Gujarat High Court
Gulshan Polyols Limited vs State Of Gujarat on 14 October, 2022
Bench: Bhargav D. Karia
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 17299 of 2021
With
R/SPECIAL CIVIL APPLICATION NO. 687 of 2020
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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GULSHAN POLYOLS LIMITED
Versus
STATE OF GUJARAT
==========================================================
Appearance:
SCA NO. 17299/2021
MR HRIDAY BUCH(2372) for the Petitioner(s) No. 1
MR DHAWAN JAYSWAL, AGP for the Respondent(s) No. 1
MR MIHIR JOSHI, SENIOR ADVOCATE WITH MR DIPEN DESAI(2481) for
SCA NO. 687/2020
MR MIHIR JOSHI, SENIOR ADVOCATE WITH MR DIPEN DESAI for the
MR DHAWAN JAYSWAL, AGP for the Respondent(s) No. 1
MR BS PATEL SENIOR ADVOCATE WITH MR CHIRAG B PATEL for the
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C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 14/10/2022
CAV JUDGMENT
1.Heard learned Senior Advocate Mr. Mihir Joshi
with learned advocate Mr. Dipen Desai for the
petitioner in Special Civil Application
No.687/2020 and for the respondent no.3 in
Special Civil Application No.17299/2021,
learned Senior Advocate Mr. B.S. Patel with
learned advocate Mr. Chirag B. Patel for the
respondent no.3 in Special Civil Application
No.687/2020, learned advocate Mr.Hriday Buch
for the petitioner in Special Civil
Application No.17299/2021 and learned
Assistant Government Pleader Mr. Dhawan
Jayswal for the respondent State.
2.Special Civil Application No.687/2020 is
preferred by Agriculture Produce Market
Committee, Bharuch feeling aggrieved by the
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
order dated 3.12.2019 passed by the
respondent no.1-Deputy Secretary (Appeals),
Agriculture, Welfare and Cooperation
Department of the State under section 48 of
the Gujarat Agriculture Produce Markets Act,
1963 (For short "the Act, 1963") in Revision
Application No.30 of 2019 whereby revision
application preferred by respondent no.3
-M/s. Jabsons Foods was partly allowed by
quashing and setting aside the order dated
11.01.2019 passed by the petitioner for levy
of market fees on the goods purchased from
outside the market area and further directing
respondent no.3 to inform the petitioner
Market Committee about the market fee after
verification of Form No.V with regard to
agriculture produce purchased or sale in the
market area of the petitioner.
3.Special Civil Application No. 17299/2021 is
filed by the petitioner being aggrieved by
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order dated 18.09.2021 passed by respondent
no.1 - Deputy Secretary (Appeals),
Agriculture, Welfare and Cooperation
Department of State in Revision Application
No.20/2021 whereby revision application filed
by respondent no.3 - Agriculture Produce
Market Committee, Jhagadiya was allowed and
order of the respondent no.2-Director,
Agriculture Marketing and Rural Finance
Department dated 11.06.2020 in Appeal No.31
of 2019 was quashed and set aside.
Accordingly, the petitioner was directed to
pay the market fees under section 28 of the
Act, 1963.
4.Special Civil Application No. 687/2020 was
admitted by order 10.01.2020. Special Civil
Application No.17299/2021 with regard to the
same subject matter of levy of market fees
under section 28 of the Act, 1963 was also
admitted by order dated 20.12.2021 in view of
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the submissions made on behalf of the
petitioner that respondent no.1 Deputy
Secretary (Appeals) has taken a completely
contrary view to its own earlier view as per
order dated 3.12.2019 in Revision Application
No.30/2019 in the matter of Jabsons Foods
which is the subject matter of challenge
before this Court in Special Civil
Application No. 687/2020.
5.In view of above facts, both the matters were
ordered to be heard together while admitting
Special Civil Application No. 17299/2021.
6.The petitioner of Special Civil Application
No. 17299/2021 was protected by way of
interim relief against the impugned order on
condition of depositing of Rs. 1 crore with
the Registry and furnishing a bank guarantee
of Rs. 3 crore from any nationalised bank
till the final disposal of the petition.
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7.Considering the issues raised in both these
petitions, it would be fruitful to record
facts of each cases individually.
8.Brief facts of Special Civil Application No.
687 of 2020 are as under :
8.1) The petitioner is Agriculture
Produce Market Committee at Bharuch
constituted under the provisions of Act,
1963 and is a local authority as per Section
10(2) of the Act. Respondent no.3 is a
trader operating in the market area of the
petitioner Market Committee.
8.2) It is the case of the petitioner
that the respondent no.3 though being a
processor and undertaking activities such as
processing of agriculture produce and thereby
liable to pay market cess, was not paying the
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market cess to the petitioner Market
Committee and therefore, the petitioner
Market Committee issued notices to the
respondent No.3 directing the respondent no.3
to pay the outstanding market cess to the
petitioner Market Committee.
8.3) Respondent no.3 challenged the
aforesaid demand notice issued by the Market
Committee before the respondent no.1-Deputy
Secretary (Appeals), State of Gujarat, by way
of Revision Application No.97 of 2012. The
said Revision Application came to be
considered by the respondent No.1 and vide
order dated 22.08.2013, the respondent no.1
disposed of the said Revision Application by
directing the respondent no.3 to produce
records with regards to the processing
activity undertaken by the respondent no.3
and to show that the market cess is payable
by the respondent no.3 or not.
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8.4) Thereafter the Market Committee
issued a notice to the respondent no.3 on
21.12.2013 to produce accounts and to pay the
outstanding market cess to the Market
Committee.
8.5) It is the case of the petitioner
that thereafter the Director-respondent no.2
herein was approached with regard to the
liability of the respondent no.3 to pay the
market cess. The Director vide its order
dated 07.02.2014 directed the respondentno.1-
Deputy Director, Agriculture Marketing and
Rural Finance to conduct inquiry with regard
to the notice issued by the petitioner and
with regard to liability of the respondent
no.3 to pay the market cess.
8.6) The respondent no.1 Deputy Director
and the District Registrar, Bharuch vide
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communication dated 08.12.2015 forwarded the
inquiry report to the Director wherein the
Deputy Director found that the Market
Committee is entitled to levy market cess and
if the respondent no.3 is claiming that it is
undertaking the activities outside the market
area, then necessary documentary evidence is
required to be produced before the Market
Committee which is not produced.
8.7) Thereafter, the petitioner-Market
Committee issued demand notice dated
01.07.2016 calling upon the respondent no.3
to pay the outstanding market fees. The
respondent no.3 challenged the said demand
notice before this Court by way of Special
Civil Application No.16465 of 2016. The said
petition came to be partly allowed by this
Court vide order dated 20.11.2018 by
directing the respondent no.3 to appear
before the Market Committee with all
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necessary documents to show that the
respondent no.3 is not liable to pay market
fees and to submit necessary Forms to get
exemption from payment of market cess.
8.8) After the order passed by this
Court, the respondent no.3 vide letter dated
18.12.2018 produced record before the Market
Committee stating that it had undertaken
processing activity and produced necessary
material and documents and asked the Market
Committee to state the outstanding market
fees payable by the respondent no.3.
8.9) The petitioner Market Committee on
verifying the documents and material produced
by the respondent no.3 found that the
respondent no.3 is a processor and is
therefore liable to pay market fees.
8.10) The petitioner therefore issued
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demand notice dated 11.01.2019 for payment of
market fees along with interest.
8.11) Respondent no.3 replied to the said
notice vide its communication dated
29.01.2019 and reiterated its claim that the
respondent no.3 is an industrial concern and
therefore not required to pay market fees.
8.12) It is the case of the petitioner
that respondent no.3 had accepted that it is
a processor and had brought the goods within
the market area for processing and had
accepted its liability to pay market fees,
however, has taken the contrary stand
thereafter.
8.13) Thereafter the Market Committee vide
notice dated 26.02.2019 again called upon the
respondent no.3 to pay the outstanding market
fees, failing which, the Market Committee
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would be constrained to take action under
Section 51A of the Act, 1963 for seizing of
the agriculture produce of the respondent
no.3.
8.14) The said notice was challenged by
the respondent no.3 before the respondent
no.1-Deputy Secretary (Appeals) by way of
Revision Application No.30 of 2019 under
Section 48 of the Act.
8.15) The petitioner filed reply to the
said Revision Application pointing out in
detail as to how the stand of the respondent
No.3 is contradictory to its own stand taken
earlier and how the respondent no.3 is making
absolutely false case before the respondent
no.1. The petitioner filed its written
submissions reiterating its stand before the
respondent no.1.
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
8.16) Respondent no.1 however, vide
impugned order dated 03.12.2019 partly
allowed the Revision Application of the
respondent no.3 by inter-alia holding that
the petitioner is entitled to levy of market
fees from the respondent no.3 only if the
respondent no.3 has purchased or sold
agriculture produce in the market area and
that respondent no.3 is an industrial
concern.
8.17) Therefore, being aggrieved and
dissatisfied with the impugned order passed
by the respondent no.1-Deputy Secretary
(Appeals), the petitioner has preferred
Special Civil Application No.687/2020.
9.Brief facts of Special Civil Application
No.17299/2021 are as under :
9.1) The petitioner's manufacturing
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processing unit is located at GIDC, Jaghadia
wherein it is carrying out its business
activity. For the purposes of producing its
product "Sorbitol 70%", the petitioner needs
to purchase Maize Corn as raw material. Upon
purchase of the Maize Corn, the same is
brought at the manufacturing/ processing unit
which is located at GIDC, Jaghadia. The raw
material thereafter is processed and the
product manufactured is namely "Sorbitol
70%".
9.2) The petitioner is carrying on its
manufacturing/processing unit since the year
2006-2007.
9.3) The respondent No. 3- Agriculture
Produce Market Committee (APMC) issued three
notices dated 05.03.2016, 16.03.2016 and
21.04.2016 inquiring from the petitioner
about the details of the purchase of Maize
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Corn ever since its inception.
