projected in the present batch of petitions to deal with the same on merits. As the issues raised transcend beyond, mere possibility of abuse of powers under the impugned enactments, we are unable to sustain the plea against the maintainability of the petitions on this grou
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slation involved, though, ruled that a trader or dealer comprehended therein, is under an obligation to obtain licence thereunder, did not lay down any proposition that failure to do so, would disentitle him to lay a challenge to a levy thereunder, otherwise 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 du
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uce in a well established regulated market, but also proper help and advice with regard to the grading and standardization as well as adequate storage facilities and financial assistance to improve his staying power. The implementation of the provisions of the various schemes of agricultural improvement and recommendation of the Government of India from time to time for effecting the above improvements demand the establishment of Regulated markets. The plan for regulation of market may, therefore, be said to be an integrated plan which intends to effectively link the various stages of marketing thereby brings benefit to the agriculturists.
A brief reference of the salient aspects of the challenge raised in the earlier round of litigation would not be totally out of place before we venture into to the emulous debate on the constitutional validity of the impugned amendments.
37. Section 21 of the Act as it stood prior to the Act, 2000 empowered every market committee to levy and collec
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f 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,
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gricultural produce in terms of Section 21 of the Act. It was of the view that the Board or the Market committee had no authority to levy and collect cess at various check gates located in the State of Assam though the area was declared as Market area. This was in the face of its conclusion that no sale or purchase used to take place in any market area where check gates were erected for the purpose of levy and collection of cess on the agricultural produce. It however, declined the prayer for refund of cess already collected, but injuncted further realization of cess at different check gates on the National Highway.
In Civil Appeal 3969/2001 preferred by the Board before the Apex Court, it by its order dated 13.08.2001 stayed the operation of the judgment of the Full Bench on the condition that the amount collected would be refundable in the event of dismissal of the appeal would have to be paid back with interest @ 15%. This appeal was eventually disposed of on 08.12.2005 holding tha
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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 sold in the market area at a rate not exceeding [two rupees] for every one hundred rupees of the aggregate amount for which a [specified agricultural produce] is bought or sold ,whether for cash or for deferred payment or other valuable considerations.
Provided that no cess will be levied on goods manufactured from the agricultural produce on which cess is proposed to be l
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ultural produce 'and most importantly sub Clause (i) and (iii) of Sub-rule 7 of Rule 21 (now amended by Rule, 2003), were integrated as Clause (ii) and Clause (iii) in Explanation-1. Thereby the legal fiction of sale or purchase as contemplated in the aforementioned clause of Rule 21(7), were engrafted in the above Explanation of Section 21 of the Act resultantly generating the polemics on legal fiction.
Before embarking on the analysis the essential features of the various clauses to the Explanation-1, expedient it would be to traverse the authorities cited at the Bar in this regard.
41. In Bengal Immunity Co. Ltd. (supra), a Constitutional Bench of the Apex Court while dealing on the validity of a demand of sales tax made under the Bihar Sales Tax Act on a non resident dealer in respect of inter state sale or purchase of goods ruled that the legal fictions are created only for some definite purpose(s) and are to be limited to those, but should not be extended beyond that field.
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ive 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 absence of an element of transfer of property from one person to another in any transaction, cannot treat it as a sale by a deeming clause and bring it within the ambit of the taxing statute.
44. Elaborating in this regard in K. Prabhakaran (supra), the Apex Court elucidated that a legal fiction presupposes the existence of the state of facts which may not exist and then work out the consequences which flow therefrom. The consequences, however, have to be worked out only to their logical extent having due regard to the purpose for which the legal fiction had been created. Stretching the consequences beyond what logically flows would amount to an illegitimate extension of the purpose of the legal fiction, it held.
45. While reiterating the above view, the Apex Court in Maruti Udy
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consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. One of these in this case is emancipation from the 1939 level of rents. The statute says that one must imagine a certain state of affairs. It does not say that, having done so, one must cause or permit one's imagination to boggle when it comes to the inevitable corollaries of that state of affairs.
