caselaws.org
Supreme Court of India
Apmc Yashwanthapura Through Its … vs M/S Selva Foods Through Its … on 14 December, 2021Author: R. Subhash Reddy
Bench: R. Subhash Reddy, Hrishikesh Roy
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 7706 OF 2021
(Arising out of Special Leave Petition(C) No.18761 of 2013)
APMC Yashwanthapura
through its Secretary …Appellant
vs.
M/s. Selva Foods
through its Managing Partner …Respondent
J U D G M E N T
R. SUBHASH REDDY, J.
1. Leave granted.
2. This appeal is filed aggrieved by the judgment
and order dated 11.01.2013 passed in Writ Appeal
No.18000 of 2011, dismissing the intra-court appeal
Signature Not Verified
Digitally signed by
filed by the appellant herein by confirming the order
Rajni Mukhi
Date: 2021.12.14
17:26:32 IST
Reason:
of the learned Single Judge allowing the Writ
1
Petition in W.P. No.11816 of 2009 on 22.08.2011,
filed by the respondent herein.
3. The respondent herein is a trader engaged in the
business of selling cleaned and processed spices in
the name and style of M/s. Selva Foods within the
market area of the appellant. They buy spices like
turmeric, chilli, coriander, methi and mustard seeds
etc., from the market areas of various Agricultural
Market Committees within the State of Karnataka and
they also import such spices from outside the State.
After importing such agricultural produce, they
undertake cleaning and processing of the spices and
sell the processed items within the market area of
the appellant.
4. During the year 2008, authorities of the Market
Committee have inspected the records of the
respondent and found that respondent had purchased
methi and mustard seeds from outside the State of
Karnataka and after importing they sold the processed
goods within the market area of the appellant and has
2
not paid the market fee. When At first instance,
order dated 12.08.2008 was passed by the appellant-
APMC cancelling the licence of the respondent on the
ground that the market fee of Rs.28,422/- and the
penalty amount was not paid. When such order was
questioned in Writ Petition No.11211 of 2008 the High
Court has allowed the writ petition on the ground
that the respondent was not given proper opportunity
and remitted the matter back for fresh consideration,
to the appellant. Further it was observed, the amount
of Rs.28422/- which was paid pursuant to interim
order would be subject to decision of the authority.
5. Subsequently after giving opportunity, order
dated 24.03.2009 was passed confirming the earlier
demand and directed the payment of Rs.85,266/- which
was payable out of the total demand of Rs.1,13,688/-.
Questioning such demand again writ petition was filed
in the High Court in W.P. No.11816 of 2009 which is
allowed by the learned Single Judge of the High court
as against which the appellant Market Committee has
3
preferred intra-court appeal in Writ Appeal No.18000
of 2011 which is dismissed by the impugned judgment
and order dated 11.01.2013. As against the same this
appeal is preferred.
6. We have heard Dr. Nanda Kishore, learned counsel
for the appellant and Mr. Haris Beeran, learned
counsel for the respondent.
7. Having heard the learned counsel for the
parties, we have perused the impugned judgment and
other material placed on record. Before we deal with
the rival contentions of both sides, we deem it
appropriate to refer to the relevant provisions of
the Karnataka Agricultural Produce Marketing
(Regulation and Development) Act of 1966. Section 65
of the Act reads as under:
“65. Levy of market fees:-
(2) The market committee shall levy
and collect market fees from every
buyer in respect of agricultural
produce bought by such buyer in the
market area, at such rate as may be
specified in the bye-laws which shall
not be more than two rupees per one
4
hundred rupees of the value of such
produce bought except in case of
livestock where the market fee shall
not be more than five rupees per head
of cattle other than sheep or goat, and
in the case of sheep or goat such fee
shall not be more than one rupee per
head in such manner and at such times
as may be specified in the bye-laws:
Provided that in the case of any co-
operative society doing business in
agricultural produce within a market
yard, market fee shall be levied and
collected at the rate of eighty per
cent of the market fee payable under
this Act:
Provided further that, if on any
agricultural produce market fee has
already been levied and collected under
sub-section (2) in any market area
within the State and such agricultural
produce is processed and sold in any
other market area within the State or
exported outside the State it shall be
exempted from the levy of market fee:
Explanation. – Nothing in this proviso
shall apply to –
(i) any processed agricultural produce
imported from outside the State and
sold in any market area within the
State; or
(ii) any agricultural produce imported
or caused to be imported by any person
either on his own account or as an
agent for another person, from outside
the State into any market area within
the State for the purpose of processing
or manufacturing except for one’s own
domestic consumption.
