Punjab-Haryana High Court
M/S Himalaya Rice Mills vs State Of Haryana And Others on 28 April, 2009
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH.
C.W.P. No. 14455 of 1990
Date of Decision: April 28, 2009
M/s Himalaya Rice Mills
...Petitioner
Versus
State of Haryana and others
...Respondents
CORAM: HON'BLE MR. JUSTICE M.M. KUMAR
HON'BLE MR. JUSTICE H.S. BHALLA
Present: Mr. P.N. Aggarwal, Advocate,
(in CWP Nos. 14455 & 15760 of 1990)
Mr. Vineet Soni, Advocate,
(in CWP No. 15287 of 1990)
for the petitioner(s).
Ms. Ritu Bahri, DAG, Haryana,
for respondent No. 1 and 3
None for respondent No. 2.
1. Whether Reporters of local papers may be
allowed to see the judgment?
2. To be referred to the Reporters or not?
3. Whether the judgment should be reported in
the Digest?
M.M. KUMAR, J.
This order shall dispose of C.W.P. Nos. 14455, 15287 and 15760 of 1990 as common question of law and facts are involved in these petitions. However, facts are being referred from C.W.P. No. 14455 of 1990.
C.W.P. No. 14455 of 1990 2
This petition filed under Article 226 of the Constitution prays for quashing notices dated 15.11.1987, 7.8.1990 and 29.10.1990 (P-1, P-3 & P-4 respectively) issued by the Market Committee, Sadhora, District Yamunanagar-respondent No. 2 and Assistant Collector IInd Grade, Sadhora-respondent No. 3 for recovery of a sum Rs. 38,608.25 paise on account of market fees under Rule 29(2) of the Punjab Agricultural Produce Markets Rules, 1961 (as applicable to the State of Haryana) (for brevity, 'the Rules'), from the petitioner firm on purchase of paddy during the period 13.10.1987 to 30.10.1987 from different firms.
Brief facts of the case are that the petitioner firm is engaged in the business of rice shelling out of paddy at Sarwan (Sadhaura). It purchases paddy within the State of Haryana for the purpose of shelling. When the paddy is brought in the State of Haryana, the market fee is paid to the concerned Notified Market Area Committee, which is leviable under the provisions of the Punjab Agricultural Produce Marketing Act, 1961 (as applicable to the State of Haryana) (for brevity, 'the Act'). However, no market fee is leviable on rice under the Act. It is claimed that Section 23 of the Act and Rule 29 of the Rules deals with the transactions in respect of paddy and other goods which were purchased from outside the State of Haryana and brought within the Notified Market Area Committee for the purpose of processing. Section 23 and 2(nn) of the Act and Rule 29 of the Rules as they existed prior to 29.4.1988 reads thus:-
"23. A Committee may, subject to such rules as may be C.W.P. No. 14455 of 1990 3 made by the State Government in this behalf, levy on ad- valorem basis fees on the agricultural produce brought or sold or brought for processing by dealers in the notified area at a rate not exceeding Three rupees for every one hundred rupees.
a) no fee shall be leviable in respect of any transaction in which delivery of the agricultural produce bought or sold is not actually made; and
b) a fee shall be leviable only on the parties to a transaction in which delivery is actually made."
"Sec. 2(nn) "Processing" means giving a treatment or a series of treatment to an agricultural produce in order to make it fit for use of consumption and includes manufacturing of an agricultural produce."
"Rule 29 Levy and collection of fees on the sale and purchase of agricultural produce:
1) Under Section 23 a Committee shall levy fee on the agricultural produce bought or sold or brought for processing by licencees in the notified market area at the rates fixed by the Board from time to time."
On 29.4.1988, the State of Haryana brought about an C.W.P. No. 14455 of 1990 4 amendment in Section 2(nn) of the Act with an object to enlarge the definition of expression "processing" to include the manufacturing of goods which were not subject to the fee and the word 'out' was inserted between the words 'manufacturing' and 'of' appearing in Section 2(nn) of the Act. Section 2(nn), after its amendment w.e.f. 29.4.1988, reads thus:
"Sec. 2(nn) "Processing" means giving a treatment or a series of treatment to an agricultural produce in order to make it fit for use of consumption and includes manufacturing out of an agricultural produce." (emphasis added) According to the petitioner firm, there is a lot of difference between the words 'processing' and 'manufacturing'. In this regard the petitioner firm has placed reliance on the meaning of words 'processing' and 'manufacturing' as given in 'Corpus Juris Secundum', which reads thus:-
MEANING OF PROCESSING (72 C.J.S. 976) "Processing is a flexible term and may refer to either chemical or physical changes in the thing acted upon. It is defined as meaning a course or method of operations; a series of actions, motions or occurrences; progressive act or continuous operation or treatment; an action operation or method of treatment applying to something; a series of operations leading to some result. It is also defined as meaning to subject to some special process or treatment C.W.P. No. 14455 of 1990 5 to subject to a process of manufacture, development or preparation for the market."