48. The decision in Sundaram Pillai (supra), was offered to accentuate that the role of an explanation added to a statutory provision is not a substantive 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
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legislative purpose. A court on the discernment of the objective, can permissibly infer the existence of hypothetical state of affairs and all conceivable consequences and corollaries logically ensuing therefrom. A purposive construction of the legal fiction needs to be adopted to achieve the legislative goal, the only constraint being that thereby the purpose of the fiction ought not to be stretched beyond the intended. The statutory purpose of the legal fiction, axiomatically is the controlling determinant, all other assumptions of relevant facts subsisting or not, to attain the same, being allowable. The significance and essentiality of a legal fiction being to fructify some legislative end, it ought to be permitted a full play subject to the restraint of unintended extension thereof annihilating the very objective of its creation.
Section 21 of the Act authorizes the levy and collection of cess specified on the agriculture produce bought or sold in the market area at the rate spe
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ement of sale or purchase, delivery of the produce involved and the movement thereof as a consequence, can by no means be dismissed as features totally alien to a transaction of sale or purchase 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 relatabl
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he legal fiction understandably seeks to cater to a mandate of national consensus in agricultural marketing system. The challenge to the amendment in Explanation I of Section 21 by the Act 2000 on this count therefore does not commend to us for acceptance.
49. We next turn to the contentious issue on quid pro quo and unauthorized creation of funds from the collections and expenses therefrom. According to the petitioners, levy of market fee inheres in it the essence of quid pro quo between the impost and the services rendered to the payers thereof. They have allege that though the Act had been enforced from the year 1974, no market yard and/or sub-yard has yet been constructed and consequential necessary facilities associated therewith have not been provided. They have maintained that the respondents have only resorted to purchase and construction of expensive guest houses and rest houses. The instance of Uparhali Market in Guwahati Sub-Division declared as a principal market yard has
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ble 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 the rate was
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ition precedent. In any view of the matter, services required to be rendered by the Collecting Authority need not be qua the contributors alone and it would suffice if a system in general is benefited thereby. The Board dismissed the apprehension of the petitioners of any inappropriate expenditure of the cess collected. Having denied that Section D of the Act is vitiated by a lack of legislative competence, the Board has insisted that the facts and figures furnished with its affidavits regarding establishment of markets yards and sub-market yards would demonstrate that effective steps not in contemplation but in reality have been taken and that schemes related thereto have been activated.
Supporting the levy, the Board has pleaded that while conferring some special benefits on the licencees, it is permissible to render services in the market in the general interest of those involved in the transactions therein and as it has been utilizing the cess realized for all relevant purposes co
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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 wide publicity for welfare of traders and other market functionaries in general inter alia by publishing monthly market news bulletin titled “Krishi Bipanan Tathya Setu” which aims to reflect all activities of the Board and the Regulated Market Committees by publishing daily market prices of specified agriculture produce at all major markets. The Board has also organized the growers by constituting the Growers So
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State Legislature. In responding to the emerging debate as to the actual nature of the impost, the Apex Court enunciated the distinctive features between a tax and a fee. While a tax was comprehended to be a compulsory exaction of money by a public authority for a public purpose enforceable by law and not a payment for any specific service rendered, a fee was identified to be a charge for a special service rendered to individual by the Government or some other agency like a local authority or statutory Corporation. The levy of tax was held to be meant for the purpose of general revenue which when collected forms part of the public revenue of the State but the amount of fee levied was supposed to be based on the expenses incurred for rendering the services. It was held that in case of a fee, no account is taken of the varying abilities of the recipients of the service to pay and it is a sort of return or consideration for services rendered for which it is necessary that the levy of fee
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m 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 individuals by some governmental agency. It was propounded therein that the special services rendered must be to the payer of the fee and the element of quid pro quo must be established between the payer of the fee and the authority charging it. Though the services may not be the exact equivalent of the fee on mathematical precision yet by and large predominantly the authority collecting the fee must illustrate that the services which it has rendered in lieu thereof is for some special benefit for the payers of the fee. Their Lordships observed that the two aspects may be so intimately connected or interwoven with the services rendered to others that it may not be possible to do a complete dichotomy as to what amount of special services was rendered to the payers and what proportion had gone to others. It was, how
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a view to achieve the objects of the marketing legislation it is not necessary to confer the whole of the benefit on the licensees but some special benefits must be conferred on them which have a direct, close and reasonable correlation between the licensees and the transactions,
(4) That while conferring some special benefits on the licensees it is permissible to render such services in the market which may be in the general interest of all concerned with the transactions taking place in the market.