9.4) It is the case of the petitioner
that even before the petitioner could respond
to such notices, the factory premises of the
petitioner came to be raided on 19.05.2016
and a panchanama was drawn.
9.5) Thereafter on 15.12.2016, the
petitioner was called upon to remain present
on 19.12.2016 with a cheque for the payment
of market fees for two years i.e., 2014-15
and 2015 16.
9.6) Upon receipt of the aforesaid
notice, the petitioner responded promptly
vide letter dated 17.12.2016, explaining how
it wasnot possible for them to remain present
in such a short notice.
9.7) It is the case of the petitioner
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that thereafter once again the petitioner's
factory premises came to be raided and
panchnama came to be drawn and there was
specific insistence that the petitioner
should pay market fees.
9.8) The petitioner was thereafter served
with a notice dated 25.05.2017 through an
advocate of Respondent No. 3-APMC whereby the
petitioner was called upon to deposit market
fee from the year 2007 to 2015-16 or else
respondent No. 3 wold initiate appropriate
proceedings.
9.9) Upon receipt of the said notice, the
petitioners replied through their advocate
intimating respondent No. 3 that the
petitioner was not required to take any
license as the petitioner brought Maize Corn
only as raw material for production of
"Sorbitol 70%" and that the petitioner is
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also not required to pay the market fee/cess,
especially when there was no purchase or sell
in the market area of respondent No. 3.
9.10) The petitioner also made a
representation before the respondent no.l
Deputy Director of APMC, Bharuch giving all
details of the purchase of Maize Corn from
the year 2006-07 to 2016-17.
9.11) However, with a view to peacefully
carry on with the business activity, the
petitioner paid Rs. 48 lakhs on 23.10.2017
and 08.01.2018 as market fees under protest.
9.12) Upon payment of the aforesaid fees,
the petitioner continued with its business
and once again the petitioner was served upon
a notice dated 23.03.2019 calling upon the
petitioner to deposit the market fees for the
year 2017-18 and 2018-19.
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
9.13) The petitioner replied through its
advocate pointing out that the levy is
illegal and unconstitutional in as much as
the Maize Corn is brought from other States
only for the purpose of processing. At the
time of purchase, the traders already pay the
requisite fee in their respective Taluka from
which the Maize Corn was purchased.
Therefore, in view of Section 28 of the
Gujarat Agriculture Produce Market Act,1963
(For short "the Act, 1963"), the petitioner
is not liable to pay any further market fee.
9.14) It is the case of the petitioner
that despite the clear reply, the advocate of
the Market Committee continued to send
notices dated 01.08.2018, 12.03.2019,
06.05.2019 and 27.05.2019 reiterating the
demand.
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9.15) Respondent No. 3 again raided the
factory premises of the petitioner and
further seized 5 trucks of Maize Corn on
01.06.2019. As the petitioner was in need of
those raw materials lying in the trucks, the
petitioner paid market fee under protest by
giving all the details of payment of market
fee from the place where the petitioner
purchased its raw material.
9.16) Thereafter, respondent No. 3 herein
filed a Criminal Complaint against the
petitioner before the learned Judicial
Magistrate First Class, Jaghdiya being
Criminal Case No. 1169 of 2019.
9.17) The petitioner therefore, approached
this Court by filing a writ petition being
Special Civil Application. No. 10485 of 2019
seeking appropriate directions as against the
illegal actions carried out by the respondent
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No. 3. This Court vide order dated
14.10.2019 disposed of the petition with
directions to make representation before
Respondent No. 3 so as to consider the same
and take appropriate decision.
9.18) In compliance with the aforesaid
order dated 14.10.2019, the petitioner herein
preferred a representation on 18.10.2019
wherein it was specifically contended as to
how Section 28 of the Act, 1962 is not
applicable to the petitioner and therefore
resultantly, the petitioner are not required
to make any payment under the head of market
fee.
9.19) It is the case of the petitioner
that upon receipt of the representation by
the petitioner, without giving any
opportunity to the petitioner, just in a
period of one week, the Secretary of the
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respondent no.3 passed an order dated
25.10.2019/01.11.2019 rejecting the
representation.
9.20) Being aggrieved with the order dated
25.10.2019/01.11.2019 passed by the Secretary
of APMC Jaghadiya, the petitioner filed an
appeal under Section 47 of the Act, 1962
being Appeal No. 31 of 2019 before the
Director of Agriculture Marketing and Rural
Finance, Gandhinagar - Respondent No.
issued notice. The petitioner served the copy
of the appeal memo along with the application
for stay on 13.11.2019. As a counter blast
the respondent No. 3 issued a notice dated
14.11.2019 calling upon the petitioner to pay
the market fee or alternatively the license
held by the petitioner would be cancelled.
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9.22) The Respondent No. 3 herein also
rejected the Form 'V' stating the market fee
is paid outside the state of Gujarat and that
the petitioner was required to pay the market
fee vide its communication dated 18.11.2019.
9.23) The petitioner thereafter pursued
the application for stay considering the
coercive actions initiated by the Respondent
No. 3 herein. The respondent No.2 vide its
order dated 27.11.2019 was pleased to grant
ad-interim relief.
9.24) Respondent No. 3 again issued a
show cause notice dated 28.11.2019 which was
received by the petitioner herein on the
16.12.2019.
9.25) It is the case of the petitioner
that before the petitioner could respond to
the said show-cause notices, the license held
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by the petitioner came to be cancelled on
10.12.2019 and that too was served upon the
petitioner on 16.12.2019, therefore
immediately the petitioner moved another
appeal being Appeal No. 60 of 2019 before
respondent No. 2.
9.26) It is the case of the petitioner
that despite there being an ad interim relief
operating against the respondent No. 3, the
respondent No.3 stopped the trucks carrying
the Maize Corn from entering the premises of
the petitioner at APMC Jaghadiya on
19.12.2019.
9.27) The petitioner therefore, had to
rush before Respondent No. 2 seeking
direction to permit the trucks to enter the
premises. The Respondent No. 2 was pleased to
issue appropriate directions on 21.12.2019,
considering the persistence of the ad interim
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relief in favour of the petitioner.
9.28) In the mean time, on 12.12.2019,
the respondent No. 3 filed its reply before
respondent No. 2 herein once again
reiterating its earlier stand.
9.29) The Respondent No. 2 thereafter
heard the parties in both the Appeals i.e.,
Appeal No. 31 of 2019 and Appeal No. 60 of
2019 and was pleased to allow both the
appeals vide its order dated 11.06.2020.
9.30) The respondent No. 3 being aggrieved
by the orders dated 11.06.2020 in both the
appeals preferred writ petitions before this
Court being Special Civil Application No.
10232 of 2020 in Appeal No. 31 of 2019 and
Special Civil Application No. 9531 of 2020 in
Appeal No. 60 of 2019. This Court relegated
respondent No. 3 before Respondent No. 1 to
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exhaust the remedy of Revision and more
particularly, with a view to enable the State
Government to clear its stand on
interpretation of Section 28 of the Act vide
its common order dated 08.02.2021 passed in
both the petitions.
9.31) In view of the order dated
08.02.2021, the respondent No. 3 preferred
Revision Application being Revision
Application No. 10/2021 before respondent
No. 1 challenging the order passed by
respondent No. 2 in Appeal No. 30 of 2019.
9.32) The Respondent No. 1 allowed the
Revision Application vide order dated
18.09.2021.
9.33) Thus being aggrieved and
dissatisfied by the impugned order, the
petitioner preferred Special Civil
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Application No.17299/2021.
10. Both the petitions involve
interpretation of provisions of section 28 of
the Act, 1963 which provides for power to
levy fees. Section 28 of the Act, 1963 was
first time amended by Gujarat Act No. 17/2007
by inserting sub-section (2) with effect from
2.07.2007. Thereafter by Gujarat Act No.8 of
2020, the said section was further amended.
11. The provisions of section 28 as it
existed prior to Gujarat Act No. 8/2020 read
as under:
"28. Power to levy fees.- "[(1)] The
market committee shall, subject to
the provisions of the rules and the
maxima and minima from time to time
prescribe, levy and collect fees on
the agricultural produce bought or
sold in the market area:
Provided that the fees so levied may
be collected by the market committee
through such agents as it may
appoint.
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[(2) (a) The market fee specified in
sub-section (1) shall not be levied
for the second time in any market
area from the buyer who is a
processor, grader, packer, value
addition centre or exporter of an
agriculture produce and market fee
has already been paid on that
agricultural produce in any market
and the information in this context
has been furnished, as prescribed,
by the person concerned that the
payment of market fee has already
been made in other market, provided
such proof as may be prescribed is
furnished to the Director by the
buyer who is doing processing,
grading, packing, value addition or
export within such period as may be
prescribed by the Government.
b) On the agricultural produce
brought in the market area for
commercial transaction or for
processing, if the permit issued
under clause (e) has not been
submitted, the market fee shall be
deposited by the buyer or processor,
as the case may be, in the office of
the market committee, within
fourteen days but before sale or
resale or processing or export
outside the market area:
Provided that in case any
agricultural produce is found to
have been processed, sold or resold
or dispatched outside the market
area without payment of market fee
payable on such produce, the market
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fees shall be levied and recovered
on five times the market value of
the processed produce or value of
the agricultural produce, as the
case may be.
(c) The market fee shall be payable
by the buyer of the agricultural
produce and shall not be deducted
from the price payable to the
agriculturist seller:
Provided that where the buyer of a
agricultural produce cannot be
identified, all the fees shall be
payable by the person who may have
sold or brought the produce for sale
in the market area:
Provided further that in case of
commercial transactions between
traders in the market area, the
market fee shall be collected and
paid by the seller.
