TaxTMI 
TaxTMI 
1983 (9) TMI 315
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....s. 7 of the Act which prohibits the carrying on of any transaction of purchase or sale of notified agricultural produce, livestock or pro ducts of livestock in a notified market area or outside the market in that area as violative of Art. 19 (1) (g) of the Constitution. (2) As to the power of the market committees to levy market fee under sub-s. (1) of s. 12 of the Act at rupee. One per hundred rupees of the aggregate amount for which such agricultural produce, livestock or products of livestock is purchased or sold outside their markets but within their respective notified market areas. And (3) Whether under r. 74 (1) of the Andhra Pradesh (Agricultural Produce and Livestock) Markets Rules, 1969 (Rules' for short) if purchase or sale of paddy has suffered market fee in the hands of a rice miller, the subsequent purchase or sale of rice by a miller to a trader, or by a trader to a trader, can be subjected to payment of market fee again. Writ Petition No. 1286 of 1973 questions the validity of a notification issued by the State Government being G. O. M. S. No. 2095 dated October 29, 1968 declaring rice to be a notified agricultural produce under s. 2 (i), and the notification....
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....ate finances to meet the increasing cost towards acquisition of land and establishment of markets with modern infrastructure facilities. The Director of Marketing accordingly addressed a letter dated February 16, 1976 to all the agricultural market committees in the State inviting their attention to the resolution of the Advisory Board and requesting them to place the proposal for the enhancement of the existing rate of market fee from SO paisa to rupee one before the market committees and communicate their consent for levy of the enhanced rate of market fee under sub-s. (1) of s. 12 of the Act read with bye-law No. 24 (i) of the concerned market committee bye-laws. Accordingly, all the market committees throughout the State accepted the recommendation of the Advisory Board and resolved to enhance the market ' fee from 50 paisa to rupee one requesting the Director to forward the amended bye-law No. 24 (i) to the State Government for their approval. The State Government of Andhra Pradesh by notification dated January 1, 1978 published in the Andhra Pradesh Gazette dated February 23, 1978 accorded their approval to the amended bye law, In pursuance of the impugned notification th....
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....kept area is concerned, the Osmangang Market was not sufficient for regulating the transactions of sale and purchase of agricultural produce. The Market Committee therefore permitted the traders of Malakept to carry on their business from their respective licensed premises, subject to the supervision and control of the functionaries of the Market Committee. Due to the location of the present markets in busy and congested places, it was not possible to extend the market areas any further. The Committee therefore acquired an area of 41 acres 22 guntas at Malakpet on a permanent lease from the Andhra Pradesh Housing Board in April 1980 It also applied for acquisition of 20 acres 20 guntas at Bahadurpura, 70 acres at Mansoorabad and 50 acres at Kukatpally. The aforesaid construction work for expansion of the markets was in progress when the writ petitions were filed. It appears from the statement of income and expenditure for the years 1978-79, 1979-80 and 1980-81 that the income from the market fee even after its increase from 50 paisa to rupee one is not sufficient to meet the expenditure of the Market Committee. It is not always possible to work out with mathematical precision th....
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....tatement showing the income and expenditure of the market committees and a detailed chart indicating the nature of development works undertaken by each. It is clear from the material placed before us that the income from the market fee even after its increase from 50 paisa to rupee one is not sufficient to meet the expenditure of the market committees. In all fairness to learned counsel for the petitioners, we must state at the very outset that they do not challenge the levy of market fee of 50 paisa per hundred rupees in the year 1972 and have confined their submissions questioning the increase in the rate of market fee from 50 paisa to rupee one per hundred rupees of the price. In support of these petitions, three main contentions were raised, namely: (1) Sub-s. (6) of s. 7 of the Act which totally prohibits purchase or sale of any notified agricultural produce, livestock and products of livestock in a notified market area, outside the market in that area, encroaches upon the right of citizens to carry on trade or business and is repugnant to Art. 19(1)(g) of the Constitution and is in consequence void, (2) The levy of market fee by the market committees under sub-s. (1) of....
