Karnataka High Court
M/S Rosemarry International Company vs The Director Of Agricultural Marketing on 17 August, 2023
Author: B M Shyam Prasad
Bench: B M Shyam Prasad
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NC: 2023:KHC:29154
WP No. 24995 of 2019
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 17TH DAY OF AUGUST, 2023
BEFORE
THE HON'BLE MR JUSTICE B M SHYAM PRASAD
WRIT PETITION NO. 24995 OF 2019 (APMC)
BETWEEN:
M/S ROSEMARRY INTERNATIONAL COMPANY
NEW GODOWN NO. 1,
APMC YARD,
GONIKOPPALU 571213.
KODAGU DIST.
ALSO HAVING ITS BRANCH AT NO. 28,
HOOTAGALI INDUSTRIAL AREA,
BELAVADI POST, MYSORE.
REP BY ITS PROP. SRI. SOURABH BANKA.
...PETITIONER
(BY SRI. B R SATENAHALLI.,ADVOCATE)
AND:
Digitally
signed by
NARASIMHA 1. THE DIRECTOR OF
MURTHY
VANAMALA AGRICULTURAL MARKETING
Location: 16, 11TH RAJ BHAVAN ROAD,
HIGH COURT
OF ALI ASKER ROAD,
KARNATAKA BANGALORE 560001.
2. AGRICULTURAL PRODUCE
MARKET COMMITTEE
GONIKOPPALU 571 213.
KODAGU DIST,
REP BY ITS SECRETARY.
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NC: 2023:KHC:29154
WP No. 24995 of 2019
3. AGRICULTURE PRODUCE
MARKET COMMITTEE
MYSORE NANJANAGUD ROAD,
BANDIPALYA,
MYSORE. 570025.
REP BY ITS SECRETARY.
...RESPONDENTS
(BY SRI.M.R. PATIL., HCGP FOR R1;
SRI. T. SWAROOP , ADVOCATE R2 AND R3)
THIS W.P. IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO
QUASHING (i) NOTICE OF DEMAND DATED 25.03.2019
CALLING UPON THE PETITIONER TO PAY A SUM OF
RS.12,93,862/- (RS.TWELVE LAKHS NINETY THREE
THOUSAND EIGHT HUNDRED SIXTY TWO) TOWARDS
THE PURPORTED MARKET FEE PERTAINING TO
PETITIONER'S GONIKOPPALU BRANCH, AS PER ANNX-A
ISSUED BY THE R-2. (ii) THE NOTICE OF DEMAND
DATED 22.03.2019 ISSUED BY THE R-3 MARKET
COMMITTEE CALLING UPON THE PETITIONER TO PAY A
SUM OF RS.7,93,514-57 (RS.SEVEN LAKHS NINETY
THREE THOUSAND FIVE HUNDRED FOURTEEN AND
PAISE FIFTY SEVEN ONLY) TOWARDS THE PURPORTED
MARKET FEE PERTAINING TO PETITIONER'S MYSORE
BRANCH, AS PER ANNX-B.
THIS PETITION, COMING ON FOR PRELIMINARY
HEARING IN 'B' GROUP, THIS DAY, THE COURT MADE
THE FOLLOWING:
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NC: 2023:KHC:29154
WP No. 24995 of 2019
ORDER
The question for consideration in this petition is: whether this Court must quash the Demand Notices dated 25.03.2019 and 22.03.2019 issued by the second and third respondents to the petitioner for payment of "differential market fee". The undisputed facts are that the petitioner is a market functionary duly licensed under the Karnataka Agricultural Produce Marketing (Regulation And Development) Act, 1966 [for short, 'APMC Act'] and is an importer of black pepper. During the relevant financial year, the petitioner has sold 11,135 kgs of black pepper and transferred the same from the market yard. The impugned notices are issued relying upon the price on which the petitioner has sold the aforesaid quantity of black pepper to its buyer.
2. Sri B.R.Satenahalli, the learned counsel for the petitioner, submits that the liability to pay market fee, as contemplated under Section 65 of the APMC -4- NC: 2023:KHC:29154 WP No. 24995 of 2019 Act, can only be limited to the price at which the black pepper is imported by the petitioner and if any demand is made otherwise i.e., based on the value for which the produce is sold, it would amount to levying a market fee even on the expenses incurred towards insurance, marine handling charges, customs duty, freight charges and other incidental charges inasmuch as the amount incurred under these heads is recovered from the buyers of a produce as part of the value thereof. The learned counsel for the petitioner proposes to rely upon the provisions of Section 75 of the APMC Act to contend that the market fee cannot be raised on tax or other expenses incurred as aforesaid.
3. Sri T.Swaroop, the learned counsel for the respondent, submits that the market fee is payable by every buyer of agricultural produce on the price for which such produce is bought, and in case of an importer who sells the imported agricultural produce -5- NC: 2023:KHC:29154 WP No. 24995 of 2019 from the market yard/sub-market yard, though fee is payable by the buyer, must realize the same from the buyer and pay to the Committee. The petitioner has paid the market fee on the price for which he has purchased the black pepper. The petitioner, who is enjoined in law to recover the market fee on the value of the produce from the buyer of the imported produce and pay to the Committee, cannot take any exception with the impugned show cause notices.