5
Provided also that in case of a buyer
in a spot exchange established by a
licensee or a licensee for direct
purchase of notified agricultural
produce or a contract farming sponsor
buying from a contract farming
producer, market fee shall be levied
and collected at the rate of seventy
per cent of the market fee payable
under this Act:
Provided also that in case of any
private markets established under
Section 72-A of the Act, market fee
shall be levied and collected at the
rate of thirty three percent of market
fee payable under this Act, provided
that no market fee is leviable on
flowers, fruits and vegetables.
Instead the Market committee may
collect user charges in respect of the
above articles, user charges for such
services provided by the Market
Committee from the buyer of the produce
at such rates as may be specified in
the bye-laws as approved by the
Director of Agricultural Marketing.
(2-A) The market fee payable under
this section shall be realised as
follows namely.-
(i) if the produce is sold through a
commission agent, the commission agent
shall realise the market fee from the
purchaser and shall be liable to pay
the same to the committee;
(ia) if the produce is sold by an
importer to the purchaser, the importer
shall realise the market fee from the
purchaser and shall be liable to pay
the same to the committee;
6
(ii) if the produce is purchased
directly by a trader from a producer
the trader shall be liable to pay the
market fee to the committee;
(iii) if the produce is purchased by a
trader from another trader, the trader
selling the produce shall realise it
from the purchaser and shall be liable
to pay the market fee to the committee;
and
(iv) in any other case of sale of such
produce, the purchaser shall be liable
to pay the market fee to the committee.
(2-B) The market fee payable under
clause (i), (ia), (ii) or (iii) of sub-
section (2-A) shall be paid to the
market committee within such time as
may be specified in the bye-laws.”
8. Dr. Nanda Kishore, learned counsel for the
appellant, has contended that as per sub-sections (2)
and (2-A) of Section 65 of the Act, market fee is
payable on the agricultural produce, which is
purchased from outside the State as an importer and
sell the processed goods within the area of the
Market Committee. It is submitted that agricultural
produce, which is subject matter of the petition is a
scheduled item, as such, after processing market fee
is leviable on such processed goods. It is submitted
7
that as per Section 65 of the Act the Market
Committee shall levy and collect market fee from
every buyer in respect of the agricultural produce
bought by such buyer in the market area at such rate
as may be specified in the bye-laws. It is submitted
that as per the second proviso to Section 65(2) of
the Act, if on agricultural produce, the market fee
has already been levied and collected under sub-
section (2) in any market area within the State and
such agricultural produce is processed and sold in
any other market area within the State or exported
outside the State, it is exempted from levy of the
market fee. However, in view of the explanation, it
is clear that any agricultural produce, imported or
caused to be imported by any person either on his own
account or as an agent for any other person from
outside the State into any market area within the
State for the purpose of processing or manufacturing,
except for one’s own domestic consumption, is liable
for market fee.
8
9. It is submitted that exemption under second
proviso to Section 65(2) of the Act, is not
applicable for the importers, on processed goods and
sales within the market area as per the explanation.
It is further submitted that in view of clause (ia)
of sub-section (2-A) of Section 65 of the Act, if the
produce is sold by an importer to the purchaser, the
importer shall realise the market fee from the
purchaser and shall be liable to pay the same to the
committee. It is submitted that the interpretation
of the relevant provisions by the learned Single
Judge, as confirmed by the Division Bench of the High
Court, is erroneous and runs contrary to the plain
reading of the Section 65 of the Act. The learned
counsel also placed reliance on the judgment of this
Court in the case of G. Giridhar Prabhu and others
v. Agricultural Produce Market Committee1.
10. On the other hand, the learned counsel appearing
for the respondent has strenuously contended that
since the respondent has purchased the agricultural
1
(2001) 3 SCC 405
9
produce from outside the State of Karnataka as and
when such produce is processed within the market area
of the appellant and sell, they are not liable to pay
market fee. By referring to amendments made to the
Act (by Act 22 of 2004), it is submitted that Section
65(2) of the Act is the charging Section and a
reading of the said provision makes it clear that
market fee can not be collected on the produce which
the respondent has purchased from outside the State
as an importer and processed within the area of the
appellant Market Committee. In support of his
contentions, the learned counsel has placed reliance
on the judgment in the case of Gujarat Ambuja
Exports Limited and Another v. State of Uttarakhand
and Others2 and also the judgment in the case of ITC
Ltd., v. State of Karnataka and Others3.
