2003 Supreme(SC) 1211

2004(2) Supreme 660
SUPREME COURT OF INDIA
(From Allahabad High Court)
V.N. Khare, CJI., S.B. Sinha and Dr. AR. Lakshmanan, JJ.
Krishi Utpadan Mandi Samiti & Ors. -Appellants
versus
Pillibhit Pantnagar Beej Ltd. & Anr. -Respondents
Civil Appeal No. 6301 of 2001
Decided on 28-11-2003
Counsel for the Parties :
For the Appellants : Rakesh Dwivedi, Sr. Advocate, Pradeep Misra, Ms. Indu Misra, Ms. Vimla Sinha, Abhishek Chaudhary, Advocates.
For the Respondents : Dushyant A. Dave, Sr. Advocate, Huzefa Ahmadi, Vibha Datta Makhija, Nakul Diwan, Ms. Priya Ahluwalia, Sanjay R. Hegde, Advocates.

IMPORTANT POINT
Krishi Utpadan Mandi Samiti has no authority to levy market fee on the purchase of wheat by the seed processing unit.

Headnote:U.P. Krishi Utpadan Mandi Adhiniyam, 1964-Sections 2(a), 6, 9, 10 and 17(iii)(b)-Seeds Act, 1966-Sections 2(11), 3, 6 and 9-Seeds Rules, 1968-Seeds Control Order, 1983-Business in certified seeds of wheat-Demand of market fee-Writ petitions challenging validity of-Wheat specified in the Schedule under heading of cereals-It has not been notified for seed-Respondent company engaged in production of certified seeds since 1996-97 and holds registration certificate from District Agriculture Officer under Seeds Control Order-After the respondent purchase wheat, they convert it into seed by applying pesticides and other chemicals and then sale is effected as wheat seed-Whether on these transactions, first respondent is liable to pay market fee-(No).

       As per Dr. AR. Lakshmanan, J. [for himself and for V.N. Khare, CJI]

       Held : Section 17(iii) of the Adhiniyam provides for imposition of market fee on the transactions of sale of specified agricultural produce in the market area at such rates notified by the State. As already noticed, Wheat is specified in the Schedule at S.No.1 under the Heading Cereals . A perusal of the Schedule would show that wherever seeds have been intended to be notified, it has been specifically mentioned as Seeds. In case of Wheat, however, Schedule does not provide or notify seed of wheat and thus the seeds of wheat are not specified in the Schedule and are thus not covered by the definition or Agricultural produce. We have also referred to the Objects and Reasons for enacting the Seeds Act, 1966 and the Seeds Rules, 1968. As already seen, Seeds Rules, 1968 have made detailed provisions of production, processing and certification of seeds under the Seed Certification Agency. The Central Government in order to exempt the movement of seeds and in exercise of its powers under the Essential Commodities Act, has enacted Foodgrains Movement Restriction (Exemption of Seeds) Orders, 1970 and the Seeds Control Order, 1983. The seeds are also exempted from Sales Tax under an exemption Notification dated 19.8.1970 issued under Section 4(1)(a) of the Act (Annexure CA 3). (Para 23)

       As Wheat Seed is not included in the Schedule, the Mandi Samiti is not allowed to levy a market fee on purchase. As the Mandi Samiti plays no role in the trade of the respondent s seeds, it may not be allowed to levy the market fee. It is also not in dispute that the Breeder Seeds are allocated by the Ministry of Agriculture or by the Universities to the various seed producing agencies and companies who multiply the breeder seeds into foundations seeds. (Para 31)

       There is no nexus whether the seed has been chemically treated or not and the levy of market fees. Since the seed is a separate commodity from grain, the same is not covered under Schedule I of the Adhiniyam and as such no market fee is leviable over the sale and/or purchase of the same. We are, therefore, of the view that the seeds are not specified agricultural produce under the provisions of the Act and, therefore, the business of purchase and sale of seeds under the supervision of Seed Certification Agency established under the Act is not a business of sale and purchase of specified agricultural produce and as such the first respondent is not required to pay the market fee or to take out a licence. (Paras 34 and 35)

       The appellant has no authority to levy market fee on the purchase of wheat by the seed processing unit. This question is answered in the negative. Wheat seed converted into certified seed is unfit for human consumption and, therefore, market fee levy is impermissible. The object of legislature was to notify only those seeds which are different from the produce itself. (Paras 38 to 40)

       As per S.B. Sinha, J.

       Taking into consideration the totality of the situation and upon giving harmonious construction to both the 1966 Act as well as the said Act, we are of the opinion that the respondent cannot be said to be a trader of agricultural produce as in the ordinary course of business, he is engaged in buying or selling agricultural produce. Once it is held that the respondent is not a trader, no market fee can be demanded from it by the appellant. Seed is also an essential commodity within the meaning of the provisions of the Essential Commodities Act 1955 which has been enacted by the Parliament in exercise of its power conferred under Entry 33 of List III of the 7th Schedule of the Constitution of India. Further more, if a Parliamentary Act governs the entire field, the seeds which are bought and further seeds produced therefrom and processed upon being governed by the Parliamentary Acts and Statutory Rules must be held to have been excluded from the purview of the provisions of the said Act. (Paras 56 and 57)