Gujarat High Court
Gulshan Polyols Limited vs State Of Gujarat on 14 October, 2022
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 17299 of 2021
With
R/SPECIAL CIVIL APPLICATION NO. 687 of 2020
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
==========================================================
1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
==========================================================
GULSHAN POLYOLS LIMITED
Versus
STATE OF GUJARAT
==========================================================
Appearance:
SCA NO. 17299/2021
MR HRIDAY BUCH(2372) for the Petitioner(s) No. 1
MR DHAWAN JAYSWAL, AGP for the Respondent(s) No. 1
MR MIHIR JOSHI, SENIOR ADVOCATE WITH MR DIPEN DESAI(2481) for
the Respondent(s) No. 3
RULE SERVED for the Respondent(s) No. 2
SCA NO. 687/2020
MR MIHIR JOSHI, SENIOR ADVOCATE WITH MR DIPEN DESAI for the
Petitioner(s) No. 1
MR DHAWAN JAYSWAL, AGP for the Respondent(s) No. 1
MR BS PATEL SENIOR ADVOCATE WITH MR CHIRAG B PATEL for the
Respondent(s) No. 3
RULE SERVED for the Respondent(s) No. 2
==========================================================
Page 1 of 100
Downloaded on : Sat Oct 15 20:25:15 IST 2022
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 14/10/2022
CAV JUDGMENT
1.Heard learned Senior Advocate Mr. Mihir Joshi with learned advocate Mr. Dipen Desai for the petitioner in Special Civil Application No.687/2020 and for the respondent no.3 in Special Civil Application No.17299/2021, learned Senior Advocate Mr. B.S. Patel with learned advocate Mr. Chirag B. Patel for the respondent no.3 in Special Civil Application No.687/2020, learned advocate Mr.Hriday Buch for the petitioner in Special Civil Application No.17299/2021 and learned Assistant Government Pleader Mr. Dhawan Jayswal for the respondent State.
2.Special Civil Application No.687/2020 is preferred by Agriculture Produce Market Committee, Bharuch feeling aggrieved by the Page 2 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 order dated 3.12.2019 passed by the respondent no.1-Deputy Secretary (Appeals), Agriculture, Welfare and Cooperation Department of the State under section 48 of the Gujarat Agriculture Produce Markets Act, 1963 (For short "the Act, 1963") in Revision Application No.30 of 2019 whereby revision application preferred by respondent no.3
-M/s. Jabsons Foods was partly allowed by quashing and setting aside the order dated 11.01.2019 passed by the petitioner for levy of market fees on the goods purchased from outside the market area and further directing respondent no.3 to inform the petitioner Market Committee about the market fee after verification of Form No.V with regard to agriculture produce purchased or sale in the market area of the petitioner.
3.Special Civil Application No. 17299/2021 is filed by the petitioner being aggrieved by Page 3 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 order dated 18.09.2021 passed by respondent no.1 - Deputy Secretary (Appeals), Agriculture, Welfare and Cooperation Department of State in Revision Application No.20/2021 whereby revision application filed by respondent no.3 - Agriculture Produce Market Committee, Jhagadiya was allowed and order of the respondent no.2-Director, Agriculture Marketing and Rural Finance Department dated 11.06.2020 in Appeal No.31 of 2019 was quashed and set aside. Accordingly, the petitioner was directed to pay the market fees under section 28 of the Act, 1963.
4.Special Civil Application No. 687/2020 was admitted by order 10.01.2020. Special Civil Application No.17299/2021 with regard to the same subject matter of levy of market fees under section 28 of the Act, 1963 was also admitted by order dated 20.12.2021 in view of Page 4 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 the submissions made on behalf of the petitioner that respondent no.1 Deputy Secretary (Appeals) has taken a completely contrary view to its own earlier view as per order dated 3.12.2019 in Revision Application No.30/2019 in the matter of Jabsons Foods which is the subject matter of challenge before this Court in Special Civil Application No. 687/2020.
5.In view of above facts, both the matters were ordered to be heard together while admitting Special Civil Application No. 17299/2021.
6.The petitioner of Special Civil Application No. 17299/2021 was protected by way of interim relief against the impugned order on condition of depositing of Rs. 1 crore with the Registry and furnishing a bank guarantee of Rs. 3 crore from any nationalised bank till the final disposal of the petition. Page 5 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
7.Considering the issues raised in both these petitions, it would be fruitful to record facts of each cases individually.
8.Brief facts of Special Civil Application No. 687 of 2020 are as under :
8.1) The petitioner is Agriculture Produce Market Committee at Bharuch constituted under the provisions of Act, 1963 and is a local authority as per Section 10(2) of the Act. Respondent no.3 is a trader operating in the market area of the petitioner Market Committee.
8.2) It is the case of the petitioner that the respondent no.3 though being a processor and undertaking activities such as processing of agriculture produce and thereby liable to pay market cess, was not paying the Page 6 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 market cess to the petitioner Market Committee and therefore, the petitioner Market Committee issued notices to the respondent No.3 directing the respondent no.3 to pay the outstanding market cess to the petitioner Market Committee.
8.3) Respondent no.3 challenged the aforesaid demand notice issued by the Market Committee before the respondent no.1-Deputy Secretary (Appeals), State of Gujarat, by way of Revision Application No.97 of 2012. The said Revision Application came to be considered by the respondent No.1 and vide order dated 22.08.2013, the respondent no.1 disposed of the said Revision Application by directing the respondent no.3 to produce records with regards to the processing activity undertaken by the respondent no.3 and to show that the market cess is payable by the respondent no.3 or not.Page 7 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 8.4) Thereafter the Market Committee issued a notice to the respondent no.3 on 21.12.2013 to produce accounts and to pay the outstanding market cess to the Market Committee.
8.5) It is the case of the petitioner that thereafter the Director-respondent no.2 herein was approached with regard to the liability of the respondent no.3 to pay the market cess. The Director vide its order dated 07.02.2014 directed the respondentno.1- Deputy Director, Agriculture Marketing and Rural Finance to conduct inquiry with regard to the notice issued by the petitioner and with regard to liability of the respondent no.3 to pay the market cess.
8.6) The respondent no.1 Deputy Director and the District Registrar, Bharuch vide Page 8 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 communication dated 08.12.2015 forwarded the inquiry report to the Director wherein the Deputy Director found that the Market Committee is entitled to levy market cess and if the respondent no.3 is claiming that it is undertaking the activities outside the market area, then necessary documentary evidence is required to be produced before the Market Committee which is not produced. 8.7) Thereafter, the petitioner-Market Committee issued demand notice dated 01.07.2016 calling upon the respondent no.3 to pay the outstanding market fees. The respondent no.3 challenged the said demand notice before this Court by way of Special Civil Application No.16465 of 2016. The said petition came to be partly allowed by this Court vide order dated 20.11.2018 by directing the respondent no.3 to appear before the Market Committee with all Page 9 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 necessary documents to show that the respondent no.3 is not liable to pay market fees and to submit necessary Forms to get exemption from payment of market cess. 8.8) After the order passed by this Court, the respondent no.3 vide letter dated 18.12.2018 produced record before the Market Committee stating that it had undertaken processing activity and produced necessary material and documents and asked the Market Committee to state the outstanding market fees payable by the respondent no.3. 8.9) The petitioner Market Committee on verifying the documents and material produced by the respondent no.3 found that the respondent no.3 is a processor and is therefore liable to pay market fees. 8.10) The petitioner therefore issued Page 10 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 demand notice dated 11.01.2019 for payment of market fees along with interest. 8.11) Respondent no.3 replied to the said notice vide its communication dated 29.01.2019 and reiterated its claim that the respondent no.3 is an industrial concern and therefore not required to pay market fees. 8.12) It is the case of the petitioner that respondent no.3 had accepted that it is a processor and had brought the goods within the market area for processing and had accepted its liability to pay market fees, however, has taken the contrary stand thereafter.
8.13) Thereafter the Market Committee vide notice dated 26.02.2019 again called upon the respondent no.3 to pay the outstanding market fees, failing which, the Market Committee Page 11 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 would be constrained to take action under Section 51A of the Act, 1963 for seizing of the agriculture produce of the respondent no.3.
8.14) The said notice was challenged by the respondent no.3 before the respondent no.1-Deputy Secretary (Appeals) by way of Revision Application No.30 of 2019 under Section 48 of the Act.
8.15) The petitioner filed reply to the said Revision Application pointing out in detail as to how the stand of the respondent No.3 is contradictory to its own stand taken earlier and how the respondent no.3 is making absolutely false case before the respondent no.1. The petitioner filed its written submissions reiterating its stand before the respondent no.1.
Page 12 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 8.16) Respondent no.1 however, vide impugned order dated 03.12.2019 partly allowed the Revision Application of the respondent no.3 by inter-alia holding that the petitioner is entitled to levy of market fees from the respondent no.3 only if the respondent no.3 has purchased or sold agriculture produce in the market area and that respondent no.3 is an industrial concern.
8.17) Therefore, being aggrieved and dissatisfied with the impugned order passed by the respondent no.1-Deputy Secretary (Appeals), the petitioner has preferred Special Civil Application No.687/2020.
9.Brief facts of Special Civil Application No.17299/2021 are as under :
9.1) The petitioner's manufacturing Page 13 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 processing unit is located at GIDC, Jaghadia wherein it is carrying out its business activity. For the purposes of producing its product "Sorbitol 70%", the petitioner needs to purchase Maize Corn as raw material. Upon purchase of the Maize Corn, the same is brought at the manufacturing/ processing unit which is located at GIDC, Jaghadia. The raw material thereafter is processed and the product manufactured is namely "Sorbitol 70%".
