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2007 DIGILAW 497 (ALL)

NAV BHARAT EXPORTS v. STATE OF U. P.

2007-03-02

R.P.MISRA, SHISHIR KUMAR

body2007
R. P. MISRA, SHISHIR KUMAR, J. ( 1 ) 1. The petitioner has approached this Court for quashing the order dated 22. 10. 2001 (Annexure 12 to the writ petition) and similar orders to other mandi Samiti in the State of Uttar Pradesh. Further a writ in the nature of mandamus commanding the respondents not to seek repayment of Mandi fee and cess for the year 1995-96 to 1998-99 from the petitioner. ( 2 ) THE facts arising out of the present writ petition are that the petitioner is involved in purchasing the paddy from different Mandies in the State of uttar Pradesh and manufacturing Basmati Rice and exporting it to different countries. The State Government in order to give incentive to the millers and exporters to export rice outside the country, formed an Export promotion Policy and provided certain reliefs to the millers and exporters from the year 1995-96. Under the aforesaid policy, if a miller purchased paddy from Krishi Utpadan Mandi Samiti in the State of Uttar Pradesh and manufactured rice and exported the same to countries outside India, such a miller and exporters shall not be liable to pay any Mandi Fees on the paddy purchased by it or on the rice exported outside the country and shall have to pay Mandi Fees only on the rice, which was broken or otherwise unfit for export and deemed to have been sold locally. The office memorandum dated 28. 11. 1995 explaining the conditions under which the miller and exporter of Basmati Rice shall be given exemption from trade Tax levy and Mandi fees. It provides that the export obligation of the miller/exporter shall be deemed to be complete provided the miller/exporter exports the minimum percentage fixed for export obligation and it further provides that the recovery percentage of rice from paddy is fixed at 50% of the paddy. The petitioner has filed the said memorandum as annexure 1 to the writ petition. Petitioner submits that similar notifications have subsequently been issued on 7. 1. 1998 for the agriculture year 1997-98 and notification dated 24. 10. 1998 for the years 1998-2000. ( 3 ) THE petitioner is miller and exporter of Basmati Rice. For the year 1995-96 the total recovery of rice from the paddy purchased by the petitioner was 64% out of which 47. 95% was exported while 16. 1. 1998 for the agriculture year 1997-98 and notification dated 24. 10. 1998 for the years 1998-2000. ( 3 ) THE petitioner is miller and exporter of Basmati Rice. For the year 1995-96 the total recovery of rice from the paddy purchased by the petitioner was 64% out of which 47. 95% was exported while 16. 05 % which was broken and discoloured rice was deemed to have been sold in the local market, as such, the petitioner paid Mandy fees and other taxes on 16. 05% of the broken rice. Similarly for the year 1996-97 the total recovery of rice was 64. 17% of which 47. 92% Basmati Rice was exported while 16. 25% broken and discoloured rice was deemed to be sold and the petitioner has paid the requisite fee for that. The same position was of 1997-98 when the recovery was 65. 15% and exportable rice 48. 93% and broken discoloured rice 16. 22 %, similarly for the year 1998-99, the total recovery was 46. 25% exported rice was 64. 25% and 17. 87% was broken and discoloured rice. As the petitioners firm had manufactured and exported the entire exportable rice, it was not liable for payment of Mandi Fee and trade tax etc. on paddy purchased. A certificate to that effect has been given by the Senior marketing Inspector dated 16. 12. 2000. Since the export promotion policy is normally declared by the State Government much after the start of the season, the petitioner used to purchase rice even before the export policy decision was notified for the year and the petitioner paid Mandi fees on the paddy purchased from different Mandies which became refundable only after the petitioners firm had completed the export obligation. The krishi Utpadan Mandi Samiti, Bilaspur, where petitioners mill is located, gave regular exemption certificate to the petitioner that the petitioner has complied the export obligation for the year 1995-96 to 1998-99. On the basis of the aforesaid certificate, the respondent No. 3 issued directions to the different Mandi Samities to refund the Mandi fees to the petitioner and in pursuance of the aforesaid letter, various Mandi Samities have refunded the same. It appears that some Mandi Samities raised objection to the Director Mandi Parishad that since in the export policy dated 24. 10. It appears that some Mandi Samities raised objection to the Director Mandi Parishad that since in the export policy dated 24. 10. 