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....oduce of like nature either processed or unprocessed and declared by the Government by notification to be agricultural produce for the purposes of this Act. The term 'market' as defined in s. 2 (vi) means a market established under sub-s. (3) of s. 4 and includes market yard and any building therein. The expression 'notified area' as defined in s. 2 (xi) means any area notified under s, 3, and 'notified market area in clause (xii) means any area declared to be a market area by notification under s. 4. Under s. 3 of the Act, the State Government is empowered to declare their intention or regulating the purchase and sale of such agricultural produce, livestock or products of livestock in such area as may be specified in such notifications. After considering the objections and suggestions, if any, the State Government is authorized to publish a final notification under sub-s. (3) thereof declaring such area to be a notified area. By sub-s. (1) of s. 4, the State Government is empowered to constitute a market committee for every notified area which shall be a body corporate having perpetual succession and a common seal. The duty of enforcing the provisions of the Ac....
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....e bye-laws for every hundred rupees of the aggregate amount for which the notified agricultural produce, livestock or products of livestock is purchased or sold, whether for cash or deferred payment or other valuable consideration. Explanation 1: For the purposes of this section, all notified agricultural produce, livestock or products of livestock taken out of a notified market area shall, unless the contrary is proved, be presumed to have been purchased or sold within such area. ... ... ... ... ... (2) The fees referred to in sub-section (1) shall be paid by the purchaser of the notified agricultural produce, livestock or products of livestock: Provided that where the purchaser cannot be identified, the fees shall be paid by the seller." Under the scheme of the Act, the market committee is 'enjoined by sub-s. (1) of s. 14 to pay into a fund called the 'Market Committee Fund' all moneys received from the traders as market fee on transactions of sale or purchase of agricultural produce taking place within the notified market area and they are to be credited in the nearest Governme....
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.... of financial aid to the schemes for such extension or improvement within such area, undertaken by other bodies or individuals; (ix) propaganda for the improvement. Of agriculture, livestock and products of livestock and thrift; (x) the expenses of, and incidental to, the conduct of elections; (xi) the promotion of grading services; (xii) measures for the preservation of foodgrains; (xiii) such other purposes as may be specified by the Government by general or special order. Sub-s (1) of s. 16 of the Act provides that there shall be formed for the whole of the State a fund to be called the 'Central Market Fund'. Every market committee is required to contribute 10% of its annual income to the Central Market Fund and the contribution so paid shall be placed to the credit of the said Fund. Sub-s. (2) of s. 16 provides that the Central Market Fund shall be vested in the State Government and deposited in the Government treasury at Hyderabad. It is administered and applied by the Director of Marketing for all or any of the purposes set out therein viz.: ....
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....so that the growers of such crops would be obliged to resort to the controlled markets only for the sale of their produce. The learned Judge thus explained the scheme, in these words: "The Madras Commercial Crops Markets Act was passed on July 25, 1933. The preamble introduces the Act with the recital that it is expedient to provide for the better regulation of the buying and selling of commercial crops in the Presidency of Madars and for that purpose to establish markets and make rules for their proper administration. The Act, therefore, was the result of a long exploratory investigation by experts in the field, conceived and enacted to regulate the buying and selling of commercial crops by providing suitable and regulated markets by eliminating middlemen and bringing face to face the producer and the buyer so that they may meet on equal terms, thereby eradicating or at any rate reducing the scope for exploitation in dealings". The learned Judge brought out the purpose and object of the legislation and stated: "The Act, Rules and the Bye-laws framed thereunder have a long-term target of providing a net work of markets wherein faciliti....
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....deration before the Court in Lakhan Lal & Ors. etc. v. The State of Bihar & Ors. etc.(3) In that case the entire area under the jurisdiction of the Gaya Municipality and several villages around it-were declared as the market area for the sale and purchase of certain agricultural produce. The Court repelled the contention that the market committee had not established any market inasmuch as a market must be a well-defined site fully equipped as a market and made no provisions for rendering services, and observed: "According to counsel, a market must be a well defined site with market equipment and facilities. The argument overlooks the definition of market in section 2 (h). The market consists of market proper and the market yards. The market yards are well-defined enclosures, buildings or localities but the market proper is under Section 2 (k) read with Section 5 (2) (ii) a larger area. For establishing a market it is sufficient to make a declaration under Section 5(2) fixing the boundaries of the market proper and the market yards on the recommendation of the market committee made under Rule 59(2). Under section 18 (1) the market committee must provide for suc....