(5) That spending the amount of market fees for the purpose 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
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red to Section 28 which enumerated the purposes for which the market committee fund may be expended. Referring to Clause (viii), (x), (xi) and (xvii) thereof, their Lordships opined that those were not relatable to the services to be rendered in the market in relation to the purchase and sale of the agricultural produce. To indicate the aforementioned clauses, which have a bearing on the present facet of the adjudication in the cases in hand, the same are extracted herein below.
(viii) providing comforts and facilities, such as shelter, shade, parking accommodation and water for the persons, draught cattle, vehicles and pack animals coming or being brought to the market or on construction and repair of approach roads; culverts, bridges and other such purposes.
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(x) propaganda in favour of agricultural improvements and thrift;
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(xi) production and betterment of agricultural produce;
(xvii) with the previous sanction of the Board, any other
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agriculturists is the solemn duty and obligation of the State those must be achieved by incurring expenses out of the public exchequer consisting 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 committ
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urposes of the particular market committee, which makes the contribution. Discountenancing the mistaken notion that the market committees and the Board could spend the income from the market fee for all good purposes and the objects of the Act in the general interest of the agricultural and agriculturists in the village, their Lordships elucidated that though the enactment was primarily meant for that purpose such an expenditure could not be approved if the same went against the very concept of quid pro quo, the quintessence of a fee. Their Lordships reiterated that the impost must be correlated with the services to the payers of the fee and all other objects may be achieved by otherwise augmenting the public revenue but not by utilizing a good and substantial portion of the market fee when such application is destructive of the notion of quid pro quo. In the facts of the case, the Apex Court noticed that the market committees and the Marketing Board involved, out of the collections ha
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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 the said decision did not lay down any legal principle of general appli
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aders against their liability to pay market fee in respect of transactions carried on in the notified market area but outside the market in that area was expressly negated and a direction was issued to the market committee of the State to take immediate steps to shift them to the market proper of the respective notified market area for the stringent compliance of the Act, Rules and Bye Laws involved.
57. A Division Bench of the Apex Court in Municipal Corporation of Delhi (Supra), while embarking on the adjudication spurred by a challenge to the enhancement of fee imposed by the Delhi Municipal Corporation for slaughtering animals in slaughter houses had to traverse through the law relating to tax and fee. While reiterating that there is no generic difference between two and that compulsion is not the hallmark of distinction between them, their Lordships observed that though a fee imposed must have a relation to the services rendered or conferred, the same need not be direct and that
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o 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 Bihar Sugar Cane (Regulation of Supply and Purchase) Act, 1981 as well as Sugarcane (Control) Order, 1966 and the Sugar (Control) Order, 1966. Having answered in the negative, the Apex Court also dwelt upon the plea of justifiability of the levy under the Market Act. It was inter alia projected on behalf of the State that various infrastructural facilities as provided to the concerned sugar factories were an unfailing testimony of the validity of the impost. The following se
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rea within the jurisdiction of the market committee concerned. As the Market Act, itself, had been held to be inapplicable for the purchase and sale of agricultural produce involved, the Court opined that the market committee would cease to be under any statutory obligation to provide any service or the infrastructural facilities for covering such transactions so as to be entitled to charge market fee thereon. The contention, therefore was negated not on the ground that the services rendered by the market committee were not having any adequate quid pro quo but on the logic that these were not required to be extended to regulate the sale and purchase of sugarcane, sugar and molasses and that therefore Section 27 of the Act was not attracted in the facts and circumstances of the case. Their Lordships, however, referred with approval to the principles laid down in Kewal Krishan Puri (Supra), correlating the market fee and the services to be rendered.
60. In Jindal Stainless Ltd. (Supra),
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egulatory measure its basis shifts from the concept of “burden” to the concept of measurable/quantifiable benefit and it becomes a “compensatory tax” and its payment is then not for revenue but as reimbursement/recompense to the services/facility provider. It is then a tax on recompense. Their Lordships ruled that compensatory tax is by nature hybrid but it is closer to fee than to tax as both fees and compensatory taxes are based on the principle of equivalence as well as reimbursement/ recompense.