9.2) The petitioner is carrying on its manufacturing/processing unit since the year 2006-2007.
9.3) The respondent No. 3- Agriculture Produce Market Committee (APMC) issued three notices dated 05.03.2016, 16.03.2016 and 21.04.2016 inquiring from the petitioner about the details of the purchase of Maize Page 14 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 Corn ever since its inception.
9.4) It is the case of the petitioner that even before the petitioner could respond to such notices, the factory premises of the petitioner came to be raided on 19.05.2016 and a panchanama was drawn.
9.5) Thereafter on 15.12.2016, the petitioner was called upon to remain present on 19.12.2016 with a cheque for the payment of market fees for two years i.e., 2014-15 and 2015 16.
9.6) Upon receipt of the aforesaid notice, the petitioner responded promptly vide letter dated 17.12.2016, explaining how it wasnot possible for them to remain present in such a short notice.
9.7) It is the case of the petitioner Page 15 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 that thereafter once again the petitioner's factory premises came to be raided and panchnama came to be drawn and there was specific insistence that the petitioner should pay market fees.
9.8) The petitioner was thereafter served with a notice dated 25.05.2017 through an advocate of Respondent No. 3-APMC whereby the petitioner was called upon to deposit market fee from the year 2007 to 2015-16 or else respondent No. 3 wold initiate appropriate proceedings.
9.9) Upon receipt of the said notice, the petitioners replied through their advocate intimating respondent No. 3 that the petitioner was not required to take any license as the petitioner brought Maize Corn only as raw material for production of "Sorbitol 70%" and that the petitioner is Page 16 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 also not required to pay the market fee/cess, especially when there was no purchase or sell in the market area of respondent No. 3.
9.10) The petitioner also made a representation before the respondent no.l Deputy Director of APMC, Bharuch giving all details of the purchase of Maize Corn from the year 2006-07 to 2016-17.
9.11) However, with a view to peacefully carry on with the business activity, the petitioner paid Rs. 48 lakhs on 23.10.2017 and 08.01.2018 as market fees under protest.
9.12) Upon payment of the aforesaid fees, the petitioner continued with its business and once again the petitioner was served upon a notice dated 23.03.2019 calling upon the petitioner to deposit the market fees for the year 2017-18 and 2018-19.Page 17 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 9.13) The petitioner replied through its advocate pointing out that the levy is illegal and unconstitutional in as much as the Maize Corn is brought from other States only for the purpose of processing. At the time of purchase, the traders already pay the requisite fee in their respective Taluka from which the Maize Corn was purchased. Therefore, in view of Section 28 of the Gujarat Agriculture Produce Market Act,1963 (For short "the Act, 1963"), the petitioner is not liable to pay any further market fee. 9.14) It is the case of the petitioner that despite the clear reply, the advocate of the Market Committee continued to send notices dated 01.08.2018, 12.03.2019, 06.05.2019 and 27.05.2019 reiterating the demand.
Page 18 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 9.15) Respondent No. 3 again raided the factory premises of the petitioner and further seized 5 trucks of Maize Corn on 01.06.2019. As the petitioner was in need of those raw materials lying in the trucks, the petitioner paid market fee under protest by giving all the details of payment of market fee from the place where the petitioner purchased its raw material.
9.16) Thereafter, respondent No. 3 herein filed a Criminal Complaint against the petitioner before the learned Judicial Magistrate First Class, Jaghdiya being Criminal Case No. 1169 of 2019.
9.17) The petitioner therefore, approached this Court by filing a writ petition being Special Civil Application. No. 10485 of 2019 seeking appropriate directions as against the illegal actions carried out by the respondent Page 19 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 No. 3. This Court vide order dated 14.10.2019 disposed of the petition with directions to make representation before Respondent No. 3 so as to consider the same and take appropriate decision. 9.18) In compliance with the aforesaid order dated 14.10.2019, the petitioner herein preferred a representation on 18.10.2019 wherein it was specifically contended as to how Section 28 of the Act, 1962 is not applicable to the petitioner and therefore resultantly, the petitioner are not required to make any payment under the head of market fee.
9.19) It is the case of the petitioner that upon receipt of the representation by the petitioner, without giving any opportunity to the petitioner, just in a period of one week, the Secretary of the Page 20 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 respondent no.3 passed an order dated 25.10.2019/01.11.2019 rejecting the representation.
9.20) Being aggrieved with the order dated 25.10.2019/01.11.2019 passed by the Secretary of APMC Jaghadiya, the petitioner filed an appeal under Section 47 of the Act, 1962 being Appeal No. 31 of 2019 before the Director of Agriculture Marketing and Rural Finance, Gandhinagar - Respondent No. 9.21) On 11.11.2019, the Respondent No. 2 issued notice. The petitioner served the copy of the appeal memo along with the application for stay on 13.11.2019. As a counter blast the respondent No. 3 issued a notice dated 14.11.2019 calling upon the petitioner to pay the market fee or alternatively the license held by the petitioner would be cancelled. Page 21 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 9.22) The Respondent No. 3 herein also rejected the Form 'V' stating the market fee is paid outside the state of Gujarat and that the petitioner was required to pay the market fee vide its communication dated 18.11.2019. 9.23) The petitioner thereafter pursued the application for stay considering the coercive actions initiated by the Respondent No. 3 herein. The respondent No.2 vide its order dated 27.11.2019 was pleased to grant ad-interim relief.
9.24) Respondent No. 3 again issued a show cause notice dated 28.11.2019 which was received by the petitioner herein on the 16.12.2019.
9.25) It is the case of the petitioner that before the petitioner could respond to the said show-cause notices, the license held Page 22 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 by the petitioner came to be cancelled on 10.12.2019 and that too was served upon the petitioner on 16.12.2019, therefore immediately the petitioner moved another appeal being Appeal No. 60 of 2019 before respondent No. 2.
9.26) It is the case of the petitioner that despite there being an ad interim relief operating against the respondent No. 3, the respondent No.3 stopped the trucks carrying the Maize Corn from entering the premises of the petitioner at APMC Jaghadiya on 19.12.2019.
9.27) The petitioner therefore, had to rush before Respondent No. 2 seeking direction to permit the trucks to enter the premises. The Respondent No. 2 was pleased to issue appropriate directions on 21.12.2019, considering the persistence of the ad interim Page 23 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 relief in favour of the petitioner. 9.28) In the mean time, on 12.12.2019, the respondent No. 3 filed its reply before respondent No. 2 herein once again reiterating its earlier stand. 9.29) The Respondent No. 2 thereafter heard the parties in both the Appeals i.e., Appeal No. 31 of 2019 and Appeal No. 60 of 2019 and was pleased to allow both the appeals vide its order dated 11.06.2020. 9.30) The respondent No. 3 being aggrieved by the orders dated 11.06.2020 in both the appeals preferred writ petitions before this Court being Special Civil Application No. 10232 of 2020 in Appeal No. 31 of 2019 and Special Civil Application No. 9531 of 2020 in Appeal No. 60 of 2019. This Court relegated respondent No. 3 before Respondent No. 1 to Page 24 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 exhaust the remedy of Revision and more particularly, with a view to enable the State Government to clear its stand on interpretation of Section 28 of the Act vide its common order dated 08.02.2021 passed in both the petitions.
9.31) In view of the order dated 08.02.2021, the respondent No. 3 preferred Revision Application being Revision Application No. 10/2021 before respondent No. 1 challenging the order passed by respondent No. 2 in Appeal No. 30 of 2019. 9.32) The Respondent No. 1 allowed the Revision Application vide order dated 18.09.2021.
9.33) Thus being aggrieved and dissatisfied by the impugned order, the petitioner preferred Special Civil Page 25 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 Application No.17299/2021.
10. Both the petitions involve interpretation of provisions of section 28 of the Act, 1963 which provides for power to levy fees. Section 28 of the Act, 1963 was first time amended by Gujarat Act No. 17/2007 by inserting sub-section (2) with effect from 2.07.2007. Thereafter by Gujarat Act No.8 of 2020, the said section was further amended.
11. The provisions of section 28 as it existed prior to Gujarat Act No. 8/2020 read as under:
"28. Power to levy fees.- "[(1)] The market committee shall, subject to the provisions of the rules and the maxima and minima from time to time prescribe, levy and collect fees on the agricultural produce bought or sold in the market area:
Provided that the fees so levied may be collected by the market committee through such agents as it may appoint.Page 26 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 [(2) (a) The market fee specified in sub-section (1) shall not be levied for the second time in any market area from the buyer who is a processor, grader, packer, value addition centre or exporter of an agriculture produce and market fee has already been paid on that agricultural produce in any market and the information in this context has been furnished, as prescribed, by the person concerned that the payment of market fee has already been made in other market, provided such proof as may be prescribed is furnished to the Director by the buyer who is doing processing, grading, packing, value addition or export within such period as may be prescribed by the Government.
b) On the agricultural produce brought in the market area for commercial transaction or for processing, if the permit issued under clause (e) has not been submitted, the market fee shall be deposited by the buyer or processor, as the case may be, in the office of the market committee, within fourteen days but before sale or resale or processing or export outside the market area:
Provided that in case any agricultural produce is found to have been processed, sold or resold or dispatched outside the market area without payment of market fee payable on such produce, the market Page 27 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 fees shall be levied and recovered on five times the market value of the processed produce or value of the agricultural produce, as the case may be.
