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2009 DIGILAW 3347 (ALL)

AMAR v. STATE OF U. P.

2009-10-27

RAJES KUMAR

body2009
JUDGMENT Hon’ble Rajes Kumar, J.—These are the bunch of cases involving common questions arising from the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 (hereinafter referred to as the “Act”) and, therefore, all the writ petitions are being disposed of together by a common order. 2. All the petitioners were carrying on the business of Chillies. Chillies was one of the notified agriculture produce. All the petitioners were the licensees under the Act. Admittedly the petitioners sold chillies during the period January, 2008 to March, 2008 in a up-mandi area, Phoolpur which comes under the principal mandi of Shahganj, Jaunpur. On the sales of chillies, the petitioners had paid mandi fees on the value shown in 6R. There is no dispute in this regard. 3.The Secretary, U.P. Krishi Utpadan Mandi Samiti Shahganj, Jaunpur issued an order dated 30.4.2008 asking the petitioners to pay additional mandi fees on the sales of chillies during the period January, 2008 to March, 2008 on the ground that in 6R the value of chillies was shown much less than the prevailing value with the view to evade the mandi fees. In the order, mandi fees had been demanded on the value of Rs. 600/- for the month of January and February and at the rate of Rs. 800/- for the month of March, 2008. The petitioners claimed to have filed an objection on 21.5.2008, which is Annexure-5 to the writ petition, disputing the demand on the ground that mandi fees were paid through the Mandi Samiti Inspector at the time of sales itself who was present, on the prevalent market rate on which no objection has been raised by the Inspector and, therefore, the demand is wholly unjustified. It appears that no cognizance has been taken by the Secretary, U.P. Krishi Utpadan Mandi Samiti Shahganj, Jaunpur to the letter of the petitioners. Therefore, the petitioners filed the revision against the order dated 30.4.2008 before the Deputy Director, Rajya Krishi Utpadan Mandi Parishad, U.P., Varanasi. The revisions of the petitioners have been rejected by the impugned orders dated 20.9.2008. 4. Heard Sri Girish Chandra Yadav, learned counsel appearing on behalf of the petitioners and Sri B.D. Mandhyan, Senior Advocate, assisted by Sri Satish Mandhyan, learned counsel for the respondents. 5. The revisions of the petitioners have been rejected by the impugned orders dated 20.9.2008. 4. Heard Sri Girish Chandra Yadav, learned counsel appearing on behalf of the petitioners and Sri B.D. Mandhyan, Senior Advocate, assisted by Sri Satish Mandhyan, learned counsel for the respondents. 5. Learned counsel for the petitioners submitted that on the prevailing market price, the goods were sold against 6R on which mandi fees were paid in the presence of Inspector, who had not raised any objection. He submitted that the selling rate depends upon the quality of the goods and there was no fixed price. He submitted that once the mandi fees have been accepted by the Inspector, who was present at the time of sales, without any objection, it was not open to the Secretary, U.P. Krishi Utpadan Mandi Samiti Shahganj, Jaunpur to raise the demand on the ground that prevailing market rate was much higher than on which the chillies were sold by the petitioners during the period January, 2008 to March, 2008. He submitted that the Secretary, U.P. Krishi Utpadan Mandi Samiti Shahganj, Jaunpur has no power to pass a re-assessment order merely on the surmises and conjectures. Learned counsel for the petitioners submitted that the order has been passed without giving any show cause notice and any opportunity of hearing. 6. In support of the contention, he relied upon the decisions of this Court in the case of M/s. Madan Sugar Works v. Chairman, Krishi Utpadan Mandi Samiti Kichcha and another, 1996 All CJ 577 and in the case of Maha Laxmi Sugar Works and others v. State of U.P. and others, 1987 UPLBEC 957. 7. Sri B.D. Mandhyan, Senior Advocate, appearing on behalf of Krishi Utpadan Mandi Samiti submitted that the market yard of Phoolpur is about 25 kilometres from Shahganj wherein the average selling rate of chillies during the period involved was three times to the rate disclosed by the petitioners as per report of Senior Agriculture Marketing Inspector. He submitted that Senior Agriculture Marketing Inspector, Azamgarh has given the report that selling rate per quintal of chillies in Azamgarh were between Rs. 1400/- to Rs. 1600/- per quintal and the Senior Agriculture Marketing Inspector of Jaunpur has given report that during the relevant period the selling rate of chillies was between Rs. 700/- to Rs. 1000/-. Therefore, the selling rate disclosed by the petitioners at Rs. 200/- to Rs. 1400/- to Rs. 1600/- per quintal and the Senior Agriculture Marketing Inspector of Jaunpur has given report that during the relevant period the selling rate of chillies was between Rs. 700/- to Rs. 1000/-. Therefore, the selling rate disclosed by the petitioners at Rs. 200/- to Rs. 276/- during the year under consideration were highly on a lower side and, therefore, the Secretary, Mandi Samiti has passed the order and