61. A survey of the authorities referred to hereinabove, in our estimate, testifies that the view expressed by the Constitution Bench of the Apex Court in Kewal Krishan Puri (Supra), on the concept of quid pro quo and the inter relation between the fee levied and the services rendered has stood the test of time, the same being in substance reiterated and re-affirmed in Ram Chandra Kailash Kumar (Supra), and Belsund Sugar Co. Ltd. (Supra). In Jindal Stainless Ltd. (Supra), as well the Const
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ent for rendering services to those who bear the brunt of the impost. Conclusively, therefore, if the levy is a fee, the element of quid pro quo is inseverable therefrom and services commensurate with the realization would have to be rendered so much so that the benefits thereof are extended to the payers though in the process the general interest of all concerned with the transaction conducted in the market is also catered to. As a return to the cess collected under the Act with which we are concerned, 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
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00 has been only for a year as is apparent therefrom. Though the deponent in the affidavit in reply in WP(C) No. 5491/2001 has affirmed the statement of payment of ₹ 20/- Lacs towards the Chief Minister's relief fund by the Board to be true to his knowledge persuasive materials are lacking in this regard. Contribution of 50% of the annual gross income of every Market Committee to the Board per se is not mutilative of the concept of quid pro quo in the utilization of market fee realized from the traders of the market area as held in Kewal Krishna Puri. The challenge to the stipulation of deposit of 30% of the income of the market committees in favour of the Marketing Board therein on this plea was negated indicating, however, that the Market Development Fund can be expended by the market committees in a general way or as far as practicable for the purpose of the particular market committee making the contribution. We respectfully subscribe to the view recorded by the Constitut
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ts own or with the assistance from the Central Government towards development of agricultural marketing 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 obligator
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terference therewith. As it is, there is no clinching evidence on record to infer that the market committees and/or the Board are, with their collections awash with liquid assets and overflowing surplus so much so that the enhancements in the rate of cess in the form introduced ought to be held illegal and unconstitutional. No unimpeachable evidence is available as well, to demonstrate that the Board indulges in essential sovereign functions and fritters away the funds composed of the cess for such purposes. The challenge to Section 3D, 3E and 25(xiii) is, therefore, answered accordingly.
66. Though not pleaded by either of the parties, in course of the arguments, the aspect of possible repugnancy between the fictional sale conceived of in Section 21 of the Act and sale as defined in the Sale of Goods Act, 1930 (hereafter referred to as the Act 1930) and the ancillary provisions thereof surfaced generating a debate thereon. The saving effect of the assent of the President enjoined by
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s 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 each prescribes, and Section 109 applies. That this is so is settled, at least when the sanctions they impose are diver
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the Madhya Pradesh Motoryan Karadhan Adhiniyam, 1991, was assailed in M.P.A.I.T. Permit Owners Association and another, supra, being in conflict with the Motor Vehicles Act, 1988. On a survey of the schemes of both the legislations, the Apex Court sustained the challenge to the vires of the State law observing that the offending provisions could not have been enacted without the assent of the President as the same directly impinged upon Article 254 of the Constitution of India as both the laws were construed to be operating in the same legislative field.
The decision in State of Rajasthan v. Rajasthan Chemist Association (supra), involved an assailment of Section 4A of the Rajasthan Sales Tax Act, 1994 contemplating levy of sales tax on any transaction of sale of notified goods not on the actual price paid or payable by the buyer to the seller of such sale as have taken place but on the market retail price of the goods declared on the package as per the provision of the Standards of
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ncidence 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 is not a legislative instrument on Entry 7 of the Concurrent List as is the Act 1930 nor does it define sale as such. The thematic layout of the Act also does not reveal any intention of the lawmakers to supercede the concept of sale under the Act 1930 and the provisions ancillary thereto. Explanation I to Section 21 of the Act precisely nurtures the presumption of sale and purchase of specified agricultural produce in the notified market area on the existence of the contingencies engrafted therein. The presumption of fiction
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ional provision.
70. The fact remains that Act 2000 effecting the amendments amongst others to Section 21 of the Act had received the assent of the President on 29.12.2000 and, therefore, an endeavour was made on behalf of the petitioners to undo the same by contending that in absence of any material on record to demonstrate that the attention of the President had been drawn to the aspect of repugnancy between the proposed State law and the earlier law made by the Parliament as well as the necessity of such a law, the assent accorded was of no consequence and, therefore, did not save the enactment under challenge.
