TaxTMI 
TaxTMI 
2025 (9) TMI 1226
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.... Rs.73,69,200/-. Out of the said amount Rs. 18,42,300/- is the market fee at 1.5% on Rs. 12,28,20,000/-, the value of the agricultural produce (11,000 metric tonnes of wheat), and Rs. 55,26,900/- is the penalty. 3. The petitioner M/s. Parisons Milling Company Private Limited is directed to pay the said amount on the premise that the petitioner has sold 11,000 metric tonnes of wheat within the "market area" as defined in the Karnataka Agricultural Produce Marketing (Regulation and Development) Act, 1966 ( for short 'Act, 1966'). 4. In terms of the impugned order, second respondent rejected the petitioner's claim that on 28.10.2006, it sold 9,000 metric tonnes of wheat, on "high seas" to its sister concern, M/s Parisons Foods Private Limited. Facts in W.P. No. 14950/2022 5. This petition is filed by M/s Parisons Foods Private Limited. In terms of the impugned order dated 17.11.2021, second respondent directed the petitioner, M/s Parisons Foods Private Limited to pay Rs. 61,21,568/-, which includes Rs. 15,30,392/- towards 1.5% market fee on Rs 10,20,26,160/-, the value of wheat, and Rs. 45,91,176/- towards penalty. 6. The petitioner's claim is that on 28.10.2006, it....
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....mitted the counsel for the petitioners as well as the respondents to address their contentions on disputed facts, to consider whether the controversy over certain disputed questions of fact can be resolved based on the official records issued and produced by the Customs Department. 13. The details of earlier rounds of Writ Petitions, Writ Appeal and proceedings before the Apex Court in Special Leave Petition may not be necessary for the adjudication of these petitions, as there is no direction or specific findings which bind this Court. On all occasions, it was open remand. 14. Both Sri Gautam Bharadwaj, the learned counsel for the petitioners and Dr Nanda Kishore, the learned counsel for the respondent - Committee extensively argued on the Bills of Entry produced. The original Bills of Entry were not made available. The petitioners submitted that the originals are with the Customs Department. At the same time, petitioners also produced an endorsement issued by the Customs Department stating that the documents (in physical format) are not available, as the transactions are 20 years old. 15. As the cases involve the interpretation of Bills of Entry issued by the Customs Dep....
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....ated 28.10.2006 and 31.10.2006, invoices and bank statements. Reference is also made to Bills of Lading, which, according to the petitioners in all petitions, record first sale transactions in Australia. 21. Referring to the Bills of Entry issued by the Customs Department which reveal the name of the importer, contract number, and other particulars mentioned therein, it is urged that the High Seas sale transactions have taken place on 28.10.2006 and 31.10.2006 and neither the seller nor the buyer is disputing the transactions and the APMC has no jurisdiction to adjudicate on the transactions which have taken place outside the "market area" under the Act,1966. 22. Learned counsel for the petitioners would submit that the original documents were in the custody of the Customs Department, and the Customs Department has endorsed stating that it is not possible to trace the original records. The very fact that the Customs Department has validated the Xerox copies of Bills of Entry means that the non-production of the originals is of little consequence is the submission. 23. It is also urged that the agreements evidencing the sale transactions, though signed on shore, will not in....
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....vt. Ltd and M/s Parisons Roller Flour Mills Pvt. Ltd. and this also would demonstrate that a high seas transaction has not taken place. 29. It is also submitted that original documents are not produced despite sufficient opportunity being granted to the petitioners. In the absence of any such original documents, APMC is justified in holding that the alleged transaction on the high seas is not genuine. 30. Learned Counsel for APMC also urged that Bills of Entry would only mean that certain goods are imported from Australia, and it is not the conclusive proof of the alleged high seas sales transactions. The high seas transactions must be independently established with acceptable materials, and the petitioners failed to prove the high-seas sale transactions, is the submission. 31. In the alternative, it is urged that even if alleged agreements for sale dated 28.10.2006 and 31.10.2006 are held to be valid, the sale transactions are not complete, as the condition for transfer of right and title agreed in the agreement, i.e., endorsement in the Bills of Lading, by the seller in favour of the buyer, is admittedly not made. Thus there is no sale on high-seas and since the selle....
