TaxTMI 
TaxTMI 
2014 (1) TMI 1671
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....Director of Rajya Krishi Utpadan Mandi Parishad, State of U. P. in revision No. 98 of 2000 and other connected revisions, upholding the orders passed by the mandi samiti. 3. The facts of the case as unfolded by the petitioner are described as under:- The petitioner is a manufacturer of paper. To manufacture the paper it uses the woods, bamboos and industrial waste raw materials. It purchases the raw material within the State of U. P. as well as from outside the State of U. P. Though it has not mentioned the names of sellers, but it is stated that the names of sellers are mentioned in the revenue receipts and G. R. as consignor and the petitioner is mentioned as consignee. The sale in question is said to be inter-State sale, which was, as per version of the petitioner, completed outside the State of U. P. in respect of which form C, as prescribed under the Central Sales Tax Act, was issued and Central sales tax at the rate of Rs. 4 per cent. was also paid by the petitioner to the ex-U. P. sales. 4. In order to purchase from outside State, the petitioner issued form 31 to the consignor for sending the goods to the petitioner at Saharanpur. Though earlier the peti....
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....form to the quantity and quality of the goods, which have been sold by you to us. The transporter, namely, M/s. Kapoor Goods Carrier shall be our agent and any inaction on the part of the transporter, we shall have full right to indemnify ourselves on account of any fault committed by the transporter as our agent. 6. Price:- Price for the goods payable by us shall be at Rs. 1,560 per tonne plus Central sales tax at four per cent. against C form on receipt of the bills. It is further clearly understood and agreed by you that the price as mentioned above represents and shall be the total consideration payable by us to you in respect of the supplies of goods under this order and you shall not be entitled to claim any additional payments nor claim any escalations whether it be on account of increase of cost of material or otherwise. The above price is inclusive of local taxes or fee if any, in respect of the supplies of goods under the order." 6. The similar was the position with regard to the sale agreement entered into in different years. It is further stated that clause 7 of the purchase order dated November 30, 1999/January 5, 2000 clearly provided that the ....
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....Steel and Press Works Ltd. v. Commercial Tax Officer reported in[1985] 60 STC 301 (SC); AIR 1985 SC 1754, the question arose as to whether the sale had taken place at the place where delivery of the goods was given to the customer after his inspection after reaching the goods to the place of his destination? The honourable Supreme court held that it is an inter-State sale, since the movement of goods from Hyderabad was occasioned by the purchase order placed by the customer/buyer, hence, the movement from the very beginning from Hyderabad until the delivery is received by the buyer is an inter-State movement and not local sale within the State where the delivery was given by the company to the buyer. 11. The learned counsel for the petitioner has given much emphasis upon the form C furnished by the petitioner to the seller to establish that this form C is issued only to the person who is importing the goods to the State of U. P. 12. The learned counsel for the petitioner further submitted that even if for the sake of arguments, it is assumed that the sale took place within the market area of Saharanpur, the petitioner being a purchasing trader would not be liable ....
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.... the special leave petition on 30th of October, 2009. He further cited a decision of the Division Bench of this court given in the petitioner's case itself, i.e., Writ-C No. 62443 of 2011 and submitted that in the earlier case, after dismissal of the first writ petition and before decision of the second writ petition, pursuant to the demand of mandi samiti, the petitioner made payment of Rs. 20 lakhs against the mandi fee by cheques. When ultimately the SLP was dismissed by the honourable Supreme Court against the order of this court, as aforesaid, the petitioner prayed for refund of amount of Rs. 20 lakhs, but the same was refused, therefore, the petitioner filed a writ petition, as above, for issuing a writ of mandamus directing the Mandi Samiti to refund the amount along with the interest. The Division Bench of this court held that the petitioner is clearly entitled for refund of the amount as claimed by it from the respondent with simple interest at nine per cent. per annum with effect from December 1, 2008, i.e., the date of declaration made by this court charging mandi fee as illegal. Against the aforesaid judgment the mandi parishad has filed a special leave petition bef....
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.... sole discretion either to impose deduction for substandard quality or to reject the consignments in toto and ask you to remove it within seven days as stipulated in our rejection note, failing which we will get it removed from our premises at your sole risk, cost and account and you will not be entitled to claim any compensation or damages in any case thereafter. The incidental expenses incurred in removal of the rejected consignments will be payable by you." 16. It is further stated that though the petitioner has laid great emphasis on clause 3 of the agreement, wherein it is provided that the goods may be handed over to the transporter who shall ensure while taking the delivery of the goods on behalf of the petitioner that the same conforms to the quantity and quality of the goods, but there is no confirmation by the transporter that the goods were according to the descriptions. There is no material at all that the agent has surveyed that the goods were according to the specifications. Neither any such examination was done by the agent nor was made any physical verification about the quantity and quality of the goods. 17. At this stage Mr. B. D. Madhyan, ....