(c) The market fee shall be payable by the buyer of the agricultural produce and shall not be deducted from the price payable to the agriculturist seller:
Provided that where the buyer of a agricultural produce cannot be identified, all the fees shall be payable by the person who may have sold or brought the produce for sale in the market area:
Provided further that in case of commercial transactions between traders in the market area, the market fee shall be collected and paid by the seller.
(d) The market functionaries, as the market committee may by bye-laws specify and in the case of market established under Chapter IVA of this Act as the Director may specify, shall maintain accounts relating to sale and purchase or processing or value addition in such manner as may be prescribed and submit to the market committee, the periodical returns, as may be prescribed.
(e) Any agricultural produce shall be removed out of the market area only in the mariner and in Page 28 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 accordance with the permit issued in such form, as may be prescribed. The vehicle carrying agricultural produce shall be accompanied by such proofs as may be prescribed.
Provided that the producer of the agricultural produce himself may remove the agricultural produce from one place to another without such permit.] [(3) (i) The market committee shall allow the trade in those items of the agricultural produce which are not specified in the notification published under sub-section (1) of section 5 for such market area.
(ii) The market committee may collect user charges for allowing the trade as provided in clause (i), at the rate not less than thirty paise and not exceeding two rupees per every hundred rupees.]"
12. The provisions of section 28 as it existed after amendment to Gujarat Act No. 8/2020 read as under:
"28. Power to levy fees.- [(1)] The market committee shall, subject to the provisions of the rules and the maxima and minima from time to time prescribe, levy and collect fees on [the agricultural produce bought or sold in the principal market yard, sub-market yard or market sub-yard Page 29 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 either brought from outside the State or from within the State]:
Provided that the fees so levied may be collected by the market committee through such agents as it may appoint.
[(2) (a) The market fee specified in sub-section (1) shall not be levied for the second time in any [the principal market yard, sub-market yard or market sub-yard] from the buyer who is a processor, grader, packer, value addition centre or exporter of an agriculture produce and market fee has already been paid on that agricultural produce in any market and the information in this context has been furnished, as made in other market, provided such proof as may be prescribed is furnished to the Director by the buyer who is doing processing, grading, packing, value addition or export within such period as may be prescribed by the Government.
(b) On the agricultural produce brought in the "[the principal market yard, sub market yard or market sub-yard] for commercial transaction or for processing, if the permit issued under clause (e) has not been submitted, the market fee shall be deposited by the buyer or processor, as the case may be, in the office of the market committee, within fourteen days but before sale or resale or processing or export outside the [the principal market Page 30 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 yard, sub-market yard or market sub-
yard]:
[Provided that in case any agricultural produce is found to have been processed, sold or resold or dispatched outside the principal market yard, sub-market yard or market sub-yard without payment of market fee, or user charges payable under clause (ii) of sub-section (3) of this section, on such produce, the market fee or user charges shall be levied and recovered two times of such leviable and recoverable amount.]
(c) The market fee shall be payable by the buyer of the agricultural produce and shall not be deducted from the price payable to the agriculturist seller:
Provided that where the buyer of a agricultural produce cannot be identified, all the fees shall be payable by the person who may have sold or brought the produce for sale in the "[the principal market yard, sub-market yard or market sub-yard]:
Provided further that in case of commercial transactions between traders in the[the principal market yard, sub-market yard or market sub- yard], the market fee shall be collected and paid by the seller.
(d) The market functionaries, as the market committee may by bye-laws specify and in the case of market Page 31 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 established under Chapter IVA of this Act as the Director may specify, shall maintain accounts relating to sale and purchase or processing or value addition in such manner as may be prescribed and submit to the market committee, the periodical returns, as may be prescribed.
(e) Any agricultural produce shall be removed out of the "[the principal market yard, sub-market yard or market sub-yard] only in the manner and in accordance with the permit issued in such form, as may be prescribed. The vehicle carrying agricultural produce shall be accompanied by such proofs as may be prescribed. Provided that the producer of the agricultural produce himself may remove the agricultural produce from one place to another without such permit.] [(3) (i) The market committee shall allow the trade in those items of the agricultural produce which are not specified in the notification published under sub section (1) of section 5 for such "[the principal market yard, sub-market yard or market sub-yard].
(ii) The market committee may collect user charges for allowing the trade as provided in clause (i), at the rate not less than thirty paise and not exceeding two rupees per every hundred rupees.]"Page 32 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
13. Corresponding Rules being the Gujarat Agricultural Produce Markets Rules, 1965 (For short "the Rules 1965") being Rules under Part VI (Fees Levy and Collection) being Rule 48 and Rule 49 are also relevant and are reproduced hereunder:
"48. Market fees.- (1) The market committee shall levy and collect fees on agricultural produce bought or sold in the market area at such areas as may be specified in the bye-laws subject to the following minima and maxima, viz.
(1)rates when levied advalorem shall not be less than 130 paise] and shall exceed [Rs. 2] per hundred rupees.
(2) rates when levied in respect of cattle, sheep or goat shall not be less than [25 paise] per animal and shall not exceed [Rs. 4] per animal.
Explanation.- For the purposes of this rule a sale of agricultural produce shall be deemed to have taken place in a market area if it has been weighed or measured or surveyed or delivered in case of cattle in the market area for the purpose of sale; notwithstanding the fact that the property in the Page 33 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 agricultural produce has by reason of such sale passed to a person in a place outside the market area.
(2) No fees shall be levied on agricultural produce brought from outside the market area into the market area for use therein by the industrial concern situated in the market area or for export and in respect of which declaration has been made and a certificate has been obtained in Form V:
Provided that if such agricultural produce brought into the market area for export is not exported or removed therefrom before the expiry of twenty days from the date on which it was so brought, the market committee shall levy and collect fees on such agricultural produce from the person bringing the produce into the market area at such rates as may be specified in the bye-laws subject to the maxima and minima specified in sub-rule (1).
Provided that no fee shall be payable on a sale or purchase to which sub-section (3) of section 6 applies.
[(3) A processor, packer, grader, exporter or value addition centre shall furnish the information that the payment of market fees has already been made in other market in Form-F 1 within 14 days.
(4) A buyer who is doing processing, Page 34 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 grading, packing, value addition or exporter shall give proof within 14 days from the transaction to the Director or any other person authorised by him, with other details of applicant. The details including his licence No. SSI No. (if available), VAT No. and banker's detail shall also be provided.
(5) A buyer shall carry the permit in FORM-G-2 when he remove the agricultural produce, from one market area to another market area.]
49. Recovery of fees.- (1) The fees on agricultural produce shall be payable as soon as it is brought into the principal market yard or sub-market yard or market proper "[or market area from the purchaser as may be specified] in the bye-
laws.
Provided that the fees so paid shall be refunded
(i) on production of sufficient proof that such produce was not sold within the limits of the market area; or
(ii) if such produce is brought from outside the market area into the market area for use therein by the industrial concerns situated in the market area or for export and in respect of which a declaration has been made and certificate has been obtained in Form V subject to the proviso to sub-rule (2) of rule 48. Page 35 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 (2) The licence fees payable under rule 56 or 57 shall be paid alongwith the application for licence but in case the market committee refuses the grant or renewal of a licence the fees recovered shall be refunded to the applicant.
: Submissions of petitioner in Special Civil Application No. 687/2020 :
14. Learned Senior Advocate Mr. Mihir Joshi for the petitioner APMC submitted that respondent no.1 has not considered that respondent no.3 M/s. Jabsons Foods in the earlier proceedings before the State Government declared that it is a processor and is undertaking activities of processing which has been recorded in the order dated 22.08.2013 passed by respondent no.1 which is binding upon respondent no.3 and therefore, respondent no.3 could not have taken a contrary stand that it is not a processor. It was submitted that in the Page 36 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 inquiry report of the District Registrar, it has been specifically recorded that respondent no.3 is a processor and the said report has never been challenged by respondent no.3. It was submitted that on reading of sub-section 2(b) of section 28 of the Act, 1963 clearly provides that on the agricultural produce brought in the market area for commercial transaction or for processing, if the permit issued under clause
(e) has not been submitted, the market fee shall be deposited by the buyer or processor, as the case may be, in the office of the market committee, within fourteen days but before sale or resale or processing or export outside the market area. It was therefore, submitted that as respondent no.3 has failed to produce the permit as required under clause(e) for removal of the agricultural produce out of the market area in accordance with such permission in such form as may be Page 37 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 prescribed, respondent no.3 is liable for levy of the market fee/cess on the agricultural produce bought or sold in the market area as per section 28(1) of the Act, 1963.
14.1) It was submitted that even in circular dated 29.02.2016 issued by the Director provides that a processor is required to pay the market fee unless documents showing that market fees have been paid with regard to the subject goods earlier and in facts of the case, such documentary evidence has not been produced and therefore, the impugned order is contrary to the provisions of section 28 of the Act, 1963. 14.2) It was submitted that respondent no.1 Deputy Secretary (Appeals) has also misinterpreted the provisions of Rule 48 of the Rules 1965 read with section 28 of the Page 38 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 Act, 1963 and the order passed by this Court in Special Civil Application No.16465/2016 whereby respondent no.3 was directed to appear before the market committee and produce Form-V and after examining such documents, appropriate decision was to be taken by the petitioner APMC in accordance with law. It was submitted that pursuant to such directions issued by the Court, the petitioner market committee found that the documents were not produced and the order was passed directing to pay the market cess in accordance with law. It was therefore, submitted that the revisional authority could not have set aside the order passed by the respondents confirmed by the Director in the appeal on the basis of facts which were not there before the market committee and after taking into consideration the new facts developed by respondent no.3 taking into consideration the certificate of Small Page 39 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 Industries which includes the processing. 14.3) It was therefore, submitted that the case of respondent no.3 that activity of the purchase and sale has taken place outside the market area is not relevant in view of clause(b) of sub-section(2) of section 28 of the Act, 1963.
