2006 (9) TMI 277 - SC - VAT and Sales Tax

Supreme Court ruling on market fee collection and High Court's jurisdiction

Star Paper Mills Ltd. Versus State of UP. and others (and other appeals)

The Supreme Court upheld the Allahabad High Court's decision regarding market fee collection, directing the appellant to follow the statutory remedy ... Whether the respondents Rajya Krishi Utpadan Mandi Parishad and several Krishi Utpadan Mandi Samitis be restrained from levying and/or collecting any market fee on the purchases made by the appellant from Uttar Pradesh Forest Corporation, Lucknow? Held that:- This is not a case where no factual adjudication is necessary. Therefore, the High Court was justified in view that the statutory remedy is to be availed. Let the appellant file the necessary details as required under the Niyamavali within three weeks from today and place its stand before the concerned authority for consideration. The said authority shall consider the stand of the appellant and dispose of the same as expeditiously as practicable preferably within six weeks from the date when the necessary details and/or objections are filed before the authority. In the peculiar circumstances of the case let no coercive steps be taken for recovery of any amount claimed by the respondents as payable by the appellant till the final adjudication by the concerned authority. Issues:1. Challenge to judgment of a division Bench of the Allahabad High Court regarding market fee collection.2. Interpretation of rule 70 of the Uttar Pradesh Krishi Utpadan Mandi Niyamavali, 1965.3. Examination of alternative remedy availability in writ petitions.4. Application of the doctrine of exhaustion of statutory remedies.5. Discretionary power of High Courts under article 226 of the Constitution.Detailed Analysis:1. The appeals challenged a judgment by the Allahabad High Court concerning market fee collection by the respondents. The appeals were divided into two sets: one related to requiring the appellant to avail statutory remedy, and the other related to rejecting a review application filed by the appellant. The primary prayer was to restrain the respondents from levying market fees on purchases made by the appellant from the Uttar Pradesh Forest Corporation. The appellant argued that as it purchased paper for its own consumption, it was not liable to pay market fees under rule 70 of the Niyamavali. The High Court directed the appellant to appear before the concerned authority after paying provisional mandi fee assessment for further adjudication.2. The interpretation of rule 70 of the Niyamavali was crucial in determining the appellant's liability to pay market fees. The appellant contended that as a purchaser of agricultural produce for domestic consumption, it did not fall under the purview of the rule. The High Court emphasized the need for factual adjudication and directed the appellant to follow the statutory remedy process. The appellant's argument was supported by citing a previous decision of the Supreme Court, emphasizing the need to establish the applicability of the court's previous rulings to the present case.3. The Supreme Court examined the issue of entertaining writ petitions when alternative remedies are available. It highlighted that the availability of an alternative remedy does not restrict the High Court's jurisdiction under article 226 of the Constitution. However, the court emphasized that the High Court should generally refrain from interference if an adequate alternative remedy exists unless strong grounds are presented to invoke its extraordinary jurisdiction. The discretionary nature of granting relief under article 226 was underscored, with references to various landmark judgments establishing the principles governing the availability of alternative remedies.4. The doctrine of exhaustion of statutory remedies was analyzed in the context of the case. The court reiterated that parties must typically exhaust statutory remedies before resorting to writ jurisdiction, except in cases where the proceedings are ultra vires or violate principles of natural justice. Exceptions to the doctrine were outlined, emphasizing situations where the impugned order is made in violation of natural justice or when the proceedings themselves constitute an abuse of the legal process. The court highlighted recent cases reiterating the importance of exhausting statutory remedies before seeking relief through writ jurisdiction.5. The judgment emphasized the discretionary power of High Courts under article 226 of the Constitution. It reiterated that the availability of alternative remedies does not restrict the High Court's jurisdiction, but the court should exercise discretion in granting relief. The court directed the appellant to follow the statutory remedy process and submit necessary details for consideration by the concerned authority. Coercive steps for recovery were stayed pending final adjudication, and the appeals were disposed of accordingly, with no costs awarded.