Market fee on certified wheat seed barred where the schedule does not specifically include wheat seed.

Wheat seed and certified wheat seed were held outside the expression "specified agricultural produce" under the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 because the Schedule did not separately notify wheat seed, and the statutory scheme showed that seeds may be treated as distinct regulated commodities only where expressly included. Market fee could not be levied on wheat purchased by a seed processing unit for certification and chemical treatment, since the transaction was not an ordinary market sale of specified produce. Certified seed was treated as a commercially distinct commodity, confined to sowing and not human consumption, and the levy was therefore impermissible.

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Issues: (i) Whether wheat seed and certified seed fall within the expression "specified agricultural produce" under the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 so as to attract market fee. (ii) Whether market fee can be levied on purchase of wheat by a seed processing unit for conversion into certified seed by chemical treatment. (iii) Whether wheat seed converted into certified seed is a commodity distinct from wheat and unfit for human consumption. (iv) Whether the legislative scheme intended notification only of seeds different from the produce itself.

Issue (i): Whether wheat seed and certified seed fall within the expression "specified agricultural produce" under the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 so as to attract market fee.

Analysis: The definition of agricultural produce under Section 2(a) read with the Schedule was construed in the light of the entries actually specified by the legislature. Wheat was included in the Schedule as a cereal, but seed of wheat was not separately specified. The production and certification process under the Seeds Act, 1966 and the Seeds Rules, 1968 showed that certified seed is treated as a distinct regulated commodity. The absence of a specific entry for wheat seed was treated as significant.

Conclusion: Wheat seed and certified seed do not fall within the specified agricultural produce for the purpose of levy of market fee.

Issue (ii): Whether market fee can be levied on purchase of wheat by a seed processing unit for conversion into certified seed by chemical treatment.

Analysis: The fee under Section 17(iii)(b) is attracted only to transactions of sale of specified agricultural produce. The unit purchased seed for the purpose of certification and processing under statutory supervision, and the transaction was not treated as an ordinary purchase of wheat in the market sense. The Court held that the levy cannot be sustained merely because the raw seed passes through a processing stage before certification.

Conclusion: Market fee cannot be levied on such purchase of wheat by the seed processing unit.

Issue (iii): Whether wheat seed converted into certified seed is a commodity distinct from wheat and unfit for human consumption.

Analysis: Reliance was placed on the principle that coating and chemical treatment destroy the basic character of foodgrains as human food and create a commercially distinct commodity. Certified seed was found to be a separate commodity, and its use was confined to sowing rather than consumption. This distinction was decisive in rejecting the levy.

Conclusion: Wheat seed converted into certified seed is a distinct commodity and is unfit for human consumption.

Issue (iv): Whether the legislative scheme intended notification only of seeds different from the produce itself.

Analysis: The Court read the Schedule and the statutory scheme as showing that where the legislature intended to include seeds, it did so expressly. Since wheat seed was not separately notified, the wider construction urged for the market committee was rejected. The scheme was held to exclude certified wheat seed from the notified produce list.

Conclusion: The legislative intent was to notify only those seeds that are different from the produce itself.

Final Conclusion: The levy of market fee on certified wheat seed was held impermissible, and the challenge to the demand failed.

Ratio Decidendi: Where a seed product has acquired a distinct commercial identity through statutory certification and chemical processing, and the relevant schedule does not specifically include that seed, it cannot be treated as specified agricultural produce for levy of market fee.

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