14.4) Learned Senior Advocate Mr. Joshi referred to the definition of "agricultural produce" as per section 2(i), definition of "market" as per section 2(xii-a),definition of "market area" as per section 2(xiii), definition of "processing" as per section 2(xvii-aa) and definition of "processor" as per section 2(xvii-aaa) which are reproduced here in below :
"2(i) "agricultural produce" means all produce, whether processed or not, of (agriculture and horticulture), specified in the Page 40 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 Schedule.
2(xii-a) "market" means a market established and regulated under this Act for the notified area and also includes a market proper, a principal market yard, sub-market yard, private market, e-market and such other markets as may be declared under this Act.
2(xiii) "market area" means any area declared to be a market area under this Act.
2(xvii-aa) "processing" means any one or more of a series of treatments relating to powdering, crushing, decorticating, dehusking, parboiling, polishing, ginning, pressing, curing or any other manual, mechanical, chemical or physical treatment to which raw agricultural produce or its product is subjected to.
2(xvii-aaa) "processor" means a person who undertakes processing of any agricultural produce on his own accord or on payment of a charge."
14.5) Referring to the above definitions, it was submitted that as per the provisions of section 28((2)(b), it is not in dispute that respondent no.3 has brought agricultural produce for processing in the market area as Page 41 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 per the definition of the "market area" and as such as per the provisions of Rule 48(1) which authorise the APMC to levy and collect fees on agricultural produce bought or sold in the market area, subject to provisions of sub-section(2) which provides that fees shall not be levied on agricultural produce brought from outside the market area into the market area for use therein by the industrial concern situated in the market area or for export and in respect of which declaration has been made and a certificate has been obtained in Form V. 14.6) It was submitted that respondent no.3 has not produced Form V or Form F as per sub-rule(3) of Rule 48 to furnish the information that payment of market fee has already been made in other market. It was therefore, submitted that in such circumstances, respondent no.3 was liable to Page 42 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 pay the market fees as levied by the petitioner APMC.
14.7) In support of his submission, learned Senior Advocate Mr. Joshi placed reliance on decision of the Apex Court in case of i) Orissa State (Prevention & Control of Pollution) Board v. Orient Paper Mills and another reported in (2003) 10 Supreme Court Cases 421, wherein it is held as under :
"13. Thus, in case manner is not prescribed under the Rules, there is no obligation or requirement to follow any, except whatever the provision itself provides viz. Section 19 in the instant case which is also complete in itself even without any manner being prescribed as indicated shortly before to read the provision omitting this part "in such manner as may be prescribed". Merely by absence of Rules, the State would not be divested of its powers to notify in official gazette any area declaring it to be air pollution control area. In case, however, the Rules have been framed prescribing the manner, undoubtedly the declaration must be in accordance with such rules.Page 43 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
14. On the proposition indicated above, a decision reported in AIR 1961 SC page 276 T. Cajee Vs. Jormanik Siem and Anr. would be relevant. The matter pertained to removal of Seim from the office namely the Chief Head man of the area in the district council governed by Schedule VI of the Constitution. The High Court took the view that the District Council could act only by making a law with the assent of the Governor. So far as the appointment and removal from the office of a Seim is concerned, provision contained in para 3(1) (g) of the Schedule was referred to, which empowered the District Council to make laws in respect of the appointment and succession of office of Chief and Headmen. The High Court took the view that in absence of framing of such a law, there would be no power of appointment of a Chief of Seim nor for his removal either. This court negated the view taken by the High Court observing that "..it seems to us that the High Court read far more into paragraph 3(1)(g) than is justified by its language.
Paragraph 3(1) is in fact something like a legislative list and enumerates the subjects on which the District Council is competent to make laws.... But it does not follow from this that the appointment or removal of a chief is a legislative Act or that no appointment or removal Page 44 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 can be made without there being first a law to that effect".
This court found that para 2(4) relating to administration of an autonomous district, vested in the District Council such powers and further observed as under:
"The Constitution could not have intended that all administration in the autonomous districts should come to a stop till the Governor made regulations under paragraph 19(1)(b) or till District Council passed laws under para 3(1)(g) ... Doubtless when regulations are made... The administrative authorities would be bound to follow the regulations so made or the laws so passed"."
ii) In case of Orient Paper & Industries Ltd v. State of M.P. and others reported in (20060 12 Supreme Court Cases 468, wherein it is held as under :
"14. According to Oxford Dictionary one of the meanings of the word 'process' is "a continuous and regular action or succession of actions taking place or carried on in a definite manner and leading to the accomplishment of some result".
The activity contemplated by the definition is perfectly general Page 45 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 requiring only the continuous or quick succession. It is not one of the requisites that the activity should involve some operation on some material in order to effect its conversion to some particular stage. There is nothing in the natural meaning of the word 'process' to exclude its application to handling.
There may be a process, which consists only in handling and there may be a process, which involves no handling or not merely handling but use or also use. It may be a process involving the handling of the material and it need not be a process involving the use of material. The activity may be subordinate but one in relation to the further process of manufacture. Any activity or operation, which is the essential requirement and is so related to the further operations for the end result, would also be a process in or in relation to manufacture. (See: C.C.E. v.
Rajasthan State Chemical Works (1991) 4 SCC 473).
15. In Black's Law Dictionary, (5th Edition), the word 'manufacture' has been defined as, "The process or operation of making goods or any material produced by hand, by machinery or by other agency; by the hand, by machinery, or by art. The production of articles for use from raw or prepared materials by giving such materials new forms, qualities, properties or Page 46 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 combinations, whether by hand labour or machine".
Thus by manufacture something is produced and brought into existence which is different from that out of which it is made in the sense that the thing produced is by itself a commercial commodity capable of being sold or supplied. The material from which the thing or product is manufactured may necessarily lose its identity or may become transformed into the basic or essential properties. (See Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. M/s. Coco Fibres (1992 Supp. (1) SCC 290).
16. Manufacture implies a change but every change is not manufacture, yet every change of an article is the result of treatment, labour and manipulation. Naturally, manufacture is the end result of one or more processes through which the original commodities are made to pass. The nature and extent of processing may vary from one class to another.
There may be several stages of processing, a different kind of processing at each stage. With each process suffered the original commodity experiences a change. Whenever a commodity undergoes a change as a result of some operation performed on it or in regard to it, such operation would amount to processing of the commodity; but it is only when the change or a series of changes takes the commodity to Page 47 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 the point where commercially it can no longer be regarded as the original commodity but instead is recognized as a new and distinct article that a manufacture can be said to take place. Process in manufacture or in relation to manufacture implies not only the production but also various stages through which the raw material is subjected to change by different operations. It is the cumulative effect of the various processes to which the raw material is subjected to that the manufactured product emerges. Therefore, each step towards such production would be a process in relation to the manufacture. Where any particular process is so integrally connected with the ultimate production of goods that but for that process processing of goods would be impossible or commercially inexpedient, that process is one in relation to the manufacture. (See Collector of Central Excise, Jaipur v. Rajasthan State Chemical Works, Deedwana, Rajasthan (1991 (4) SCC
473).
xxx
19. To put differently, the test to determine whether a particular activity amounts to 'manufacture' or not is: Does new and different goods emerge having distinctive name, use and character. The moment there is transformation into a new commodity commercially known as a distinct and separate commodity having its own Page 48 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 character, use and name, whether be it the result of one process or several processes 'manufacture' takes place and liability to duty is attracted. Etymologically the word 'manufacture' properly construed would doubtless cover the transformation. It is the transformation of a matter into something else and that something else is a question of degree, whether that something else is a different commercial commodity having its distinct character, use and name and commercially known as such from that point of view is a question depending upon the facts and circumstances of the case. (See Empire Industries Ltd. v. Union of India (1985 (3) SCC 314).
xxx
21. The stand of leaned counsel for the respondents that the levy is under two circumstances i.e. (i) on the buying and selling of notified agricultural produce when brought within the State into the market area (ii) on the notified agriculture produce when brought from within the State or from outside the State into the market areas. The case at hand, it is submitted, relates to the second category."
iii) In case of Vipul Manharlal Shah v.