1998 it was provided that an exporter shall be entitled to exemption from Mandi Fees only if he exports a minimum of 50% of rice and since the petitioner had not exported 50%, it was not entitled to exemption and the refund of Mandi Fees paid by the petitioner for purchasing paddy. ( 4 ) THE Director, Mandi Parishad, respondent No. 2 called for an explanation from the petitioner vide its letter dated 2. 12. 2000. Petitioner submits a detailed reply and explanation annexing the documents that he has exported the entire quantity of rice produced from the paddy and only broken and discoloured rice was deemed to be sold from the local market for which the petitioner has already paid the market fee, as such, he is entitled for exemption. It was also submitted before the respondent No. 2 that the total recovery of exportable rice was from 46 to 48 % which has already been exported, therefore, it has rightly been held that the petitioner has completed the obligation. Nothing was decided by the State Government then the petitioner has again made a representation on 19. 3. 2001 explaining the whole situation. The State Government has made various enquiries and after that the State Government had issued a notification dated 26. 9. 2001 to the effect that even if amount of rice exported is less than 50% of the paddy even then the exporter shall be entitled to exemption from Mandi fee, cess and trade tax etc. , however, the exporter shall have to pay Mandi Fees on the broken, damaged and discoloured rice not fit for export but the State government has taken this decision with regard to the year 2001 to 2005 and not with regard to the earlier years though it has held that standard fixed in the earlier years though it has been held that standard fixed in earlier policy could not be complied with by the exporters. Though the petitioner has completed the export obligation but the State Government has not given any directions to the respondent No. 2 in response to the letter dated 7. 2. 2001 and the respondent No. 3 vide its letter dated 22. 10. Though the petitioner has completed the export obligation but the State Government has not given any directions to the respondent No. 2 in response to the letter dated 7. 2. 2001 and the respondent No. 3 vide its letter dated 22. 10. 2001 directed the Mandi Samiti, Bilaspur, respondent No. 8 to recover the amount of Mandi fee refunded to the petitioner in the absence of any directions given by the Government without considering the explanation submitted by the petitioner and without giving any opportunity of hearing. Petitioner further submits that similar letters were also written to other mandi Samities in the State of Uttar Pradesh for the said purpose. Petitioner submits that since the direction of the respondent No. 2 recovering the Mandi fee from the petitioner was wholly illegal and arbitrary, the petitioner made a representation to the respondent No. 2 on 5. 11. 2001 and explaining the respondent No. 2 that the State Government itself has accepted the plea of the petitioner that recovery of rice from paddy produced in Tarai and some other parts of the State was only about 46 to 47% and since the petitioner has always exported the entire rice produced, therefore, the liability of the petitioner is complete and he is entitled for refund of Mandi fees paid by the petitioner on purchase of paddy. However, the respondent No. 3 refused to take any further action on the representation of the petitioner on the ground that the notification dated 26. 09. 2001 pertains to the year 2001 to 2005, therefore, the same is not applicable to the earlier orders and as the State Government has not given any directions in response to his letter dated 7. 2. 2001 (Annexure 9 to the writ petition) it can do nothing. In view of the aforesaid fact, various Mandi Samities have issued a recovery certificate for recovery of mandi fees refunded to the petitioner with interest at the rate of 24% along with 10% recovery charges. Aggrieved by the aforesaid order, the petitioner has approached this Court. ( 5 ) THE notices were issued and the respondents were granted time to file counter affidavit and the respondents were restrained from recovering any amount of Mandi, which has already been refunded to the petitioner in the year 1998-1999. Aggrieved by the aforesaid order, the petitioner has approached this Court. ( 5 ) THE notices were issued and the respondents were granted time to file counter affidavit and the respondents were restrained from recovering any amount of Mandi, which has already been refunded to the petitioner in the year 1998-1999. ( 6 ) IT has been submitted on behalf of the petitioner that various reports clearly goes to show and the subsequent notification issued by the State government giving certain facts for the year 2001 to 2005 clearly goes to show that there cannot be recovery of 50% of rice. It always varies from 46 to 50%. There is no dispute to this effect that the total rice which was recovered from the paddy has been exported. It is not the case of the respondents that the petitioner has not exported the total rice came from the paddy. The petitioner has brought to the knowledge regarding the notification dated 26. 