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2006 DIGILAW 1143 (ALL)

PUTTAN LAL SHIV GOPAL v. STATE OF UTTAR PRADESH

2006-04-27

SUSHIL HARKAULI, VIKRAM NATH

body2006
JUDGMENT By the Court—Heard learned Counsel for the petitioner, learned Standing Counsel and Shri B.D. Madhyan for the respondents. 2. The relevant provisions for the purposes of this writ petition are Sections 2(a), 2(t), 4-A, 6, 8 and Section 17(iii)(b) of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 (in short referred to as the Act). 3. For the reference of these provisions including relevant part of Section 17(iii)(b) of the Act are reproduced below : “2. (a) “agricultural produce” means such items of produce of agriculture, horticulture, viticulture, apiculture, sericulture, pisciculture, animal husbandry, or forest as are specified in the Schedule, and includes admixture of two or more of such items, and also includes any such item in processed form, and further includes gur, rab, shakkar, khandsari and jaggery; (t) “specified agricultural produce” means agricultural produce, specified in the notification under Section 6 or as modified under Section 8; 4-A. Power to amend Schedule.—The State Government may, by notification in the Gazette, add to, amend or omit any of the items of agricultural produce specified in the Schedule, and thereupon the Schedule shall stand amended accordingly. 6. Declaration of Market Area.—On the expiry of the period referred to In Section 5, the State Government shall consider the objections received within the said period and may thereupon declare, by notification in the Gazette, and in such other manner as may be prescribed, that the whole or any specified portion of the area mentioned in the notification under Section 5 shall be the Market Area in respect of such agricultural produce, and with effect from such date as may be specified in the declaration. 8. 8. Alteration of Market Area and modification of the list of Agricultural Produce.—(1) The State Government, where it considers necessary or expedient in the public interest so to do, may; by notification in the Gazette, and in such other manner as may be prescribed and with effect from the date specified in the notification,— (a) include any agricultural produce in, or exclude any agricultural produce from, the list of agricultural produce specified in the notification under Section 6; (b) include any area in, or exclude any area from, the Market Area specified in the notification under Section 6; (c) divide a Market Area specified in the notification under Section 6 into two or more separate Market Areas; (d) amalgamate two or more Market Areas specified in the notification under Section 6 into one Market Area; or (e) declare that a Market Area specified in the notification under Section 6 shall cease to be such area : Provided that before action under this sub-section is taken, the State Government shall invite and consider, in the prescribed manner, objections, if any, against the proposed action. 17. Powers of the Committees.—A Committee shall, for the purposes of this Act, have the power to— (iii) levy and collect,— (a) such fees as may be prescribed for the issue or renewal of licences; and (b) market fee which shall be payable on transaction of sale of specified agricultural produce in the market area at such rates, being not less than one percentum and not more than two and a half percentum of the price of the agricultural produce so sold as the State Government may specify by notification, and development cess which shall be payable on such transactions of sale at the rate of half percentum of the price of the agricultural produce so sold and such fee or development cess shall be realised in the following manner :” 4. From a reading of the above provisions, it is clear that the scheme of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 (the Act) says that the liability to pay Mandi fee and also to obtain licence arises only in respect of the items specified in the schedule, or an admixture of two or more such items or processed form of such items. 5. 5. It necessarily follows that if an item is not specified in the schedule or is not admixture of two or more of such items or is not an item in processed form of the specified items of the schedule, no tax can be levied. 6. However, the liability to pay Mandi fee or to obtain a licence does not merely arise because the item specified in the schedule is an admixture or processed form of such items. In order to attract the liability under Section 17 of the Act, it is also necessary that the item must be specified under Sections 6/8 of the Act so as to fall within the meaning of the words “specified agricultural produce”. 7. The “specified agricultural produce” have to be notified under Section 6 of the Act and such list of notified items, which are for a local market area, can be modified under Section 8 of the Act. 8. The State Government has the power under Section 4-A of the Act to amend the schedule. The State Government also has the power under Section 8 of the Act to modify the list of “specified agricultural produce” notified under Section 6 of the Act. More to it, the State Government further has the power under Section 26-M of the Act to issue directions on questions of policy and the Board, i.e., the Krishi Utpadan Mandi Parishad, according to Section 26-M of the Act, shall be guided by such directions. Further, under the U.P. State Control Over Public Corporation Act, 1975, the Corporations which include the Mandi Parishad in discharge of its functions are to be guided by directions given by the State Government on questions of policies. 9. In the present case, initially, the agricultural produce items mentioned in the schedule contained the item “wood” and the item “catechu”, which is popular known in Hindi as “Kattha”. 