Mustard oil does not come under the ambit of ‘agricultural produce’ and thus Cess cannot be levied on it: Gauhati HC

Gauhati High Court: A Division Bench comprising of A.S. Bopanna, CJ. and Arup Kumar Goswami, J. interpreted the meaning of ‘Agricultural Produce’ of Assam Agricultural Produce Market Act, 1972.

The appellants were levying a cess on Mustard Oil imported from outside the State of Assam which was contended by the respondents to be unjustified and accordingly they sought for a refund of the amount collected by the respondent as cess.

The appellant here referred to the Section 2(1)(i) of Assam Agricultural Produce Market Act, 1972, which defines “Agricultural Produce” and if interpreted would include agricultural produce and as Mustard Seed was included in the Schedule at entry (IV) then its oil shall also be treated the same. Even ‘trade’ and ‘processing’ combines both processed and non-processed product thus bringing it under the ambit of agricultural produce. Alternately the respondent cannot be given the refund ordered as the cess burden was transferred by the respondent upon the end user and hence was unjustified.

Now the question arose whether Mustard Oil could be subjected to levy of cess without the same being included in the Schedule. It was answered by the case of State of Rajasthan v. Rajasthan Agriculture Input Dealer’s Assn., (1996) 5 SCC 479, according to which cess could only be levied on mustard seed and not on mustard oil as it was not considered as an agricultural produce. Further, regarding the refund, the Court considered it to be unjust enrichment upon the appellant as it was collected from the end user and could not be direct to be repaid to the appellant.

Accordingly, the appeal was partly allowed.[Assam State Agricultural Marketing Board v. Tinsukia Trading Co. (P) Ltd.,2018 SCC OnLine Gau 1581, decided on 08-11-2018]

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