9. 2001 in which it has clearly been stated and given an example to that effect that out of 100 kg paddy only about 66 kg rice comes out and if out of that about 46 kg becomes the exportable rice then a person is entitled for relief for 46 kg and for 4 kg he will be liable to pay the Mandi fee as well as the trade tax but as regards the 46 kg, he will be entitled for the benefit. In support of the aforesaid contention the petitioner submits that the State Government himself has accepted that out come of the export rice will be roughly 46 to 50% and if it is 46% and the total 46% has been exported then according to the Government order the obligation will be treated to be completed and the person concerned will be entitled for the benefit. ( 7 ) THE further submission has been made on behalf of the petitioner that in spite of the recommendation and in spite of the certificate issued by the various authorities though the matter was pending before the State government but no benefit has been given and the petitioners have been discriminated regarding the year 1995 to 1997-98, therefore, no recovery can be made from the petitioner and the petitioner is also entitled for the said benefit which is being provided in the subsequent years. On the other hand, Sri B. D. Mandhyan, who appears for the respondents Mandi samiti has submitted that as the petitioner has failed to fulfill the export obligations, as such, he is not entitled for benefit under the government Order of no payment of Mandi fee and developmental cess on purchase of paddy out of which minimum 50% of rice must be exported. As the petitioner having exported less than the percentage fixed is not entitled for the benefit of the Government Order, as such, the mistake committed earlier of repaying the market fee collected back to the petitioner has been set right after due verification and the petitioner has been required to repay back the market fee refunded to it. In paragraph 11 of the counter affidavit it has been stated that the facts given by the petitioner may be correct but as per government orders, the minimum recovery of rice from paddy has been taken to be 50% which can go up-to standard of 66. 66% and the exporter will have to export 50% of rice vice versa the paddy purchase. Therefore, exporter is to export 50% of the rice of paddy purchase, which the petitioner fails to achieve. In 1995-96 he exported 47. 95% in 1996-97 only 47. 92%, in 1997-98 only 48. 93% and in 1998-99 only 46. 25% and in all the years, having failed to export minimum required the petitioner will not be entitled for exemption of market fee of paddy purchased within the State of U. P. ( 8 ) THE further submission has been made on behalf of the respondents that the question involved in the present case is regarding the benefit of exemption of market fee and development cess under the memorandum dated 28. 11. 1995 and the notification-dated 24. 10. 1998 was made available on the transaction of rice. Only in the event of the paddy purchased, rice produced from that paddy must be 50%, which was to be exported. The petitioners export was between 46 to 48% which is apparent from the averment made in the writ petition, therefore, the respondents have rightly issued the order dated 22. 10. 1998 was made available on the transaction of rice. Only in the event of the paddy purchased, rice produced from that paddy must be 50%, which was to be exported. The petitioners export was between 46 to 48% which is apparent from the averment made in the writ petition, therefore, the respondents have rightly issued the order dated 22. 10. 2001 (Annexure 12 to the writ petition) that if the condition of 50% of the export rice will not fulfilled, then petitioner as well as similarly situated persons are not entitled for the benefit and are liable to return the amount of market fee and development cess, which was returned to the petitioner under that notification as the government did not amend the notification, therefore, the orders passed by the respondents are fully valid in law. As the government has not taken any decision upon the representation of the petitioner, on which the exemption was exempted but till this date no notification has been issued by the government amending the earlier notification and the subsequent notification, the exemption has been granted to export rice even if recovery was less than 50% of the paddy purchased but the same is applicable for the year 2001 to 2005. As the state Government did not take any decision for the past period from 1995 to 2000, as