State of Gujarat reported in 2016 SCC Page 49 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 Online Guj 1811, wherein it is held as under :
"12. It is not in dispute that by virtue of provision under Article 246(3) of the Constitution, the legislature of the State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II (State) in the Seventh Schedule of the Constitution. Further from reading of List II of Seventh Schedule, it is clear that the State is empowered to legislate laws on the subject of markets and even as per Entry 28 to collect fees in respect of any of the matters in List II, by virtue of Entry 66 of the List. In that view of the matter, the core question which requires to be considered in this case is whether the word "market" used in Entry 28 will interpret the market area or not. If we take dictionary meaning of market as per Black's Law Dictionary, 9th Edition, the word "market" includes place of commercial activity in which goods or services are bought and sold (2), geographical area or demographic segment considered as a place for demand for particular goods or services. Similarly, if we read the word "market" defined in Oxford Dictionary, it is defined as a regular gathering of people for purchase and sale of provisions, livestock, and an open space or covered building where vendors Page 50 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 convene to sell their goods; the area or arena in which commercial dealings are conducted. Looking to the meaning as referred above, we are of the considered view that market necessarily means only principal market or a sub market. But it is always open for the respondents to notify the area for the purpose of implementation of the provisions of the Act. If transactions are within the boundaries of geographical area as per the notification and if the transactions are made for buying or selling by the traders like petitioners who are undisputedly within such area, it is to be treated as market only. Restrictive meaning of market confining to places therein to principal market or sub-market will run contrary to the objectives of the Act.
xxx
14. The Hon'ble Supreme Court, by considering the provision under Section 27(c)(iii) of Uttarakhand Agricultural Produce Marketing (Development and Regulation) Act, which was the subject-matter of challenge therein, observed that agricultural produce was brought from outside the State into the market area for carrying out manufacturing. As a fact, it was found that as there was no sale or purchase of the agricultural product within the market area per se. The Hon'ble Supreme Court has struck Page 51 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 down the said provision on the ground that it runs contrary to the objects of the Act. Impugned provision of Section 28 of the Act itself makes it very clear that it prescribes levy and collection of fee on the agricultural produce bought and sold in the market area. In that view of the matter, we are of the considered view that such judgment will not support the case of the petitioners having regard to the facts and circumstances of the present case. Thus, we reject the plea of the petitioners that the State legislature had no competence to enact law, particularly under Section 28 of the Act which empowers levy and collection of fee within the market only. 15. It is also the case of the petitioners that in view of provision under Section 28(2)(a) of the Act, no market fee can be levied for the second time. From the reading of the very provision, the said provision makes it clear that such levy cannot be made if such fee is already collected as market fee and further proof is filed for payment of such fee. It is the case of the respondents that when proof is produced to show that the goods purchased by the petitioners have already suffered market fee, to such extent, it is deductible and the same cannot be levied. In view of such stand of the respondents in the affidavit in reply coupled with the submission of learned counsel for the respondents that it cannot be said that 2nd respondent market Page 52 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 committee is collecting market fee for second time contrary to the provision under Section 28(2)(a) of the Act, the contention of the petitioners deserves rejection.
xxx
19. It is also the case of the petitioners that by the restriction by virtue of the provisions of the Act, the rights conferred on the petitioners of free trade guaranteed under Article 301 of the Constitution are violated. In the case of Jan Mohammad Noor Mohammad Bagban v. State of Gujarat and Another, reported in (1966) 1 SCR 505 = AIR 1966 SC 385 with reference to the provision of Gujarat Agricultural Produce Market Act 20 of 1964 alone such pleas were raised before the Hon'ble Supreme Court and all such contentions were rejected by the Hon'ble Supreme Court. In that view of the matter, we need not deal with such ground in detail in view of the above judgment.
xxx
22. Equally, the allegation of the petitioners that public notice dated 6th January, 2016 issued by 2nd respondent is discriminatory as much as the same is issued only to the traders of Kalupur Chokha Bazar. It is further submitted that as much as no such notice is issued to other traders in the entire market area, the action of the 2nd respondent is Page 53 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 discriminatory. Such plea also cannot be accepted for the reason that as the traders in Kalupur Chokha Bazar were not paying market fee, such notice is issued to the traders of Kalupur Chokha Bazar. In the absence of any such material to show that for other areas where the traders are trading in notified items, no steps were taken to recover fees from such traders, the authorities may take steps area- wise. That itself cannot make the action of the 2nd respondent discriminatory. The notice issued insisting for taking licence and payment of market fee in the market area from the traders who are transacting business in the market area is in accordance with rules." : Submissions of respondent no.3 in Special Civil Application No. 687/2020 :
15. On the other hand learned Senior Advocate Mr. B.S. Patel appearing for respondent no.3 Jabsons Foods submitted that respondent no.3 is an industrial concern and the Commissioner of Small Scale Industries has issued certificate to that effect. He invited the attention to the certificate dated 29.11.2014 issued by the District Page 54 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 Industries Centre, Bharuch, for manufacture of items like Chikkis, Khakras, Peanuts, Chanas, Dry Fruits, Farsan etc. produced at Annexure-R1 to the affidavit in reply filed on behalf of respondent no.3. It was therefore, submitted that as per section 28 of the Act, 1963 respondent no.3 is not liable to pay any market cess/fees as nothing has been brought or sold in the market area of the petitioner APMC and therefore, the provisions of section 28(2) of the Act, 1963 is also not applicable.
15.1) It was further submitted that respondent no.1 and this Court directed respondent no.3 to submit Form V as per Rule 113 of the Rules, 1965, however, the petitioner never raised any demand alleging that respondent no.3 bought the material from market area of the petitioner-APMC or any transaction has taken place in the market Page 55 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 area at the instance of respondent no.3.
15.2) Learned Senior Advocate Mr. Patel also pointed out that various Form V were submitted by respondent no.3 for verification of the petitioner but the same were not taken into consideration. He invited the attention of the Court to the representation dated 6.02.2020 along with Form V produced at Anneuxre-R2 collectively to the affidavit in reply to submit that respondent no.3 in order not to burden the reply, all representations made to the petitioner are not placed on record.
15.3) Learned Senior Advocate Mr. Patel submitted that Form V under Rule 113 of the Rules 1965 are duly submitted as per the directions issued by this Court vide order dated 20.11.2018 passed in Special Civil Application No. 16465/2016 and thereafter the Page 56 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 petitioner ignoring such forms has passed the order of levy of fees which is rightly not upheld by respondent no.1. It was submitted that by the impugned order passed by respondent no.1, the petitioner is directed to verify Form V submitted by respondent no.3.
15.4) Learned Senior Advocate Mr. B.S. Patel also relied upon the observations made by this Court in order passed in Special Civil Application No. 16465/2016 to contend that from the beginning it is the stand of respondent no.3 that it is not only the processor but also an industrial concern and therefore, the provisions of sub-section(2) of section 28 would not be applicable so as to fasten the liability to generate more revenue by the petitioner.
15.5) It was further submitted that Page 57 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 section 28(2)(e) of the Act, 1963 provides for the procedure to remove any agricultural produce out of the market area and in accordance with the permit issued in the form which may be prescribed, however, no such Form is prescribed by the Rules, 1965 till date. It was further submitted that respondent no.3 has not removed any agricultural produce from the market area without any permission as Rule 48(2) of the Rules, 1965 provides for exemption from levy of market fees on the agricultural produce in respect of which declaration has been made and certificate has been obtained in Form V. It was therefore, submitted that the petitioner cannot levy any market fee or cess upon the respondent no.3 on conjoint reading of section 28(1)(2) of the Act, 1963 read with Rule 48 of the Rules 1965.
15.6) Learned Senior Advocate Mr. Patel Page 58 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 referred to and relied upon the additional affidavit filed on behalf of respondent no.3 to point out that respondent no.3 is a manufacturer and has been carrying on manufacturing since inception under the license granted by the competent authorities like factory license, license issued by the Joint Commissioner of Industries and General Manager, District Industries Centre, Bharuch.
It was also submitted that respondent no.3 is a member of Agricultural and Processed Food Products and Export Development Authority as a manufacturer exporter. It was therefore, submitted that on perusal of such licenses and documents, it cannot be said that respondent no.3 is only a processor but it is also a manufacturing industrial concern and therefore, the provisions of section 28(2) of the Act, 1963 would not be applicable as sought to be applied by the petitioner to collect the market fees from respondent no.3. Page 59 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 In support of his submissions, learned Senior Advocate Mr. Patel relied upon the following decisions :
1) Gujarat Ambuja Exports Limited and another v. State of Uttarakhand and others reported in (2016) 3 Supreme Court Cases 601, wherein it is held as under :
"28. A perusal of the Preamble of the Act shows that the Act has been enacted to regulate the marketing of agricultural produce, and for the effective superintendence and control of the markets in the State of Uttarakhand. At this stage, it is imperative to examine the role of the preamble as an aid of statutory interpretation.A Constitution Bench of this Court in Kavalappara Kottarathil and Kochunni alias Moopil Nayar v. States of Madras and Kerala[AIR 1960 SC 1080] held as under:
"The preamble of a statute is "a key to the understanding of it"
and it is well established that "it may legitimately be consulted to solve any ambiguity, or to fix the meaning of words which may have more than one, or to keep the effect of the Act within its real Page 60 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 scope, whenever the enacting part is in any of these respects open to doubt"
xxx
31. A combined reading of all the above mentioned provisions and the preamble makes it amply clear that the Act has been enacted with a view to regulate the buying and selling of the agricultural produce within the area notified as Market Area under Section 4 of the Act. At the cost of repetition, we extract the impugned provision, i.e. Section 27 (c) (iii):
"any such agricultural produce, which arrives in any Market area of the State for sale, storage, processing, manufacturing, transaction or other commercial purposes from any other State or out of Country for the first time, it shall be registered as "Primary Arrival" and on such produce, Market fee and Development cess shall be payable."
Section 27 (c)(iv) reads as:
"any agricultural produce which is brought to any Market area within the State after the transaction of sale from any other Market area of the State after paying Market fee and Development cess for the purpose of sale, storage, processing, manufacturing, transaction or other commercial purposes, it Page 61 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 shall be called as "Secondary Arrival" and on such produce, no Market fee and Development cess shall be leviable."