MEANING OF 'MANUFACTURING' (66 C.J.S. 669) "Manufacture" has been defined as the production of articles for use from raw or prepared material by giving these materials new forms, qualities properties, or combinations, whether by hand labour or by machinery; also anything made for use from raw or prepared materials."
The petitioner has claimed that despite the above mentioned clear distinction, a demand notice dated 13.11.1987 was served upon the petitioner firm (P-1), raising demand against the paddy brought from outside the State of Haryana allegedly for manufacture of 'rice'. After receipt of the aforementioned demand notice, a legal notice (P-2) was sent by the petitioner firm taking the stand that the market fees on the processing/manufacturing out of the agriculture products could be charged under the Act from the date on which the amendment came into existence and not retrospectively. In the present case, the realisation of the market fee involved the goods (paddy) which the petitioner-firm had brought for processing/manufacturing from outside the State of Haryana during the period 13.10.1987 to 30.10.1987. Rejecting the aforementioned reply, another demand notice dated 7.8.1990, was issued to the petitioner firm (P-3), which was followed by a recovery notice dated 29.10.1990, sent by the Assistant Collector IInd Class, Sadhora (P-4). C.W.P. No. 14455 of 1990 6
It is pertinent to notice that the petitioner firm also filed C.W.P. No. 207 of 1988 challenging imposition of market fee on paddy bought and processed outside the market yard area but within the notified market area. Initially the recovery of market fee was stayed by this Court vide order dated 10.4.1990, however, the said writ petition was later on dismissed.
In the written statement filed on behalf of respondent No. 2 the stand taken in the preliminary objections is that since the petitioner firm has already challenged levy of market fee on the goods bought or sold or brought for processing in the mills of the petitioner firm by filing C.W.P. No. 207 of 1988 and the same has been dismissed by this Court, therefore, the instant petition is barred by the principle of res judicata. It has further been asserted that even as per un-amended Section 2(nn) read with Section 23 of the Act, the market fee is leviable on the agricultural produce brought for processing in the notified market area. On merits, issuance of demand notices to the petitioner firm has been justified.
Despite the fact that the case was called twice yesterday and again the case has been called today, no one has put in appearance on behalf the Market Committee-respondent No. 2. Even the learned State counsel has stated that the matter pertains to the Market Committee-respondent No. 2 and she has no instructions.
Mr. P.N.Aggarwal and Mr. Vaneet Soni, learned counsel for the petitioner have vehemently contended that vide notification dated 31.3.1971 the respondent- State in exercise of power under C.W.P. No. 14455 of 1990 7 Section 38 of the Punjab Agricultural Produce Markets Act, 1961 have amended the schedule to the Act and item No. 6 Rice (Chawal) in addition to some other items was omitted from the schedule. According to the learned counsel this schedule has notified those items which are considered as agricultural produce as per the definition clause of Section 2(a). The argument seems to be that once the item is not agricultural product then it would not attract the imposition of market fee.
Having heard learned counsel and perusing the paper book with their able assistance we find that there is merit in the instant petitions and the same deserve to be allowed. At the outset it is pertinent to notice that on 29.4.1991, when C.W.P. No. 14455 of 1990 came up for hearing before a Division Bench, the following order was passed:-
" The learned counsel for the respondent opposed the admission of the Writ Petition stating at the bar that the same is not covered with Civil Writ Petition No. 6927 of 1988 pending before the Ist Bench. It was kept for arguments after the completion of the Motion cases. As no time was left, the case was adjourned for today. Today also, the learned counsel for the petitioner argued the case and when we were at the stage of allowing the Writ Petition as it was squarely covered by the Notification by which rice (chawal) has been deleted from the definition of 'agricultural produce', the learned C.W.P. No. 14455 of 1990 8 counsel for the respondent stated that still it would involve the question whether after shelling of the paddy and making the rice would amount to processing only or it would amount to manufacturing. Though, prima facie, we do not find this question is involved in this Writ Petition, however in the interest of justice, we adjourn the Writ Petition, on payment of Rupees One Thousand as costs in each Writ Petition.
To be heard after the decision in Civil Writ Petition No. 6927 of 1988.
The costs will not form costs of the Writ petition. The costs are only for the adjournment." It is, thus, evident that once the expression Rice has been omitted from the schedule which has listed items to be considered as agricultural produce then it cannot be claimed that any market fee was leviable on the petitioner till the inclusion of Rice (chawal) in the schedule. It has not been disputed that lateron the item has again been included. It would not affect the omission of this item from the schedule. Therefore by deeming fiction, rice has not been regarded as agricultural produce and it must be held that the same is not excisable to any market fee.
No other issue has been raised.
For the reasons afore mentioned this petition succeeds and is allowed. The demand of market fee raised is hereby set aside.
C.W.P. No. 14455 of 1990 9
(M.M. KUMAR)
JUDGE
(H.S. BHALLA)
April 28, 2009 JUDGE
Pkapoor