TaxTMI 
TaxTMI 
1974 (1) TMI 100
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....in their godowns. The commission agents used to collect sales tax on the turnover of sales of jaggery made by them in the market area, from their principals, the agriculturists. Some of the members of the market committee, Kamareddy, and some agriculturists preferred Writ Petition No. 17 of 1972 for the issuance of a writ of mandamus directing the State Government to frame appropriate rules whereunder the buyers of jaggery alone should be made liable to pay sales tax, and the same is still pending. In the meanwhile, the market committee, Kamareddy, at its meeting held on 16th December, 1972, passed a resolution directing the commission agents to collect sales tax on jaggery sold in the market area from the buyers alone, instead of the producers, with effect from 19th December, 1972. Pursuant to the said resolution, the secretary of the market committee issued notices to the petitioner and the appellants herein as well as the other dealers instructing them to collect sales tax from the purchasers of jaggery instead of the sellers. As the request made by the commission agents to the Director of Marketing, who is the revisional authority under the Markets Act, to issue necessary instr....
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....aid by them on the turnover of the sales in respect of jaggery made by them, reimbursed from their principal-producers. According to the counsel, there is no provision in the Markets Act or the Rules made thereunder which authorises the market committee to pass any resolution regulating the mode or manner of levy or collection of sales tax on the turnover of the sales of agricultural produce that take place in the market area, and, therefore, the market committee is not competent to direct the commission agents to collect sales tax from the purchasers instead of their principal-sellers and hence, the impugned resolution is illegal, without jurisdiction and liable to be quashed. 4.. Mr. Babul Reddy, the learned counsel appearing for the appellants in W.A. No. 172 of 1973 and Mr. Venkatarama Reddy, the learned counsel appearing for the petitioners in W.P. No. 2504 of 1973, adopted the arguments of Mr. P. Rama Rao. 5.. Mr. Reddipanthulu, the learned counsel appearing for the Market Committee, Kamareddy, resisted the claim advanced on behalf of the commission agents contending, inter alia, that the market committee is empowered to pass the impugned resolution as it only amounts t....
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....ion 1 refers to the short title, extent and commencement of the Act. Section 2 provides for definitions of various terms such as "agricultural produce", "grower", "live-stock", "market", "market committee", "notified area", "notified market area" and "products of live-stock", etc. Section 3 empowers the State Government to publish a draft notification declaring their intention of regulating the purchase and sale of any specified agricultural produce, live-stock or products of live-stock in any area as may be specified therein and calling for objections or suggestions within a specified period. After the expiration of the period specified in the draft notification and after considering such objections and suggestions as may be received by it before such expiration, the State Government may publish in the prescribed manner a final notification declaring the area or any portion thereof, specified in the draft notification, to be a notified area for purposes of the Act, in respect of any agricultural produce, live-stock and products of live-stock specified in the notification. Under section 4 the Government shall constitute a market committee for every notified area and declare the not....
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...., the provisions of section 7(1) do not apply to the case of a person who intends to sell his own agricultural produce and live-stock. Section 8 refers to appointment of sub-committees and delegation of powers, whereas section 9 deals with the calling of meetings of the market committee. Section 10 provides for appointment and salaries of officers of market committee whereas section 11 deals with the execution of contracts. Section 12 deals with levy of fees by the market committees whereas section 13 refers to levy of subscription for market reports, etc. Section 14 provides for market committee fund whereas section 15 indicates the purposes for which the market committee fund may be expended. Section 16 refers to central market fund. Section 18 empowers the market committee to borrow. Section 22 refers to supersession of market committees. Section 27 provides for a revision to the Director of Marketing against any orders passed by the market committee. Section 28 makes the Act inapplicable to markets established by or on behalf of the State Government. Section 30 makes the provisions of the Act to override other laws providing for the establishment, maintenance or regulation o....
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....ommittee is only to control the market and manage its affairs. The market shall be opened for trading at such hours as the market committee may from time to time fix. Subrules (3), (4) and (5) of rule 26 refer to certain instances relating to the management. Rule 27 empowers the market committee to implement the provisions of the Act and of the Rules and bye-laws made thereunder in the market area, to implement the directions given by the Government from time to time in the establishment and development of markets and to maintain and manage the market yards. It also provides for the powers specified in clauses (iv) to (xx). None of the powers specified in clauses (i) to (xx) of rule 27 relates to the levy or collection of sales tax. Nor does rule 28, which provides for the powers and duties of the chairman and vice-chairman, indicate any power in them to levy or collect sales tax. Rule 27(v) and (viii) reads as follows: "27. The market committee shall- (v) supervise the conduct of the market functionaries...... (viii) regulate the making, execution and enforcement or cancellation of agreements of sales, the weighment, delivery, payment and all other matters relating to the ma....