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....r less on similar lines as the Act with which we are concerned. The contention that the provision contained in sub-s. (6) of s. 7 of the Act which prohibits the carrying on of any transaction of purchase or sale of agricultural produce, livestock or products of livestock in a notified market area, outside the market in that area, infringes the right of a citizen to trade "as and where he wills" and therefore must be struck down as obnoxious to Art. 19 (1) (g) of the Constitution. It is urged that the limitation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a balance between the freedom guaranteed in Art. 19 (1) (g) and the social control permitted by cl. (6) of Art. 19, it must be held to be void. The contention is obviously based on the following passage in Halsbury's Laws of England, 3rd edn., vol. 32 p. 15 para 9 which explains what freedom of business signifies: "It is the general principle of the common law that a man is entitled to exercise any lawful trade or calling as and where he wills; and the law has always regarded jealously any interference with trade, even ....
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....her places and the object of the scheme being defeated. It is obviously in the interests of the producers of agricultural produce that they can get the best competitive prices in an open market and that they have not to pay the middlemen. Sale or purchase of agricultural produce in such a market under the supervision and control of the market committee is likely to be in ready cash and therefore advantageous to the producers and the use of standard weight must eliminate the possibility of his being victimized by malpractices. Supervision of the operations in the notified market area can be more conveniently done if business is carried on in a specified area or areas intended for that purpose. The Act is an integrated one and it regulates the buying and selling of notified agricultural produce, livestock and products of livestock from a centralized place. The petitioners being licensed traders under sub-s. (1) of s. 7 are bound by sub-s. (5) thereof to comply with the provisions of the Act, the Rules and the bye-laws framed thereunder. They are therefore subject to the restriction contained in sub-s. (6) of s. 7 of the Act. The non obstante clause in sub-s. (6) of s. 7 provides t....
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....ed market area, but outside the market, there is no liability to pay market fee because there is no quid pro quo i. e. services are not rendered outside the market. There is a fallacy underlying the argument that since the services are rendered by the market committees within the market proper, there is no liability to pay a market fee on purchase or sale taking place in the notified market area but outside the market. The contention does not take note of the fact that the establishment of a regulated market for the purchase or sale of notified agricultural produce, livestock or products of livestock is itself a service rendered to persons engaged in the business of purchase or sale of such commodities. The duty of a market committee constituted under sub-s. (1) of s. 4 of the Act does not end with establishing such number of markets in the notified market area under the first part of sub-s. (3) but also extends to the providing of such facilities in the market as the Government may from time to time by general or special order specify under the second part of sub-s. (3). In exercise a of their powers under s. 33 of the Act, the State Government have framed the Andhra Pradesh (A....
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.... bodies or individuals, propaganda for the improvement of agricultural produce, livestock and products of livestock and thrift, the promotion of grading services, measures for the preservation of the foodgrains, etc., are not services which are confined to the market area only. They are services which are required to be performed by the market committee and which may be rendered throughout the notified market area without being confined to the market." In Sri Vijaya Cotton Traders' case, supra, Alladi Kuppuswami, C. J. speaking for himself and Jeevan Reddy, J. followed the earlier decision in Immidisetti Ramakrishnaiah & Sons' case, supra, and held that the services to be rendered and the facilities to be provided by the market committees extended throughout the notified market area without being confined to the market proper. The view expressed by the High Court in these two cases is clearly in consonance with the scheme of the Act. lt appears that taking advantage of the ad-interim orders issued by this Court staying prosecution under sub-s. (1) of s. 23 of the Act, the petitioners who are big merchants engaged in the business of purchase and sale of agricultural produ....
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.... from their licensed premises, maintain stock registrar, exhibit price list etc. The petitioners having been licensed as dealers under sub-s. (1) of s. 7 are bound by the terms and conditions of their licence and also they are subject to the restrictions imposed by sub-s. (6) of s. 7. They must comply with the provisions of the Act, the Rules and the bye-laws framed thereunder, and effect all sales of notified agricultural produce, livestock and products of livestock under the supervision and control of the market committee established under the Act. Arguments in these proceedings have revolved around certain observations of Untwalia, J. in Kewal Krishan Puri and Anr v. State of Punjab and Ors (1) where he, speaking for the Court, after referring to the judgment of Mukherjea, J. (as he then was) in the leading case of the Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt(2) known as the Shirur Mutt case, and the dictum of Latham, C. J. in Matthews v. Chicory Marketing Board(3) upon which it was based, and the subsequent decisions on the subject, drew a distinction between a tax and a fee. Stress was particularly laid on the....
