The physical presence of agricultural produce within the market area is necessary for the levy of market fee under Section 17 (iii) (b) of the U. P. Krishi utpadan Mandi Adhiniyam, 1964, and the legislation must pertain to the relevant Entry of List II, which is markets and fairs.

( 1 ) THE question which requires consideration here is whether a Market Committee of Krishi utpadan Mandi Samiti is entitled to levy market fee under Section 17 (iii) (b) of U. P. Krishi utpadan Mandi Adhiniyam. 1964, (hereinafter referred to as the Act) if the agricultural produce is neither brought in nor taken out of the market area.

( 2 ) THE petitioner M/s. Metal Craft is a registered partnership firm having its business premises and office at 14, Navyug Market. Ghaziabad, and it carries on the business of sale and purchase of iron and steel and also export of rice. The petitioner wanted to purchase broken rice from the rice millers of U. P. for the purpose of export to foreign countries and accordingly, made an application on July 31, 1997, to Krishi Utpadan Mandi Samiti, Ghaziabad (respondent No. 2) for grant of a licence. It was also stated in the application that the petitioner had exported rice in november. 1996 by purchasing it from places outside U. P. The respondent No. 2 asked the petitioner to deposit the licence fee for the years 1995-96. 1996-97 and 1997-98, which was done as per the demand. Thereafter, the respondent No. 2 sent a demand notice to the petitioner on october 12, 1997. demanding market fee at the rate of 2 per cent amounting to Rs. 12,94. 860. 00 on the sale price of rice exported by the petitioner which was Rs. 6,47,42,994. 00. The petitioner sent a reply on October 18, 1997, stating that it had never purchased any rice from inside the state of U. P. nor any transaction of sale or purchase of rice was carried out within the State. It was accordingly requested that the demand notice/ order dated October 12. 1997, be rescinded. The respondent No. 2, however, initiated proceeding for recovery of the amount in question and issued a citation dated December 6, 1997. The petitioner, thereafter, filed C. M. Writ Petition No. 43329 of 1997 in the High Court which was disposed of on December 17, 1997, with a direction to respondent No. 2 to decide the petitioners representation within a month and the recovery proceedings were suspended for six months. The petitioner appeared before respondent No. 2 on the date fixed, namely, January 14, 1998, along with the relevant document and submitted that the rice had been purchased from places outside the State of U. P. and had been sent directly to the ports for being exported to South Africa and, as such, it was not liable to pay any market fee. The respondent No. 2 passed an order on January 25, 1998, holding that the transaction of sale of the rice exported by the petitioner firm took place within the market are a of Ghaziabad, and, accordingly, the market fee imposed by the order dated October 12. 1997 was valid and proper. Feeling aggrieved, the petitioner preferred a revision under Section 32 of the Act before the rajya Krishi Utpadan Mandi Parishad, Lucknow (respondent No. 1) which was dismissed by the order dated March 9. 1993. The present writ petition under Article 226 of the Constitution has been filed for quashing the orders dated October 12, 1997 passed by respondent No. 2 and the order dated March 9. 1998 passed by respondent No. 1. The learned single Judge, who heard the petition, was of the opinion that the controversy raised involves a substantial question of law of general importance and made a reference to larger Bench. That is how the matter has come before us.

( 3 ) THE case of the petitioner with regard to the rice exported by it is that certain dealers In South africa wanted to buy rice from India. The petitioner quoted the rates and entered into negotiations. After the deal with settled, the rice was purchased from rice millers in Haryana. Punjab and Madhya Pradesh from where it was directly dispatched to the ports at Mumbai and kandla and the clearing and forwarding agents of the petitioner loaded the same on the ship. After the goods had been loaded, a Bill of Lading was prepared and signed by the Master of the ship in th