Gujarat High Court
Doshi Kantilal Ratilal And Ors. vs State Of Gujarat And Ors. on 20 July, 1994
Equivalent citations: (1994)2GLR1706, 1995 A I H C 6011, (1994) 2 GUJ LR 1706
Author: M.B. Shah
Bench: M.B. Shah
JUDGMENT M.R. Calla, J.
1. Common questions of law based on identical facts arise in this batch of four Special Civil Applications and, therefore, we decide the same by this common judgment. Returns have been filed in Special Civil Application Nos. 74 of 1982 and 1093 of 1982 only.
2. The petitioners-Firms have prayed for quashing and setting aside the amended bye-laws 20, 23, 24 and 44 and to restrain the respondents from enforcing and executing the aforesaid bye-laws of the respective Agricultural Produce Market Committees. Challenge is also thrown to Rule 49 of the Gujarat Agricultural Produce Markets Rules, 1965 (hereinafter referred to as "the Rules"). The petitioners-Firms or Federations of merchants deal in ground-nut, grains, oil seeds, etc. They are essentially traders or purchasers of the agriculture produce and their grievance is with regard to the levy of the fees (on the agricultural produce) by the Agricultural Produce Market Committee, which is recovered from them under the aforesaid bye-laws and Rule 49.
3. Section 28 of the Gujarat Agricultural Produce Markets Act, 1963 (hereinafter referred to as "the Act") is reproduced as under:
28. The market committee shall, subject to the provisions of the rules and the maxima and minima from time to time prescribed levy and collect fees on the agricultural produce bought or sold in the market areas:
Provided that the fees so levied may be collected by the Market committee through such agents as it may appoint.
Bye-laws have been framed by the Market Committee to give effect to the provisions of the Act and the Rules. Rules 48 and 49 are reproduced as under:
48. Market fees--(1) The market committee shall levy and collect fees on agricultural produce bought or sold in the market area at such rate as may be specified in the bye-laws subject to the following minima and maxima, viz., (1) rates when levied ad valorem shall not be less than 15 paise and shall not exceed 40 paise per hundred rupees.
(2) rates when levied in respect of cattle, sheep or goat shall not be less than 10 paise per animal and shall not exceed Rs. 2 per animal.
Explanation- For the purpose 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 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 concerns 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 (i):
Provided that no fee shall be payable on a sale or purchase to which sub-sec, (3) of Section 6 applies.
Rule 49 Prior to Amendment of 4-9-1982.
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 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 a certificate has been obtained in Form V subject to the proviso to Sub-rule (2) of Rule 48.
(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.
Rule 49 After Amendment dated 4-9-1982.
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 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 a certificate has been obtained in Form V subject to the proviso to Sub-rule (2) of Rule 48.
(iii) 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.
Rule 48 deals with the levy and collection of fees on agricultural produce bought or sold in the market area and Rule 49 deals with the recovery of fees on agricultural produce. Mr. Raval appearing in Special Civil Application No. 47 of 1982 submitted that Special Civil Application was admitted on 15-1-1982, but the amendment in the Rule 49 was made on 4-9-1982, i.e., during the pendency of the Special Civil Application and, therefore, there was no challenge to Rule 49 at the time when this petition No. 47 of 1982 was filed. Today at the stage of concluding the arguments the Learned Counsel Mr. Raval passed on an Application seeking amendment challenging the validity of Rule 49 but we have already heard the submissions made by the other Learned Counsel in other cognate matters on the validity of Rule 49 and, therefore, it is not necessary for us to entertain the aforesaid unstamped papers seeking amendment at the fag-end of the arguments.