71. The decision of the Apex Court in Gram Panchayat of Village Jamalpur (Supra) and Kaiser-I-hind (P) Ltd. (Supra), were relied upon to buttress these arguments. Indeed their Lordships in the above decisions had underlined the essentiality of presentation of all relevant materials bearing on the repugnancy between the proposed State enactment and the earlier law made by th
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sent as required.
73. The learned Counsels for the parties present without any reservation admitted to a query made by this Court that such a plea bearing on the assent vis-a-vis Act 2000 had not been pleaded in the writ petitions and, therefore, the respondents had no occasion to respond to the same. We feel inclined in the above admitted factual premise to subscribe to the view taken in Engineering Kamgar Union (Supra), and negate the assertion made qua the assent. A passing reference at this stage may also be made of the decision Subodh Chit Fund (P) Limited (Supra), wherein the Apex Court had approved the conclusion of the Madras High Court that the sanction of the President for the amending enactment is not necessary if the same had been obtained for the principal legislation.
74. By Act 2006, which received the assent of the Governor on 16.01.2007, Sub-section (2) was added to Section 21 of the Act as already amended by Act 2000. Section 10 of the Act 2006 proclaims that Sectio
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he market Committee(s) in the market areas in addition to the powers of the Market Committee (but not both) on the Agricultural produce bought or sold in such market, whenever felt necessary with the approval of the State Government. The cavil is on two counts. Firstly such retrospective conferment of powers on the Board w.e.f. 03.09.1974 is impermissible as the Act had come into force from 01.05.1975 being the appointed date and secondly such authorization 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
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e ultra vires the Act. The validity or otherwise of Section 21(2) thus has to be adjudged in the above backdrop vis-a-vis the legislative authority to enact a validating law with retrospective effect.
77.As it is, Section 21(2) invests the Board with the prerogative to levy and collect cess whenever felt necessary with the approval of the State Government for any or all of the Market committees on the agricultural produce bought or sold in the market areas at the rate specified therein. The remonstrance on behalf of the petitioners is firstly, such authorization of the Board is not contemplated in the scheme of the Act and the Rules and secondly, such investiture is with the object of purposefully legalizing the exactions made by it during the pre amendment period and ruled to be illegal and unauthorized by the Full Bench.
The law with regard to the retrospective enactment of a validating Act with the concomitant restraint is by now settled. It was held by the Apex Court in Virender
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While reiterating the above view, in State Bank'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 liabi
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red notifications. The jurisdictional High Court upheld the challenge to the said enactment on the ground that it was not permissible as the same had an effect of upsetting the earlier judicial adjudication. The Apex Court while interfering with such determination of the High Court clarified that the Validation Act had only knocked off the basis of the earlier judgment by validating the omission of non-publication of the notification.
80. The decision in Ashok Lanka and Anr. (Supra) turned on its own facts. It involved a challenge to the selection for grant of licence for settlement of liquor shops under the Chhattisgarh Excise Act, 1915 and the Rules framed thereunder. Though under the Rules, an applicant was amongst others, required to submit an affidavit making the prescribed disclosures, the Commissioner of Excise before initiation of the process issued a circular deferring the submission of the affidavit till after the selection of the candidates. After completion of the selectio
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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 Full Bench of this Court, in the above premise cannot be sustained.
As the bestowal of the power ordained by Section 21(2) is inveighed to be abhorrent to the scheme
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perly and/or is abusing its power or is guilty of corruption or mismanagement.
83. The State Government or the Board in terms of Section 3(11) may call for any information from a Market Committee or from any other functionary under it pertaining to specified agricultural produce and may also inspect the records of the Market Committee or such functionary if need be. Section 3(13) mandates the Board to submit every year the estimate of its annual income and expenditure for the sanction of the State Government. The powers and the functions of the Board are delineated in Section 3A. In addition to its act of superintendence and control over the Market Committee, it is required thereunder to ensure the coordination of the working of the Market committees and other affairs thereof, undertake the State level planning of the development of Agricultural produce and markets; administer the Marketing Board Fund; issue directions to the Market Committees in general to ensure improvement thereof.
