Madhya Pradesh High Court
The Sagar Anaj Avam Tilhan Vyapari Sangh vs Krishi Upaj Mandi Samiti, Sagar And Anr. on 21 March, 1987
Equivalent citations: AIR1989MP34, AIR 1989 MADHYA PRADESH 34, (1989) JAB LJ 263
Author: N.D. Ojha
Bench: N.D. Ojha, Faizanuddin
JUDGMENT N.D. Ojha, C.J.
1. The Order in this petition shall also govern the disposal of M- P. No. 3411 of 1985 (Vyapari Sangh Chirmiri Kshetfa, Chirmiri v. State of M. P. and another).
2. Petitioner 1 in M. P. No. 222/83 is an Association of traders, whereas petitioner 2 is a member of petitioner 1 Association. He is a trader holding licence under the M. P. Krishi Upaj Mandi Adhiniyam, 1973 (hereinafter referred to as the 1973 Adhiniyam). The petitioner in M. P. No. 3411/85 is an Association of grain arid oilseeds dealers. Its members are dealers within the meaning of the Mandi Adhiniyam. Section 6 of the Mandi Adhiniyam empowers the market committee to control marketing of notified agricultural produce and for this purpose, a dealer is required to take a licence which is renewed from time to time.
3. The case set up by the petitioners in these two writ petitions is that the dealers are being required to pay a portion of their purchased agricultural produce Under Section 4 of the M. P. Nirashriton Avam Nirdhan Vyaktiyon Ki Sahayata Adhiniyam, 1970 (hereinafter referred to as the 1970 Adhiniyam). They have challenged the constitutional validity of the provisions contained in Section 4(1)(i) of the 1970 Adhiniyam. In support of this challenge, they have placed reliance on the decision of a Division Bench of this Court in Bhagwandas v. State of Madhya Pradesh, 1972 MPLJ 568 : (AIR 1972 Madh Pra 95). In that case, the provisions of Section 4(1)(i) of the 1970 Adhiniyam were held to be illegal.
4. For the respondents, on the other hand, it was urged by Shri M. V. Tamasker learned Addl. Advocate General, that the levy which is being realised from the traders is not one as contemplated by Section 4(1)(i) of the 1970 Adhiniyam, but that which is leviable under Clause (ii) of Section 4(1) which inter alia, provides that market committee constituted under the Act shall..... (ii) collect from the purchasers of agricultural produce within the market area :
(a) such agricultural produce;
(b) at such rate not more than 500 grams per quintal as the State Govt. may by general or special order, specify.
Section 5-B of the 1970 Adhiniyam permits collection of levy Under Section 4 to be made in kind or cash. Counsel for the respondents has placed reliance on the same decision on which reliance has been placed by counsel for the petitioners, namely, the D. B. decision of this Court in case of Bhagwandas (supra). In that case, while striking down Section 4(1)(i) of the 1970 Adhiniyam, it was held that Clause (ii) was, in no way, invalid. The relevant discussion is to be found in paras 8 and 9 of the report. Referring to the submissions made in that case challenging the validity of this clause, it was held as under :
"We are unable to agree with this contention of learned counsel for the petitioners. This collection by the Market Committee is clearly in the nature of a purchase tax covered by Entry 54 of List II in the Seventh Schedule to the Constitution which is as follows :
"Taxes on the sale or purchase of goods b,ther than newspapers; subject to the provisions of entry 92-A of List I. The Legislature having fixed the maximuin rate at which grain can be collected under this head, the delegation of power to fix the actual rate according to the varying needs of each local authority, which would get the benefit of such collection, cannot be said to be excessive delegation. The rate would depend upon the number of destitutes who have to be cared for and the amount that is likely to be collected depending upon the extent of grain trade being carried on in a particular area. The power of the State Government under Sub-section (2) of Section 4 of the Act to distribute this collection in a given proportion among the local authorities coming within the jurisdiction of a particular market area is also an essential part of the delegation and must depend upon the varying circumstances of each area. We, therefore, hold that Section 4, so far as it provides for the collection of grain from the purchasers and its distribution according to the directions of the State Government, is not illegal."
As seen above, the constitutional validity of CL (ii) was upheld relying on Entry 54 of List II of the Seventh Schedule to the Constitution.
