Karnataka High Court
Apmc vs M/S Selva Foods on 11 January, 2013
Bench: N.Kumar, B.Sreenivase Gowda
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IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 11TH DAY OF JANUARY, 2013
PRESENT
THE HON'BLE MR. JUSTICE N.KUMAR
AND
THE HON'BLE MR. JUSTICE B.SREENIVASE GOWDA
W.A. NO.18000 OF 2011 (APMC)
BETWEEN:
APMC,
YASHWANTHPURA,
TUMKUR ROAD,
BANGALORE - 22,
REPRESENTED BY ITS
SECRETARY.
...APPELLANT
(BY SRI. B.G. SRIDHARAN, SR. CAUNSEL FOR
SRI. A.C. BALARAJ, ADVS.)
AND:
M/S. SELVA FOODS,
REGISTERED PARTNERSHIP,
HAVING ITS
REGISTERED OFFICE AT NO.340-B,
9TH CROSS, 4TH STAGE,
4TH MAIN ROAD,
PEENYA INDUSTRIAL AREA,
BANGALORE,
REPRESENTED BY ITS
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MANAGING PARTNER,
K. MOSSA.
... RESPONDENT
(BY SRI. S.A.H. RAZVI ADV. FOR PRIME LAW
ASSOCIATES, ADVS)
THIS WRIT APPEAL IS FILED UNDER SECTION 4
OF THE KARNATAKA HIGH COURT ACT, PRAYING TO
SET ASIDE THE ORDER PASSED IN THE WRIT
PETITION NO.11816/2009 (APMC) DATED
22/08/2011.
THIS APPEAL COMING ON FOR ORDERS, THIS
DAY, N.KUMAR.J., DELIVERED THE FOLLOWING:
JUDGMENT
This appeal is preferred against the order passed by the learned Single Judge, who has held that the petitioner is not liable to pay any market fee to the respondent under Section 65(2) of the Karnataka Agricultural Produce Marketing (Regulations and Development) Act, 1966.
2. For the purpose of convenience, the parties are referred to as they are referred to in the writ petition.
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3. The petitioner is in the business of selling cleaned and processed spices in the name and style of Selva Foods from the year 1980. Their case is that they buy spices like turmeric, chilli, coriander, methi and mustard from the APMC yard for which they pay market fee as specified by the APMC. Since, the purchase from the APMC yard at Bangalore is not sufficient, they also buy spices from various other states. The petitioner is not liable to pay market fee in respect of spices brought from other states. In otherwords, spices imported. The respondent visited the office of the petitioner and after examining their books, issued show cause notice dated 18.6.2008 claiming that the petitioner has purchased methi and mustard of the value of Rs.16,86,975/- for the year 2006-07 from outside the state. They also claimed a sum of Rs.25,305/- as market fee. The petitioner gave his reply contending that Section 65(2) of the Karnataka 4 Agricultural Produce Marketing (Regulations and Development) Act, 1966 (hereinafter referred to as the "Act" for short) provides for exemption of payment of market fee when the notified agricultural produce is brought from another state for the purpose of processing it and then selling it. Instead of recording a finding, accordingly, the respondent proceeded to cancel the licence issued to the petitioner. Therefore, the petitioner confined to file W.P.No.11211/2008 which came to be allowed setting aside the cancellation order and remanded the matter back to the APMC yard for fresh consideration and in accordance with law. Thereafter, again the respondent passed the very same order claiming market fee. Aggrieved by the said order, the petitioner filed W.P.11816/2009 before this Court. The learned Single Judge held that the agricultural produce undergoes process of cleaning, it becomes processed product and does 5 not attract market fee. Therefore, the learned Single Judge set aside the order of APMC. Aggrieved by the said order of learned Single Judge, the respondent-APMC has preferred the present appeal.
4. Sri.B.G.Sridhar, learned senior counsel appearing for the appellant-APMC contended that when an importer purchases these notified products outside the market area for the purpose of manufacturing or processing, no doubt he is not liable to pay any market fee. But after processing and manufacturing when the said product is sold, he is under obligation to collect market fee from the purchaser and then pay it to the APMC. He places reliance on sub-section (2-A)(ia) of Section 65(2) of the Act. Therefore, he contends that the order passed by the learned Single Judge is erroneous and requires to be set aside.
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5. Per contra, the learned counsel appearing for the respondent contends that Section 65(2) of the Act is the charging Section. If the trader, who imports these products from outside the state, he is not liable to pay any market fee at all. Therefore, the question of importer realizing the market fee from the purchaser and then pay it to the APMC would not arise. Therefore, he submits that order passed by the learned Single Judge though has a different reasoning is valid and legal and do not call for interference.