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....He further cited a decision of the honourable Supreme Court, i.e., Bengal Timber Trading Co. Ltd., Calcutta v. Commissioner of Sales Tax, Madhya Pradesh, Indore reported in[1967] 19 STC 366 (SC); AIR 1967 SC 1348. In this case the honourable Supreme Court held that the place of actual delivery in the light of all the circumstances of the case can only be the destination of the goods and the goods can only be said to be fully delivered and finally accepted after they are acknowledged at the destination by the sleeper control officer. 20. He further cited another decision of the honourable Supreme Court, i.e., Ram Chandra Kailash Kumar and Co. v. State of U. P. reported in AIR 1980 SC 1124. In this case the various traders carrying on business in the State of U. P. within the jurisdiction of several market committees challenged the levy of fee before this court from time to time. There were several rounds of litigation, in which they by and large failed. Ultimately the matter reached the honourable Supreme Court. The honourable Supreme Court discussed the various provisions of Mandi Adhiniyam as well as the Rules framed thereunder. The traders/appellants urged the several po....
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....sale of wood and a right to go to that land to cut that wood. The wood may be used by the manufacturer for manufacturing furniture or may be used in the manufacture of paper or any other commodity. That is immaterial. The owner of the jungle wherefrom the wood is cut and brought, has been declared as a producer and the licensee has been declared as a purchaser, therefore, he is liable to pay the market fee under section 17(iii)(b)(2) of the Act. 23. On the basis of the findings of the honourable Supreme Court he submitted that once the petitioner has been declared as purchaser and also made liable to pay market fee being covered under section 17(iii)(b)(2) of the Act, the petitioner's status shall not change in the transaction of sale even at a later stage and he shall remain liable to pay the market fee being covered under the aforesaid clause. 24. He further drew attention of this court towards the definition "trader" as is defined under section 2(y) of the Act and submitted that the trader can be said to be a person who in the ordinary course of business is engaged in buying or selling agricultural produce, whereas in the present case buying of wood/bamboo ....
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....ecorded at our mills weighbridge will be final and conclusive and will form the basis for payment of our transportation cost. In case of any shortage in the quantity delivered to you by M/s. Green Timber Traders the same shall be deducted from your bill. 5. Destination:- From the place/places of works of the above supplier at Yamunanagar to our mills at Saharanpur. 7. Payment:- The payment at Rs. 150 per MT shall be made on submission of bills subject to deduction of tax at source at applicable rates. 28. Another purchase order is of the same date issued to M/s. Zigma Industries, W-9, Industrial Area, Yamunanagar. 29. Another purchase order of the same date issued to Tejinder Singh and Sons, 1, Industrial area, Yamunanagar. Clauses 2, 5 and 7 of the same are reproduced hereunder:- 2. Weighment:- The weighment recorded at our mills weighbridge will be final and conclusive and will form the basis for payment of your transportation cost. In case of any shortage in the quantity delivered to you by M/s. Zigma Industries the same shall be deducted from your bill. 5. Destination:- From the place/places of works of the above supplier at Yamunanagar....
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.... status of the seller, the liability for payment of fee also changes and since the seller's status is not identifiable, he cannot be ascertained to be a selling trader. 33. He further drew attention of this court towards the finding of the revisional authority and submitted that the revisional authority has observed that from the evidence produced by the revisionist, it is not ascertainable as to what was the site of sale made between 1998-2002 as it is not disclosed in form C and form 31, rather it only establishes that the woods were transported to the Saharanpur State of U. P. from out of State. 34. He further stated that the revisional authority also acknowledged the bill, vouchers and the agreements entered into with the transporters, which verify that the purchase order had been issued from Saharanpur to the seller at the place out of State and the woods had been received at the revisionists mill gate and the specifications of goods had also been verified at Saharanpur. Moreover, the weight of goods had also been made at mill gate. The revisionist has failed to produce any verification certificate issued by its agent. At the event of rejection of the goo....
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....ller and as received by the petitioner, it was the transporter who was made liable to deduction in the costs of the transportation payable by the petitioner. He further submitted that the terms of contract, invoices and other documents show that the sellers have not written off their rights over the raw material being sold to the petitioner. The petitioner had nominated the transporter to take delivery on its behalf as its agent. The delivery was taken by the transporter on behalf of the petitioner at the place of dispatch outside the State of U. P. as if the petitioner himself has gone to the place of seller for taking delivery and brought the goods itself to its factory at Saharanpur. He further submitted that the transporters had inspected the consignment on behalf of the petitioner and taken delivery, therefor, the transporters had been made responsible for any short-fall in quantity or deterioration in quality, whereas the authorities have erred in not looking on the entire contract and conduct of the parties for ascertaining the true nature and character of the transaction. He further submitted that section 9(2) of the Mandi Adhiniyam permits a person from carrying on a busin....
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....ct or the Rules or bye-laws made thereunder and may, in his discretion also recover summarily and pay to market committee cost of the prosecution." 38. It is contended that no dispute regarding the status of seller was ever raised before or adjudicated by the authorities below, therefore, the petitioner has not adduced the factual evidences about the status of sellers. However, the petitioner has brought on record form C, which was issued in respect of inter-State transaction of purchase of wood carried out by the petitioner from the sellers. Form C is issued only in respect of transactions between two persons registered as dealers under the Central Sales Tax Act. Therefore, the sellers are indisputedly the traders for the sale transactions in dispute. He further submits that once the Division Bench of this court in Writ Petition No. 62443 of 2011 held that the petitioner is a trader, that finding is binding upon the single judge and the doctrine of res judicata applies. In support of his submission, he cited the following decisions:- (1) Sree Narayana Dharmasanghom Trust v. Swami Prakasananda reported in[1997] 6 SCC 78. (2) Gori....