4. As regards the contention that the market fee payable cannot include tax and such other expenses and the purported prohibition thereagainst under Section 75 of the APMC Act, Sri T. Swaroop submits that the provisions of Section 75 are under Chapter VII of the APMC Act which vests jurisdiction in the Committee to grant licenses to market functionaries [who would be 'buyers' for the purposes of this Chapter] to use any place in the Market Area in relation to marketing of agricultural produce and -6- NC: 2023:KHC:29154 WP No. 24995 of 2019 Section 75 imposes a burden on these buyers to pay the requisite price to the grower of the agricultural produce [the seller] subject to the deduction of fees, market charges, taxes and advances paid if any and subject to the proof thereof with a further stipulation that if such commission agent/buyer fails to pay the amount as required to the grower within five days, the commission agent's license can be cancelled as contemplated under Section 75 (3) of the APMC Act. As such, the petitioner, who is a market functionary, cannot rely upon the provisions of Section 75 to impugn the show cause notices.
5. The expressions "commission agent", "buyer/purchaser", "exporter", and "market functionary"1 are specifically defined for the purposes of the Act, and the expression "market functionary" is 1 Section 2(21): "Market Functionary" or "functionary" includes a broker, a commission agent, an exporter, a ginner, an importer, a presser, a processor, a stockist, a trader, and such other person as may be declared under the rules or the bye-laws to be a market functionary. -7-
NC: 2023:KHC:29154 WP No. 24995 of 2019 a compendious expression including the aforesaid. The provisions of Section 65(2) of the Act stipulate that the Committee shall "levy and collect market fee from every buyer" in respect of agricultural produce bought by such buyer at the rate mentioned therein, and provisions of Section 65(2A)2 stipulate the manner in which the market fee shall be realized by the Committee when the sale of the agricultural produce is by different market functionaries. In the case of sales through a Commission Agent3 or by an importer4, the Commission Agent or the importer, as the case may be, shall realize the same from the purchaser and they shall pay to the Committee within the time prescribed by the Bye-law [Section 2 Inserted by Act 4 of 1982 3 Section 65(2A)(i) : if the produce is sold through a commission agent, the commission agent shall realize the market fee from the purchaser and shall be liable to pay the same to the committee.
4 Section 65(2A) (ii): if the produce is purchased by a trader from a producer, the trader shall be liable to pay the market fee to the committee.
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NC: 2023:KHC:29154 WP No. 24995 of 2019 65(2B) of the Act], and in the event of failure to pay as aforesaid, the Committee under Section 65A of the Act is invested with the authority to impose penalty as mentioned therein. These provisions are rather exhaustive and operate independently.
6. On the other hand, the provisions of Chapter VII of the APMC Act provide for "Regulation of Trade", and the provision of Section 72 therein enable the Committee to grant license to different market functionaries such as a Commission Agent, a broker, a processor and also to refuse license, to use any place in the market yard. The provisions under this Chapter, amongst other, provide for establishment of " private market yards" and "Farmer- Consumer Market in a Market Area" and the rules therefor. As part of this Scheme, a protection to "the seller"5 is extended under Section 75 therein. A 5 Section 2(40): "Seller" means a person who sells or agrees to sell goods.
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NC: 2023:KHC:29154 WP No. 24995 of 2019 "buyer"6 must, in terms of the provisions of this Section, pay to the seller, subject to deductions permitted thereunder, either by cash or cheque, the price of the goods immediately. However insofar as immediate payment, some exception is carved out. Crucially, if the "buyer" does not pay the price as aforesaid [or the additional fee as contemplated under Section 75(2)], the license is deemed to be cancelled.
7. The petitioner, a market functionary who is subject to the provisions of Section 65(2A) of the APMC Act and who is liable to pay market fee as prescribed under Section 65(2) of the APMC Act, cannot rely upon the provisions of Section 75, to contend that market fee cannot be levied on certain aspects "of the price" at which the agricultural produce is sold. As regards agricultural produce, a 6 Section 2(5): "Buyer" or "Purchaser" means a person, who himself or on behalf of any other person or agent buys or agrees to buy notified agricultural produce in the market area.
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NC: 2023:KHC:29154 WP No. 24995 of 2019 Committee must "levy and collect" market fee at the rate specified in the bye-laws but shall not be more than two rupees for every hundred rupees of the "value of such produce", and this value would be the price at which the produce is sold. It is obvious that the provisions of Section 75 in Chapter VII of the APMC Act cannot restrict or alter the liability under Section 65(2) in Chapter VI of this Act. Therefore, the canvass by Sri T.Swaroop based on Sections 65(2), 65 (2A) and 75 of the APMC Act is irrefutable, and this Court is not persuaded to opine, in the light of the express provisions in these Sections, that insistence upon the petitioner to pay market fee based on the price for which an importer sells the agricultural produce at the market area would be in contravention of the provisions of the APMC Act.
8. However, it is undisputed that the petitioner has not filed a detailed responses in response to the impugned show cause notices, but
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NC: 2023:KHC:29154 WP No. 24995 of 2019 has only asked for certain clarifications from the Committee to understand the basis on which the demand for market fee is raised and similarly there is nothing on record to justify the conclusion that the marketing committee has furnished documents as requested by the petitioner. Hence, the following:
ORDER The petition is disposed of directing the Marketing Committees concerned [the second and the third respondents], who have issued the corresponding impugned notices, to furnish information as is permissible and called for by the petitioner within four [4] week from the date of certified copy of this order. The petitioner is permitted to file response to the impugned show cause notices within four [4] weeks from the date of receipt of the additional information now permitted. Further, the second and the third
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NC: 2023:KHC:29154 WP No. 24995 of 2019 respondents are called upon to decide on the show cause notices in the light of the response filed within a period of eight [8] weeks from the date on which the response is filed.
Sd/-
JUDGE SA/-
ct:sr