32. Before we examine the legislative competence of the State Legislature to enact the impugned provisions, we direct our attention to the decision of a Constitution Bench of this Court, rendered in the case of M.C.V.S. Arunachala Nadar & Ors. v. State of Madras[AIR 1959 sc 300], wherein the object of the market legislations in general was assessed:
"6......Marketing legislation is now a well-settled feature of all commercial countries. The object of such legislation is to protect the producers of commercial crops from being exploited by the middlemen and profiteers and to enable them to secure a fair return for their produce......"
33. The primary object, thus, of any market legislation is to ensure that the producer of the agricultural produce gets a fair return. It is also essentially meant to govern the "buyer-seller" relationship. In this context, an examination of Section 27(c)(iii) would show that it is against the scheme of the Act, as it seeks to levy market fee and development cess even on those units which merely bring agricultural produce from outside the State into the market area for carrying out Page 62 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 manufacturing, in that there is no sale or purchase of the product within the market area per se.
34. Further, it is important to examine the legislative competence of the State Legislature to enact the particular provision. The two relevant entries in play here are Entry 52 of List I and Entry 28 of List II. Entry 28 of List II pertains to Markets and Fairs, while Entry 52 of List I pertains to Industry. In the case of The Belsund Sugar Co. Ltd v. State of Bihar[(1999)9 SCC 620], it was held, inter alia, as under:
"16.It becomes at once clear that if location of markets and fairs simpliciter and the management and maintenance thereof are only contemplated by the Market Act, then they would fall squarely within the topic of legislative power envisaged by Entry 28 of List II. However, the Market Act, as well will presently show, deal with supply and distribution of goods as well as trade and commerce therein as it seeks to regulate the sale and purchase of agricultural produce to be carried on in the specified markets under the Act. To that extent the provisions of Entry 33 of List III override the legislative powers of the State Legislature in connection with legislations dealing with trade and commerce in, and the Page 63 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 production, supply and distribution of goods. Once we turn to Entry 33 of the Concurrent List, we find that on the topic of trade and commerce in, and the production, supply and distribution of, goods enumerated therein at Sub-
clause (b), we find listed items of foodstuffs, including edible oilseeds and oils."
35. The scope of the term 'Industry' for the purpose of Entry 52 of List I was examined at length by Ruma Pal, J. in her concurring opinion in the constitution bench decision of ITC Ltd. referred to supra, wherein it was held as under:
"126. To sum up: the word 'Industry' for the purposes of Entry 52 of List I has been firmly confined by Tika Ramji to the process of manufacture or production only. Subsequent decisions including those of other Constitution Benches have re-affirmed that Tika Ramji's case authoritatively defined the word 'industry'-to mean the process of manufacture or production and that it does not include the raw materials used in the industry or the distribution of the products of the industry. Given the constitutional framework, and the weight of judicial authority it is not possible to accept an argument canvassing a wider meaning of the word 'industry'.Page 64 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 Whatever the word may mean in any other context, it must be understood in the Constitutional context as meaning 'manufacture or production'.
127. Applying the negative test as evolved in Tika Ramji in this case it would follow that the word 'industry' in Entry 24 of List II and consequently Entry 52 of List I does not and cannot be read to include Entries 28 and 66 of List II which have been expressly marked out as fields within the State's exclusive legislative powers. As noted earlier Entry 28 deals with markets and fairs and Entry 66 with the right to levy fees in respect of, in the present context, markets and fairs. Entry 52 of List I does not override Entry 28 in List II no has Entry 28 in List II been made subject to Entry 52 unlike Entry 24 of List II. This Court in Belsund Sugar (supra) has also accepted the argument that Entry 28 of List II operated in its own and cannot be affected by any legislation pertaining to industry as found in Entry 52 of List I.
128. If 'industry' does not include 'markets and fairs' it is important to define what markets and fairs connote.
'Market' may strictly be defined as "the meeting or congregating together of people for the Page 65 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 purchase and sale of provisions or livestock, publicly exposed, at a fixed time and place". ......At common law, fairs and markets were also franchises or rights to hold a concourse of buyers and sellers to dispose of the commodities in respect of which the franchise is given. This included the right to levy a toll or sum payable by the buyer upon sales of articles in a market. The sense in which the words has been used in Entry 28 appears to cover not only such right but the market place itself including the concourse of buyers and sellers' and the regulation of all these."
(emphasis laid by this Court)." 15.7) Reliance was placed upon the definition of "industrial concern" as per section 2(c) of the Industrial Finance Corporation Act, section 2(d) of Collection of Statistics Act, 2(c) of Industrial Development Bank of India and section 2(e) of Research and Development Cess Act, 1986 which reads as under :
"INDUSTRIAL CONCERN" means any concern engaged or to be engaged in -Page 66 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
(i) the manufacture, preservation or processing of goods"
15.8) It was therefore, submitted that the processing of goods is also part of the industrial concern and therefore, the provisions of section 28(1) could not be applicable to respondent no.3. 15.9) Learned Senior Advocate Mr. Patel also referred to and relied upon decision in case of Chhaganlal Mansukhlal and another v. K.K. Bhatt and another reported in (1981) 2 Supreme Court Cases 418, wherein it is observed as under :
"3. Learned counsel for the parties are agreed that the provisions of Rule 49 are not attracted and no fees are payable under it at the stage of entry into a market area if the agricultural produce in question is covered by sub-rule 2 of Rule 48, i.e. when such produce fulfils either of the following conditions:
(1) It is brought from outside the market area there into for use Page 67 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 therein by the industrial concerns situated therein or for export and in respect thereof a declaration has been made and a certificate has been obtained in Form V. (2) The sale or purchase of such produce comes within the purview of sub-section (3) of section 6 of the Gujarat Agricultural Produce Markets Act.
4. After hearing learned counsel for the parties, we accept this interpretation of Rules 48 & 49 which flows directly from the language employed therein, and hold that Rule 49 will have no application to any case which falls within the ambit of sub-rule (2) of Rule 48."
15.10) Referring to the above decision, it was submitted that when Rule 48(2) of the Rules, 1965 is applicable, Rule 49 is not applicable and no fees are payable under it at the stage of entry into a market area. 15.11) It was therefore, submitted that in facts of the case definition of "processing" as per section 2(xvii-aa) of the Act, 1963 Page 68 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 which has been brought on statute with effect from 2.07.2007 is also not applicable as respondent no.3 is manufacturing a new product rather than doing treatments relating to powdering, crushing, decorticating, dehusking, parboiling, polishing, ginning, pressing, curing or any other manual, mechanical, chemical or physical treatment to which raw agricultural produce or its product is subjected to. It was submitted that respondent on.3 is an industrial concern as a Small Scale Industry and as such the provisions of section 28 of the Act, 1963 would not be applicable.
: Submissions of petitioner in Special Civil Application No. 17299//2021 :
16. Learned advocate Mr. Hriday Buch appearing for the petitioner in Special Civil Application No.17299/2021 submitted that the petitioner M/s. Gulshan Polyols Limited is also an industrial concern. He relied upon Page 69 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 the process flow chart to demonstrate that the raw material maize is used for production of edible oil, cattle field, poultry and for pharmaceutical purposes. It was submitted that considering the activities of the petitioner, it cannot be said that the petitioner is only a processor. 16.1) Learned advocate Mr. Buch submitted that the findings arrived at by respondent no.1 in the impugned order are contradictory to its stand taken in case of Jabsons Foods. 16.2) Learned advocate Mr. Buch pointed out that in paragraph no. 5.6 of the impugned order, respondent no.1 has observed that "any market" stated in section 28 is to mean the "market" as defined under section(2) of the Act, 1963 which is not correct. It was submitted that the petitioner is purchasing the agricultural produce of maize from other Page 70 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 States and therefore, the observations made in paragraph no. 5.7 of the impugned order are contrary to the provisions of section 2(xii-a), 2(xiii) and provisions of section 28(2)(b)of the Act, 1963 read with Rule 48 (2), (3) and (5) of the Rules 1965. It was submitted that the petitioner has never been asked to produce Form F1, Form G2 and Form V along with verification by the respondent no.3 APMC and as such respondent no.1 has travelled beyond the scope of revisional jurisdiction to interpret section 28(2)(b) of the Act, 1963. It was submitted that the provisions of section 28(2) are to be applied if the market fee is to be levied as per the provisions of section 28(1) of the Act, 1963. 16.3) Learned advocate Mr. Buch further submitted that respondent no.3 has rejected Form-V submitted by the petitioner without assigning any reason only with a view to Page 71 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 harass the petitioner and to coerce the petitioner to enter into undue settlement. 16.4) It was submitted that the petitioner has submitted the communications with the market from where it has purchased the goods to demonstrate that such markets were situated outside the State of Gujarat and as such, in view of the provisions of section 28 of the Act, 1963 and Rule 48 of the Rules, 1965 whenever an agricultural produce is procured from outside the State of Gujarat and brought in the market area within the State of Gujarat, the same is required to be declared as per Form-V to the appropriate authority and certificate is required to be produced. However, the petitioner has already submitted Form-V which has been rejected by respondent no.3.
16.5) Learned advocate Mr. Buch referred to and relied upon the order passed by Page 72 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 respondent no.1 in case of Jabsons Foods which is the subject matter of Special Civil Application No.687 of 2020 to point out that respondent no.1 has taken a contrary view in case of the petitioner.