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....ovisions of section 17(iii)(b)(3) of the Act; thirdly, keeping in view the notification dated November 11, 1998 the mandi fee is not payable on purchase of agricultural produce as raw materials to produce other than the agricultural produce. On the aforesaid backdrop, he submitted that the orders impugned passed by the authorities of the mandi parishad suffer from fact and law and, therefore, deserve to the quashed. 42 In the light of the facts and circumstances of the case, as above, I find that the present case is fully covered by the decision of the honourable Supreme Court rendered in the case of Commissioner of Sales Tax, Eastern Division, Nagpur v. Husenali Admji and Co. reported in[1959] 10 STC 297 (SC); AIR 1959 SC 887 and Bengal Timber Trading Co. Ltd. v. Commissioner of Sales Tax, Madhya Pradesh, Indore reported in[1967] 19 STC 366 (SC) AIR 1967 SC 1348. 43. It is no longer res integra that the bamboos are "agricultural produce" as is defined under section 2(a) of the U. P. Krishi Utpadan Mandi Adhini-yam, 1964. In order to examine the effect of inter-State sale on levy of mandi fee when I read over the Central Sales Tax Act, 1956 (hereinafter referred t....
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....Another letter dated April 5/13, 2001, which is in connection with the same transaction issued to the transporter M/s. Kapoor Goods Carrier shows that the weighment recorded at the petitioner's mills weighbridge shall be made to be final and conclusive and that shall also be made the basis for payment of transportation costs. The destination is assigned from the place/places of works of the supplier at Yamunanagar to petitioner's mill at Saharanpur and in the same terms the payment has been made subject to submission of bills. 48. The purchase order issued to M/s. Zigma Industries shows that in the same very terms one transporter, M/s. Tejinder Singh and Sons was authorized as the petitioner's agent to take over the delivery of the goods and the price was made payable in the same terms on receipt of bills. In connection with this transaction another letter was issued to the transporter M/s. Tejinder Singh and Sons, in which it was provided that the weighment recorded at the petitioner's weighbridge will be final and conclusive and will form the basis for payment of transportation costs. The destination is shown from the place/places of works of the supplier....
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.... of Goods Act, 1930 when I examine the terms of purchase orders, I find that it was completely an agreement which had become complete on fulfilment of conditions imposed therein, therefore, it can, unequivocally, be said that the sale completed at the petitioner's mill, which falls within the market area of State of U. P. 54. The next question for consideration is whether the sale took place between two traders and further who is liable to pay market fee. In this respect before examining the status of the parties it is appropriate to mention the relevant provisions of the U. P. Krishi Utpadan Mandi Adhiniyam, 1964, section 2(y) of which defines "trader" as under:- "2. (y) 'trader' means a person who in the ordinary course of business is engaged in buying or selling agricultural produce as a principal or as a duly authorized agent of one or more principals and includes a person, engaged in processing of agricultural produce." Section 17(iii) of the U. P. Krishi Utpadan Mandi Adhiniyam, 1964 is also quoted hereunder:- "17. Powers of the committee:-A committee shall, for the purposes of this Act, have the power to:- ....
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....obtained the licence, accept a lump sum in lieu of the amount of market fee or development cess that may be payable by him for an agricultural year in respect of such specified agricultural produce, for such period, or such terms and in such manner as the State Government may, by notified order specify:- Provided also that no market fee or development cess shall be levied on transactions of sale of specified agricultural produce on which market fee or development cess has been levied in any market area if the trader furnishes in the form and manner prescribed, a declaration or certificate that on such specified agricultural produce market fee or development cess has already been levied in any other market area. (iii-a) . . . (v) . . . (v-a) . . . (v-b) . . . (vi) . . . (vii) . . . (viii) . . ." 55. It is not in dispute that the petitioner is manufacturer....
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....ount as claimed by him from the respondents. 58. After going through the decision of Ram Chandra Kailash Kumar and Co. v. State of U. P. AIR 1980 SC 11241 find that in the said case it was the sale between the producer and the licensee/manufacturer of paper (petitioner), therefore, in the light of the provisions of section 17(iii)(b)(2) of the Act, the honourable Supreme Court held that the licensee for cutting the wood was held purchaser and also liable to pay the market fee, but does not determine the petitioner's status as trader for all the times as the determination depends case to case. 59. The petitioner has also sought the protection from payment of market fee under circular dated November 11, 1998 issued by the Rajya Krishin Utpadan Mandi Parishad, U. P., a bare perusal of paragraph 13 of the aforesaid circular shows that it provides that on the first arrival of specified agricultural produce in the market area for sale, storage or processing on which no market fee has been levied in any market area, whether brought from place in the same market area, or from any other market area or from outside the State or the country, shall be called as "primary a....