such, the petitioner has rightly been refused to give the benefit. ( 9 ) THE counsel for the respondents has mentioned Section 17 (iii) (b) which provides for levy and collection of market fee. The further reliance has been placed upon by the judgment of the Apex Court reported in AIR 1980 sc, 1124 Ram Chandra Kailash Kumar and Co. and others Vs. State of U. P. and another and reliance has been placed upon Para 20 of the said judgment. ( 10 ) THE same is being reproduced below:- "20. A propos this point attention first to be focused on the definition of the word "producer in clause (p) an "trader in clause (y) of section of the Act which have already been quoted, producer who produces agricultural produce generally does not indulge in trading activities so as to become a trade within the meaning of clause (y ). He covered by clause (p) only. If a person simply a trader indulging in trading activities he is covered by the definition in clause (9 ). He covered by clause (p) only. If a person simply a trader indulging in trading activities he is covered by the definition in clause (9 ). We have coined the expression producer-trader for a person who is both a producer of agricultural produce and himself trades in it. For the purposes of the Act he ceases to be producer and becomes a trader only the definition indicates. While discussion the question of levy of market fee a paddy and rice this aspect of the matter is important and therefore we thought it appropriate to highlight it at this stage. By and large in the notification dated April 11, 1978 there is hardly an duplication of any item of agricultural produce. As for example, under Group Animal Husbandry products, mill has been omitted although it is to be found in the Schedule appended to the Act. From milk can be prepared Ghee or Khoya and Items 1 and 2 in Group are the said articles. Hides and Skin can be had from the animals, so wool obtained from the sheep. Bu in case paddy and rice mentioned as Items 3 and 4 in Group A-1 "cereals", there is duplication as rice is obtained from paddy. We would, therefore, like clarify the position of law in this regard. If paddy is purchased in a particular market area by a rice miller and the same paddy is converted into rice and sold then the rice miller will be able to pay market fee on his purchase of paddy from the agriculturist-produce under sub-clause (2) of Section 17 (iii) (b ). He cannot be asked to pay market fee over again under sub-clause (3) in relation to the transaction of rice. Nor will it be open to the Market Committee to choose between either of the two in the example just given. Market fee has to be levied and collected in relation to the transaction of paddy alone. Otherwise, there will be a risk of violation of Article 14 if it is left to be sweet-will of the Market Committee in the case of some rice millers to charge market fee on the transaction of paddy and in case of others to charge it when the sale of rice takes place. Otherwise, there will be a risk of violation of Article 14 if it is left to be sweet-will of the Market Committee in the case of some rice millers to charge market fee on the transaction of paddy and in case of others to charge it when the sale of rice takes place. If, however, paddy is brought by the rice-miller from another market area, then the Market Committee of the areas where paddy is converted into rice and sold will be entitled to charge market fee on the transaction of sale in accordance with sub-clause (3 ). We now take the example of a producer-trader who is an agriculturist and produces paddy in his own filed but owns a rice mill also in the same market areas. He mills the paddy grown by him into rice and sells it as such. It is plain that in his case no market fee can be charged on paddy because there is no transaction of sale and purchase of paddy and market fee can be charged only on the sale of rice by him in accordance with sub-clause (3) and he will be entitled to pass on the burden to his purchaser. Disputes of facts were raised before us as to whether paddy had been subjected to the charge of market fee or not and whether the same paddy has been milled into rice. We did not enter into this disputed question of fact, and as observed above, after clarifying the law we direct the Market Committees to levy market fee in the light of this judgment. It will be open to any trader to go to the High Court again, if necessary, for the redress of his grievance in connection with a disputed question which may arise even after our judgment. " ( 11 ) IN view of the aforesaid submission the learned counsel for the respondents submits that the petitioner has got no case and the order dated 22. 10. 