(d) The market functionaries, as the
market committee may by bye-laws
specify and in the case of market
established under Chapter IVA of
this Act as the Director may
specify, shall maintain accounts
relating to sale and purchase or
processing or value addition in such
manner as may be prescribed and
submit to the market committee, the
periodical returns, as may be
prescribed.
(e) Any agricultural produce shall
be removed out of the market area
only in the mariner and in
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accordance with the permit issued in
such form, as may be prescribed. The
vehicle carrying agricultural
produce shall be accompanied by such
proofs as may be prescribed.
Provided that the producer of the
agricultural produce himself may
remove the agricultural produce from
one place to another without such
permit.]
[(3) (i) The market committee shall
allow the trade in those items of
the agricultural produce which are
not specified in the notification
published under sub-section (1) of
section 5 for such market area.
(ii) The market committee may
collect user charges for allowing
the trade as provided in clause (i),
at the rate not less than thirty
paise and not exceeding two rupees
per every hundred rupees.]"
12. The provisions of section 28 as it
existed after amendment to Gujarat Act No.
8/2020 read as under:
"28. Power to levy fees.- [(1)] The
market committee shall, subject to
the provisions of the rules and the
maxima and minima from time to time
prescribe, levy and collect fees on
[the agricultural produce bought or
sold in the principal market yard,
sub-market yard or market sub-yard
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either brought from outside the
State or from within the State]:
Provided that the fees so levied may
be collected by the market committee
through such agents as it may
appoint.
[(2) (a) The market fee specified in
sub-section (1) shall not be levied
for the second time in any [the
principal market yard, sub-market
yard or market sub-yard] from the
buyer who is a processor, grader,
packer, value addition centre or
exporter of an agriculture produce
and market fee has already been paid
on that agricultural produce in any
market and the information in this
context has been furnished, as made
in other market, provided such proof
as may be prescribed is furnished to
the Director by the buyer who is
doing processing, grading, packing,
value addition or export within such
period as may be prescribed by the
Government.
(b) On the agricultural produce
brought in the "[the principal
market yard, sub market yard or
market sub-yard] for commercial
transaction or for processing, if
the permit issued under clause (e)
has not been submitted, the market
fee shall be deposited by the buyer
or processor, as the case may be, in
the office of the market committee,
within fourteen days but before sale
or resale or processing or export
outside the [the principal market
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yard, sub-market yard or market sub-
yard]:
[Provided that in case any
agricultural produce is found to
have been processed, sold or resold
or dispatched outside the principal
market yard, sub-market yard or
market sub-yard without payment of
market fee, or user charges payable
under clause (ii) of sub-section (3)
of this section, on such produce,
the market fee or user charges shall
be levied and recovered two times of
such leviable and recoverable
amount.]
(c) The market fee shall be payable
by the buyer of the agricultural
produce and shall not be deducted
from the price payable to the
agriculturist seller:
Provided that where the buyer of a
agricultural produce cannot be
identified, all the fees shall be
payable by the person who may have
sold or brought the produce for sale
in the "[the principal market yard,
sub-market yard or market sub-yard]:
Provided further that in case of
commercial transactions between
traders in the[the principal market
yard, sub-market yard or market sub-
yard], the market fee shall be
collected and paid by the seller.
(d) The market functionaries, as the
market committee may by bye-laws
specify and in the case of market
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established under Chapter IVA of
this Act as the Director may
specify, shall maintain accounts
relating to sale and purchase or
processing or value addition in such
manner as may be prescribed and
submit to the market committee, the
periodical returns, as may be
prescribed.
(e) Any agricultural produce shall
be removed out of the "[the
principal market yard, sub-market
yard or market sub-yard] only in the
manner and in accordance with the
permit issued in such form, as may
be prescribed. The vehicle carrying
agricultural produce shall be
accompanied by such proofs as may be
prescribed. Provided that the
producer of the agricultural produce
himself may remove the agricultural
produce from one place to another
without such permit.]
[(3) (i) The market committee shall
allow the trade in those items of
the agricultural produce which are
not specified in the notification
published under sub section (1) of
section 5 for such "[the principal
market yard, sub-market yard or
market sub-yard].
(ii) The market committee may
collect user charges for allowing
the trade as provided in clause (i),
at the rate not less than thirty
paise and not exceeding two rupees
per every hundred rupees.]"
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
13. Corresponding Rules being the Gujarat
Agricultural Produce Markets Rules, 1965 (For
short "the Rules 1965") being Rules under
Part VI (Fees Levy and Collection) being Rule
48 and Rule 49 are also relevant and are
reproduced hereunder:
"48. Market fees.- (1) The market
committee shall levy and collect
fees on agricultural produce bought
or sold in the market area at such
areas as may be specified in the
bye-laws subject to the following
minima and maxima, viz.
(1)rates when levied advalorem shall
not be less than 130 paise] and
shall exceed [Rs. 2] per hundred
rupees.
(2) rates when levied in respect of
cattle, sheep or goat shall not be
less than [25 paise] per animal and
shall not exceed [Rs. 4] per animal.
Explanation.- For the purposes of
this rule a sale of agricultural
produce shall be deemed to have
taken place in a market area if it
has been weighed or measured or
surveyed or delivered in case of
cattle in the market area for the
purpose of sale; notwithstanding the
fact that the property in the
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
agricultural produce has by reason
of such sale passed to a person in a
place outside the market area.
(2) No fees shall be levied on
agricultural produce brought from
outside the market area into the
market area for use therein by the
industrial concern situated in the
market area or for export and in
respect of which declaration has
been made and a certificate has been
obtained in Form V:
Provided that if such agricultural
produce brought into the market area
for export is not exported or
removed therefrom before the expiry
of twenty days from the date on
which it was so brought, the market
committee shall levy and collect
fees on such agricultural produce
from the person bringing the produce
into the market area at such rates
as may be specified in the bye-laws
subject to the maxima and minima
specified in sub-rule (1).
Provided that no fee shall be
payable on a sale or purchase to
which sub-section (3) of section 6
applies.
[(3) A processor, packer, grader,
exporter or value addition centre
shall furnish the information that
the payment of market fees has
already been made in other market in
Form-F 1 within 14 days.
(4) A buyer who is doing processing,
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
grading, packing, value addition or
exporter shall give proof within 14
days from the transaction to the
Director or any other person
authorised by him, with other
details of applicant. The details
including his licence No. SSI No.
(if available), VAT No. and banker's
detail shall also be provided.
(5) A buyer shall carry the permit
in FORM-G-2 when he remove the
agricultural produce, from one
market area to another market area.]
49. Recovery of fees.- (1) The fees
on agricultural produce shall be
payable as soon as it is brought
into the principal market yard or
sub-market yard or market proper
"[or market area from the purchaser
as may be specified] in the bye-
laws.
Provided that the fees so paid shall
be refunded
(i) on production of sufficient
proof that such produce was not sold
within the limits of the market
area; or
(ii) if such produce is brought from
outside the market area into the
market area for use therein by the
industrial concerns situated in the
market area or for export and in
respect of which a declaration has
been made and certificate has been
obtained in Form V subject to the
proviso to sub-rule (2) of rule 48.
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
(2) The licence fees payable under
rule 56 or 57 shall be paid
alongwith the application for
licence but in case the market
committee refuses the grant or
renewal of a licence the fees
recovered shall be refunded to the
applicant.
: Submissions of petitioner in Special Civil
Application No. 687/2020 :
14. Learned Senior Advocate Mr. Mihir Joshi
for the petitioner APMC submitted that
respondent no.1 has not considered that
respondent no.3 M/s. Jabsons Foods in the
earlier proceedings before the State
Government declared that it is a processor
and is undertaking activities of processing
which has been recorded in the order dated
22.08.2013 passed by respondent no.1 which
is binding upon respondent no.3 and
therefore, respondent no.3 could not have
taken a contrary stand that it is not a
processor. It was submitted that in the
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
inquiry report of the District Registrar, it
has been specifically recorded that
respondent no.3 is a processor and the said
report has never been challenged by
respondent no.3. It was submitted that on
reading of sub-section 2(b) of section 28 of
the Act, 1963 clearly provides that on the
agricultural produce brought in the market
area for commercial transaction or for
processing, if the permit issued under clause
(e) has not been submitted, the market fee
shall be deposited by the buyer or processor,
as the case may be, in the office of the
market committee, within fourteen days but
before sale or resale or processing or export
outside the market area. It was therefore,
submitted that as respondent no.3 has failed
to produce the permit as required under
clause(e) for removal of the agricultural
produce out of the market area in accordance
with such permission in such form as may be
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
prescribed, respondent no.3 is liable for
levy of the market fee/cess on the
agricultural produce bought or sold in the
market area as per section 28(1) of the Act,
1963.
14.1) It was submitted that even in
circular dated 29.02.2016 issued by the
Director provides that a processor is
required to pay the market fee unless
documents showing that market fees have been
paid with regard to the subject goods earlier
and in facts of the case, such documentary
evidence has not been produced and therefore,
the impugned order is contrary to the
provisions of section 28 of the Act, 1963.
14.2) It was submitted that respondent
no.1 Deputy Secretary (Appeals) has also
misinterpreted the provisions of Rule 48 of
the Rules 1965 read with section 28 of the
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
Act, 1963 and the order passed by this Court
in Special Civil Application No.16465/2016
whereby respondent no.3 was directed to
appear before the market committee and
produce Form-V and after examining such
documents, appropriate decision was to be
taken by the petitioner APMC in accordance
with law. It was submitted that pursuant to
such directions issued by the Court, the
petitioner market committee found that the
documents were not produced and the order was
passed directing to pay the market cess in
accordance with law. It was therefore,
submitted that the revisional authority could
not have set aside the order passed by the
respondents confirmed by the Director in the
appeal on the basis of facts which were not
there before the market committee and after
taking into consideration the new facts
developed by respondent no.3 taking into
consideration the certificate of Small
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
Industries which includes the processing.
