- (1.) MESSERS. Prem Chand Ram Lal is a firm dealing in Gur, Shakkar, Khandsari, Banaspati Oil etc. , at Sangrur, and holds the license under the Punjab Agricultural Produce Markets Act (hereinafter called the Act), from the Market Committee, Sangrur. The firm is also licensed under the Punjab General Sales Tax Act, the Central Sales Tax Act and the Punjab Licensing Order for the sale of Gur, Shakkar and Khandsari etc. , The firm started business with effect from 1st April, 1967 and during the year 1967-68, in the course of its business, it imported Gur, Shakkar and Khandsari etc. from outside Mandis of Haryana and U. P. for purposes of trade. These goods were purchased from the commission agents (Pacca Arhtias) in packed condition against regular bills and were transported through the railways or by road under railway receipts and goods receipts and octroi was duly deposited at the time of te import. These goods were sold by the petitioner-firm at its shop to the customers in the same packed conditions in which they were imported. The emphasis of the petitioner is on the fact that the transactions of importing goods from outside Mandis had nothing to do with the producers or the Kacha Arhtias. The petitioner-firm did not file any returns with regard to the imported goods in form 'm' and only filed returns in respect o the transactions made with the producers, the value of which was shown as Rs. 2781/- for the year. In November, 1967, the Secretary of the Market committee, Sangrur, called upon the petitioner-firm to produce its accounts to enable him to levy the market fee on the goods brought by it from outside Mandis of Haryana and U. P. etc. In reply the petitioner submitted that the entries relating to goods bought and sold in the market yard were maintained in the returns filed by it in form 'm' and the necessary fee thereon had already been deposited. The petitioner-firm maintained that it was not liable to pay any market fee on the transactions with regard to the imported goods and was only liable to pay market fee on the transactions had with the producers of the agricultural produce. After some correspondence, the Administrator of the Market committee levied Rs. 5014/- as market fee on the basis of best judgment assessment and imposed an equal amount by way of penalty by order dated 30th September, 1969. A demand of Rs. 10,028/ was raised against the petitioner-firm and a demand notice was issued for the payment thereof which was received by the petitioner on 14th October, 1968. The Petitioner-firm filed the present writ petition on 28th October, 1968, praying for the quashing of the assessment order and the notice of demand, copies of which are Annexures 'l' and 'k' to the writ petition. The returns have been filed by the respondents.
(2.) THE first point argued before me is that no market fee can be levied under the Act in respect of the transactions of purchase or sale which are not made with the producers of the agricultural produce. I find myself unable to agree with that submission. The argument of the learned counsel is that the object of the Act is to regulate the buying and selling of commercial cops, by providing suitable and regulated market, by eliminating middlemen and bringing face to face the producer and the buyer and to ensure a fair price to the producer. He following passage from the judgment of their Lordships of the Supreme Court in M. C. V. S. Arunachala Nadar v. State of Madras, AIR 1959 SC 300, is relied upon :- "with a view to provide satisfactory conditions for the growers of commercial crops to sell their produce on equal terms and at reasonable prices, the Act was passed on 25th July, 1933. The preamble introduces the Act with the recital that it is expedient to provide for the better regulation of the buying and selling of commercial crops in the Presidency of madras and for that purpose to establish markets and make rules for their proper administration. The Act, therefore, was the result of a long exploratory investigation by experts in the field, conceived and enacted to regulate the buying and selling of commercial crops by providing suitable and regulated market by eliminating middlemen and bringing face to face the producer and the buyer so that they may meet on equal terms, thereby eradicating or at any rate reducing the scope for exploitation in dealings. " These observations were made by their Lordships with regard to the Madras Commercial Crops Markets Act, 20 of 1933, but this alone cannot be said to be the object of every Marketing Act, like the Punjab Act. the preamble of the Punjab Act is as under :- "an Act to consolidate and amend the law relating to the better regulations of the purchase, sale, storage and processing of agricultural produce and the establishment of markets for agricultural produce in the State of Punjab. " This Act, therefore, envisages the establishment of markets for the purchase or sale of agricultural produce and for that purpose the dealers who run their shops in the market area become a very important part of the market. Their transactions relating to the purchase or sale in agricultural produce as specified in the Schedule to the Act are to be regulated. The source of supply of the agricultural produce seems to me to be immaterial. The