2001 (Annexure 12 to the writ petition) is perfectly correct and the petitioner is liable to refund the Mandi fee and cess which has already been refunded to the petitioner and he is liable for payment of Mandi fee also. ( 12 ) WE have considered the submissions made on behalf of the parties and perused the record. 10. 2001 (Annexure 12 to the writ petition) is perfectly correct and the petitioner is liable to refund the Mandi fee and cess which has already been refunded to the petitioner and he is liable for payment of Mandi fee also. ( 12 ) WE have considered the submissions made on behalf of the parties and perused the record. From the record it is clear that there was an export policy dated 24. 10. 1998 which clearly provides that the exporter will be entitled for exemption from Mandi fee only if he exports minimum of 50% of rice. It is also clear from the record and the certificate issued by the competent authority that the petitioner has exported the total rice that is the percentage of rice was only around 46 to 47% recovery from the paddy and it has been certified that the total quantity of rice was exported. It is not the case of the respondents that the petitioner has not fulfilled the obligation. Admittedly, the matter was referred to the state Government giving complete details to this effect and Director, mandi Parishad has also recommended the case but the State Government instead of taking any decision relating to the year 1995 to 2000 had issued a notification dated 26. 9. 2001 which pertains to the year 2001-2005 but no orders regarding the benefit for the previous years have been given. The State Government was of the view that if it is 46 to 50% and 46% have been exported then it will be treated to be complete obligation according to the Government Notification dated 26. 9. 2001 and for remaining 4% the person concerned will be liable for payment of Mandi fee as well as other fees. ( 13 ) IT clearly goes to show that the State Government was of the view that there will not be a total 50% of the recovery from the paddy for the purposes of export of rice, there can be some variation and variation can be up to 4 to 5%. If that can be for the period of 2001 to 2005 why it cant be for the period 1995 to 2000. From the record, it is clear that it is not the case of the respondents that the petitioner has not exported rice for these years of the total recovery for about 46 to 47%. If that can be for the period of 2001 to 2005 why it cant be for the period 1995 to 2000. From the record, it is clear that it is not the case of the respondents that the petitioner has not exported rice for these years of the total recovery for about 46 to 47%. There was a difference of only 2 or 3%, therefore, the State Government should have taken a decision to that effect taking into consideration of all these facts for the previous years also. Though, in our opinion, the petitioner has been discriminated, as the persons who are exporting rice for the year 2001-2005 will be benefited in spite of the fact that percentage is not 50%. As certain variation of recovery has been mentioned itself and it has been stated that the benefit of two or three percentage will be given and the persons will be entitled to the benefit by not paying the mandi fee and cess fee to the extent of rice, which has been exported. Rest of the remaining, for that purpose the exporter has to pay the Mandi fee. This fact should have also been considered by the State Government but without considering the aforesaid fact the subsequent notification has been issued on 26. 9. 2001. ( 14 ) AS the State Government has not taken any decision, therefore, we are of the opinion, that the matter may be remanded to the State Government that is respondent No. 1 to take a decision taking into consideration the fact that as certain benefits have been given in view of the State Government notification issued on 26. 9. 2001 where in the facts and circumstances, the petitioner is also entitled for the same. It is provided that the State government respondent no. 1 will take a decision taking into consideration the subsequent notification and will pass a detailed and reasoned order within a period of three months from the date of production of the certified copy of the order. It is also made clear that the respondents are restrained from recovering any amount from the petitioner, which has already been refunded to the petitioner, and any amount, which is to be paid by the petitioner as mandi fee till the final decision is taken by the respondent No. 1. With these observations the writ petition is disposed of. It is also made clear that the respondents are restrained from recovering any amount from the petitioner, which has already been refunded to the petitioner, and any amount, which is to be paid by the petitioner as mandi fee till the final decision is taken by the respondent No. 1. With these observations the writ petition is disposed of. There shall be no order as to costs. .