14.3) It was therefore, submitted that the
case of respondent no.3 that activity of the
purchase and sale has taken place outside the
market area is not relevant in view of
clause(b) of sub-section(2) of section 28 of
the Act, 1963.
14.4) Learned Senior Advocate Mr. Joshi
referred to the definition of "agricultural
produce" as per section 2(i), definition of
"market" as per section 2(xii-a),definition
of "market area" as per section 2(xiii),
definition of "processing" as per section
2(xvii-aa) and definition of "processor" as
per section 2(xvii-aaa) which are reproduced
here in below :
"2(i) "agricultural produce" means
all produce, whether processed or
not, of (agriculture and
horticulture), specified in the
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
Schedule.
2(xii-a) "market" means a market
established and regulated under this
Act for the notified area and also
includes a market proper, a
principal market yard, sub-market
yard, private market, e-market and
such other markets as may be
declared under this Act.
2(xiii) "market area" means any area
declared to be a market area under
this Act.
2(xvii-aa) "processing" means any
one or more of a series of
treatments relating to powdering,
crushing, decorticating, dehusking,
parboiling, polishing, ginning,
pressing, curing or any other
manual, mechanical, chemical or
physical treatment to which raw
agricultural produce or its product
is subjected to.
2(xvii-aaa) "processor" means a
person who undertakes processing of
any agricultural produce on his own
accord or on payment of a charge."
14.5) Referring to the above definitions,
it was submitted that as per the provisions
of section 28((2)(b), it is not in dispute
that respondent no.3 has brought agricultural
produce for processing in the market area as
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
per the definition of the "market area" and
as such as per the provisions of Rule 48(1)
which authorise the APMC to levy and collect
fees on agricultural produce bought or sold
in the market area, subject to provisions of
sub-section(2) which provides that fees shall
not be levied on agricultural produce brought
from outside the market area into the market
area for use therein by the industrial
concern situated in the market area or for
export and in respect of which declaration
has been made and a certificate has been
obtained in Form V.
14.6) It was submitted that respondent
no.3 has not produced Form V or Form F as per
sub-rule(3) of Rule 48 to furnish the
information that payment of market fee has
already been made in other market. It was
therefore, submitted that in such
circumstances, respondent no.3 was liable to
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
pay the market fees as levied by the
petitioner APMC.
14.7) In support of his submission,
learned Senior Advocate Mr. Joshi placed
reliance on decision of the Apex Court in
case of i) Orissa State (Prevention & Control
of Pollution) Board v. Orient Paper Mills and
another reported in (2003) 10 Supreme Court
Cases 421, wherein it is held as under :
"13. Thus, in case manner is not
prescribed under the Rules, there is
no obligation or requirement to
follow any, except whatever the
provision itself provides
viz. Section 19 in the instant case
which is also complete in itself
even without any manner being
prescribed as indicated shortly
before to read the provision
omitting this part "in such manner
as may be prescribed". Merely by
absence of Rules, the State would
not be divested of its powers to
notify in official gazette any area
declaring it to be air pollution
control area. In case, however, the
Rules have been framed prescribing
the manner, undoubtedly the
declaration must be in accordance
with such rules.
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
14. On the proposition indicated
above, a decision reported in AIR
1961 SC page 276 T. Cajee Vs.
Jormanik Siem and Anr. would be
relevant. The matter pertained to
removal of Seim from the office
namely the Chief Head man of the
area in the district council
governed by Schedule VI of the
Constitution. The High Court took
the view that the District Council
could act only by making a law with
the assent of the Governor. So far
as the appointment and removal from
the office of a Seim is concerned,
provision contained in para 3(1) (g)
of the Schedule was referred to,
which empowered the District Council
to make laws in respect of the
appointment and succession of office
of Chief and Headmen. The High Court
took the view that in absence of
framing of such a law, there would
be no power of appointment of a
Chief of Seim nor for his removal
either. This court negated the view
taken by the High Court observing
that
"..it seems to us that the High
Court read far more into
paragraph 3(1)(g) than is
justified by its language.
Paragraph 3(1) is in fact
something like a legislative
list and enumerates the subjects
on which the District Council is
competent to make laws.... But it
does not follow from this that
the appointment or removal of a
chief is a legislative Act or
that no appointment or removal
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
can be made without there being
first a law to that effect".
This court found that para 2(4)
relating to administration of an
autonomous district, vested in the
District Council such powers and
further observed as under:
"The Constitution could not have
intended that all administration
in the autonomous districts
should come to a stop till the
Governor made regulations under
paragraph 19(1)(b) or till
District Council passed laws
under para 3(1)(g) ... Doubtless
when regulations are made... The
administrative authorities would
be bound to follow the
regulations so made or the laws
so passed"."
ii) In case of Orient Paper & Industries Ltd
v. State of M.P. and others reported in
(20060 12 Supreme Court Cases 468, wherein it
is held as under :
"14. According to Oxford Dictionary
one of the meanings of the word
'process' is "a continuous and
regular action or succession of
actions taking place or carried on
in a definite manner and leading to
the accomplishment of some result".
The activity contemplated by the
definition is perfectly general
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
requiring only the continuous or
quick succession. It is not one of
the requisites that the activity
should involve some operation on
some material in order to effect its
conversion to some particular stage.
There is nothing in the natural
meaning of the word 'process' to
exclude its application to handling.
There may be a process, which
consists only in handling and there
may be a process, which involves no
handling or not merely handling but
use or also use. It may be a process
involving the handling of the
material and it need not be a
process involving the use of
material. The activity may be
subordinate but one in relation to
the further process of manufacture.
Any activity or operation, which is
the essential requirement and is so
related to the further operations
for the end result, would also be a
process in or in relation to
manufacture. (See: C.C.E. v.
Rajasthan State Chemical
Works (1991) 4 SCC 473).
15. In Black's Law Dictionary, (5th
Edition), the word 'manufacture' has
been defined as,
"The process or operation of
making goods or any material
produced by hand, by machinery
or by other agency; by the hand,
by machinery, or by art. The
production of articles for use
from raw or prepared materials
by giving such materials new
forms, qualities, properties or
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
combinations, whether by hand
labour or machine".
Thus by manufacture something is
produced and brought into existence
which is different from that out of
which it is made in the sense that
the thing produced is by itself a
commercial commodity capable of
being sold or supplied. The material
from which the thing or product is
manufactured may necessarily lose
its identity or may become
transformed into the basic or
essential properties. (See Deputy
Commissioner of Sales Tax (Law),
Board of Revenue (Taxes), Ernakulam
v. M/s. Coco Fibres (1992 Supp. (1)
SCC 290).
16. Manufacture implies a change but
every change is not manufacture, yet
every change of an article is the
result of treatment, labour and
manipulation. Naturally, manufacture
is the end result of one or more
processes through which the original
commodities are made to pass. The
nature and extent of processing may
vary from one class to another.
There may be several stages of
processing, a different kind of
processing at each stage. With each
process suffered the original
commodity experiences a change.
Whenever a commodity undergoes a
change as a result of some operation
performed on it or in regard to it,
such operation would amount to
processing of the commodity; but it
is only when the change or a series
of changes takes the commodity to
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
the point where commercially it can
no longer be regarded as the
original commodity but instead is
recognized as a new and distinct
article that a manufacture can be
said to take place. Process in
manufacture or in relation to
manufacture implies not only the
production but also various stages
through which the raw material is
subjected to change by different
operations. It is the cumulative
effect of the various processes to
which the raw material is subjected
to that the manufactured product
emerges. Therefore, each step
towards such production would be a
process in relation to the
manufacture. Where any particular
process is so integrally connected
with the ultimate production of
goods that but for that process
processing of goods would be
impossible or commercially
inexpedient, that process is one in
relation to the manufacture. (See
Collector of Central Excise, Jaipur
v. Rajasthan State Chemical Works,
Deedwana, Rajasthan (1991 (4) SCC
473).
xxx
19. To put differently, the test to
determine whether a particular
activity amounts to 'manufacture' or
not is: Does new and different goods
emerge having distinctive name, use
and character. The moment there is
transformation into a new commodity
commercially known as a distinct and
separate commodity having its own
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
character, use and name, whether be
it the result of one process or
several processes 'manufacture'
takes place and liability to duty is
attracted. Etymologically the word
'manufacture' properly construed
would doubtless cover the
transformation. It is the
transformation of a matter into
something else and that something
else is a question of degree,
whether that something else is a
different commercial commodity
having its distinct character, use
and name and commercially known as
such from that point of view is a
question depending upon the facts
and circumstances of the case. (See
Empire Industries Ltd. v. Union of
India (1985 (3) SCC 314).
xxx
21. The stand of leaned counsel for
the respondents that the levy is
under two circumstances i.e. (i) on
the buying and selling of notified
agricultural produce when brought
within the State into the market
area (ii) on the notified
agriculture produce when brought
from within the State or from
outside the State into the market
areas. The case at hand, it is
submitted, relates to the second
category."
iii) In case of Vipul Manharlal Shah v.
State of Gujarat reported in 2016 SCC
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
Online Guj 1811, wherein it is held as
under :
"12. It is not in dispute that by
virtue of provision under Article
246(3) of the Constitution, the
legislature of the State has
exclusive power to make laws for
such State or any part thereof with
respect to any of the matters
enumerated in List II (State) in the
Seventh Schedule of the
Constitution. Further from reading
of List II of Seventh Schedule, it
is clear that the State is empowered
to legislate laws on the subject of
markets and even as per Entry 28 to
collect fees in respect of any of
the matters in List II, by virtue of
Entry 66 of the List. In that view
of the matter, the core question
which requires to be considered in
this case is whether the word
"market" used in Entry 28 will
interpret the market area or not. If
we take dictionary meaning of market
as per Black's Law Dictionary, 9th
Edition, the word "market" includes
place of commercial activity in
which goods or services are bought
and sold (2), geographical area or
demographic segment considered as a
place for demand for particular
goods or services. Similarly, if we
read the word "market" defined in
Oxford Dictionary, it is defined as
a regular gathering of people for
purchase and sale of provisions,
livestock, and an open space or
covered building where vendors
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
convene to sell their goods; the
area or arena in which commercial
dealings are conducted. Looking to
the meaning as referred above, we
are of the considered view that
market necessarily means only
principal market or a sub market.