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....section 5(2) read with section 11 and item No. 77 of the First Schedule, make it abundantly clear that the commission agents, who are dealers and who sell jaggery belonging to their principals within the market area, would be liable to pay sales tax on the transactions of sale entered into by them with the purchasers. But, however, they are entitled to have the tax paid by them reimbursed from their principals. 13.. This brings us to examine whether the market committee has jurisdiction or is competent to pass the impugned resolution. On a close and careful reading of the provisions of the Markets Act and the Rules made thereunder, we do not find any provision empowering the market committee to regulate the mode and manner of levy or collection of sales tax in respect of transactions of sale within the notified area. But instead the Markets Act and the Rules provide only for the levy of market fees and its collection. The market committee is authorised to supervise the conduct of the market functionaries. The plea advanced on behalf of the respondents that what has been done by the market committee in passing the impugned resolution is nothing but a kind of regulation in the con....
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.... resolution is undoubtedly opposed to the provisions of section 11 of the Sales Tax Act and, therefore, it must be held to be without jurisdiction. 14.. We shall presently examine the submission of Mr. Subhashana Reddy that rules 27(v) and (viii), 64 and 73 of the Rules made under the Markets Act would support his plea. Clause (v) of rule 27 simply refers to the general supervision of the market committees over the conduct of the market functionaries. Market functionaries are those who are entrusted with the duties or functions of the market committee. Clause (v) does not, therefore, refer to the power of the market committee in respect of levy or collection of sales tax. Clause (viii) of rule 27 authorises the market committee to regulate the making, execution and enforcement or cancellation of agreement of sales. There may be disputes relating to weighment, delivery, payment or any other matter pertaining to the marketing of notified agricultural produce. The term "payment" in clause (viii) of rule 27 may take in the mode and time of payment. Hence the regulation of payment with regard to the marketing or sale of notified agricultural produce cannot be construed to be regulati....
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....e commission agents also liable for it with a view to facilitate easy collection. Hence, the principal, i.e., the producer or agriculturists, need not have any complaint or grouse in this regard. Nor is it necessary for them to go and approach the market committee for any help. They themselves are competent to dictate terms to their commission agents and if the commission agents are not heeding their advice, they are always entitled either to change their agents or sell directly their produce within the notified market area. Further they can save the commission that would be payable to the commission agents. In the circumstances, the commission agents are bound to carry out the instructions of their principals and, therefore, it cannot be said that the growers are in anyway helpless or that they are aggrieved. 16.. The problem may be looked from another angle. It admits of no doubt that the market committee is also not helpless in punishing the commission agents who indulge in collection of sales tax both from the producers and the purchasers and making a fraudulent gain. It is really the market committee that grants licences to the commission agents for doing business within th....
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....tres like Anakapalle, Tadepalligudem and Chittoor. There is no evidence on record with regard to the practice prevalent in Anakapalle, Tadepalligudem and Chittoor. Hence, it is not possible for us to give a specific finding on this aspect. But, however, the trade practice prevalent in a particular business centre or place cannot be said to be a law or custom enforceable in a different place. It admits of no doubt that no such practice is prevalent either in Kamareddy or Nizamabad. Hence, the practice if any, that is prevalent in the markets of Anakapalle, Tadepalligudem and Chittoor cannot be enforced as a law or practice in the market area of Kamareddy with which we are concerned in these cases. 20.. Lastly, it is urged on behalf of the respondents that the incidence of sales tax is really on the consumer or the last purchaser and that the agriculturist-producers, who are the principals, are entitled to pass on the incidence of sales tax to the purchasers and, therefore, what has been done by the market committee by passing the impugned resolution is nothing but passing the incidence of sales tax from the principals to the purchasers. In support of this plea, reliance is placed....
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....x and the amount collected by way of tax is to be shown separately, for it has to be paid over to Government. The learned judge, S.K. Das, J. (as he then was), speaking for the court, observed thus: ".....the true effect of section 8-B and the Turnover and Assessment Rules is that: (a) a registered dealer is enabled to pass on the tax, (b) an unregistered dealer cannot do so, and (c) the amount collected by way of tax is to be shown separately, for it has to be paid over to Government. This does not mean that it is incompetent to the legislature enacting legislation pursuant to entry 54 in List II by suitable provision to make the tax paid by the purchaser to the dealer together with the sale price in consideration of the goods sold, a part of the turnover of the dealer; nor does it mean what in law the tax as imposed by Government is a tax on the buyer making the dealer a mere collecting agency so that the tax must always remain outside the sale price." The aforesaid authorities would clearly establish that the liability to pay sales tax to the State is only on the seller and the buyers have no statutory duty to pay sales tax, although the seller may include the sales tax in th....