5. Reliance was also placed by counsel for the respondents on a recent decision of another D.B. Anaj Vyapari Samiti Mandla v. Krishi Upaj Mandi Samiti Mandla, M. P. No. 1413 of 1983, DA 22-7-1986 (Madh Pra) taking a similar view.
6. Counsel for the petitioners, however, urged that the law laid down by this Court in case of Bhagwandas (AIR 1972 Madh Pra95) (supra) is no longer a good law in view of the decision of the Supreme Court in Omprakash Agrawal v. Giri Raj Kishori, AIR 1986 SC 726. That was case where the constitutional validity of Section 3 of Haryana Rural Development Fund Act (12 of 1983) was challenged. The said Section 3 contemplated levy of a cess, whereas Sub-section (5) of Section 4 entitled the State Government to spend the cess credited to the fund in the rural areas in connection with development of roads, hospitals, means of communication, water supply, sanitation facilities and for the welfare of agricultural labour or for any other scheme approved by the State Government for the development of the rural areas. The constitutional validity of Section 3 was challenged on the ground that the cess contemplated by Section 3 came within the purview of 'fee' and was liable to be quashed in the absence of quid pro quo.
7. In this connection, it would be relevant to point out certain observations made by the Supreme Court in para 7 of the report, it was held as under :
"In these appeals, we are relieved of the necessity of finding out whether the cess in question is a tax leviable by the State, since such a claim is not made before us. The only question which remains to be considered is whether the cess levied under the Act is of the nature of a fee levied of leviable on a dealer in a market area."
Thereafter, the distinction between 'tax' and 'fee' was pointed out and it was held that the levy of cess Under Section 3 was liable to be quashed inasmuch as it did not conform with the requirements of a valid levy of fee.
8. In the instant case, the validity of Clause (ii) of Section 4(1) of the 1970 Adhaniyam was upheld in the decision of Bhagwandas (AIR 1972 Madh Pra 95) (supra) relying on Entry 54 of List II of the Seventh Schedule as already Indicated above. Before us also Shri Tamasker placed reliance on the said entry and submitted that the levy under Clause (ii) was a Valid levy under the said entry 54 of List II of the Seventh Schedule to the Constitution. Entry 54 is as follows as already noted above :
"54. Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I."
Clause (ii) starts with the words 'collected from the purchasers of agricultural produce'. Apparently the levy under Clause (ii) is consequent on sale and purchase of agriculture produce which will constitute goods within the meaning of entry 54 of List II of Seventh Schedule to the Constitution. Reliance was placed by learned counsel for the respondents also on entries 5 and 9 of List II of the Seventh Schedule. It was urged that keeping in view the purpose for which the levy contemplated by Section 4(1)(ii) was to be realised, the levy is justifiable even under the aforesaid two entries. Entries 5 and 9 read as under :--
"5. Local government, that is to say, the constitution and powers of municipal corporation, improvement trusts, district boards, mining settlement authorities and other local authorities for the purpose of local self-government or village administration.
9. Relief of the disabled and unemployable."
Sub-sections (3) and (3-A) of Section 4(i) of the 1970 Adhiniyam mainly deal with the purpose for which the levy has been made. They are as under :--
"(3). The Collector may, by order apportion 25% of the contribution payable by a market committee under Clause (i) of Sub-section (1) and of the collections made by a market committee under Clause (ii) thereof between the several local authorities within the jurisdiction whereof the market area concerned falls.
(3-A). The amount remaining after apportionment under Sub-section (2) shall be utilised for the purpose of setting up and maintaining homes for destitutes and indigent person in the area falling within the jurisdiction of the market committee concerned :
Provided that....."
9. In this connection, it was urged by counsel for the petitioners that since the levy contemplated by Clause (ii) of Section 4(1) of the 1970 Adhiniyam was realised by the market committee, it could not be said that the levy was in the nature of tax. According to him, in order to justify levy as a tax, the impugned tax has to be realised by the State Government or the Local Authority which imposes the levy and in case of tax by the Govenment, the amount has to be credited in the consolidated fund of the State and since in the instant case these ingredients are lacking it is not possible to justify the levy as a tax.
10. In Asstt. Collector pf Central Excise Calcutta v. National Tobacco Co. of India Ltd., AIR 1972 SC 2563 it has been held that the term 'levy' does not extend to 'collection'. Article 265 of the Constitution makes distinction between them. Since there is distinction between levy and collection, there may be cases where even though the levy may be justified, but the manner of collection may be invalid Consequently even if in a given case it may be established that the manner of collection was wrong, on that ground alone, the levy cannot be invalidated.