But it is always open for the
respondents to notify the area for
the purpose of implementation of the
provisions of the Act. If
transactions are within the
boundaries of geographical area as
per the notification and if the
transactions are made for buying or
selling by the traders like
petitioners who are undisputedly
within such area, it is to be
treated as market only. Restrictive
meaning of market confining to
places therein to principal market
or sub-market will run contrary to
the objectives of the Act.
xxx
14. The Hon'ble Supreme Court, by
considering the provision under
Section 27(c)(iii) of Uttarakhand
Agricultural Produce Marketing
(Development and Regulation) Act,
which was the subject-matter of
challenge therein, observed that
agricultural produce was brought
from outside the State into the
market area for carrying out
manufacturing. As a fact, it was
found that as there was no sale or
purchase of the agricultural product
within the market area per se. The
Hon'ble Supreme Court has struck
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down the said provision on the
ground that it runs contrary to the
objects of the Act. Impugned
provision of Section 28 of the Act
itself makes it very clear that it
prescribes levy and collection of
fee on the agricultural produce
bought and sold in the market area.
In that view of the matter, we are
of the considered view that such
judgment will not support the case
of the petitioners having regard to
the facts and circumstances of the
present case. Thus, we reject the
plea of the petitioners that the
State legislature had no competence
to enact law, particularly under
Section 28 of the Act which empowers
levy and collection of fee within
the market only. 15. It is also the
case of the petitioners that in view
of provision under Section 28(2)(a)
of the Act, no market fee can be
levied for the second time. From the
reading of the very provision, the
said provision makes it clear that
such levy cannot be made if such fee
is already collected as market fee
and further proof is filed for
payment of such fee. It is the case
of the respondents that when proof
is produced to show that the goods
purchased by the petitioners have
already suffered market fee, to such
extent, it is deductible and the
same cannot be levied. In view of
such stand of the respondents in the
affidavit in reply coupled with the
submission of learned counsel for
the respondents that it cannot be
said that 2nd respondent market
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
committee is collecting market fee
for second time contrary to the
provision under Section 28(2)(a) of
the Act, the contention of the
petitioners deserves rejection.
xxx
19. It is also the case of the
petitioners that by the restriction
by virtue of the provisions of the
Act, the rights conferred on the
petitioners of free trade guaranteed
under Article 301 of the
Constitution are violated. In the
case of Jan Mohammad Noor Mohammad
Bagban v. State of Gujarat and
Another, reported in (1966) 1 SCR
505 = AIR 1966 SC 385 with reference
to the provision of Gujarat
Agricultural Produce Market Act 20
of 1964 alone such pleas were raised
before the Hon'ble Supreme Court and
all such contentions were rejected
by the Hon'ble Supreme Court. In
that view of the matter, we need not
deal with such ground in detail in
view of the above judgment.
xxx
22. Equally, the allegation of the
petitioners that public notice dated
6th January, 2016 issued by 2nd
respondent is discriminatory as much
as the same is issued only to the
traders of Kalupur Chokha Bazar. It
is further submitted that as much as
no such notice is issued to other
traders in the entire market area,
the action of the 2nd respondent is
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
discriminatory. Such plea also
cannot be accepted for the reason
that as the traders in Kalupur
Chokha Bazar were not paying market
fee, such notice is issued to the
traders of Kalupur Chokha Bazar. In
the absence of any such material to
show that for other areas where the
traders are trading in notified
items, no steps were taken to
recover fees from such traders, the
authorities may take steps area-
wise. That itself cannot make the
action of the 2nd respondent
discriminatory. The notice issued
insisting for taking licence and
payment of market fee in the market
area from the traders who are
transacting business in the market
area is in accordance with rules."
: Submissions of respondent no.3 in Special
Civil Application No. 687/2020 :
15. On the other hand learned Senior
Advocate Mr. B.S. Patel appearing for
respondent no.3 Jabsons Foods submitted that
respondent no.3 is an industrial concern and
the Commissioner of Small Scale Industries
has issued certificate to that effect. He
invited the attention to the certificate
dated 29.11.2014 issued by the District
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
Industries Centre, Bharuch, for manufacture
of items like Chikkis, Khakras, Peanuts,
Chanas, Dry Fruits, Farsan etc. produced at
Annexure-R1 to the affidavit in reply filed
on behalf of respondent no.3. It was
therefore, submitted that as per section 28
of the Act, 1963 respondent no.3 is not
liable to pay any market cess/fees as nothing
has been brought or sold in the market area
of the petitioner APMC and therefore, the
provisions of section 28(2) of the Act, 1963
is also not applicable.
15.1) It was further submitted that
respondent no.1 and this Court directed
respondent no.3 to submit Form V as per Rule
113 of the Rules, 1965, however, the
petitioner never raised any demand alleging
that respondent no.3 bought the material from
market area of the petitioner-APMC or any
transaction has taken place in the market
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
area at the instance of respondent no.3.
15.2) Learned Senior Advocate Mr. Patel
also pointed out that various Form V were
submitted by respondent no.3 for verification
of the petitioner but the same were not taken
into consideration. He invited the attention
of the Court to the representation dated
6.02.2020 along with Form V produced at
Anneuxre-R2 collectively to the affidavit in
reply to submit that respondent no.3 in order
not to burden the reply, all representations
made to the petitioner are not placed on
record.
15.3) Learned Senior Advocate Mr. Patel
submitted that Form V under Rule 113 of the
Rules 1965 are duly submitted as per the
directions issued by this Court vide order
dated 20.11.2018 passed in Special Civil
Application No. 16465/2016 and thereafter the
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
petitioner ignoring such forms has passed the
order of levy of fees which is rightly not
upheld by respondent no.1. It was submitted
that by the impugned order passed by
respondent no.1, the petitioner is directed
to verify Form V submitted by respondent
no.3.
15.4) Learned Senior Advocate Mr. B.S.
Patel also relied upon the observations made
by this Court in order passed in Special
Civil Application No. 16465/2016 to contend
that from the beginning it is the stand of
respondent no.3 that it is not only the
processor but also an industrial concern and
therefore, the provisions of sub-section(2)
of section 28 would not be applicable so as
to fasten the liability to generate more
revenue by the petitioner.
15.5) It was further submitted that
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section 28(2)(e) of the Act, 1963 provides
for the procedure to remove any agricultural
produce out of the market area and in
accordance with the permit issued in the form
which may be prescribed, however, no such
Form is prescribed by the Rules, 1965 till
date. It was further submitted that
respondent no.3 has not removed any
agricultural produce from the market area
without any permission as Rule 48(2) of the
Rules, 1965 provides for exemption from levy
of market fees on the agricultural produce in
respect of which declaration has been made
and certificate has been obtained in Form V.
It was therefore, submitted that the
petitioner cannot levy any market fee or cess
upon the respondent no.3 on conjoint reading
of section 28(1)(2) of the Act, 1963 read
with Rule 48 of the Rules 1965.
15.6) Learned Senior Advocate Mr. Patel
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referred to and relied upon the additional
affidavit filed on behalf of respondent no.3
to point out that respondent no.3 is a
manufacturer and has been carrying on
manufacturing since inception under the
license granted by the competent authorities
like factory license, license issued by the
Joint Commissioner of Industries and General
Manager, District Industries Centre, Bharuch.
It was also submitted that respondent no.3 is
a member of Agricultural and Processed Food
Products and Export Development Authority as
a manufacturer exporter. It was therefore,
submitted that on perusal of such licenses
and documents, it cannot be said that
respondent no.3 is only a processor but it is
also a manufacturing industrial concern and
therefore, the provisions of section 28(2) of
the Act, 1963 would not be applicable as
sought to be applied by the petitioner to
collect the market fees from respondent no.3.
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
In support of his submissions, learned Senior
Advocate Mr. Patel relied upon the following
decisions :
1) Gujarat Ambuja Exports Limited and
another v. State of Uttarakhand and others
reported in (2016) 3 Supreme Court Cases 601,
wherein it is held as under :
"28. A perusal of the Preamble of
the Act shows that the Act has been
enacted to regulate the marketing of
agricultural produce, and for the
effective superintendence and
control of the markets in the State
of Uttarakhand. At this stage, it is
imperative to examine the role of
the preamble as an aid of statutory
interpretation.A Constitution Bench
of this Court in Kavalappara
Kottarathil and Kochunni alias
Moopil Nayar v. States of Madras and
Kerala[AIR 1960 SC 1080] held as
under:
"The preamble of a statute is "a
key to the understanding of it"
and it is well established that
"it may legitimately be
consulted to solve any
ambiguity, or to fix the meaning
of words which may have more
than one, or to keep the effect
of the Act within its real
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
scope, whenever the enacting
part is in any of these respects
open to doubt"
xxx
31. A combined reading of all the
above mentioned provisions and the
preamble makes it amply clear that
the Act has been enacted with a view
to regulate the buying and selling
of the agricultural produce within
the area notified as Market Area
under Section 4 of the Act. At the
cost of repetition, we extract the
impugned provision, i.e. Section
27 (c) (iii):
"any such agricultural produce,
which arrives in any Market area
of the State for sale, storage,
processing, manufacturing,
transaction or other commercial
purposes from any other State or
out of Country for the first
time, it shall be registered as
"Primary Arrival" and on such
produce, Market fee and
Development cess shall be
payable."
Section 27 (c)(iv) reads as:
"any agricultural produce which
is brought to any Market area
within the State after the
transaction of sale from any
other Market area of the State
after paying Market fee and
Development cess for the purpose
of sale, storage, processing,
manufacturing, transaction or
other commercial purposes, it
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shall be called as "Secondary
Arrival" and on such produce, no
Market fee and Development cess
shall be leviable."
