TaxTMI 
TaxTMI 
TaxTMI 
2009 (8) TMI 1093
X X X X Extracts X X X X
X X X X Extracts X X X X
....ions of the M.P. Krishi Upaj Mandi Adhiniyam, 1972 (hereinafter referred to "the Act"). The facts in brief leading to filing of the present petition are that the petitioner Nos. 1 and 2 are a registered company and the petitioner No. 3 is a registered partnership firm which is undertaking the activity of manufacturing bidi in the name and style of telephone bidi. They were served with notices, annexure P1, dated June 13, 2002 and June 18, 2002 to the effect that tobacco being a notified agricultural produce fell within the purview of the Adhiniyam on account of the Constitution Bench judgment of the Supreme Court rendered in the case of I.T.C. Limited v. Agricultural Produce Market Committee [2002] 1 JT SC 294 and therefore the petitioners....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cco as a raw material for preparing bidi amounts to manufacture and not processing of tobacco and on that account the petitioner does not fall within the purview of section 19 of the Act. For this purpose the petitioner has relied upon the decisions rendered in the cases of Orient Paper & Industries Ltd. v. State of M.P. [2006] 148 STC 649 (SC); [2006] 12 SCC 468, Kesarwani Zarda Bhandar v. State of U.P. [2009] 19 VST 545 (SC); [2008] 8 SCC 305, Anwarkhan Mehboob Co. v. State of Bombay (Now Maharashtra) [1960] 11 STC 698 (SC) and Kher Stone Crusher, Jabalpur v. General Manager, District Industries Centre, Jabalpur [1990] 79 STC 149 (MP); [1990] 23 VKN 359 Full Bench decision of this court. Per contra the learned counsel for the respondents....
X X X X Extracts X X X X
X X X X Extracts X X X X
....petitioner is neither selling nor purchasing tobacco within the market area. It therefore, to be seen whether the effect of preparing bidi from the tobacco amounts to processing so as to make the petitioner liable to pay market fees. The provision of section 19 of the Act which is the charging section provides that the market committee can levy market fee on the sale of a notified agricultural produce within market area and on the notified agricultural produce when it is used for processing. Section 6(b) provides that no person shall use any place in the market area for marketing of the notified agricultural produce or operate in the market area as a market functionary except in accordance with the Act or Rules. It further provides that th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or preparing bidi which he thereafter exports for sale outside the market area. The Supreme Court in the case of Orient Paper [2006] 148 STC 649 (SC); [2006] 12 SCC 468 has considered the provisions of the Act specifically section 2(1)(mmm) and section 19 and in that case held that manufacture of paper from bamboo amounts to manufacture, and therefore, no market fee can be levied on such process. The Supreme Court after considering several judgments on the issue has laid down the test of distinguishing manufacture from processing by stating that when a new distinct and different goods or marketable commodity emerges after the process to which a raw material is subjected then the process amounts to manufacture in the following terms in para....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. The case at hand, it is submitted, relates to the second category. 22.. Had it been only that the goods notified brought into the market area to be covered by the second category then the stand of the respondents would have been acceptable. But the further condition it must be 'used for processing' shows that the emphasis is on end-user. In this case that makes the difference. Therefore, the appellant is correct in its stand that levy on the notified agricultural produce being brought within market area where end-user is manufacture does not attract levy of market fee." In the case of Kesarwani [2009] 19 VST 545; [2008] 8 SCC 305, the Supreme Court has held that preparing zafrani zarda from tobacco amounts to manufacture and j....
X X X X Extracts X X X X
X X X X Extracts X X X X
....material used for manufacture has to be distinguished from manufactured product. In the instant case, tobacco is used for the purpose of preparing bidi which is a distinct, separate and different marketable commodity which is commercially recognized as such and is totally different from tobacco in the sense that a person wanting to purchase tobacco would not under any impression purchase bidi instead or vice versa. In view of the aforesaid, I am of the considered opinion that the process of utilization of the tobacco by the petitioner for preparing bidi amounts to manufacture and as has been held by the Supreme Court in the case of Orient Paper [2006] 148 STC 649; [2006] 12 SCC 468 falls outside the purview of section 19 and cannot be sub....