6. From the aforesaid facts and rival contentions, the point that arises for our consideration is :
"Whether a trader, who imports a product outside the State is liable to pay market fee when he sells the said product to the purchaser ?"7
7. In order to answer these question, it is necessary to look into Section 65 of the Act as a whole, which is extracted hereinbelow:
"65. Levy of market fees.-
(2) The market committee shall levy and collect market fees from every buyer in respect of agricultural produce bought by such buyer in the market area, at such rate as may be specified in the bye-laws which shall not be more than two rupees per one hundred rupees of the value of such produce bought except in case of livestock where the market fee shall not be more than five rupees per head of cattle other than sheep or goat, and in the case of sheep or goat such fee shall not be, more than one rupee per head in such manner and at such times as may be specified in the bye-laws.
Provided that in the case of any co-
operative society doing business in agricultural produce within a market yard, market fee shall be levied and collected at the rate of eighty per cent of the market fee payable under this Act.
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Provided further that, if on any agricultural produce market fee has already been levied and collected under sub-section (2) in any market area within the State and such agricultural produce is processed and sold in any other market area within the State or exported out side the State it shall be exempted from the levy of market fee.
Provided also that in case of a buyer in a spot exchange established by a licencee or a licencee for direct purchase of notified agricultural produce or a contract farming sponsor buying from a contract farming producer, market fee shall be levied and collected at the rate of seventy percent of the market fee payable under this Act.
Explanation: Nothing in this proviso shall apply to,-
(i) any processed agricultural produce imported from out side the State and sold in any market area within the State ; or
(ii) any agricultural produce imported or caused to be imported by any person either on his own account or as an agent for another person, from out side 9 the State into any market area within the State for the purpose of processing or manufacturing except for one's own domestic consumption.
(2-A) The market fee payable under this section shall be realised as follows, namely:-
(i) if the produce is sold through a commission agent, the commission agent shall realise the market fee from the purchaser and shall be liable to pay the same to the committee;
(ia) if the produce is sold by an importer to the purchaser, the importer shall realise the market fee from the purchaser and shall be liable to pay the same to the committee;
(ii) if the produce is purchased directly by a trader from a producer, the trader shall be liable to pay the market fee to the committee;
(iii) if the produce is purchased by a trader from another trader, the trader selling the produce shall realiste it from 10 the purchaser and shall be liable to pay the market fee to the committee; and
(iv) in any other case of sale of such produce, the purchaser shall be liable to pay the market fee to the committee.
(2B) The market fee payable under clauses (i), (ia), (ii) or (iii) of sub-section (2A) shall be paid to the market committee within such time as may be specified in the bye-
laws.
(3) Notwithstanding anything contained in this Act, if any market committee in the State has already levied and collected market fee under sub-section (2) from a buyer in respect of any agriculture produce as may be specified by the State Government by notification, no market fee shall be levied and collected again in respect of such agricultural produce by any other market committee in the State subject to production of such proof as may be prescribed for having collected the market fee (4) Notwithstanding anything contained in this Act, no market fee is payable for a 11 period of five years by a New Agricultural produce Processing Industries in respect of purchases of agricultural produce by such Processing Industries, in accordance with the Industrial policy of the Government vide Government Order CI 319 SPI 2005, dated th 26 August 2006."
8. Section 65(2) is the charging Section which provides for market committee to levy and collect market fee from every buyer in respect of agricultural produce brought by the said buyer in the market area. Therefore, to attract these provision, the condition precedent is that the agricultural produce should be bought by the buyer in the market area. In otherwords, if the agricultural produce is bought by the buyer in the market area, he is liable to pay market fee. Sub Section 2-A of Section 65 of the Act provides how the buyer under this Section realize the market fee payable by him. Section 65(2)(2-A)(ia) on which reliance is placed says that after the produce is sold by an importer to the purchaser, the importer shall realize the market fee 12 from the purchaser and shall be liable to pay the same to the Committee. In otherwords, this provision enables the persons who has paid the market fee to the APMC, to recover the said market fee from the purchaser. The condition precedent for application of this provision is that the buyer should have paid the market fee or say under obligation to pay market fee, only if he is liable to pay market fee and then the question of recovering the market fee from the purchaser would arise. If he is not liable to pay market fee under Section 65(2), the question of realizing if from the purchaser would not arise. In the instant case, admittedly, the petitioner is not liable to pay any market fee as he has not purchased the notified agricultural produce within the market area. Therefore, Section 65(2) is not attracted. When 65(2) is not attracted, consequently, Section 65(2)(2-A)(ia) is also not attracted. Hence, the petitioner is not liable to pay market fee to the respondent. 13
9. Infact, the learned Single Judge of this Court interpreting Section 65(2) of the Act in the case of ITC Ltd. v. State of Karnataka reported in AIR 2005 KARNATAKA 330 has taken pains to explain the ambit and scope of Section 65(2) at paragraphs 51 and 52 of its judgment.
10. In that view of the matter, there is no merit in the appeal. Accordingly, it is dismissed.
Sd/-
JUDGE Sd/-
JUDGE DM/-