32. Before we examine the
legislative competence of the State
Legislature to enact the impugned
provisions, we direct our attention
to the decision of a Constitution
Bench of this Court, rendered in the
case of M.C.V.S. Arunachala Nadar &
Ors. v. State of Madras[AIR 1959 sc
300], wherein the object of the
market legislations in general was
assessed:
"6......Marketing legislation is now
a well-settled feature of all
commercial countries. The object
of such legislation is to
protect the producers of
commercial crops from being
exploited by the middlemen and
profiteers and to enable them to
secure a fair return for their
produce......"
33. The primary object, thus, of any
market legislation is to ensure that
the producer of the agricultural
produce gets a fair return. It is
also essentially meant to govern the
"buyer-seller" relationship. In this
context, an examination of Section
27(c)(iii) would show that it is
against the scheme of the Act, as it
seeks to levy market fee and
development cess even on those units
which merely bring agricultural
produce from outside the State into
the market area for carrying out
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
manufacturing, in that there is no
sale or purchase of the product
within the market area per se.
34. Further, it is important to
examine the legislative competence
of the State Legislature to enact
the particular provision. The two
relevant entries in play here are
Entry 52 of List I and Entry 28 of
List II. Entry 28 of List II
pertains to Markets and Fairs, while
Entry 52 of List I pertains to
Industry. In the case of The Belsund
Sugar Co. Ltd v. State of
Bihar[(1999)9 SCC 620], it was held,
inter alia, as under:
"16.It becomes at once clear
that if location of markets and
fairs simpliciter and the
management and maintenance
thereof are only contemplated by
the Market Act, then they would
fall squarely within the topic
of legislative power envisaged
by Entry 28 of List II. However,
the Market Act, as well will
presently show, deal with supply
and distribution of goods as
well as trade and commerce
therein as it seeks to regulate
the sale and purchase of
agricultural produce to be
carried on in the specified
markets under the Act. To that
extent the provisions of Entry
33 of List III override the
legislative powers of the State
Legislature in connection with
legislations dealing with trade
and commerce in, and the
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
production, supply and
distribution of goods. Once we
turn to Entry 33 of the
Concurrent List, we find that on
the topic of trade and commerce
in, and the production, supply
and distribution of, goods
enumerated therein at Sub-
clause (b), we find listed items
of foodstuffs, including edible
oilseeds and oils."
35. The scope of the term 'Industry'
for the purpose of Entry 52 of List
I was examined at length by Ruma
Pal, J. in her concurring opinion in
the constitution bench decision of
ITC Ltd. referred to supra, wherein
it was held as under:
"126. To sum up: the word
'Industry' for the purposes of
Entry 52 of List I has been
firmly confined by Tika Ramji to
the process of manufacture or
production only. Subsequent
decisions including those of
other Constitution Benches have
re-affirmed that Tika Ramji's
case authoritatively defined the
word 'industry'-to mean the
process of manufacture or
production and that it does not
include the raw materials used
in the industry or the
distribution of the products of
the industry. Given the
constitutional framework, and
the weight of judicial authority
it is not possible to accept an
argument canvassing a wider
meaning of the word 'industry'.
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
Whatever the word may mean in
any other context, it must be
understood in the Constitutional
context as meaning 'manufacture
or production'.
127. Applying the negative test
as evolved in Tika Ramji in this
case it would follow that the
word 'industry' in Entry 24 of
List II and consequently Entry
52 of List I does not and cannot
be read to include Entries 28
and 66 of List II which have
been expressly marked out as
fields within the State's
exclusive legislative powers. As
noted earlier Entry 28 deals
with markets and fairs and Entry
66 with the right to levy fees
in respect of, in the present
context, markets and fairs.
Entry 52 of List I does not
override Entry 28 in List II no
has Entry 28 in List II been
made subject to Entry 52 unlike
Entry 24 of List II. This Court
in Belsund Sugar (supra) has
also accepted the argument that
Entry 28 of List II operated in
its own and cannot be affected
by any legislation pertaining to
industry as found in Entry 52 of
List I.
128. If 'industry' does not
include 'markets and fairs' it
is important to define what
markets and fairs connote.
'Market' may strictly be defined
as "the meeting or congregating
together of people for the
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
purchase and sale of provisions
or livestock, publicly exposed,
at a fixed time and place". ......At
common law, fairs and markets
were also franchises or rights
to hold a concourse of buyers
and sellers to dispose of the
commodities in respect of which
the franchise is given. This
included the right to levy a
toll or sum payable by the buyer
upon sales of articles in a
market. The sense in which the
words has been used in Entry 28
appears to cover not only such
right but the market place
itself including the concourse
of buyers and sellers' and the
regulation of all these."
(emphasis laid by this Court)."
15.7) Reliance was placed upon the
definition of "industrial concern" as per
section 2(c) of the Industrial Finance
Corporation Act, section 2(d) of Collection
of Statistics Act, 2(c) of Industrial
Development Bank of India and section 2(e) of
Research and Development Cess Act, 1986 which
reads as under :
"INDUSTRIAL CONCERN" means any concern
engaged or to be engaged in -
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
(i) the manufacture, preservation or
processing of goods"
15.8) It was therefore, submitted that the
processing of goods is also part of the
industrial concern and therefore, the
provisions of section 28(1) could not be
applicable to respondent no.3.
15.9) Learned Senior Advocate Mr. Patel
also referred to and relied upon decision in
case of Chhaganlal Mansukhlal and another v.
K.K. Bhatt and another reported in (1981) 2
Supreme Court Cases 418, wherein it is
observed as under :
"3. Learned counsel for the parties
are agreed that the provisions of
Rule 49 are not attracted and no
fees are payable under it at the
stage of entry into a market area if
the agricultural produce in question
is covered by sub-rule 2 of Rule 48,
i.e. when such produce fulfils
either of the following conditions:
(1) It is brought from outside the
market area there into for use
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
therein by the industrial concerns
situated therein or for export and
in respect thereof a declaration has
been made and a certificate has been
obtained in Form V.
(2) The sale or purchase of such
produce comes within the purview of
sub-section (3) of section 6 of the
Gujarat Agricultural Produce Markets
Act.
4. After hearing learned counsel for
the parties, we accept this
interpretation of Rules 48 & 49
which flows directly from the
language employed therein, and hold
that Rule 49 will have no
application to any case which falls
within the ambit of sub-rule (2) of
Rule 48."
15.10) Referring to the above decision, it
was submitted that when Rule 48(2) of the
Rules, 1965 is applicable, Rule 49 is not
applicable and no fees are payable under it
at the stage of entry into a market area.
15.11) It was therefore, submitted that in
facts of the case definition of "processing"
as per section 2(xvii-aa) of the Act, 1963
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
which has been brought on statute with
effect from 2.07.2007 is also not applicable
as respondent no.3 is manufacturing a new
product rather than doing treatments relating
to powdering, crushing, decorticating,
dehusking, parboiling, polishing, ginning,
pressing, curing or any other manual,
mechanical, chemical or physical treatment to
which raw agricultural produce or its product
is subjected to. It was submitted that
respondent on.3 is an industrial concern as a
Small Scale Industry and as such the
provisions of section 28 of the Act, 1963
would not be applicable.
: Submissions of petitioner in Special Civil
Application No. 17299//2021 :
16. Learned advocate Mr. Hriday Buch
appearing for the petitioner in Special Civil
Application No.17299/2021 submitted that the
petitioner M/s. Gulshan Polyols Limited is
also an industrial concern. He relied upon
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
the process flow chart to demonstrate that
the raw material maize is used for production
of edible oil, cattle field, poultry and for
pharmaceutical purposes. It was submitted
that considering the activities of the
petitioner, it cannot be said that the
petitioner is only a processor.
16.1) Learned advocate Mr. Buch submitted
that the findings arrived at by respondent
no.1 in the impugned order are contradictory
to its stand taken in case of Jabsons Foods.
16.2) Learned advocate Mr. Buch pointed
out that in paragraph no. 5.6 of the impugned
order, respondent no.1 has observed that "any
market" stated in section 28 is to mean the
"market" as defined under section(2) of the
Act, 1963 which is not correct. It was
submitted that the petitioner is purchasing
the agricultural produce of maize from other
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
States and therefore, the observations made
in paragraph no. 5.7 of the impugned order
are contrary to the provisions of section
2(xii-a), 2(xiii) and provisions of section
28(2)(b)of the Act, 1963 read with Rule 48
(2), (3) and (5) of the Rules 1965. It was
submitted that the petitioner has never been
asked to produce Form F1, Form G2 and Form V
along with verification by the respondent
no.3 APMC and as such respondent no.1 has
travelled beyond the scope of revisional
jurisdiction to interpret section 28(2)(b) of
the Act, 1963. It was submitted that the
provisions of section 28(2) are to be applied
if the market fee is to be levied as per the
provisions of section 28(1) of the Act, 1963.
16.3) Learned advocate Mr. Buch further
submitted that respondent no.3 has rejected
Form-V submitted by the petitioner without
assigning any reason only with a view to
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
harass the petitioner and to coerce the
petitioner to enter into undue settlement.
16.4) It was submitted that the petitioner
has submitted the communications with the
market from where it has purchased the goods
to demonstrate that such markets were
situated outside the State of Gujarat and as
such, in view of the provisions of section 28
of the Act, 1963 and Rule 48 of the Rules,
1965 whenever an agricultural produce is
procured from outside the State of Gujarat
and brought in the market area within the
State of Gujarat, the same is required to be
declared as per Form-V to the appropriate
authority and certificate is required to be
produced. However, the petitioner has already
submitted Form-V which has been rejected by
respondent no.3.
16.5) Learned advocate Mr. Buch referred
to and relied upon the order passed by
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
respondent no.1 in case of Jabsons Foods
which is the subject matter of Special Civil
Application No.687 of 2020 to point out that
respondent no.1 has taken a contrary view in
case of the petitioner.