16.6) Learned advocate Mr. Buch also referred to and relied upon the decision in case of Gujarat Ambuja Exports Limited and another(supra) to submit that in case of the petitioner also no market fee can be levied on goods procured from outside the State of Gujarat of which there is no sale or purchase of the product within the market area. 16.7) Learned advocate Mr. Buch also referred to and relied upon the decision in case of APMC Yashwanthapura through its Secretary v. Selva Foods through its Managing Partner reported in 2021 SCC OnLine SC 1253 wherein the Apex Court held that if one merely imports notified agricultural Page 73 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 produce from outside the State for the purpose of cleaning and processing without selling the process produced within the market area, is not liable to pay the market fee in facts of the said case. It was submitted that in facts of the petitioner also in similar situation, no market fee would be payable by the petitioner as once the agricultural produce is processed, it will not attract the market fees as there is no sale in the market area.
: Submissions of State Government in both the petitions:
17. Learned Assistant Government Pleader Mr. Dhawan Jayswal submitted that respondent no.1 Deputy Secretary (Appeals) has not taken any contrary decision in case of Special Civil Application No.17299/2021 than that taken in Special Civil Application No.687/2020 because in both the cases the facts are different and Page 74 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 the decision of respondent no.1 Deputy Secretary (Appeals) is based on the facts of each case. It was submitted that in case of Jabsons Foods in Special Civil Application No.687/2020 there was direction by this Court to APMC to consider Form-V to be submitted before it and thereafter to grant exemption from the payment of market fee whereas in case of petitioner in Special Civil Application No.17299/2021, Form-V were not submitted before respondent no.3 APMC and Form-V which were submitted later on have been rejected by the APMC on valid grounds. 17.1) It was submitted that the issue of applicability of section 28 as it existed prior to 2020 is already discussed by this Court in the order passed in Special Civil Application No. 16465/2016 and accordingly, respondent no.1 has passed the impugned orders in both the matters.
Page 75 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 : Submissions of respondent no.3 in Special Civil Application No. 17299//2021 :
18. Learned Senior Advocate Mr. Mihir Joshi with learned advocate Mr. Dipen Desai for the respondent no.3 APMC submitted that the petitioner was holding license for the year 2019-2020 and thereafter the petitioner company has never applied for renewal of license before the District Registrar and the District Registrar has also not issued license under section 27A of the Act, 1963 and therefore, in absence of license the petitioner is prohibited from carrying out any operation in the market area of APMC as per the scheme of the Act.
18.1) It was submitted that for the year 2021-2022 the petitioner company has not renewed the license and therefore, the petitioner is not entitled for any Page 76 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 discretionary relief from this Court when the action of the petitioner is punishable under section 36 of the Act, 1963.
18.2) It was submitted that from 2006-2007 till 2016-2017, the petitioner company was regularly paying market cess on agricultural produce as it was doing business of processing the maize since 2006. It was submitted that thereafter several payments of market fees were made along with penalty of five times as stipulated in the Act,1963 without any protest. It was submitted that the issue raised by the petitioner with regard to the undue harassment and coercion is an afterthought and was raised before respondent no.2 for the first time and was never raised before the Market Committee. It was submitted that the petitioner failed to produce the stock register and other documents for inspection before respondent Page 77 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 no.3 APMC inspite of the fact that the same was demanded for number of times and it was only after notice was issued by the Market Committee that the petitioner produced some of the documents.
18.3) It was submitted that Form-V submitted by the petitioner company were rejected by respondent no.3 APMC since all the details mentioned in the Forms were not filled and stock register was also not supplied along with the Forms. Rejection of the form filed was never challenged by the petitioner and therefore, the petitioner cannot raise the objection with regard to the rejection of such forms by the Market Committee.
18.4) Reliance was also placed on the following averments made in affidavit in reply with regard to the documents produced Page 78 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 by the petitioner from its seller outside the State of Gujarat namely, Yashika Agro Market Yard to point out that such documents were not genuine as under :
"17. It is submitted that since the documents and the stock registers were not supplied by the petitioner
- company along with the Form V, the answering respondent was constrained to verify about the genuineness of the details with the Yashika Agro Market Yard where the petitioner - company purchases the agricultural produce from the trader and has allegedly paid market cess. It is further submitted that the answering respondent was in the receipt of the letter addressed by the Yashika Agro Market Yard stating that M/s Narendra Birdichand Agrawal and M/s Amit Traders have issued false and forged documents and the this fact was brought to the notice to the Deputy Secretary (Appeals) by filing further affidavit. Copies of Form V are annexed hereto and marked as ANNEXURE:R3 Colly to this reply."
18.5) It was submitted that in view of above, there are disputed questions of facts and therefore, in view of forged and fabricated certificates produced by the Page 79 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 petitioner, the petitioner is not entitled to any relief under Article 226 of the constitution of India.
18.6) It was submitted that as per the provisions of section 28 of the Act, 1963 market fee paid outside the State of Gujarat was not paid by the petitioner and exemption claimed under sub-section 2(b) of section 28 cannot be extended on that ground. 18.7) It was submitted that respondent no.1 has rightly interpreted the word "market" mentioned in sub-section(2) of section 28 of the Act,1963 as per the definition of "market" in section 2(xiii) of the Act and when the Act, 1963 applies to the State of Gujarat, any payment of cess made outside the territories of Gujarat State will not have any bearing for the purpose of seeking exemption. It was therefore, submitted that the order passed by respondent Page 80 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 no.1 is just and proper.
18.8) Learned Senior Advocate Mr. Joshi reiterated the submissions which were made in Special Civil Application No.687/2020 and submitted that there is total outstanding of Rs.4,71,00,106/- to be recovered from the petitioner by respondent no.3 APMC and as such, no interference may be made in the impugned order passed by respondent no.1, more particularly, in absence of supply of requisite form and documents by the petitioner company.
: Rejoinder of the petitioner in Special Civil Application No. 17299//2021 :
19. In rejoinder, learned advocate Mr. Buch submitted that this Court vide order dated 8.02.2021 has directed the State Government to take an independent decision on interpretation of section 28 of the Act, 1963 Page 81 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 and as respondent no.1 has failed to take any such decision, in view of the fact that there is no buying and selling of agricultural produce in the market area so as to attract levy of market fee as per the provisions of section 28 of the Act, 1963.
19.1) It was pointed out that right from 2005-2006, the petitioner was never asked for any license by respondent no.3 and it is only after 2016-2017 that the petitioner was asked to obtain the license and the issue of license is unnecessarily brought in submissions of respondent no.3 which is the subject matter of another set of proceedings and the petitioner was holding valid license for the year 2019-2020.
19.2) It was submitted that the petitioner is in process of applying for renewal of license. It was pointed out that there is no fraud or misrepresentation by the petitioner Page 82 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 inasmuch as the fishing inquiry by respondent no.3 was made behind the back of the petitioner and the same cannot be considered as valid inquiry in this proceeding. 19.3) Learned advocate Mr. Buch submitted that the petitioner company is manufacturing pharmaceutical product "Sorbitol 70%" which is not an agricultural produce and is sold outside the market area and therefore, as per the provisions of section 28(2)(b) of the Act, 1963, the petitioner is entitled to exemption from the levy of market fees. : Analysis :
20. On perusal of the provisions of section 28 of the Act, 1963, it is a charging section for levy of fees by the Market Committee, subject to the provisions of the Rules,1965 and to prescribe maximum and minima from time to time by the Market Page 83 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 Committee, levy and collection of fees on the agricultural produce bought or sold in the market area as it existed prior to amendment in the year 2020.
21. In facts of the case of both the petitions admittedly, there is no agricultural produce bought or sold in the market area. "Market area" is defined under section 2(xiii) to mean any area declared or deemed to be declared to be a market area in the Act,1963. Word "market" is defined in clause 2(xii-a)to mean a market established and regulated under the Act,1963 for the notified market area and also includes a market proper, a principal market yard, sub- market yard, private market, e-market and such other markets as may be declared under the Act. Thus the market area as per section 28 of the Act, 1963 has to be understood as market established and regulated under the Page 84 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 provisions of the Act, 1963.
22. Sub-section (2)(a) of section 28 provides that market fee or cess shall not be levied for the second time in any market area from the buyer who is a processor, grader, packer, value addition centre or exporter of any agriculture produce and market fee has already been paid on that agriculture produce in any market and the information in this context has been furnished by the person along with proof. Section 28(2)(b) provides that on the agriculture produce brought in the market area for commercial transaction or for processing, if the permit issued under clause (e) has not been submitted, the market fee shall be deposited by the buyer or the processor within fourteen days for sale or resale or processing or export outside the market area. Proviso to section 28 (2)(b) stipulates for levy of penalty by way of Page 85 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 market fee or the user charges two times of the leviable and recoverable amount. Therefore, the provisions of section 28(2)(a) and section 28(2)(b) of the Act, 1963 provides for exemption from payment of market fee on the agricultural produce brought in the market area for commercial transaction or for processing subject to conditions. Therefore, as observed by this Court in order passed in Special Civil Application No. 16465/2016 provisions of section 28(2)(b) would be applicable, subject to the conditions stipulated therein as under:
"17. It is the case of the writ applicants from day one that the fees which is sought to be levied is upon the agricultural produce purchased outside the market area and, thereafter, being brought in the market area for being used in the factory. This stance of the writ applicants is fortified by few findings recorded by the Deputy Director (Agriculture Marketing & Rural Finance). It appears that the writ applicants, on receipt of the demand notice, took up the issue with the Director (Agriculture Page 86 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 Marketing & Rural Finance). The Director, in turn, directed the Deputy Director to hold an inquiry and file a report in this regard. Some of the observations in the report are relevant. The same are quoted as under;
"(5) Shree Jabson Foods has obtained a license from Shree Agricultural Produce Market Committee. According to the learned advocate of the Market Committee, cess of the agricultural produce purchased from within the market area has been paid but the cess of the agricultural produce purchased from outside the market area has not been paid. (17) Thus, as per the reply submitted by the Jabson Foods, if the agricultural produce have been purchased from outside and the cess of the same is not required to be paid, then also as per sections 28(A) & (B) of the Gujarat Agricultural Produce Market (Amendment) Act, 2007, a procedure has to be followed, and as per subrule 49(1) of the Market Committee also, the Market Committee has to be informed about the same.