11. In this case, it is not in dispute that the
respondent is a trader as defined under provisions of
the Act and has purchased spices, which are notified
2
(2016) 3 SCC 601
3
2005 SCC OnLine Kar 86 : 2005 AIHC 2950
10
as agricultural produce, not only from market areas
within the State of Karnataka but also from outside
the State of Karnataka. After such imports, they
process the goods and sell the processed goods within
the market area. Even the processed goods are
notified items as per the schedule under the Act.
12. A reading of Section 65 of the Act, which is the
charging section, it is clear that, the Market
Committee shall levy and collect the market fees from
every buyer in respect of agricultural produce bought
by such buyer in the market area, at such rate as may
be specified in the bye-laws. As per the second
proviso to Section 65(2) of the Act, if on any
agricultural produce market fee has already been
levied and collected under sub-Section (2) in any
market area within the State and such agricultural
produce is processed and sold in any other market
area within the State or exported outside the State,
it shall be exempted from the levy of market fee.
However, a reading of the explanation, makes it
11
clear, the applicability of second proviso excluded
to any agricultural produce imported from outside the
State and processed and sold in any market area
within the State; or any other agricultural produce
imported or caused to be imported by any person
either on his own account or as an agent for another
person, from outside the State into any market area
within the State for the purpose of processing or
manufacturing except for one’s own domestic
consumption. Further, as per Section (2-A)(ia), if
the produce is sold by an importer to the purchaser,
the importer to realise the market fee from the
purchaser and shall be liable to pay the same to the
committee. A harmonious reading of the Section 65(2)
of the Act, its second proviso, and explanation to
the same and clause (2-A)(ia), makes it clear that if
any dealer imports agricultural produce from outside
the State into any market area within the State of
Karnataka for the purpose of processing and sale, the
applicability of second proviso to sub-section (2) of
12
Section 65 of the Act stands excluded. The
explanation to sub-section (2) of Section 65 of the
Act, makes it clear that even the processed items
from the agricultural produce imported from outside
the State of Karnataka, attract market fee on sales
within the market area of the appellant – Market
Committee. It is also clear from the aforesaid
Section, it is the obligation of the importer to
realise the market fee from the purchaser and pay the
same to the Market Committee.
13. In the case of G. Giridhar Prabhu & Ors.1 while
interpreting the provisions of Karnataka Agricultural
Produce Marketing Regulation Act, 1966 this Court has
held that a person purchasing the raw cashew nuts,
then extracting cashew kernels by means of
manufacturing process for the purpose of sale in
domestic and international market, is held to be a
trader within the meaning of sub-section (2) of
Section 48 or importer under Section 2(14-A) of the
Act, therefore, would be liable to collect the market
13
fee from his buyers and to pay such fees to the
Marketing Committee.
14. In the case of Gujarat Ambuja Exports Limited &
Anr.2 while considering the provisions of Uttarakhand
Agricultural Produce Marketing (Development and
Regulation) Act, this Court has held that
agricultural produce which is brought into market
area not for the purpose of sale, but only for the
purpose of manufacture or further processing
activities, cannot be subjected to market fees.
Similarly, in the case of ITC Ltd.3, learned Single
Judge of the High Court of Karnataka has held that
mere activity of stocking and processing of even the
imported notified agricultural produces, which are
imported into the market area do not attract payment
of market fees.
15. We also endorse the view in the aforesaid
judgments but in the case on hand respondent is a
buyer as defined under sub-section (2) of Section 65
of the Act and we cannot ignore the second proviso
14
and Explanation to Section 65(2) of the Act. It is
not a case where the respondent is denying sale of
the imported agricultural produce within the market
area of the appellant after processing. In that view
of the matter it is not entitled for exemption from
payment of market fees. At the same time we make it
clear that if one merely imports notified
agricultural produce from outside the State for the
purpose of cleaning and processing without selling
the processed produce within the market area is not
liable to pay market fee. As much as in this case
without disputing the factum of sale within the
market area post the import, the respondent has
defended the proceedings only on the ground that once
the agricultural produce is processed it will not
attract market fee as such the same cannot be
accepted. It is the sale within the market area that
attracts levy of market fee, and not the first
purchase that was outside the market area. Notably
the goods sold are also notified agricultural produce
15
specified in the Schedule. Validity of the item
under the Schedule is not under challenge.
16. For the aforesaid reasons, the appeal is
allowed. The impugned judgment and order passed in
W.A. No.18000/2011 dated 11.01.2013 is set aside.
Consequently, the Writ Petition No.11816 of 2009
stands dismissed. No order as to costs.
…………………J.
[R. SUBHASH REDDY]
…………………J.
[SANJIV KHANNA]
New Delhi
December 14, 2021.
16
Comments