11. Counsel for the petitioners placed reliance on certain decisions laying down the distinction between tax and fee. In our opinion, it is not necessary to consider those decisions in detail inasmuch as the distinction between 'tax' and 'levy' is, by now, well settled 'Tax' is a compulsory exaction of money by public authority for public purpose enforceable by law. In the instant case, if the levy is found to be a compulsory exaction of money by a public authority for public purpose, it will squarely fall within the purview of a tax. As already seen above and particularly in view of the D.B. decision of this Court in case of Bhagwandas(supra), the levy falls within the entry 54 of List II of the Seventh Schedule to the Constitution.
12. It may also be pointed out that as is apparent from Sub-sections (3) and (3-A) of Section 4 of the 1970 Adhiniyam, levy is for the benefit of local authorities within the jurisdiction whereof the market area falls and the amount which remains after allotment to the local authorities, is under Sub-section (3-A) to be utilised for the purpose of setting up and maintaining homes for the destitutes and indigent persons in the area falling within the jurisdiction of the market area concerned.
13. In Kasturilal Harlal v. State of U. P., AIR 1987 SC 27, it was held as under : --
"It is now well settled that an entry in a legislative List must be read in its widest amplitude and the legislature must be held to have power not only to legislate with respect to the subject matter of the entry, but also to make ancillary or incidental provision in aid of the main topic of legislation."
If the exaction contemplated by Section 4(1)(ii) of the 1970 Adhiniyam is for public purpose which in view of the provisions contained in Sub-sections (3) and (3-A) cannot be doubted, the mere fact that the amount of tax in place of being first credited to the consolidated fund before being diverted to the public purpose concerned is straightway permitted to be utilised for the public purpose concerned by making a provision for its collection and utilisation by a public authority, it will not invalidate even the collection. The levy would thus be justified in view of entry 54 of List II of the Seventh Schedule. It can also be justified keeping in view the purpose for which the levy has been made and in the light of the observations made by the Supreme Court in case of M/s. Kasturilal Harlal (supra) even under entries 5 and 9 of List II of the Seventh Schedule to the Constitution.
14. Lastly it was urged that even if the levy contemplated by Clause (ii) of Section 4(1) of the 1970 Adhiniyam was justified as a tax, it could be collected only in the manner provided for in the 1970 Adhiniyam and for non-payment of the tax, the licence of a dealer granted to him under the provisions of the M. P. Krishi Upaj Mandi Adhiniyam 1973 could neither be revoked nor could its renewal be refused So far as this submission in concerned, we find substance therein. Section 32 of the Krishi Upaj Mandi Adhiniyam deals with the power to grant licences. This section also deals with the renewal of the licences. Section 33 of the said Adhiniyam on the other hand, deals with the power to cancel or suspend the licences. The various grounds on which a licence can be cancelled or suspended are to be found in Section 33. Likewise the criteria for granting or renewing a licence are to be found in Section 32. Nothing has been brought to our notice which may entitle the market committee to either refuse, to renew the licence of a dealer or to cancel or suspend his licence on the ground of non-payment of a tax levied by Clause (ii) of Section 4(1) of the 1970 Adhiniyam which is an Act different from the M. P. Krishi Upaj Mandi Adhiniyam, 1973 under which the licence is granted. Each writ petition, even though it must fall in view of the foregoing discussion in so far as it challenges the validity of the levy, it has to be allowed to this extent that the respondents have to be directed not to take any action either for cancellation qr suspension of licences of dealers or to refuse renewal of the licences on the ground of nonpayment of the levy aforesaid
15. In the result, these two writ petitions, in so far as they challenge the validity of levy contemplated Under Section 4(1)(ii) of the 1970 Adhiniyam, fail and are dismissed. However, they are allowed to this extent that the respondent No. 1 in writ petition No. 222/83 and respondent 2 in writ petition No. 3411/85 namely the Mandi Samitis concerned are directed neither to refuserenewalof licences of dealers carrying on business within their respective areas, nor to suspend or cancel their licences for non-payment of the levy Under Section 4(1)(ii) ofthe Adhiniyamof 1970. It shall, however, be open to them to collect the said levy in the manner provided for in the 1970 Adhiniyam. In the circumstances of the case, parties shall bear their own costs. Security amount be refunded to the petitioners.