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1994 Supreme(All) 382
High Court of Allahabad
A.P. Misra & A.N. Gupta, JJ.
Ram Karan
Vs.
Krishi Utpadan Mandi Samiti, Saharanpur
Decided On : 5.5.1994
Sunil Ambavani
The power of a Mandi Samiti to levy and collect market fees under Section 17(iii)(b) of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 does not include the power to make a re-assessment of market fees in the absence of a specific provision in the Adhiniyam.
Headnote:
MARKET FEE - RE-ASSESSMENT - UTTAR PRADESH KRISHI UTPADAN MANDI ADHINIYAM, 1964 - SECTION 17(III)(B) - EXPLANATION - DIRECTIONS ISSUED BY COURT FOR ASSESSMENT AND RE-ASSESSMENT OF MARKET FEES - POWER OF RE-ASSESSMENT - LIMITATION PERIOD.
Fact of the Case:
Rice millers of Saharanpur, Uttar Pradesh, challenged the re-assessment of market fees levied by the Krishi Utpadan Mandi Samiti (Mandi Samiti) for the years 1988-89 to 1991-92. The dispute arose from the sale of rice produced from paddy purchased both inside and outside the market area of the Mandi Samiti. The petitioners claimed that they had already paid market fees on the rice sold within the market area and that no fees were payable on the rice sold outside the market area. The Mandi Samiti, relying on the Explanation to Section 17 of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 (Adhiniyam), contended that the petitioners were liable to pay market fees on all rice sold, regardless of whether it was sold inside or outside the market area, unless they could prove otherwise.
Finding of the Court:
The Court held that the Mandi Samiti was not entitled to make a re-assessment of market fees in the absence of any provision for re-assessment in the Adhiniyam. The Court also observed that the Adhiniyam did not provide a comprehensive framework for the levy and collection of market fees, including procedures for assessment, hearing, and redressal of grievances. The Court noted that the Supreme Court had earlier suggested the incorporation of machinery provisions in the Adhiniyam, but the State Government had failed to take appropriate steps in this regard.
Issues: 1. Whether the Mandi Samiti had the power to make a re-assessment of market fees in the absence of a specific provision in the Adhiniyam? 2. Whether the Adhiniyam provided a comprehensive framework for the levy and collection of market fees, including procedures for assessment, hearing, and redressal of grievances?
Ratio Decidendi: 1. The Court held that the Mandi Samiti did not have the power to make a re-assessment of market fees in the absence of a specific provision in the Adhiniyam. The Court reasoned that the word "levy" in Section 17(iii)(b) of the Adhiniyam included both imposition of tax and assessment, but did not include collection. Therefore, the Mandi Samiti's power to levy and collect market fees did not extend to re-assessment. 2. The Court held that the Adhiniyam did not provide a comprehensive framework for the levy and collection of market fees, including procedures for assessment, hearing, and redressal of grievances. The Court noted that the Adhiniyam did not specify the period within which assessment should be completed, did not provide for a hearing before assessment, and did not provide for an appeal against the assessment order.
Final Decision: The Court allowed the writ petitions in part, quashing the re-assessment of market fees for the years 1988-89 to 1991-92 and the demand notices issued in that behalf. The Court also modified the directions issued earlier in the case of Shri Mahalakshmi Sugar Works (1987) to provide a more comprehensive framework for the assessment and re-assessment of market fees. The Court directed that a Mandi Samiti could make a re-assessment only if some material came into its possession after assessment within six months of passing the assessment order, and that a show cause notice must be issued to the trader specifying the grounds for the proposed re-assessment.
A.N. Gupta, J.
1. Since common questions are involved for decision a this bunch of 12 writ petitions, they are being disposed of by one judgment.
2. The petitioners in all these writ petitions are rice millers of Saharanpur in the State of Uttar Pradesh and the sole opposite party is Krishi Utpadan Mandi Samiti, Saharanpur (hereinafter referred to as Mandi Samiti). These rice millers purchase paddy from inside as well as outside the market area of (he Mandi Samiti after paying market fee. Rice is produced by the petitioners out of the paddy so purchased. Sixty per cent of the rice so produced is given by the petitioners to the State Government as levy in accordance with the provisions of U.P. Rice and Paddy (Levy and Regulations of Trade) Order, 1985 and the remaining 40% retained by them called the released share is sold by the petitioners in the open market. In accordance with the decision given by the Supreme Court in the case of M/s. Ram Chandra Kailash Kumar vs. State of Uttar Pradesh, AIR 1980 SC 1124 market fee is not payable by the petitioners on the said rice sold by them in the market area of the Mandi Samiti as it was held in that case that the market fee is a single point levy in one market area. In the said case it has further been held that in case paddy is purchased from outside the market area and if the rice produced out of it is sold within the market area of the Mandi Samiti, the traders shall be liable to pay the market for to the Mandi Samiti It is not disputed that in case the paddy is purchased from outside the market area and the rice produced out of it is also sold or sent outside the market area of the Mandi Samiti, no market fee would be payable to it. The dispute in these petitions is confined to that part of the rice which was produced out of the paddy purchased by the petitioners from outside the market area of the Mandi Samiti and its sale or despatch, according to the petitioners, was made outside the market area of the Mandi Samiti.
The contention of the petitioners is that out of the paddy purchased by them from outside the market area of the Mandi Samiti, they produced rice some of which was sent or sold by them outside market area of the Mandi Samiti and, therefore, no market fee is payable by them to it on the said despatches/sales. On the other hand, the contention of the Mandi Samiti is that since the petitioners failed to furnish the proof of despatch or sale of rice outside its market area, it shall be presumed that they sold the said rice within its market area according to the provisions contained in Explanation to section 17 of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 (hereinafter called the Adhiniyam) which may be extracted here:-
"Explanation-For the purpose of clause (iii), unless the contrary is proved, any specified agricultural produce taken out or proposed to be taken out of a market area by or on behalf of a [licenced trader shall be presumed to have been sold within such area and in such case, the, price of such produce presumed to be sold shall be deemed to be such reasonable price as may be ascertained in the manner prescribed."
3. This explanation lays down a presumption that unless the contrary is proved, any specified agricultural produce (rice is also one of the specified agricultural produce) taken out of the market area shall be presumed to have been gold within such area. The vires of this explanation was challenged through a writ petition in this Court in the case of Sri Mahalaxmi Sugar Works, Farid Nagar vs. State of Uttar Pradesh, 1987 UP LB EC 957 but this Court did not declare the said explanation as ultra vires but instead of doing so issued following directions in order to mitigate the hardship caused to the traders and to safeguard payment of market fee to Mandi Samiti in accordance with law:-
"(1) Every trader proposing to take out the goods manufactured or produced in the market area shall be entitled to issue of gate passes from the Ma