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nt 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 Market Committees thereunder all officers and staff of Market committees in the form of loan or grant for development purposes, as well as for any purpose as may be deemed necessary by the Board or the State Government for carrying out the objectives of the Act. Section 3F stipulates for annual audit of the accounts of the Board to be submitted by the State Government every year.
85. A market area under Section 5 of the Act is to be declared by the State Government by notification in the official gazette. Section 5A obligates that all specified agricultural produce shall
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er Section 7 to enforce the provisions of the Act and the rules and bye-laws framed thereunder in such area. The State Government is left with the discretion to establish more than one Market Committee for the same area in the process as referred to in Section 7(2). The composition of every Market Committee is provided for in Section 8. Each Market committee in terms of Section 13 as well, is a body corporate having perpetual succession and a common seal and may sue or be sued in its corporate name and is competent amongst others to do all things necessary for the purpose for which it is established. Section 13(2) prohibits any person from using any place for buying or selling specified agricultural produce or to function as a trader etc., within the market area where a Market committee is established without a 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 Sec
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pose. The collections by the Market committee are to be deposited in “Market Committee Fund” and all expenditures incurred by it under or for the purpose of this Act would be met therefrom. The surplus if any, as Section 23 requires would be applied in the manner as provided in Section 25 which inter alia may be for any matter as may be entrusted by the Board. The State Government under Section 37 is endowed with the power to supersede a Market committee in the eventualities as mentioned therein. A residuary power on the State Government has been conferred by Section 33 to inspect or cause to be inspected the accounts of the Board or to institute an enquiry into the affairs of the Board if considered necessary.
87. The Assam Agricultural Produce Markets (General) Rules, 1975, as amended by the Assam Agricultural Produce Market (General) (Amendment) Rules, 2003 framed in exercise of power under Section 49 of the Act amongst others provide a detailed procedure for levy and collection of
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ader's licence in case of a habitual defaulter. Rule 23(13) contemplates an appeal against the assessment order by the Committee to the Chairman of the Board. Rule 25 provides for refund of market fee recovered in excess of the amount actually due or on a transaction which is exempted under the Rules. The amount recoverable is to be defrayed out of the Market Development Fund or Market Committee Fund depending on 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 Governmen
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pt as contained in Section 25(1) & (xi) and obviously relatable to those conceived of by the Act. As held above, the purposes enumerated in Clause (vi) and (vii) of Section 3E and Clauses (xii) and (xiii) of Section 25 thereof must essentially be in conformance with the requirements prescribed in Kewal Krishan Puri (supra).
88. Section 3A(1)(v) (vi), 3A(2) (viii), 3E(iv)(v)(vi)(vii), 14, 15, 16 and 25, on a conjoint reading evince an inextricable homogeneity in statutory assignments for the State Government, Board and the Market Committee(s) to effectuate the enjoinments thereof. The Board in this legislative paradigm can by no means be branded a stranger so as to disqualify it from being entrusted with the power to levy and collect cess even in well defined and demanding exigencies. The empowerment of the Board to levy and collect cess having regard to the framework of the Act hedged by the conditions as enumerated in Section 21(2) of the Act, in the opinion of this Court cannot be d
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not yet been 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 app
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tly appreciates the needs of its own people, its laws are directed to problems made manifest by experience and its discrimination are based on adequate grounds. The presumption of constitutionality is indeed so strong that in order to sustain it, the Court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation.
Another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc. It has been said by no less a person than Holmes, J. that the legislature should be allowed some play in the joins, because it has to deal with complex problems which do not admit of solution through any doctrinaire or straitjacket formula and this is particularly true in case of legislation dealing with economics matters, where, having regard to
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ttees 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 petitioners have alleged that the Board in purported exercise of its powers under Section 21(2) of the Act has been realizing cess from the truck drivers of the consignments bound for different destin
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tside the State of Assam and has furnished the names and particulars of the firms and companies indulging in such activities with documents in support thereof. The petitioners in the aforementioned writ petition in their reply affidavit while admitting such local sales by some of the members of the association have contended that the documents relied upon by the Board disclose that the transactions relate to the year 2005 and barring one or two instances, the article sold was wheat products and not wheat. In view of the above admission it is inessential to dilate further in this regard. It is, therefore, easily deductible that the petitioners' assertion of denying any local sale of their goods in Assam is factually incorrect.