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....f 5000 metric tonnes of wheat. (j) On the date of the agreements, some payments in respect of alleged sale is said to have been made; however, the rest of the payments are said to have been made only after the goods were seized by the authorities under the Act, 1966. (k) The payments said to have been made after the goods are intercepted do not exactly match with the value of the goods said to have been sold as reflected in the invoice. (l) Insofar as the transaction between M/s Parisons Milling Company Private Ltd. and M/s Parisons Foods Private Ltd. covered in Bill of Entry No. 217539 in the name of M/s Parisons Foods Private Ltd. for 9000 Metric Tonnes of wheat, the invoice number mentioned is 608047 and the invoice date is 22.10.2006. However, in the invoice generated for sale between M/s Parisons Milling Company Private Ltd and M/s Parisons Foods Private Ltd. dated 28.10.2006, the number is 01/PMCL. There is a mismatch to this effect. (m) In the Bill of Lading No. 6 reflecting transaction between AWB International Ltd. and AWB India Pvt. Ltd., there is no reference contract Number. The Invoice dated 31.10.2006 raised by AWB India Pvt. Ltd. i....
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.... 'Act, 1930') which reads as under: "4. Sale and agreement to sell.-(1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner and another. (2) A contract of sale may be absolute or conditional. (3) Where, under a contract of sale, the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell. (4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled, subject to which the property in the goods is to be transferred." 38. From Section 4 of the Act, 1930, it is evident that the contract of sale may be absolute or conditional. The sale takes place when property in goods is transferred by the seller to the buyer. It is also apparent that under the contract of sale, if the property in goods is transferred from the seller to the buyer, the contra....
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....ition that sale is complete only on payment of price agreed. 45. The Bills of Lading without "endorsement" by the seller in favour of the buyer for having transferred the rights and title to the goods, if interpreted holding that there is no concluded sale in favour of the buyer, the respondent-Committee does not get the jurisdiction to impose market fee and penalty. The reason is the APMC will have the authority to impose a market fee only if the sale transaction takes place within the market area. However, M/s Parisons Foods Private Limited and M/s Parisons Roller Flour Mills Private Ltd. have asserted that they have purchased the wheat on high seas, from M/s Parisons Milling Company Pvt. Ltd and AWB India respectively. The APMC also contends that the sale has taken place. The dispute is relating to place of sale. 46. Under the Act, 1966, when the notified agricultural produce is found in the possession of a person who is not a consumer, and who is a trader, then the person has to establish as to why he is not liable to pay the market fee on the notified agricultural produce. 47. The Court has to consider whether the high seas sale transaction is established without endo....
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....ion". If there is a breach of condition, then the party aggrieved may repudiate the contract. 54. If the stipulation is collateral to the main purpose, then it is a "warranty", and breach of "warranty" does not enable the aggrieved party to repudiate the contract or the goods. 55. Section 12(4) of the Act, 1930 clarifies as to whether a stipulation is a "condition" or "warranty" depends on the construction of the contract. Said sub-section also clarifies that the "warranty" may amount to a "condition", though it is termed as "warranty" in the agreement. In other words, nomenclature of the stipulation in the agreement is not the criterion to decide whether the stipulation is a condition or a warranty. 56. At this juncture, it is necessary to refer to Clauses 9 and 13(a) of the agreements for sale dated 28.10.2006 and 31.10.2006 and other relevant clauses in the agreement for sale dated 31.10.2006. 57. Now the Court has to refer to Clauses No.9 and 13(a) of the agreements. Clause No.9 of the said agreement dated 28.10.2006 reads as under: "9. Delivery: All the rights and title of the above goods are transferred to the Buyer by the seller endorsing the above Bi....
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....tract. Breach of contract gives a right or action, or cause of action, to the party to the contract. Still, the discretion is with the aggrieved party to take recourse to action as advised in law or to waive the right by taking no action, or to bargain for better terms, or he may still proceed with the contract, condoning the breach by the other party. If the party chooses to proceed with the contract, despite the breach by the other party, the contract remains alive till the transaction is concluded or terminated in any other manner provided under law. 64. For the above-mentioned reasons, the Court is of the view that, even if the endorsement on the Bill of Lading is treated as a condition of transfer, the absence of endorsement does not invalidate the contract since, no action is taken by the aggrieved party to repudiate the contract. Thus, the Court is of the view that second sale (beyond the jurisdiction of Australia) indeed has concluded without the endorsement by the seller as the parties are at ad idem. Both buyer and seller are asserting that the sale of wheat has taken place. And even if the APMC contends that a sale has taken place. The only difference is that, buyer a....
