Market fee liability turns on where title passes and sale completes, not on later use in manufacturing.

Market fee under the Rajasthan Agricultural Produce Markets Act is attracted when agricultural produce is bought and sold in the market area, and the time of passing property must be determined from the contract terms, the parties' conduct and surrounding circumstances under the Sale of Goods Act, 1930. Where the seller retains responsibility until delivery, title passes on delivery and the sale is completed where delivery occurs; on the stated facts, the levy was upheld. Purchase of agricultural produce for processing or manufacture does not by itself avoid market fee if the sale was completed in the market area. The decision also treated the bye-product issue as distinct.

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Issues: (i) Whether market fee under the Rajasthan Agricultural Produce Markets Act, 1961 and Rule 58 of the Rajasthan Agricultural Produce Market Rules, 1963 is leviable when the passing of title in agricultural produce is governed by the terms of sale; (ii) Whether agricultural produce purchased for processing or manufacture, and not for further sale, escapes levy of market fee.

Issue (i): Whether market fee under the Rajasthan Agricultural Produce Markets Act, 1961 and Rule 58 of the Rajasthan Agricultural Produce Market Rules, 1963 is leviable when the passing of title in agricultural produce is governed by the terms of sale.

Analysis: Liability to market fee depends on whether the agricultural produce was bought and sold in the market area. That question turns on when property in the goods passed, which must be determined from the contract terms, the conduct of the parties and the surrounding circumstances under the Sale of Goods Act, 1930. Where the contract shows that the seller retained responsibility till delivery, the intention is that title passes only on delivery. In such a case, if delivery occurs within the market area, the sale is completed there and the statutory requirement of purchase and sale in the market area is satisfied.

Conclusion: Market fee is leviable where the contract shows that ownership passed only on delivery within the market area; on the facts of Arihant Udhyog, the levy was upheld.

Issue (ii): Whether agricultural produce purchased for processing or manufacture, and not for further sale, escapes levy of market fee.

Analysis: The fact that the purchased agricultural produce is later used as raw material for processing or manufacture does not by itself negate the levy. The decisive question remains whether the produce was bought and sold in the market area. If that requirement is satisfied, the subsequent use of the goods in manufacture is immaterial. A separate question concerning levy on a bye-product is distinct and does not alter the liability on the agricultural produce actually purchased.

Conclusion: Purchase for processing or manufacture does not, by itself, avoid market fee if the agricultural produce was bought and sold in the market area.

Final Conclusion: The appeal of Arihant Udhyog was dismissed, while the connected appeals were allowed to the extent that the matters other than Arihant Udhyog were remanded for fresh consideration on the basis of each individual contract of sale.

Ratio Decidendi: Market fee on agricultural produce is attracted only when the sale is completed in the market area, and the place of passing of property must be determined from the contract and the intention of the parties under the Sale of Goods Act, 1930.

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