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.... to the binding effect of the aforesaid observations made by this Court in Kewal Krishan Puri's case, supra. With greatest respect, the decision in Kewal Krishan Puri's case does not lay down any legal principle of general applicability. The decision in Kewal Krishan Puri's case is clearly distinguishable on facts. In that case, there was sufficient material showing that the income from the market fee in the State of Punjab had become a source of revenue, and therefore the increase the rate of market fee from Rs. 2 per hundred rupees to Rs. 3 was quashed. It appears that the income of almost all the market committees was to the tune of several lakes of rupees per year and every market committee was required under sub-s. (2) (a) of s. 27 to pay 30 per centum of its income to the Punjab State agricultural Marketing Board as its contribution to the Marketing Development Fund maintained under s. 25 of that Act. Due to the progressive increase in the rate of market fee from 0.50 p. to Rs. 2 per hundred rupees during the course of few years both the State Agricultural Marketing Board as well as the market committees throughout the State were left with huge surplus funds. The ....
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....ees could be permitted to be spent in this fashion." In the ultimate analysis, the Court held in Kewal Krishan Puri's case, supra, that so long as the concept of fee remains distinct and limited in contrast to tax, such expenditure of the amounts recovered by the levy of a market fee cannot be countenanced in law. A case is an authority only for what it actually decides and not for what may logically follow from it. Every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found that there are not intended to be expositions of the whole law but governed or qualified by the particular facts of the case in which such expressions are to be found. It would appear that there are certain observations to be found in the judgment in Kewal Krishan Puri's case, supra, which were really not necessary for purposes of the decision and go beyond the occasion and therefore they have no binding authority though they may have merely persuasive value. The observation made therein seeking to quantify the extent of correlation between the amount of fee collected and the cost of rendition of service....
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....e. Both are compulsory exactions of money by public authorities. Compulsion lies in the fact that payment is enforceable by law against a person inspite of his unwillingness or want of consent. A levy in the nature of a fee does not cease to be of that character merely because there is an element of compulsion or coerciveness present in it, nor is it a postulate of a fee that it must have direct relation to the actual service rendered by the authority to each individual who obtains the benefit of the service. It is now increasingly realized that merely because the collections for the services rendered or grant of a privilege or licence are taken to the consolidated fund of the State and not separately appropriated towards the expenditure for rendering the service is not by itself decisive. Presumably, the attention of the Court in the Shirur Mutt case was not drawn to art. 266 of the Constitution. The Constitution no where contemplates it to be an essential element: of fee that it should be credited to a separate fund and not to the consolidated fund. It is also increasingly realized that the element of quid pro quo in the strict sense is not always a sine qua non far a fee. It is ....
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....e given such a narrow construction. The levy of market fee under sub-s. (1) of s. 12 of the Act is correlated to the purposes mentioned in s. 15 of the Act. All the moneys received by a market committee from the traders as market fee on transactions of sale or purchase of agricultural produce, livestock and products of livestock taking place within the notified market area have to be paid into a fund called the Market Committee Fund under sub-s.(1) of s. 14 of the Act. All expenditure incurred by the market committee under and for purposes of the Act have to be defrayed out of the said Fund and any surplus remaining after such expenditure, has to be invested in such manner as may be prescribed. Under sub-s. (2) thereof, every market committee has to pay to the State Government out of its fund the cost of any special or additional staff employed by the Government with their consultation. Under sub-s. (3) the market committee may grant loans to another market committee out of its surplus funds, with the previous sanction of the State Government, at such rates of interest as may be prescribed. The purpose for which the proceeds of the Market Committee fund can be expended are set o....
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....ral produce, livestock and products of livestock to the market and sell them at a reasonable price. There was not a whisper during the course of the arguments that the market committees were not providing the services as enjoined by Rules 54 to 73. All that was said is that there was no due observance of the directions issued by the State Government and the Food & Agricultural Department GOMs. No. 719 dated December 27, 1979 drawing the attention of the market committees to certain basic amenities like drinking water for users of the market, drinking water for the cattle, shed for use of the users of yards etc. We were not referred to any specific instance where any of the market committees have not provided these basic amenities. Much emphasis was however laid on the second part of the aforesaid G.O. which reads : "The Governor of Andhra Pradesh also directs the market committees to provide the other facilities mentioned below at the market yards in course of time as and when funds permit. 1. Rest House for Ryots. 2. Electrification of Market yard. 3. Auction-cum-Weighing shed. &....
