Important Point
Trader (seller) shall be liable to pay market fee to the Market Com­mittee on the agricultural produce sold to Govt. whether he has realised it from Govt. or not when the transaction falls under Section 17(iii)(b)(3) of U.P. Krishi Utpadan Mandi Adhiniyam, 1984.

Judgment

Thomas, J.-The area of dispute, in this appeal, has now been consid­erably narrowed down with the decision of a three Judge Bench of this Court in Food Corporation of India v. State of Kerala1. The short question now remains is whether the market fee payable to the Market Committee constituted under the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 (for short “the Act”) shall be paid by the seller or purchaser when agricultural produce is sold by a trader to the Government. The aforesaid question arose under the following facts:

2. Appellants are traders carrying on business in rice milling within certain areas constituted in the State of U.P. Such areas have been notified as market areas under Section 6 of the Act. Among the busi­ness activities carried on by the appellants they purchased paddy from cultivators or sellers outside the market area and the paddy so purchased is hulled to make it rice for sale. They are under a duty to sell rice to the State Government as levy by virtue of Clause (3) of the U.P. Rice and Paddy (Levy and Regulation of Trade) Order, 1985, which was issued under the Essential Commodities Act. It will herein­after be referred to as the “Levy Order”.

3. Provisions of the Act envisage the formation of a Market Committee for each market area and the said Committee is empowered to levy and collect fee called “market fee” on transactions of sale of agricultur­al produce which take place within the market area, at such rates as the State Government may specify by notification. Section 17(iii) of the Act reads thus :

“17. Powers of the Committee.-A Committee shall, for the purpose of this Act, have the power to-

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(iii) levy and collect:

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(b) market fee, which shall be payable on transactions of sale of specified agricultural produce in the market area at such rates, being not less than one per centum and not more than two percentum of the price of the agricultural produce so sold, as the State Government may specify by notification, and such fee shall be realised in the following manner-

(1) if the produce is sold through a commission agent, the commission agent may realise the market fee from the purchaser and shall be liable to pay the same to the Committee;

(2) 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;

(3) if the produce is purchased by a trader from another trader, the trader selling the produce may realise it from the purchaser and shall be liable to pay the market fee to the Committee; and

(4) in any other case of sale of such produce, the purchaser shall be liable to pay the market fee to the Committee.”

4. The Market Committee concerned made demands on the appellants to remit the market fee as indicated in Section 17(iii)(b)(3) of the Act. Appellants challenged the said demand before the Allahabad High Court on different grounds. First ground is that when a rice miller gives rice to the Government as levy under the Levy Order it does not amount to a “transaction of sale” and hence no market fee can be collected thereon. Second ground is that the State Government is not a “trader” as contemplated in the sub-clause and hence there is no liability to pay market fee. Third ground is that, even if it was a sale to a trader the liability to pay market fee is on the purchaser i.e. Gov­ernment and not the miller who sells it to the Government.

5. High Court did not accept any of the aforesaid contentions and hence the reliefs prayed for by the appellants in the writ petitions were disallowed. Against the judgment repelling those contentions Special Leave Petitions have been filed by the appellants and hence these appeals.

6. In the present appeals, appellants did not contend that Government is not a trader as envisaged in sub-clause