16.6) Learned advocate Mr. Buch also
referred to and relied upon the decision in
case of Gujarat Ambuja Exports Limited and
another(supra) to submit that in case of the
petitioner also no market fee can be levied
on goods procured from outside the State of
Gujarat of which there is no sale or purchase
of the product within the market area.
16.7) Learned advocate Mr. Buch also
referred to and relied upon the decision in
case of APMC Yashwanthapura through its
Secretary v. Selva Foods through its
Managing Partner reported in 2021 SCC OnLine
SC 1253 wherein the Apex Court held that if
one merely imports notified agricultural
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
produce from outside the State for the
purpose of cleaning and processing without
selling the process produced within the
market area, is not liable to pay the market
fee in facts of the said case. It was
submitted that in facts of the petitioner
also in similar situation, no market fee
would be payable by the petitioner as once
the agricultural produce is processed, it
will not attract the market fees as there is
no sale in the market area.
: Submissions of State Government in both the
petitions:
17. Learned Assistant Government Pleader Mr.
Dhawan Jayswal submitted that respondent no.1
Deputy Secretary (Appeals) has not taken any
contrary decision in case of Special Civil
Application No.17299/2021 than that taken in
Special Civil Application No.687/2020 because
in both the cases the facts are different and
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
the decision of respondent no.1 Deputy
Secretary (Appeals) is based on the facts of
each case. It was submitted that in case of
Jabsons Foods in Special Civil Application
No.687/2020 there was direction by this Court
to APMC to consider Form-V to be submitted
before it and thereafter to grant exemption
from the payment of market fee whereas in
case of petitioner in Special Civil
Application No.17299/2021, Form-V were not
submitted before respondent no.3 APMC and
Form-V which were submitted later on have
been rejected by the APMC on valid grounds.
17.1) It was submitted that the issue of
applicability of section 28 as it existed
prior to 2020 is already discussed by this
Court in the order passed in Special Civil
Application No. 16465/2016 and accordingly,
respondent no.1 has passed the impugned
orders in both the matters.
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
: Submissions of respondent no.3 in Special
Civil Application No. 17299//2021 :
18. Learned Senior Advocate Mr. Mihir Joshi
with learned advocate Mr. Dipen Desai for the
respondent no.3 APMC submitted that the
petitioner was holding license for the year
2019-2020 and thereafter the petitioner
company has never applied for renewal of
license before the District Registrar and
the District Registrar has also not issued
license under section 27A of the Act, 1963
and therefore, in absence of license the
petitioner is prohibited from carrying out
any operation in the market area of APMC as
per the scheme of the Act.
18.1) It was submitted that for the year
2021-2022 the petitioner company has not
renewed the license and therefore, the
petitioner is not entitled for any
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
discretionary relief from this Court when the
action of the petitioner is punishable under
section 36 of the Act, 1963.
18.2) It was submitted that from 2006-2007
till 2016-2017, the petitioner company was
regularly paying market cess on agricultural
produce as it was doing business of
processing the maize since 2006. It was
submitted that thereafter several payments of
market fees were made along with penalty of
five times as stipulated in the Act,1963
without any protest. It was submitted that
the issue raised by the petitioner with
regard to the undue harassment and coercion
is an afterthought and was raised before
respondent no.2 for the first time and was
never raised before the Market Committee. It
was submitted that the petitioner failed to
produce the stock register and other
documents for inspection before respondent
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
no.3 APMC inspite of the fact that the same
was demanded for number of times and it was
only after notice was issued by the Market
Committee that the petitioner produced some
of the documents.
18.3) It was submitted that Form-V
submitted by the petitioner company were
rejected by respondent no.3 APMC since all
the details mentioned in the Forms were not
filled and stock register was also not
supplied along with the Forms. Rejection of
the form filed was never challenged by the
petitioner and therefore, the petitioner
cannot raise the objection with regard to the
rejection of such forms by the Market
Committee.
18.4) Reliance was also placed on the
following averments made in affidavit in
reply with regard to the documents produced
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by the petitioner from its seller outside the
State of Gujarat namely, Yashika Agro Market
Yard to point out that such documents were
not genuine as under :
"17. It is submitted that since the
documents and the stock registers
were not supplied by the petitioner
- company along with the Form V, the
answering respondent was constrained
to verify about the genuineness of
the details with the Yashika Agro
Market Yard where the petitioner -
company purchases the agricultural
produce from the trader and has
allegedly paid market cess. It is
further submitted that the answering
respondent was in the receipt of the
letter addressed by the Yashika Agro
Market Yard stating that M/s
Narendra Birdichand Agrawal and M/s
Amit Traders have issued false and
forged documents and the this fact
was brought to the notice to the
Deputy Secretary (Appeals) by filing
further affidavit. Copies of Form V
are annexed hereto and marked as
ANNEXURE:R3 Colly to this reply."
18.5) It was submitted that in view of
above, there are disputed questions of facts
and therefore, in view of forged and
fabricated certificates produced by the
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
petitioner, the petitioner is not entitled to
any relief under Article 226 of the
constitution of India.
18.6) It was submitted that as per the
provisions of section 28 of the Act, 1963
market fee paid outside the State of Gujarat
was not paid by the petitioner and exemption
claimed under sub-section 2(b) of section 28
cannot be extended on that ground.
18.7) It was submitted that respondent
no.1 has rightly interpreted the word
"market" mentioned in sub-section(2) of
section 28 of the Act,1963 as per the
definition of "market" in section 2(xiii) of
the Act and when the Act, 1963 applies to the
State of Gujarat, any payment of cess made
outside the territories of Gujarat State will
not have any bearing for the purpose of
seeking exemption. It was therefore,
submitted that the order passed by respondent
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
no.1 is just and proper.
18.8) Learned Senior Advocate Mr. Joshi
reiterated the submissions which were made
in Special Civil Application No.687/2020 and
submitted that there is total outstanding of
Rs.4,71,00,106/- to be recovered from the
petitioner by respondent no.3 APMC and as
such, no interference may be made in the
impugned order passed by respondent no.1,
more particularly, in absence of supply of
requisite form and documents by the
petitioner company.
: Rejoinder of the petitioner in Special
Civil Application No. 17299//2021 :
19. In rejoinder, learned advocate Mr. Buch
submitted that this Court vide order dated
8.02.2021 has directed the State Government
to take an independent decision on
interpretation of section 28 of the Act, 1963
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
and as respondent no.1 has failed to take any
such decision, in view of the fact that there
is no buying and selling of agricultural
produce in the market area so as to attract
levy of market fee as per the provisions of
section 28 of the Act, 1963.
19.1) It was pointed out that right from
2005-2006, the petitioner was never asked for
any license by respondent no.3 and it is only
after 2016-2017 that the petitioner was asked
to obtain the license and the issue of
license is unnecessarily brought in
submissions of respondent no.3 which is the
subject matter of another set of proceedings
and the petitioner was holding valid license
for the year 2019-2020.
19.2) It was submitted that the petitioner
is in process of applying for renewal of
license. It was pointed out that there is no
fraud or misrepresentation by the petitioner
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
inasmuch as the fishing inquiry by respondent
no.3 was made behind the back of the
petitioner and the same cannot be considered
as valid inquiry in this proceeding.
19.3) Learned advocate Mr. Buch submitted
that the petitioner company is manufacturing
pharmaceutical product "Sorbitol 70%" which
is not an agricultural produce and is sold
outside the market area and therefore, as per
the provisions of section 28(2)(b) of the
Act, 1963, the petitioner is entitled to
exemption from the levy of market fees.
: Analysis :
20. On perusal of the provisions of section
28 of the Act, 1963, it is a charging
section for levy of fees by the Market
Committee, subject to the provisions of the
Rules,1965 and to prescribe maximum and
minima from time to time by the Market
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
Committee, levy and collection of fees on the
agricultural produce bought or sold in the
market area as it existed prior to amendment
in the year 2020.
21. In facts of the case of both the
petitions admittedly, there is no
agricultural produce bought or sold in the
market area. "Market area" is defined under
section 2(xiii) to mean any area declared or
deemed to be declared to be a market area in
the Act,1963. Word "market" is defined in
clause 2(xii-a)to mean a market established
and regulated under the Act,1963 for the
notified market area and also includes a
market proper, a principal market yard, sub-
market yard, private market, e-market and
such other markets as may be declared under
the Act. Thus the market area as per section
28 of the Act, 1963 has to be understood as
market established and regulated under the
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
provisions of the Act, 1963.
provides that market fee or cess shall not be
levied for the second time in any market area
from the buyer who is a processor, grader,
packer, value addition centre or exporter of
any agriculture produce and market fee has
already been paid on that agriculture produce
in any market and the information in this
context has been furnished by the person
along with proof. Section 28(2)(b) provides
that on the agriculture produce brought in
the market area for commercial transaction or
for processing, if the permit issued under
clause (e) has not been submitted, the market
fee shall be deposited by the buyer or the
processor within fourteen days for sale or
resale or processing or export outside the
market area. Proviso to section 28 (2)(b)
stipulates for levy of penalty by way of
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
market fee or the user charges two times of
the leviable and recoverable amount.
Therefore, the provisions of section 28(2)(a)
and section 28(2)(b) of the Act, 1963
provides for exemption from payment of market
fee on the agricultural produce brought in
the market area for commercial transaction or
for processing subject to conditions.
Therefore, as observed by this Court in order
passed in Special Civil Application No.
16465/2016 provisions of section 28(2)(b)
would be applicable, subject to the
conditions stipulated therein as under:
"17. It is the case of the writ
applicants from day one that the
fees which is sought to be levied is
upon the agricultural produce
purchased outside the market area
and, thereafter, being brought in
the market area for being used in
the factory. This stance of the writ
applicants is fortified by few
findings recorded by the Deputy
Director (Agriculture Marketing &
Rural Finance). It appears that the
writ applicants, on receipt of the
demand notice, took up the issue
with the Director (Agriculture
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
Marketing & Rural Finance). The
Director, in turn, directed the
Deputy Director to hold an inquiry
and file a report in this regard.