4. Mr. J.G. Shah, Learned Counsel for the petitioners, submitted that the liability is on the agricultural produce and not on the transactions and, therefore, fees is to be recovered from the one who brings the produce and the purchaser should not be made liable. He has referred to the provisions of Section 28 and Rules 48 and 49. Mr. R.N. Shah, the Learned Counsel for the petitioners, also submitted in addition to the aforesaid argument of Shri J.G. Shah that enhancement of the fees from 25 to 40 Ps. is also unreasonable and further that the bye-laws do not bear the approval of the Director. So far as question of enhancement is concerned, it was also stated by the Learned Counsel Mr. R.N. Shah that the amount which has been accumulated by the Market Committee is worth one crore and it is lying in the account of the Committee and, therefore, there was no need for enhancement. The return filed shows that the Director himself had issued a Circular requiring the Committees to amend the bye-laws and only thereupon the Committees had amended the bye-laws accordingly and, therefore, the argument that the bye-laws did not bear the approval of the Director is of little significance with no consequence.
5. The main question which calls for the decision in this case is whether the recovery of fee from the purchaser is valid or not and in this regard it is submitted by the Learned Counsel for the petitioners that it is the case in which no services are rendered to the purchasers and the purchasers do not bling the agricultural produce in the market area and, therefore, levy against the purchaser is invalid. It is clearly made out from the unamended and amended Rule 49 quoted in the earlier part of this judgment that through the amendment dated 4-9-1982 the words "from the purchaser" were inserted and, therefore, on the basis of this amendment the purchaser has been made liable to pay the fees. The Agricultural Produce Markets Act and the Rules made thereunder are basically and essentially meant to afford protection to the agriculture producers against their exploitation by the dealers, traders, merchants or the purchasers. Moreover, Section 28 uses the words "agricultural produce bought and sold in the market area". Fee is leviable on agricultural produce bought and sold in the market area and the same is manifest in the extant Rule 49. The Learned Counsel for the petitioners placed reliance on (1975) XVI GLR 916 (Chhaganlal v. A.P.M.C., Dohad). It has been held in the aforesaid decision by the Division Bench with reference to Section 28 of the Gujarat Agricultural Produce Markets Act, 1963 read with Agricultural Produce Markets Rules, 1965, particularly Rule 48 thereof that market fee is to be levied only once at the initial stage of the entry of agricultural produce into the market and successive transactions cannot be again made subject to levy and that it would amount to tax which is not permissible. It has been further held that levy of market fees on successive transactions of sale is, therefore, ultra vires of Section 28 of the Act and, therefore, void. This question was then considered by the Supreme Court in (Chhaganlal Mamukhlal v. K.K. Bhatt) and the Supreme Court accepted the interpretation of Rules 48 and 49 as given by the Gujarat High Court in the aforesaid case of Chhaganlal v. A.P.M.C., Dohad, observing that it flows directly from the language employed therein and held that Rule 49 will have no application to any case which falls within the ambit of Sub-rule (2) of Rule 48. This decision was rendered by the Supreme Court on 5-2-1981 and it is thereafter, that Rule 49 of Gujarat Agricultural Produce Markets Rules, 1965 was amended on 4-9-1982 so as to include the words "from the purchaser", which were earlier not contained in the language of Rule 49. After the aforesaid amendment, which is in the nature of a clarificatory amendment, interpretation which has been given in (case of Chhaganlal) XVI GLR 916 (supra) and accepted in (case of Chhaganlal Mansukhlal) (supra), cannot be of any help to the petitioners as now in terms of Rule 49 the fees on agricultural produce shall be payable by the purchaser when it is brought into the market and purchased and it is nobody's case that it is charged more than once.
