TaxTMI 
TaxTMI 
1984 (9) TMI 252
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....cate (Miss. Maya Rao, Advocate, with him) (in C.A. No. 2581 of 1984), Sudama Jha and Miss. Maya Rao, Advocates (in C.A. No. 2525 of 1984) and H.K. Puri, Advocate (in C.A. Nos. 10074 and 10075 of 1983), for the respondents. -------------------------------------------------- The judgment of the Court was delivered by DESAI, J.-Whether the whole includes the parts is the core question. Whether legume, whole grain, when notified as a "specified agricultural produce" within the meaning of the expression in section 2(t) of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 ("Act" for short), would also comprehend its split folds or parts, commercially called dal so as to enable Mandi Samiti (Market Committee for convenience of reference) to levy market fee under section 17 of the Act on the transaction of sale of dal of legumes specified in the Schedule to the Act, is the narrow question that falls to be determined in this group of appeals. Appellant Market Committee levied market fee on the transaction of sale of dal of various legumes by the respondents, asserting that they were specified agricultural produce and the transactions of sale in respect of them by the re....
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.....P., probably out of panic or as contended before us out of abundant caution, issued in exercise of the power conferred by section 4A of the Act the Notification No. 383/12-5-600(401)/81 dated January 20, 1982, which reads as under: "In exercise of the powers conferred upon him under section 4A of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 (U.P. Act No. 25 of 1964), the Governor is hereby pleased to notify that with effect from the date of publication in the Gazette of this Notification, in place of items mentioned under column (1) under the heading (legume) in the Schedule of section 2(a) the following items shall be substituted, namely: Legumes Amended Krishi Utpadan Legume 1. Chana 1. Chana (Saboot Aur Dala Hua) 2. Matar 2. Matar (Saboot Aur Dali Hui) 3. Arhar 3. Arhar (Saboot Aur Dali Hui) 4. Urad 4. Urad (Saboot Aur Dali Hui) 5. Moong 5. Moong (Saboot Aur Duli Hui) 6. Masoor 6. Masoor (Saboot Aur Duli Hui) 7. Lobhia (Seeds) 7. Lobhia (Saboot Aur Dali Hui) 8. Soyabean 8. Soyabean 9. Khosari 9. Khosari (Saboot Aur Dali Hui) 10. Sanai (Seeds) 10. Sanai (Seeds) 11. Dhencha (Seeds) 11. Dhencha (Seeds) 12. Gwar....
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....y allowed the petitions and quashed the notice issued by the Market Committee raising the demand for market fee. Hence these appeals by special leave. If the contention raised on behalf of the appellant in the first batch of appeals is accepted, the judgment of the High Court in the second batch of appeals will have to be quashed and set aside without anything more. In view of this inter-connection between the two batches of appeals, they were heard together though one after the other and are being disposed of by this common judgment. To appreciate the very narrow contention arising in these appeals, a glance at the relevant provisions of the Act is indispensable. The Act was enacted as its long title shows "to provide for the regulation of sale and purchase of agricultural produce and for the establishment, superintendence and control of markets therefor in Uttar Pradesh". "Agricultural produce " is defined in section 2(a) as under: "'agricultural produce' means such items of produce of agriculture, horticulture, viticulture, apiculture, sericulture, pisciculture, animal husbandry of forest as are specified in the Schedule, and includes admixture of two or more of such items,....
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....he Market Area or modify the list of agricultural produce. Every agricultural produce set out in the notification declaring a Market Area under section 6 or alterations made under section 8 becomes specified agricultural produce for the purposes of the Act. Section 9 sets out the effects of a declaration of a Market Area, the principle being that no one within the Market Area can set up, establish or continue or allowed to be set up, established or continued, any place for the sale-purchase, storage, etc., of the specified agricultural produce, except under and in accordance with the conditions of a licence granted by the Committee. Sub-section (2) confers power on the Market Committee to give licence to carry on business as a trader, etc., in the principal market yard or sub-market yard. Section 17 enumerates the powers of the Market Committee which has to be set up for each Market Area as required by section 12, which inter alia includes the power to levy and collect market fee in the circumstances therein mentioned. The relevant portion of it reads as under: "17. A Committee shall, for the purposes of the Act, have the power to- ....................................................
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....ion dated April 11, 1978, could only be legume whole grain and not its split portions which is the end product of a manufacturing process. It was said that the dal which is obtained by applying a process of manufacture to the whole grain of legumes is neither an agricultural produce and at any rate it is not a specified agricultural produce. The High Court charted an easy course by merely referring to the subsequent notification dated January 20, 1982, which substituted entry under heading "II Legumes" in the Schedule by putting into bracket words "saboot aur dala hua" and concluded that if an amendment by a notification became necessary to bring split folds of legume in the Schedule, by necessary implication they could not have been included or deemed ever to have been included in the Schedule "II Legumes" prior to the amendment and therefore market fee could not be levied on the transaction of sale of split folds of legume (dal) in a market area. We propose for the time being to ignore this notification and concentrate on the entry in the Schedule as it stood prior to the notification dated January 20, 1982, and the definition of the expression "agricultural produce" to ascertain....