10. By an amendment notification dated 27.3.1997, the item “catechu” was removed from the schedule and “khair wood” was brought into the schedule. “Catechu” is a product of “khair wood”. The question is whether “catechu” can be called a processed form of “khair wood” or not. A substance may be a product of another substance in the sense that the latter substance may be an essential ingredient of the former substance. “Catechu” is a product of “khair wood”. The question is whether “catechu” can be called a processed form of “khair wood” or not. A substance may be a product of another substance in the sense that the latter substance may be an essential ingredient of the former substance. But that would not necessarily mean that the latter is a “processed form” of the former. To demonstrate by example : paper is made out of wood but it is difficult to call “paper” a processed form of “wood”. 11. In the case of Ram Chandra Kailash Kumar & Co. v. State of U.P., A.I.R. 1980 S.C., 1124, the Supreme Court said (in para-23 of the Law Report) as follows: “23.....Difficulty cropped up in relation to the charging of market fee apropos the transaction of Catechu. According to the Market Committees Catechu is a product from timber or trees like Gum or Lac. It trickles down from the trees. On the other hand, according to the Catechu dealers by processing of Khair trees Catechu is produced. We leave this question of fact to be decided by the Market Committees concerned in the first instance and then by a Court of law. If Catechu is a product of Khair trees by some processing as prima facie it appears to us to be so then it is plain that market fee can be charged only on the purchase of Khar wood and not on the sale of Catechu.” 12. At the time when “catechu” found place in the schedule, i.e., before the amendment notification dated 27.3.1997, it had been notified as the “specified agricultural produce” in the local market area of Kanpur Nagar. Although “catechu” has been deleted from the schedule, but so far the list notified under Section 6 of the Act for Kanpur Nagar. Mandi area, which included “catechu”, has not been modified under Section 8 of the Act by the State Government creating some confusion. The petitioner contends that deletion of “catechu” from the schedule indicates that the intention was to make the said item not liable to Mandi fee or Mandi.licence. The respondents contend that after introduction of “khair wood” in one of the items in the schedule, “catechu” became redundant as an item in the schedule as it is merely a processed form of “khair wood”. 13. The respondents contend that after introduction of “khair wood” in one of the items in the schedule, “catechu” became redundant as an item in the schedule as it is merely a processed form of “khair wood”. 13. It does not appear to us to be necessary to enter into this question as to whether “catechu” is or is not a processed form of “khair wood” because in view of the controversies generated with regard to the question regarding several item being dubbed as processed form of the scheduled commodities, the State Government has taken a policy decision, which is mentioned in the letter of the Special Secretary dated 7.3.2002 addressed to the Director, Mandi Parishad and enclosed as Annexure 3 to this writ petition that in respect of any item, which is not mentioned in the schedule directly, if a question arises whether the said item is or is not a processed form of the items mentioned in the schedule, the same will be decided by the State Government on the recommendation of the Mandi Parishad and till such decision is taken by the State Government, such items should not be burdened with the liability of the Mandi fee or licence merely because the Mandi Parishad or the Mandi Samiti thinks that the item is a processed form of a scheduled commodity. 14. As stated above, because the whole Act confers exclusive power on the State Government to add or omit any item from the schedule, to specify certain agricultural produce as “specified agricultural produce” for a local market area, to. amend or modify any such declaration or notification including alteration of market area and also the power to issue directions for guidance of the Mandi Parishad, we are of the opinion that the decisions taken by the State Government as contained in the letter dated 7.3.2002 is a policy decision of the State Government. 15. It has been submitted by Shri B.D. Madhyan that such decisions are merely for guidance and are not binding. In support of this proposition, he relies upon the decision of the Supreme Court in the case of State of U.P. v. Neeraj Avasthi and others, (2006) 1 SCC 667 . 16. The aforesaid decision of the Supreme Court is with regard to service matter. In support of this proposition, he relies upon the decision of the Supreme Court in the case of State of U.P. v. Neeraj Avasthi and others, (2006) 1 SCC 667 . 16. The aforesaid decision of the Supreme Court is with regard to service matter. In the case before us as pointed out above, it is totally within the domain of the State Government under the various provisions referred above to determine which item is to be taxed and which item is not to be taxed. Having such wide powers, in our opinion, the policy decision of the State Government has to be followed by the Mandi Parishad. 17. In view of the above, till such time as the State Government takes a decision on the recommendation of the Mandi Parishad, if any, with regard to the item “catechu” by determining whether “catechu” can be called a processed form of “khair wood” for the purposes of Section 2(a) of the Act, the Mandi Parishad or the Mandi Samiti will not compel any dealer to compulsory licensing or deposit any Mandi fee on “catechu”. Consequently, we quash the orders dated 4.8.2005, Annexure 5 and 27.10.2005, Annexure 6 to this writ petition. Writ petition is allowed as above. Petition Allowed. ————