However, Jabson Foods has not submitted anything as regards the same. Thus, it appears that the above law, rules and sub-
rules have not been complied with."
Page 87 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
18. Thus, it appears that the Market Committee conceded before the Deputy Director that the writ applicants have paid the fees on the agricultural produce purchased within the market area but have failed to pay the fees on the agricultural produce purchased outside the market area and, thereafter, brought within the area."
23. In case of Chhaganlal Mansukhlal and another v. Agricultural Produce Market Committee reported in 1975 GLR 916, this court has held that no fees is payable at the stage of entry into market area if the agricultural produce in question is covered by sub-rule(2) of Rule 48 if it is brought from outside market area for use therein by the industrial concern situated in the market area or for export and in respect thereof a declaration has been made and certificate has been obtained in Form V. In such circumstances, the petitioner in Special Civil Application No.687/2020 was directed to Page 88 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 produce Form-V which were filled up as and when the goods were purchased from different places outside the market area and brought within the market area for industrial use and after verification, the market committee was directed to take appropriate decision in that regard.
24. The issue with regard to the levy of market fee was not required to be adjudicated again as it is clear from the provisions of the Act,1963 as well as the observations made by this Court after considering the decision of Division Bench judgment of this Court as well as Apex Court judgment that no market fee would be leviable if the goods are brought into the market by the industrial concern along with Form-V as per Rule 48(2) of the Rules, 1965.
25. The contention raised on behalf of the Page 89 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 APMC cannot be accepted in both the cases as in both the petitions in view of undisputed fact to the effect that respondent no.3 in Special Civil Application No. 687/2020 and petitioner in Special Civil Application No. 17299/2021 are industrial concern and as such the provisions of section 28(2)(b) of the Act, 1963 which is applicable to a processor which is also an industrial concern as per the definition of "industrial concern"
extracted hereinabove and as such the provision of Rule 48 of the Rules, 1965 is complied with which is not amended from the beginning to commensurate with section 28 of the Act,1963. Moreover, the procedure prescribed in Section 28(2)(e) is not yet implemented by APMC or the respondent State for issuance of permit for removal of goods by the processor. Therefore, on conjoint reading of various definitions of market, market area and provisions of section 28(2) Page 90 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
(b) of the Act, 1963 and Rule 48(2) and Rule 49 of the Rules, 1965, APMC was not justified in levy of market cess on the industrial concern with regard to the goods brought in the market area or removed therefrom after following the procedure prescribed under the same.
26. The Apex Court in case of Gujarat Ambuja Exports Limited and another(supra) in connection with Uttarakhand Agricultural Produce Marketing (Development and Regulation) Act, 2011 held that that the Act has been enacted to regulate the market of agricultural produce and for effective superintendence and control of the markets in the State and on combined reading of preamble and other relevant sections, it was amply clear that the Act has been enacted with a view to regulate buying and selling of agriculture produce within the area notified Page 91 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 as market area. In such circumstances, the Apex Court examined the validity of section 27(c)(iii) of the said Act that it was against the scheme of the Act as it seeks to levy market fee and development cess even on those units which merely bring agricultural produce from outside the State into the market area for carrying out manufacturing, in that there is no sale or purchase of product within the market area per se. Applying the same analogy, the APMC cannot levy market fee on the industrial units in both the cases which merely bring agricultural produce into the market area for carrying out manufacturing activity which includes processing, as there is no sale or purchase of the products within the market area, subject to fulfillment of Rule 48 of the Rules. 1965.
27. Similarly, in case of APMC Page 92 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 Yashwanthapura(supra) the Apex Court in facts of the said case held that when there is denial of sale of the agricultural produce within the market area of the APMC after processing, then such manufacturer was held to be entitled for exemption from payment of market fee as the same is neither bought or sold in market area.
28. Reliance placed by the learned advocate for APMC on the decision in case of Orissa State (Prevention & Control of Pollution) Board(supra) for the contention that whole working and functioning of the Act is meant for regulating the market operation within the State of Gujarat and merely because Rules have not been framed prescribing the manner as per section 28(2)(e) of the Act,1963 it would not render the Act inoperative. It was submitted that merely because Rules are not framed as per the provisions of the Act, the Page 93 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 action taken by the APMC would not itself become ultra vires. It was submitted that as held by the Apex Court, the powers which vests in an authority would not cease to exist simply for the reason that the rules have not been framed or the manner of exercise of power has not been prescribed. These contentions on behalf of the APMC would not be relevant in facts of the case, more particularly, when as per the directions issued by this Court, Form-V was submitted by both the industrial concerns before APMC as per Rule 48(2) of the Rules 1965 and reference to clause (e) and clause (b) of sub-section 2 of section 28 with regard to permit to be issued for removal of goods from outside the market area is concerned, there is no prescribed procedure and as such declaration made by the industrial concern would be sufficient for exemption from levy of market fees/cess on such goods to be Page 94 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 removed from market area. Therefore, as per the provisions of section 28(1), market fee is leviable on agriculture produce bought or sold in market area, whereas section 28(2)
(b), refers to agriculture produce brought in market area for commercial transaction or for processing and such agricultural produce is to be removed as per the permission prescribed under clause(e) thereof only.
29. In facts of the case once agricultural produce is brought in the market area, there is no removal of agricultural produce as per clause (e) because what is removed from the market area is not an agricultural produce but it is a different product. The contention of the APMC that the industrial concern in both the cases is a processor is contrary to the facts on record. In that view of the matter, there is no need for submission of any permission as per clause (e) of section Page 95 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 28 of the Act, 1963. Because as per Rule 48(2) of the Rules, 1965 no fees could be levied on agriculture produce brought from outside the market area into market area for use thereof by industrial concern situated in the market area or for export in respect of which declaration is made and certificate has been obtained in Form-V, subject to proviso whereby time limit of 20 days is prescribed from the date on which goods was brought in the market area. In such circumstances, Rule 49 prescribing the recovery of fees on agricultural produce payable by the buyer of agricultural produce brought into the market area, subject to proviso that no such fees shall be refunded on production of sufficient proof that such produce was not sold within the limits of market area or if such produce is brought from outside the market area into the market area for use therein by the industrial concerns situated in market area Page 96 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 or for export and in respect of which declaration has been made and certificate has been obtained in Form-V, subject to proviso to sub-rule(2) of Rule 48 would not be applicable in facts of the case as the industrial concerns in both the cases have brought agricultural produce from outside the market area into the market area but after paying the same outside the market area and have been removed from market area after filing declaration and certificate obtained in Form-V. Therefore, it would be necessary to refer to Form-V which entitles the industrial concern from exemption of payment of market fee. Form-V prescribed under the Rules as per Rule 48(2) is for providing details of agricultural produce, name of sellers from where it is brought, cart and packages through whom it is brought, name of buyer or his agent with certificate. Thus all details are required to be furnished with Page 97 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 APMC for bringing the agricultural produce in the market area which is used by the industrial concern situated in the market area or for export for which such Form is filed.
30. Therefore, in facts of the case, the petitioner APMC in Special Civil Application No.687/2020 was not justified in levy of market fee which has been rightly held by respondent no.1 Deputy Secretary (Appeals) in revision application filed by respondent no.3 therein.
31. Similarly the petitioner in Special Civil Application No.17299/2021 is not liable to pay market fees on the agricultural produce bought from outside market and brought into market area for production of various products and by-products after processing and manufacturing by it. It is also not in dispute that in both the cases Page 98 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 Form-V as required in Rule 48(2) which is not amended either in the year 2007 or 2020 and hence, impugned order passed by respondent no.1 in Special Civil Application No.17299/2021 is liable to be quashed and set aside which is contrary to the order passed by same respondent in Special Civil Application No.687/2020.
32. In view of foregoing reasons, Special Civil Application No.687/2020 is ordered to be dismissed. Rule is discharged.
33. Whereas, Special Civil Application No.17299/2021 succeeds and is accordingly allowed. Impugned order is hereby quashed and set aside. Bank guarantee furnished by the petitioner pursuant to the interim order passed by this Court as well as deposit made by it shall be returned to the petitioner. Respondent no.3 APMC shall also refund the amount of Rs.1 Crore deposited by the Page 99 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022 C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022 petitioner pursuant to the interim order within a period of four weeks from the date of receipt of this order.
34. Rule is made absolute to the aforesaid extent. No order as to costs.
(BHARGAV D. KARIA, J) RAGHUNATH R NAIR Page 100 of 100 Downloaded on : Sat Oct 15 20:25:15 IST 2022