Some of the observations in the
report are relevant. The same are
quoted as under;
"(5) Shree Jabson Foods has
obtained a license from Shree
Agricultural Produce Market
Committee. According to the
learned advocate of the Market
Committee, cess of the
agricultural produce purchased
from within the market area has
been paid but the cess of the
agricultural produce purchased
from outside the market area has
not been paid. (17) Thus, as per
the reply submitted by the
Jabson Foods, if the
agricultural produce have been
purchased from outside and the
cess of the same is not required
to be paid, then also as per
sections 28(A) & (B) of the
Gujarat Agricultural Produce
Market (Amendment) Act, 2007, a
procedure has to be followed,
and as per subrule 49(1) of the
Market Committee also, the
Market Committee has to be
informed about the same.
However, Jabson Foods has not
submitted anything as regards
the same. Thus, it appears that
the above law, rules and sub-
rules have not been complied
with."
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18. Thus, it appears that the Market
Committee conceded before the Deputy
Director that the writ applicants
have paid the fees on the
agricultural produce purchased
within the market area but have
failed to pay the fees on the
agricultural produce purchased
outside the market area and,
thereafter, brought within the
area."
23. In case of Chhaganlal Mansukhlal and
another v. Agricultural Produce Market
Committee reported in 1975 GLR 916, this
court has held that no fees is payable at
the stage of entry into market area if the
agricultural produce in question is covered
by sub-rule(2) of Rule 48 if it is brought
from outside market area for use therein by
the industrial concern situated in the market
area or for export and in respect thereof a
declaration has been made and certificate has
been obtained in Form V. In such
circumstances, the petitioner in Special
Civil Application No.687/2020 was directed to
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produce Form-V which were filled up as and
when the goods were purchased from different
places outside the market area and brought
within the market area for industrial use and
after verification, the market committee was
directed to take appropriate decision in that
regard.
24. The issue with regard to the levy of
market fee was not required to be adjudicated
again as it is clear from the provisions of
the Act,1963 as well as the observations
made by this Court after considering the
decision of Division Bench judgment of this
Court as well as Apex Court judgment that no
market fee would be leviable if the goods are
brought into the market by the industrial
concern along with Form-V as per Rule 48(2)
of the Rules, 1965.
25. The contention raised on behalf of the
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APMC cannot be accepted in both the cases as
in both the petitions in view of undisputed
fact to the effect that respondent no.3 in
Special Civil Application No. 687/2020 and
petitioner in Special Civil Application No.
17299/2021 are industrial concern and as such
the provisions of section 28(2)(b) of the
Act, 1963 which is applicable to a processor
which is also an industrial concern as per
the definition of "industrial concern"
extracted hereinabove and as such the
provision of Rule 48 of the Rules, 1965 is
complied with which is not amended from the
beginning to commensurate with section 28 of
the Act,1963. Moreover, the procedure
prescribed in Section 28(2)(e) is not yet
implemented by APMC or the respondent State
for issuance of permit for removal of goods
by the processor. Therefore, on conjoint
reading of various definitions of market,
market area and provisions of section 28(2)
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
(b) of the Act, 1963 and Rule 48(2) and Rule
49 of the Rules, 1965, APMC was not justified
in levy of market cess on the industrial
concern with regard to the goods brought in
the market area or removed therefrom after
following the procedure prescribed under the
same.
26. The Apex Court in case of Gujarat Ambuja
Exports Limited and another(supra) in
connection with Uttarakhand Agricultural
Produce Marketing (Development and
Regulation) Act, 2011 held that that the Act
has been enacted to regulate the market of
agricultural produce and for effective
superintendence and control of the markets in
the State and on combined reading of preamble
and other relevant sections, it was amply
clear that the Act has been enacted with a
view to regulate buying and selling of
agriculture produce within the area notified
C/SCA/17299/2021 CAV JUDGMENT DATED: 14/10/2022
as market area. In such circumstances, the
Apex Court examined the validity of section
27(c)(iii) of the said Act that it was
against the scheme of the Act as it seeks to
levy market fee and development cess even on
those units which merely bring agricultural
produce from outside the State into the
market area for carrying out manufacturing,
in that there is no sale or purchase of
product within the market area per se.
Applying the same analogy, the APMC cannot
levy market fee on the industrial units in
both the cases which merely bring
agricultural produce into the market area
for carrying out manufacturing activity which
includes processing, as there is no sale or
purchase of the products within the market
area, subject to fulfillment of Rule 48 of
the Rules. 1965.
27. Similarly, in case of APMC
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Yashwanthapura(supra) the Apex Court in facts
of the said case held that when there is
denial of sale of the agricultural produce
within the market area of the APMC after
processing, then such manufacturer was held
to be entitled for exemption from payment of
market fee as the same is neither bought or
sold in market area.
28. Reliance placed by the learned advocate
for APMC on the decision in case of Orissa
State (Prevention & Control of Pollution)
Board(supra) for the contention that whole
working and functioning of the Act is meant
for regulating the market operation within
the State of Gujarat and merely because Rules
have not been framed prescribing the manner
as per section 28(2)(e) of the Act,1963 it
would not render the Act inoperative. It was
submitted that merely because Rules are not
framed as per the provisions of the Act, the
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action taken by the APMC would not itself
become ultra vires. It was submitted that as
held by the Apex Court, the powers which
vests in an authority would not cease to
exist simply for the reason that the rules
have not been framed or the manner of
exercise of power has not been prescribed.
These contentions on behalf of the APMC
would not be relevant in facts of the case,
more particularly, when as per the directions
issued by this Court, Form-V was submitted by
both the industrial concerns before APMC as
per Rule 48(2) of the Rules 1965 and
reference to clause (e) and clause (b) of
sub-section 2 of section 28 with regard to
permit to be issued for removal of goods from
outside the market area is concerned, there
is no prescribed procedure and as such
declaration made by the industrial concern
would be sufficient for exemption from levy
of market fees/cess on such goods to be
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removed from market area. Therefore, as per
the provisions of section 28(1), market fee
is leviable on agriculture produce bought or
sold in market area, whereas section 28(2)
(b), refers to agriculture produce brought in
market area for commercial transaction or for
processing and such agricultural produce is
to be removed as per the permission
prescribed under clause(e) thereof only.
29. In facts of the case once agricultural
produce is brought in the market area, there
is no removal of agricultural produce as per
clause (e) because what is removed from the
market area is not an agricultural produce
but it is a different product. The contention
of the APMC that the industrial concern in
both the cases is a processor is contrary to
the facts on record. In that view of the
matter, there is no need for submission of
any permission as per clause (e) of section
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28 of the Act, 1963. Because as per Rule
48(2) of the Rules, 1965 no fees could be
levied on agriculture produce brought from
outside the market area into market area for
use thereof by industrial concern situated in
the market area or for export in respect of
which declaration is made and certificate has
been obtained in Form-V, subject to proviso
whereby time limit of 20 days is prescribed
from the date on which goods was brought in
the market area. In such circumstances, Rule
49 prescribing the recovery of fees on
agricultural produce payable by the buyer of
agricultural produce brought into the market
area, subject to proviso that no such fees
shall be refunded on production of sufficient
proof that such produce was not sold within
the limits of market area or if such produce
is brought from outside the market area into
the market area for use therein by the
industrial concerns situated in market area
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or for export and in respect of which
declaration has been made and certificate has
been obtained in Form-V, subject to proviso
to sub-rule(2) of Rule 48 would not be
applicable in facts of the case as the
industrial concerns in both the cases have
brought agricultural produce from outside the
market area into the market area but after
paying the same outside the market area and
have been removed from market area after
filing declaration and certificate obtained
in Form-V. Therefore, it would be necessary
to refer to Form-V which entitles the
industrial concern from exemption of payment
of market fee. Form-V prescribed under the
Rules as per Rule 48(2) is for providing
details of agricultural produce, name of
sellers from where it is brought, cart and
packages through whom it is brought, name of
buyer or his agent with certificate. Thus all
details are required to be furnished with
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APMC for bringing the agricultural produce in
the market area which is used by the
industrial concern situated in the market
area or for export for which such Form is
filed.
30. Therefore, in facts of the case, the
petitioner APMC in Special Civil Application
No.687/2020 was not justified in levy of
market fee which has been rightly held by
respondent no.1 Deputy Secretary (Appeals) in
revision application filed by respondent no.3
therein.
31. Similarly the petitioner in Special
Civil Application No.17299/2021 is not liable
to pay market fees on the agricultural
produce bought from outside market and
brought into market area for production of
various products and by-products after
processing and manufacturing by it. It is
also not in dispute that in both the cases
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Form-V as required in Rule 48(2) which is not
amended either in the year 2007 or 2020 and
hence, impugned order passed by respondent
no.1 in Special Civil Application
No.17299/2021 is liable to be quashed and set
aside which is contrary to the order passed
by same respondent in Special Civil
Application No.687/2020.
32. In view of foregoing reasons, Special
Civil Application No.687/2020 is ordered to
be dismissed. Rule is discharged.
33. Whereas, Special Civil Application
No.17299/2021 succeeds and is accordingly
allowed. Impugned order is hereby quashed and
set aside. Bank guarantee furnished by the
petitioner pursuant to the interim order
passed by this Court as well as deposit made
by it shall be returned to the petitioner.
Respondent no.3 APMC shall also refund the
amount of Rs.1 Crore deposited by the
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petitioner pursuant to the interim order
within a period of four weeks from the date
of receipt of this order.
34. Rule is made absolute to the aforesaid
extent. No order as to costs.
(BHARGAV D. KARIA, J)
RAGHUNATH R NAIR
