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section (2-A) shall be paid to the market committee within such time as may be specified in the bye-laws.”

8. Dr. Nanda Kishore, learned counsel for the appellant, has contended that as per sub-sections (2) and (2-A) of Section 65 of the Act, market fee is payable on the agricultural produce, which is purchased from outside the State as an importer and sell the processed goods within the area of the Market Committee. It is submitted that agricultural produce, which is subject matter of the petition is a scheduled item, as such, after processing market fee is leviable on such processed goods. It is submitted that as per Section 65 of the Act the Market Committee shall levy and collect market fee from every buyer in respect of the agricultural produce bought by such buyer in the market area at such rate as may be specified in the bye-laws. It is submitted that as per the second proviso to Section 65(2) of the Act, if on agricultural produce, the 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 outside the State, it is exempted from levy of the market fee. However, in view of the explanation, it is clear that any agricultural produce, imported or caused to be imported by any person either on his own account or as an agent for any other person from outside the State into any market area within the State for the purpose of processing or manufacturing, except for one’s own domestic consumption, is liable for market fee.

12. A reading of Section 65 of the Act, which is the charging section, it is clear that, the Market Committee shall levy and collect the 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. As per the second proviso to Section 65(2) of the Act, 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 outside the State, it shall be exempted from the levy of market fee. However, a reading of the explanation, makes it clear, the applicability of second proviso excluded to any agricultural produce imported from outside the State and processed and sold in any market area within the State; or any other agricultural produce imported or caused to be imported by any person either on his own account or as an agent for another person, from outside the State into any market area within the State for the purpose of processing or manufacturing except for one’s own domestic consumption. Further, as per Section (2-A)(ia), if the produce is sold by an importer to the purchaser, the importer to realise the market fee from the purchaser and shall be liable to pay the same to the committee. A harmonious reading of the Section 65(2) of the Act, its second proviso, and explanation to the same and clause (2-A)(ia), makes it clear that if any dealer imports agricultural produce from outside the State into any market area within the State of Karnataka for the purpose of processing and sale, the applicability of second proviso to sub-section (2) of Section 65 of the Act stands excluded. The explanation to sub-section (2) of Section 65 of the Act, makes it clear that even the processed items from the agricultural produce imported from outside the State of Karnataka, attract market fee on sales within the market area of the appellant – Market Committee. It is also clear from the aforesaid Section, it is the obligation of the importer to realise the market fee from the purchaser and pay the same to the Market Committee.

14. In the case of Gujarat Ambuja Exports Limited & Anr.2 while considering the provisions of Uttarakhand Agricultural Produce Marketing (Development and Regulation) Act, this Court has held that agricultural produce which is brought into market area not for the purpose of sale, but only for the purpose of manufacture or further processing activities, cannot be subjected to market fees. Similarly, in the case of ITC Ltd.3, learned Single Judge of the High Court of Karnataka has held that mere activity of stocking and processing of even the imported notified agricultural produces, which are imported into the market area do not attract payment of market fees.

15. We also endorse the view in the aforesaid judgments but in the case on hand respondent is a buyer as defined under sub-section (2) of Section 65 of the Act and we cannot ignore the second proviso and Explanation to Section 65(2) of the Act. It is not a case where the respondent is denying sale of the imported agricultural produce within the market area of the appellant after processing. In that view of the matter it is not entitled for exemption from payment of market fees. At the same time we make it clear that if one merely imports notified agricultural produce from outside the State for the purpose of cleaning and processing without selling the processed produce within the market area is not liable to pay market fee. As much as in this case without disputing the factum of sale within the market area post the import, the respondent has defended the proceedings only on the ground that once the agricultural produce is processed it will not attract market fee as such the same cannot be accepted. It is the sale within the market area that attracts levy of market fee, and not the first purchase that was outside the market area. Notably the goods sold are also notified agricultural produce specified in the Schedule. Validity of the item under the Schedule is not under challenge.