90A. Noticeably “wheat and wheat products” have been enlisted as agriculture produce as defined under Section 2(1)(i) of the Act in Schedule thereto. The endeavour on their part to squirm out of the Board's asseveration of their involvement in sales and p
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he 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 have been declared as principle yard which is at a place about 40 k.m. from Guwahati. They have alleged that the said principle market yard consists of a double storeyed abandoned structure wholly unfit for human habitation with no link road. They have also furnished a list of market committees to demonstrate the correctness of this plea.
The Board while refuting the above assertions in its affidavit has claimed that godowns, auction platforms, open sheds, guest houses, community toilets etc. have been constructed which are being utilized by the traders and the buyers. It has pleaded that ample facili
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d that no market area or principal market yard or sub-market yard has at all been set up till date as required under the Act.
The permissibility or validity of collection of cess at the check gates referred to hereinabove, however, does not ipso facto follow from the above deduction. It is claimed by the Board that the check gates are located within the declared market areas under the Act. Such check gates are contemplated in Section 21A of the Act introduced for the first time by Act 2000 requiring the territorial market committee to establish the same at different points within the market area whenever felt necessary with the prior approval of the Board. This, the said provision discloses is for the purpose of prevention of evasion of cess of specified agricultural produce. 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 p
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produce ferried in any vessel or other contents to ensure prevention of evasion of cess under the Act.
93. The authority and competence of the Board and/or the market committees to set up check gates understandably was not in issue in the earlier round of litigation, the power to this effect having been conferred on only by the two amending Acts. The issue pertaining to the collection of cess at the check gates for the pre-amendment period in absence of any sale or purchase therein was not answered by the Apex Court in its wisdom, the traders/dealers not having assailed the decision of the Full Bench declining the prayer for refund. The Apex Court parted with the issue, as assessment subsequent to the amendment in 2001 would involve different set of facts and examination thereof.
The statements of objects and reasons for the Act, 2000 and Act, 2006, which appear germane, are reproduced hereunder in seriatim:
Statement of Objects and
Reasons
Amending Act-The Assam Act No. 1 of 200
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. [Published in the Assam Gazette
Extraordinary, dated 27th June, 2000] pp-475-512.
. . .
Statement of Objects and Reasons:
The Assam Act No – III of 2007
In order to remove difficulties in implementing of a few sections such as Sections 2, 3, 4, 5, 13, 14, 21, 21A and 23 of the Assam Agricultural Produce Market Act, 1972 (as amended up to 2000) and 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
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itative against the letter and spirit of the Act.
94. The realization of the cess, however, by all means would have to be in scrupulous observance of the necessary preconditions embodied in Section 21 of the Act and Rule 21, 22 and 23 of the Rules as discussed hereinabove.
The legal fiction engrafted in Section 21 would apply only in absence of any direct evidence of sale to the contrary. The levy and collection of cess on the specified agricultural produce would ensue only on the sale or purchase thereof in the market area as comprehended therein as well as at the rate specified. The fictional factors would hold the sway only in absence of any direct evidence of sale or purchase repelling the same. In other words, the legal fiction would operate if the trader/dealer concerned fails to establish against sale or purchase of the specified agricultural produce in the concerned notified market area. This is so, be the collector of the cess is the concerned Market Committee or the Board o
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ions 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 in
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aceted factual enquiries to be made, it would be appropriate to remit this issue to a body composed of representatives of the Government, the Board, the concerned Market Committees and the traders. The Commissioner & Secretary, Department of Agriculture, Government of Assam, would within six (6) weeks herefrom constitute a Committee in terms of the above in consultation with the Board, Market Committees and the petitioner association. The petitioners/petitioner association would cooperate with the aforementioned authority in this regard as and when notified. In the interest of workability of the Committee, the composition thereof, ought to be compact yet representative. The petitioners and other similarly situated traders/dealers, may, if so advised approach the Committee and stake their claims for refund by disclosing all material facts and documents in support thereof. If the same is done, the Committee would:
1) notify the concerned authority of the Board, and the Market Committee(
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