6. Considerable argument was made on the basis of the Supreme Court decision in Kewal Krishan v. State of Punjab and it was urged that according to this decision the element of quid pro quo may not be possible, or even necessary, to be established with arithmetical exactitude, but even broadly and reasonably it must be established by the authorities who charge the fees that the amount is being spent for rendering services to those on whom falls the burden of the fee; the amount of fee realised must be earmarked for rendering services to the licensee in the notified market area and a good and substantial portion of it must be shown to be expended for this purpose. Mr. Mehta appearing for the respondents submitted that the question was later considered in (Sreenivasa General Traders v. State of A.P.) and after considering the earlier decision in Kewal Krishan's case the position has been made clear on three respects of the matter on which arguments have been made before us and which are relevant to the controversy raised in this case. We may succinctly deal with the same as under:
(1) On the question of liability of the purchaser to pay the fee on agricultural produce:
The liability of traders to pay market fee arises because under Rule 48 the market committee has been clothed with the power to levy and collect fee on agricultural produce bought and sold in the market area. Whether the agricultural produce is subject of purchase or sale - the fee may be levied and collected, once such produce is brought in the market. It has to be agreed on all hands that the agricultural produce is brought into the market only for the purpose of sale and purchase and under Rule 49 (amended) it is to be recovered from the purchaser. The purchasers or traders cannot escape this liability by saying that it is to be recovered from the pany which brings such produce in the market. The reason is clearly found in the language employed in Section 28 read with Rule 48 inasmuch as the fee is ON AGRICULTURAL PRODUCE BOUGHT OR SOLD IN THE MARKET AREA and under Rule 49 (amended) it is to be recovered from the purchaser and, therefore, who has B ROUGHT IT, IS NEITHER RELEVANT NOR OF ANY CONSEQUENCE. Mr. Mehta also placed reliance on AIR 1967 SC 973 (Krishna (coconut Co. v. B.G C. & T.M. Committee) para 11 thereof and submitted that the same words 'bought and sold' have been considered by the Supreme Court and it has been held as under:
But it is a well settled rule of construction that the Court should endeavour as far as possible to construe a statute in such a manner that the construction results in validity rather than its invalidity and gives effect to the manifest intention of the legislature enactin that statute. The object in passing the Act was to prevent the mischief of exploitation of producers of commercial crops such as coconuts and copra and to see that such producers got a fair price for their goods. The mischief to prevent which the Act was enacted was the exploitation of these producers by middlemen and those buying goods from them and therefore, the Act provided facilities such as a market place, place for storage, correct weighment etc., so that the producers and his purchasers come face to face in a regulated & controlled market and a fair, price was obtained by them. If the construction suggested by Mr. Agarwala were to be accepted and the section were to be construed as being applicable to those transactions only which have a dual aspect, that is, buying by a dealer from a producer and the dealer selling those identical goods within the notified area, the object of the Act would be defeated, for in a large number of cases the transactions would halt at the stage of buying and the Committee in those cases would have no power to levy the fee on them. Why is a buyer or a seller or a buyer and seller required to be registered and why does the Act prevent those who have not registered themselves from effecting transactions in commercial crops unless the object was to regulate and control transactions in those commodities at all stages and in a manner preventing the exploitation of the producer? The legislature had thus principally the producer in mind who should have a proper market where he can bring his goods for sale and where he can secure a fair deal and a fair price The Act thus aims at transactions which such a producer would enter into with those who buy from him. The words "brought and sold" used in Section 11(1) aim at those transactions whereunder a dealer buys from a producer who brings to the market his goods for sale. The transactions aimed at must be viewed in the sense in which the legislature intended it to be viewed, that is, as one transaction resulting in buying on the one hand and selling on the other. Such a construction is commendable because it is not only in consonance with the words used in Section 11(1) but is consistent with the object of the Act as expressed through its various provisions. The construction on the other hand canvassed by the appellants is defective of the purpose of the Act and should, unless we are compelled to accept it, be avoided. The construction which we are inclined to accept acquires some support from the fact that Section 11(1) makes the purchaser and not the seller primarily responsible for payment of the fee and it is only when the purchaser cannot be identified that the seller is made liable.
Thus, the purchaser and not the seller is made liable. We hold accordingly.