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....ll of Lading, the Court has to hold that the agreement, if at all, was entered on the high seas; it remained an agreement for sale till further steps were taken in furtherance of the agreement. 71. Thus, Clause No. 10 is to be construed as an obligation cast on the buyer on the sale and transfer of right and title to the goods and not before. This interpretation will not render Clause No.9 redundant, and both clauses co-exist. 72. Likewise, the clause in the agreement for sale dated 31.10.2006, extracted in paragraph No.58 indicates that the sale transaction is complete. However, clause No. 13(a) extracted in the paragraph No. 57 supra, incorporated in the agreement would reveal that the sale transaction is subject to endorsement on the Bill of Lading by the seller in favour of the buyer. The clause No. 10 under the caption 'Delivery and Clearance' also incorporates the condition that the seller shall sign/endorse in favour of the buyer for clearance of goods by the buyer. Though clause No. 10 could be interpreted to say that said endorsement is only required for the purpose of clearance before the Customs Authority, clause No. 13(a) is very specific and provides for ....
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....nder the Customs Act have to be filled and submitted by the person who seeks customs clearance as an importer or person for whose benefit the goods are imported. Buyers have claimed that they have purchased the goods on the high seas. It is also the claim of the buyers that they have presented the Bills of Lading to the Customs Department in Mangalore. Thus, the Court has to hold that the buyers have presented the Bills of lading to the Customs department at Mangalore. In other words, the Bills of Lading appear to have been handed over to the buyers or their representatives in Mangalore port as the delivery of Bills of Lading on high seas is not established and more than anything else, it is not pleaded that Bills of Lading have been handed over on high seas. (d) For want of endorsement on the Bills of Lading, which is a condition precedent for transfer of right and title and for want of plea and proof for delivery of Bills of Lading on high seas, the Court has to hold that the Bills of Lading were delivered on shore at Mangalore to the buyers, and the buyers have presented the same along with Bills of Entry. (e) As per the definition of the "importer" as found in....
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....t. Ltd. were in possession of the notified produce only for the purpose of processing without there being any sale. 78. All the petitioners asserted the sale transaction with a rider that the sale transaction has taken place outside the market area. Hence, the said judgment does not apply to the facts of the case. 79. The judgment in Gujarat Ambuja Exports Ltd. and Another vs State of Uttarakhand and others (2016) 3 SCC 601 is also on the question of liability to pay market fee in case the agricultural produce is not sold and enters the market area only for the purpose of storage and processing. Hence, the said judgment also does not apply to the facts of the case. 80. Reliance is also placed on the judgment of the co-ordinate bench of this Court in ITC Ltd. vs State of Karnataka and Others 2005 SCC Online Kar 86. 81. On going through the aforementioned judgments, this Court is of the view that the questions raised in the present petitions are not addressed in the said judgments. 82. In the present case, the question is whether the petitioners are required to pay market fee on the premise that the sale transaction has taken place within the market area. The judgment ....
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.... on the seller M/s Parisons Milling Company Private Ltd. and the buyer - M/s Parisons Foods Private Ltd. Such doubly levy is impermissible. 87. Learned counsel for the respondent-Committee also fairly admitted that such double levy is impermissible. 88. Thus, the order dated 17.11.2021 marked at Annexure-A in Writ Petition No. 14908/2022 has to be set-aside by clarifying the position that the petitioner in Writ Petition No. 14908/2022 is required to pay market fee and penalty in respect of 9000 metric tonnes of wheat ordered to be paid in terms of order dated 17.11.2021 marked at Annexure-A in Writ Petition No. 14950/2022 filed by M/s Parisons Foods Private Ltd. 89. It is also made clear that petitioner in Writ Petition No. 14908/2022 viz., M/s Parisons Milling Company Private Ltd. and the petitioner in Writ Petition No. 14950/2022 i.e., M/s Parisons Foods Private Limited are jointly and severally liable to pay the market fee and penalty imposed in terms of Annexure-A dated 17.11.2021 in writ Petition No. 14950/2022. 90. Since, the primary liability to pay the market fee is that of the buyer and the seller has the responsibility to collect the market fee from the buyer ....