market fee is leviable under Section 23 of the Act which is in these terms :- "a committee may, subject to such rules as may be made by the State Government in this behalf, levy on advalorem basis fees on the agricultural produce bought or sold by licensees in the notified market area at a rate not exceeding fifty naye Paise for every one hundred rupees ; Provided that - (a) no fee shall be liveable in respect of any transaction in which delivery of the agricultural produce bought or sold is not actually made, and (b) a fee shall be liveable only on the parties to a transaction in which delivery is actually made. " It is thus clear that the market fee is liveable in respect of transactions in which delivery of the agricultural produce is actually made in the notified market area. The State Government has framed the rules known as the Punjab Agricultural Produce Markets (General) Rules, 1962. (hereinafter called the Rules), in exercise of its powers under Section 43 of the Act and Rule 24 prescribes the mode of sale of agricultural produce brought into the market for sale. It is not stated in this rule that it relates only to the agricultural produce brought into the market by producers. It is not permissible to add the words 'by the producers' in this rule, as the rule is perfectly intelligible in the form in which it is couched. According to this rule, the agricultural produce brought into the market is to be sold by public action, the manner of which has been set out in detail. The rule, however, does not apply to retail sales as may be specified in the bye-laws of the committee. Rule 29 relates to the levy of the fee on the sale and purchase of agricultural produce for which provision is made in Section 23 of the Act. Rule 31 provides for the maintenance of accounts with regard to the transactions and the fee to be paid to the market committee and the manner of its assessment. The leaned counsel for the petitioner states that te goods imported by the petitioner-firm are not sold by public auction in the market but by private contracts and that no provision with regard to the retail sales has been made in the bye-laws. If that be so, under Rule 24 the petitioner-firm cannot sell the agricultural produce brought by it into the notified market area except by public auction and it may be infringing the provisions of that rule if the sale is not made by public auction in the absence of any provision with regard to the retail sales. The learned counsel has relied upon from 'i' and 'j' which are issued by the auctioneer to the purchaser and the seller of agricultural produce which are sold in the market and submits that forms 'm' and 'n' and relate to the same transactions. Forms 'i' and 'j' relate to only those transactions which take place by public auction through Kacha Arhtias From 'i' is issued by the Kacha Archtia to the buyer and form 'j' is issued by him to the seller but sale by auction is by no means confided to the agricultural produce brought into the market area by the producers themselves and, therefore, the said rules and the forms do not indicate conclusively that the market fee can be lievied only on those transactions of purchase or sale in which one of the parties is a producer. The market fee is one of the three principal sources of revenue to te market committee, the other two being license fee and the fines levied by the Courts in respect of the defaults or offences committed under the Act. The receipts from all the sources including these three sources constitute the Market Committee Funds as is described in Section 27 of the Act. Section 28 of the Act enumerates the various purposes for which the Market Committee Funds can be expended as under :- "28. Subject to the provisions of Section 27, the Market Committee Funds shall be expended for the following purposes :- (I) acquisition of sites for the market ; (II) maintenance and improvement of the market ; (III) construction and repair of buildings which are necessary for the purposes of the market and for the health, convenience and safety of the persons using it ; (IV) provision and maintenance of standard weights and measures ; (V) pay, leave allowances, gratuities, compassionate allowances and contributions towards leave allowances, compensation for injuries and death resulting from accidents while on duty, medical aid, pension or provident fund of the persons employed by the Committee ; (VI) payment of interest on loans that may be raised for purposes of the market and the provisions of a sinking fund in respect of such loans ; (VII) collection and dissemination of information regarding all matters relating to crop statistics and marketing in respect of the agricultural produce concerned ; (VIII) providing comforts and facilities, such as shelter, shade, parking accommodation and water for the persons, draught cattle, vehicles and pack animals coming or being brought to the market or on construction and repair of approach roads, culverts, bridges and other such purposes ; (IX) expenses incurred in the maintenance of the offices and in auditing the accounts of the Committees ; (X) propaganda in favour of agricultural improvements and thrift ; (XI) production and betterment of agricultural produce ; (XII) meeting any legal expenses