(2) On the question of challenge to the bye-laws Nos. 20, 23, 36 and 44 and Rule 49 -
Bye-laws have been framed to give effect to the provisions of the Act and the Rules. Once it is held that agricultural produce is leviable and it is to be recovered from the purchaser, the only question which remains for consideration is about the validity of these bye-laws and Rule 49 on the ground that no fee can be charged without rendering any service. Firstly it is factually incorrect to say that no service is rendered by the market committee to purchasers. Agricultural Produce Markets Act on the one hand affords protection to the producers against their exploitation or victimisation and eliminates the middle man and on the other hand it facilitates an easy and regulated market for the purchase or sale at a centralised place which in itself is a service rendered to persons engaged in business of purchase or sale of the notified agricultural produce. Secondly rendering of service is not a quid pro quo for charging the fee. Even Kewal Krishan 's case (supra) on which strong reliance has been placed by the petitioner does not lay down in categorical terms that presence of quid pro quo is a must. Kewal Krishan's case (supra) has been considered by the Supreme Court in detail in Sreenivasa's case (supra) and in view of what has been held and laid down in the Sreenivasa's case it cannot be said that rendering of service in such cases must be there as a quid, pro quo. Reference may be made to the following observations made by the Apex Court in Sreenivasa's case (supra) in paras 30 and 31:
The traditional view that there must be actual quid pro quo for a fee has undergone a sea change in the subsequent decisions. The distinction between a tax and a fee lies primarily in the fact that a tax is levied as part of a common burden, while a fee is for payment of a specific benefit or privilege although the special advantage is secondary to the primary motive of regulation in public interest. If the element of revenue for general purpose of the State predominates, the levy becomes a tax. In regard to fees there is and must always be, correlation between the fee collected and the service intended to be rendered. In determining whether a levy is a fee, the true test must be whether its primary and essential purpose is to render specific services to a specified area or class; it may be of no consequence that the State may ultimately and indirectly be benefited by it. The power of any legislature to levy a fee is conditioned by the fact that it must be "by and large" quid pro quo for the services rendered. However, correlationship between the levy and the services rendered expected is one of general character and not of mathematical exactitude. All that is necessary is that there should be a "reasonable relationship" between the levy of the fee and the services rendered.
It is also increasingly realised that the element of quid pro quo in the strict sense is not always a sine quo non for fee.
In view of the law laid down by the Supreme Court the challenge to the impugned bye-laws and Rule 49 can't be sustained.
(3) On the question of enhancement of the market fee:
The enhancement of the market fee cannot be made subject-matter of challenge, unless it is shown to be excessive or shockingly disproportionate and exorbitant. In the instant case, the fee which was 25 paise prevailing over years was increased to 40 paise. In para 34 of Sreenivasa's case (supra) the Supreme Court has observed as under:
That apart, when the petitioners concede that they do not challenge the levy of market fee @ 50 paise per hundred rupees in the year 1972, there can be no basis for challenging the increase in the rate of market fee from 50 paise to rupee one in 1978) Surely the cost of rendering services has correspondingly increased with the fall in the value of rupee In the economic sense, 50 paise of 1972 is certainly equivalent to at least rupee one of today, if not more.
Therefore, we have no hesitation in holding that the challenge on this ground as well has no basis.
7. Before parting with the case, we may mention that Mr. Raval placed reliance on (State of U.P. v. Ramchandra) para 22 (Javed Ahmed v. State of Maharashtra) para 4, and (Union of India v. Godfrey Philips India Ltd.) para 12 and submitted that the earlier decision in was a decision rendered by a Bench of five Judges whereas the later decision (Sreenivasa's case), on which reliance has been placed by the respondents, was a case decided by the Bench of three Judges only and, therefore, according to the Supreme Court's own decisions, the earlier judgment of the larger Bench must be followed and even if there are two decisions by Benches of equal number of Judges, the matter should be referred to larger Bench and, therefore, the matter should be decided on the basis of the earlier judgment of the Supreme Court headed by five Judges.
8. We have considered the submission of Learned Counsel for the petitioner Mr. Raval and the decisions (State of U.P. v. Ramchandra) (Javed Ahmed v. State of Maharashtra) and (Union of India v. Godfrey Philips India Ltd.) and we are of the opinion that in (Sreenivasa's case) the question has been fully considered and after considering (Kewal Krishan's case) in detail with full analysis the result has been given. This is not a case in which the later decision has been rendered without considering the earlier judgment of the larger Bench and, therefore, this contention raised by Mr. Raval can't be accepted.
9. Thus, all the contentions raised on behalf of the petitioners fail. No other point has been urged before us and we do not find any merit in any of these petitions and all the petitions are accordingly dismissed. Rule is discharged in all these petitions. Interim orders passed in all or any of these matters automatically stand vacated. No order as to costs.