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....re rendered to the users of the market i.e the growers of agricultural produce, livestock or products of livestock and persons engaged in the business of purchase or sale of the same. The contention that the increase in the rate of market fee levied by the market committees in the State under sub- s. (1) of s. 12 of the Act from 50 paisa to rupee one was illegal and invalid on the ground that there was no quid pro quo i.e. there was no correlation between the increase in the rate of market fee and the service rendered must therefore fail. There still remains the question that if purchase or sale of paddy has suffered market fee in the hands of a rice miller, whether subsequent purchase or sale of rice by a miller to a trader or by a trader to a trader should again be subjected to payment of market fee. The contention is that under Rule 74(1) of the Andhra Pradesh (Agricultural Produce & Livestock) Markets Rules, 1969 no such market fee is payable on rice produced from paddy. The same is the contention with regard to cotton seed extracted from cotton. Rule 74(1) of the rules reads as follows: "74. Market Fees: (1) The fees leviable under sub-section (1) o....
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.... a traded to a trader. The question is whether the fee is payable at both the stages ? It would all depend upon the scheme of each Act. The decision in Ramesh Chandra's case, supra, turned on a construction of sub-clause (2) of s. 17 (iii) (b) of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964, as amended by U.P. Act 7 of 1978. It was conceded in that case on behalf of the State Government and the market committees that there cannot be any multi-point levy of market fee in the same market area. Under, sub-clause (2) of s. 17 (iii) (b) of that Act if in agricultural produce is purchased from a producer directly, the trader is liable to pay market fee but when the trader sells the same produce or any products of the same produce to another trader, neither the seller nor the purchaser can be made to pay the market fee under sub-clause (3). The scheme of the Act with which we are concerned appears to be entirely different. Under Sub-s. (1) of. s. 12 of the Act, a market committee is empowered to levy market fee on any notified agricultural produce, livestock or products of livestock purchased or sold in the notified market area. It would appear that every purchase or sale of....
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.... were accordingly issued in the Memo second above that market fees should be levied both on paddy and rice. The preliminary notification proposing to amend rule 74 of the A.P. (Agricultural Produce & Livestock) Markets Rules, 1969 issued in G.O. first read above and published at pages 227-229 of the Rules supplement to Part II of the A.P. Gazette No. 23 dated 15.6.1978 is here by cancelled." In view of this clarification, it follows that paddy and rice having both been notified to be two separate agricultural commodities, upon the language of sub-s. (1) of s. 12 of the Act, market fee is leviable both on sale of paddy by a producer to a rice miller and on purchase and sale by a miller to a trader or by a trader to a trader. The question Still remains whether in view of r. 74 (1) the power of a market committee to levy market fee on such transactions is in any way affected: and if so, to what extent., The words used in 3 r. 74 (1) are: "The fees leviable under sub-s. (1) of 8. 12 on notified agricultural produce, livestock and products of livestock, if paid to a market committee within the State, shall not be collected by another market committee", when the conditions set out ....
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.... If that be so, it must logically follow that the subsequent sale of rice in the notified market area of the same market committee cannot be subject to the levy of market fee on purchase or sale of rice by a miller to a trader or by a trader to a trader if sale or purchase of paddy within such notified market area has suffered the levy of market fee. This is of course subject to the qualification that such sale or purchase has taken place in the notified market area, but outside the market in that area, as enjoined by the proviso to r. 74 (1). R. 74 (1) is not very happily worded but one part of its meaning is clear. It was obviously introduced to grant exemption from payment of market fee on sale or purchase of agricultural produce, livestock or products of livestock on which such fee has already been levied under sub-s. (1) of s. 12 by a market committee within the State. According to the terms of r. 74 (1) read with the proviso thereto, the fee leviable under sub-s. (1) of s. 12 on any notified agricultural produce, livestock or products of livestock, if paid to a market committee within the State, shall not be collected by another market committee when such notified agricult....