incurred by the Committee ; (XIII) imparting education in marketing or agriculture ; (XIV) payments of travelling and other allowances to the members and employees of the Committee, as prescribed; (XV) loans and advances to the employees ; (XVI) expenses of and incidental to elections ; and (XVII) with the previous sanction of the Board, any other purpose which is calculated to promote the general interests of the Committee or the notified market area. " The various purposes mentioned in Section 28 of the Act do not lead to the conclusion that the markets are established only for transactions of agricultural produce in which one of the parties is the producer. These purposes are of all the dealers in the notified market area whether they transact their sales or purchases it the producers of agricultural produce or with others, like consumers. I am of the opinion that the market fee is levied for providing facilities to the licensees working in the notified market area and is equitably levied on the quantum of business done by them. These licensees get the privilege of dealing in all kinds of agricultural produce mentioned in the schedule to the Act on a regulated basis with the result that cut-throat competition is eliminated and reasonable profit is assured to them. They are provided with numerous facilities on a collective basis and the market committee requires funds for maintaining the market in a proper shape and to perform the duties imposed on it by the Act, the rules and the bye-laws. They levy of the market fee has been held to be valid and constitutional by their Lordships of the Supreme Court in Mohammad Hussain Gulam Mohammad v. State of Bombay, AIR 1962 SC 97. In that case Section 11 of the Bombay Agricultural Produce Markets Act, 1939 was under consideration. The said section give power to the market committee subject to the provisions of the rules and subject to such maxima as may be prescribed, to levy fees on the agricultural produce bought and sold by licensees in the market area. it is to be noted that this section is in identical terms as Section 23 of the Act except that in the Act words "bought or sold" are used while in Section 11 of the Bombay Act, the words "bought and sold" are sued. It was contended in that case that the fee provided for by Section 11 was in the nature of sales tax. Repelling this contention, their Lordships observed as under : "now there is no doubt that the market committee which is authorised to levy this fee renders services to the licensees, particularly when the market is established. Under the circumstances it cannot be held that the fee charged for services rendered by the market committee in connection with the enforcement of the various provisions of the Act and the provisions for various facilities in the various markets established by it, is in the nature of sales tax. It is true that the fee is calculated on the amount of produce bought and sold but that in our opinion is only a method of realising fees for the facilities provided by the committee. The attack on Section 11 must, therefore fail. "
(3.) THE validity of the market fee was again considered by their Lordships of the Supreme Court in Lakhan Lal v. State of Bihar, Writ Petns. Nos. 103 and 199 of 1967, D/- 26-3-1968 = (Reported in AIR 1968 SC 1408 ). The Act under consideration was the Bihar Agricultural Produce Markets Act, 1960 and this is what their Lordships observed ; "the next contention is that the fees levied by the market committee are in the nature of taxes as the committee does not render any services to the users of the market and the levy of fees is therefore, illegal. This contention is not tenable. The market committee has taken steps for the establishment of a market where buyers and sellers meet and sale and purchases of agricultural produce take place at fair prices. Unhealthy market practices are eliminated, market charges are defined and improper ones are prohibited. Correct weighment is ensured by employment of licensed weighment and by inspection of scales, weights and measures and weighing and measuring instruments. The markets committee has appointed a dispute sub-committee for quick settlement of disputes. It has set up a market intelligence unit for collecting and publishing the daily prices and information regarding the stock, arrivals and despatches of agricultural produce. It has provided a grading unit where the technique of grading agricultural produce is taught. The contract form for purchase and sale is standardised. The provisions of the Act and the Rules are enforced through inspectors and other staff appointed by the market committee. The fees charged by the market committee are co-related to the expenses incurred by it for rendering these services. The market fee of 25 naye paise per Rs. 100/- worth of agricultural produce and the license fees prescribed by Rules 71 and 73 are not excessive. The fees collected by the market committee form part of the market committee fund which is set apart and ear-marked for the purposes of the Act. There is sufficient quid pro quo for the levies and they satisfy the test of 'fees' as laid down in Commr. Hindu Religious Endowments. Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt. 1954 SCR 1005 = (AIR 1954 SC 282 ). ";