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.... Suppose a producer sells neither gram nor peas each by itself but mixes gram and peas, according to the contention canvassed on behalf of the respondents, this mixture would be not an agricultural produce. The contention can be negatived by referring to the definition which says agricultural produce means such items of produce of agriculture (omitting the words which are not necessary for the present purpose) as are specified in the Schedule such as gram and peas as also an admixture of two or more of such items, i.e., admixture of gram and peas. A further step can be taken as flowing from the definition itself. Agricultural produce means such items of agricultural produce, namely, gram as specified in the Schedule and it shall include any such items, i.e., gram in its processed form. Even the respondents did not contend, on the contrary it was the sheet anchor of their submission, that a split legume is obtained by a manufacturing process of whole grain of legumes, "saboot", as it is now described, and that dal, i.e., the whole grain split into two folds is its processed form acquired by manufacturing process. Even on their own submission dal of legume enumerated in the Schedule....
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....evy on the product is not contemplated by the Act. Reference in this connection was made to the decision in Ramesh (Ram) Chandra v. State of U.P. [1980] 3 SCR 104 in which levy of market fee under the Act by various Market Committees was challenged on diverse grounds, one such being that if market fee is paid on the transaction of sale of paddy, though rice is separately enumerated in the Schedule, no market fee could be levied on the transaction of sale of rice. This Court has observed at page 130 that "if paddy is purchased in a particular market area by a rice miller and the same paddy is converted into rice and sold then the rice miller will be liable to pay market fee on his purchase of paddy from the agriculturist-producer under sub-clause (2) of section 17(iii)(b). He cannot be asked to pay market fee over again under sub-clause (3) in relation to the transaction of rice. Nor will it be open to the Market Committee to choose between either of the two in the example just given above. Market fee has to be levied and collected in relation to the transaction of paddy alone." Reliance was also placed on the observation at page 132 where the Court observed "if catechu is a product....
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....the objects therein enumerated, only one of them being to ensure that the agricultural producer has his say in the utilisation of market funds for the improvement of the market as a whole. Agricultural producer has nowhere been mentioned in the nine objects set out therein except as mentioned above. On the other hand, the Constitution Bench in Ramesh (Ram) Chandra's case [1980] 3 SCR 104 noticed that the "Act was enacted for the development of new market areas and for efficient data collection and processing of arrivals in the mandis to enable the World Bank to give a substantial help for the establishment of various markets in the State of U.P.". The Act was compared with similar statutes in force in different States and a distinguishing feature was pointed out that in other States the Act is mainly meant to protect the agriculturist producers from being exploited when he comes to the mandis for selling his agricultural produce. This Court observed in agreement with the High Court that certain other transactions also have been roped in the levy of market fee in which both sides are traders and neither side is an agriculturist and this has been done for the effective implementatio....
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.... paddy is dehusked, there is no change in the identity of the goods. This contention was negatived in all the four cases depending upon provisions of the relevant sales tax law. It was however, said that the ratio of the decision would assist us in understanding what is the processed form of a particular agricultural produce. Approaching the matter from this angle, it was urged that though rice is produced out of paddy, this Court held that it is not true to say that paddy continued to be paddy even after dehusking, and they are two different things in ordinary parlance. This ratio cannot assist us at all for a very good reason. It was not pointed out to us that the various provisions of the relevant sales tax law which came for consideration of this Court in those four decisions did or did not have a definition such as we have of "agricultural produce" in section 2(a) of the Act. In this connection, however, specific reliance was placed on the decision of Modi Spinning and Weaving Mills Co. Ltd., Modinagar v. State of U.P. 1980 All LJ 1137 wherein in the context of the Act, it was held that cotton waste is not comprehended in the entry in the Schedule "cotton ginned and unginned"....
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....ll be payable on the sales or purchases of any goods specified in the Schedule". The relevant entry is the "sugar as defined in item No. 8 of the First Schedule to the Central Excises and Salt Act, 1944". Affirming the decision of the Gujarat High Court, this Court held that patasa, harda and alchidana were exempt from any tax payable under the Bombay Sales Tax Act, 1959, because they are comprehended in the expression "sugar" in the entry granting exemption. This conclusion was reached holding that the expression "sugar" in entry 47 granting exemption will comprehend within its ambit all forms of sugar, that is to say, sugar of any shape or texture, colour or density and by whatever name it is called. If this line of reasoning is adopted, legume whole grain will necessarily comprehend both folds of the whole grain. But we do not propose to rest our decision on the approach to various commodities commercially recognised distinct under relevant sales tax law. To sum up, for the reasons herein stated, the High Court was in error in holding that the legume whole grain as set out in the Schedule does not include its split form, i.e., dal, and therefore, no market fee was leviable on t....
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....uce in relation to market area notified in the notification. Section 8 confers power to alter the market area or the agricultural produce in respect of the altered market area. When these steps are taken then alone those agricultural produces enumerated in the notification under section 6 or under section 8 would assume and acquire the mark or character of "specified agricultural produce", on the sale transaction of which market fee can be levied by the Market Committee. Proceeding along it was urged that even though a notification was issued under section 4A on January 20, 1982, amending the Schedule in respect of legumes, in the absence of a notification under section 8 making the agricultural produce so introduced in the Schedule as specified agricultural produce, those agricultural produces would not acquire the character of specified agricultural produces qua market area and therefore, the respondents are not liable to pay any market fee thereon. If the amended Schedule introduced by the notification dated January 20, 1982, introduces fresh agricultural produces in the Schedule, the contention of Mr. Nariman must carry conviction because it was conceded that a fresh notificat....