Supreme Court: The Division Bench comprising of R. Subhash Reddy* and Sanjiv Khanna, JJ., held that where the trader do not dispute the factum of sale within the market area post import, he cannot claim the benefit of the provision exempting market fee where the agricultural produces are imported into the market area merely for stocking and processing. The Bench clarified,
“It is the sale within the market area that attracts levy of market fee, and not the first purchase that was outside the market area.”
The respondent, M/s. Selva Foods was a trader engaged in buying spices like turmeric, chilli, coriander, methi and mustard seeds etc., from the market areas of various Agricultural Market Committees within the State of Karnataka and also in importing such spices from outside the State; after cleaning and processing of the spices and the respondent used to sell the processed items within the market area of the appellant.
Having inspected the records of the respondent, the Market Committee found that though the respondent had purchased agricultural produced from outside the State of Karnataka and after importing they sold the processed goods within the market area of the appellant, it had not paid the market fee. Consequently, the appellants cancelled the licence of the respondent on the ground that the market fee and the penalty amount was not paid in spite of demands and directed the payment of Rs.85,266 which was payable out of the total demand of Rs.1,13,688.
Questioning such demand, the respondent approached the High Court by filing a writ petition which was allowed by the Single Judge as against which the appellant Market Committee had preferred intra-court appeal which was dismissed by the impugned judgment and order. Aggrieved, the appellant filed the instant appeal.
The respondent contended that since they had purchased the agricultural produce from outside the State of Karnataka as and when such produce is processed within the market area of the appellant and sold, they are not liable to pay market fee. By referring to amendments made to the Act (by Act 22 of 2004), it was submitted that Section 65(2) of the Act is the charging Section which makes it clear that market fee can not be collected on the produce which the respondent has purchased from outside the State as an importer and processed within the area of the appellant Market Committee.
Noticeably, the respondent was a trader as defined under provisions of the Act and had purchased spices, which were notified as agricultural produce, not only from market areas within the State of Karnataka but also from outside the State of Karnataka and even the processed goods were notified items as per the schedule under the Act.
As per sub-sections (2) and (2-A) of Section 65 of the Karnataka Agricultural Produce Marketing (Regulation and Development) Act of 1966, market fee is payable on the agricultural produce, which is purchased from outside the State as an importer and the processed goods are sold within the area of the Market Committee. Notably, as per the second proviso to Section 65(2) of the Act, if on agricultural produce, the market fee has already been levied and collected under subsection (2) in any market area within the State and such agricultural produce is processed and sold in any other market area within the State or exported outside the State, it is exempted from levy of the market fee. However, any agricultural produce, imported or caused to be imported by any person either on his own account or as an agent for any other person from outside the State into any market area within the State for the purpose of processing or manufacturing, except for one’s own domestic consumption, is liable for market fee. Further, as per Section (2-A)(ia), if the produce is sold by an importer to the purchaser, the importer to realise the market fee from the purchaser and shall be liable to pay the same to the committee.
Considering the above, the Bench opined,
“A harmonious reading of the Section 65(2) of the Act, its second proviso, and explanation to the same and clause (2-A)(ia), makes it clear that if any dealer imports agricultural produce from outside the State into any market area within the State of Karnataka for the purpose of processing and sale, the applicability of second proviso to sub-section (2) of 12 Section 65 of the Act stands excluded.”
Therefore, the Bench opined that it is the obligation of the importer to realise the market fee from the purchaser and pay the same to the Market Committee. Since, the respondent did not deny sale of the imported agricultural produce within the market area of the appellant after processing, the Bench held that it was not entitled for exemption from payment of market fees. However, relying on the decision in Gujarat Ambuja Exports Ltd v. State of Uttarakhand, (2016) 3 SCC 601, the Bench clarified that mere activity of stocking and processing of even the imported notified agricultural produces, which are imported into the market area do not attract payment of market fees.
Lastly, the Bench held that it is the sale within the market area that attracts levy of market fee, and not the first purchase that was outside the market area. Accordingly, the appeal was allowed and the impugned judgment and order were set aside and quashed.
[APMC Yashwanthapura v. Selva Foods, 2021 SCC OnLine SC 1253, decided on 14-12-2021]
*Judgment by: Justice R. Subhash Reddy
For the Appellant: Nanda Kishore, Advocate
For the Respondent: Haris Beeran, Advocate
Kamini Sharma, Editorial Assistant has put this report together