raised the demand on the basis of the average selling rate of Rs. 600/- for the months of January and February and Rs. 800/- for the month of March, 2008 which was very reasonable. He submitted that if the petitioners were aggrieved, they should file the objection but no such objection has been filed. He further submitted that under Section 17 of the Act, the authorities have a right to levy mandi fees, which includes both imposition of tax as well as assessment and by way of order dated 30.4.2008, the Secretary, Mandi Samiti has passed an assessment order. He submitted that it is not the case of re-assessment but is a case of original assessment inasmuch as before the order dated 30.4.2008 no other demand has been raised by the Secretary, Mandi Samiti. He submitted that Secretary, Mandi Samiti has issued the order in the month of April relating to the transactions of January, 2008 to March, 2008 within a reasonable period. He submitted that it is true that no machinery has been provided for the assessment under the Act but even in the absence of such machinery the validity of the Act has been upheld by the Apex Court in the case of Ram Chandra Kailash Kumar & Company and others v. State of U.P. and others, AIR 1980 SC 1124 and the Division Bench of this Court in the case of Shri Mahalaxmi Sugar Works Farid Nagar and others v. State of Uttar Pradesh and others, 1987 UPLBEC 957 has upheld the validity of the explanation added to Section 17 of the Act and has issued the direction relating to the assessment. He submitted that a further direction has been issued by the Division Bench of this Court in the case of Ram Karan v. Krishi Utpadan Mandi Samiti, Saharanpur, (1994) 2 UPLBEC 1405. He submitted that a further direction has been issued by the Division Bench of this Court in the case of Ram Karan v. Krishi Utpadan Mandi Samiti, Saharanpur, (1994) 2 UPLBEC 1405. He submitted that if the petitioners would have any grievance against the order dated 30.4.2008, the petitioners would have filed the objection before the Secretary, Mandi Samiti itself. 8. Having heard learned counsel for the parties, I have perused the impugned orders and the material available on record. 9. The relevant parts of Section 17 read as follows : “17. He submitted that if the petitioners would have any grievance against the order dated 30.4.2008, the petitioners would have filed the objection before the Secretary, Mandi Samiti itself. 8. Having heard learned counsel for the parties, I have perused the impugned orders and the material available on record. 9. The relevant parts of Section 17 read as follows : “17. Powers of the Committee.—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 transactions 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— (1) if the produce is sold through, a Commission Agent, the Commission Agent, may realise the market-fee and the development cess from the purchaser and shall be liable to pay the same to the Committee; (2) if the produce, is purchased directly by a trader from a producer, the trader shall be liable to pay the market-fee and development cess to the Committee; (3) if the produce is purchased by a trader from another trader, the trader selling the produce may realise it from the purchaser and shall be liable to pay the market-fee and development cess to the Committee : Provided that notwithstanding anything to the contrary contained in any judgment, decree or order of any Court, the trader selling the produce shall be liable and be deemed always to have been liable with effect from June 12, 1973 to pay the market-fee to the Committee and shall not be absolved from such liability on the ground that he has not realised it from the purchaser : Provided further that the trader selling the produce shall not be absolved from the liability to pay the development cess on the ground that he has not realised it from the purchaser; (4) in any other case of sale of such produce, the purchaser shall be liable to pay the market fee and development cess to the Committee : Provided that no market-fee or development cess shall be levied or collected on the retail sale of any specified agricultural produce where such sale is made to the consumer for his domestic consumption only : Provided further that notwithstanding anything contained in this Act, the Committee may at the option of, as the case may be, the Commission Agent, trader or purchaser, who has obtained the licence, accept a lump sum in lieu of the amount of market-fee or development cess that may be payable by him for an agricultural year in respect of such specified agricultural produce, for such period, or such terms and in such manner as the State Government may, by notified order specify : Provided also that no market-fee or development cess shall be levied on transactions of sale specified agricultural produce on which market-fee or development cess has been levied in any Market Area if the trader furnishes in the form and manner prescribed, a declaration or certificate that on such specified agricultural produce market-fee or development cess has already been levied in any other Market Area. (iii-a).......................................................... (iv)............................................................. (v).............................................................. (v-a)........................................................... (v-b)........................................................... (vi)............................................................. (vii)............................................................ (viii)........................................................... Explanation.—For the purpose of clause (iii), unless the contrary is proved, any specified agricultural produce taken out or proposed to be taken out of a Market Area by or on behalf of a licensed trader shall be presumed to have been sold within such area and in such case, the price of such produce presumed to be sold shall be deemed to be such reasonable price as may be ascertained in the manner prescribed.” Rules 66 and 68 of the U.P. Krishi Utpadan Mandi Niyamawali, 1965 (hereinafter referred to as the “Rule”) read as follows : “Rule 66. Market Fee and Cess (Section 17 (iii)).—(1) The market Committee shall levy and collect market fee and development cess in the Market Area in accordance with the provisions of sub-clause (b) of clause (iii) of Section 17 of the Act at such rate as may be specified in the bye-laws : Provided that no market fee and development cess shall be levied and charged prior to the date on which provisions of Section 10 of the Act are enforced : Provided further that when the specified agricultural produce is presumed to have been sold in accordance with the explanation given under clause (viii) of Section 17 of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964, the price of such produce shall be the price which prevailed for that type of produce in that market just on the previous working day. (2) No market fee or development cess shall be levied more than once on any consignment of the specified agricultural produce brought for sale in the Market Yard if the market fee or development cess has already been paid on it in any Market Yard of the same Market Area and in respect of which a declaration has been made and a certificate has been given by the seller in Form No. V. Rule 68. Recovery of fees [Section 17 (iii)].—(1) The market fee and development cess on specified agricultural produce shall be payable as soon as such produce is sold in the market area in accordance with the terms and conditions specified in the bye-laws. (2) The market fee and development cess shall be realised in the manner laid down in sub-clause (b) of clause (iii) of Section 17. (2) The market fee and development cess shall be realised in the manner laid down in sub-clause (b) of clause (iii) of Section 17. (3) The Licence-fee shall be paid along with the application for licence : Provided that in case, the Market Committee refuses to issue a licence, the fee deposited by the applicant shall be refunded to him. (4) The payment of the market fee and Licence fee shall be made to the Committee in cash and in special circumstances by bank draft of nationalised bank.” 10. In the case of Ram Chandra Kailash Kumar & Company and others v. State of U.P. and others (supra), the question was raised that in the absence of any machinery provision, the provision of levy is inoperative. The Apex Court upheld the validity of the Act and observed as follows “A machinery for adjudication of disputes is necessary to be provided under the Rules for the proper functioning of the Market Committees. We have already observed and expressed our hope for bringing into existence such machinery in one form or the other. But it is not correct to say that in absence of such a machinery no market fee can be levied or collected. If a dispute arises then in the first instance the Market Committee itself or any Sub-Committee appointed by it can give its finding which will be subject to challenge in any Court of law when steps are taken for enforcement of the provisions for realisation of the market fee.” 11. In Civil Appeal Nos. 1769-1773 of 1998, Krishi Utpadan Mandi Samiti v. M/s Sarswati Cane Crusher and others (unreported judgment), the Apex Court observed as follows : “We are satisfied that the orders of this Court afore-referred to would need some repair work. We treat the said order to be conceiving of a provisional assessment where-after doors are opened for a final assessment. We conceive that when demands are raised by the Krishi Utpadan Mandi Samiti against a trader before he could ask for transit of goods outside the market area, the trader would be entitled to tender a valid rebuttal to say that no sale had taken place within the notified area and that if the explanation is accepted there and then by the Mandi Samiti, no question of payment would arise as also of withholding the gate passes. If prima facie evidence led by the trader is not acceptable by the Mandi Samiti, the trader or the dealer can be compelled to pay the market fees demanded before issuance of gate pass. If the trader makes the payment without demur, the matter ends and the assessment finalized. But in case he does so and arises protest, then the assessment shall be taken to be provisional in nature making it obligatory on the trader to pay the fee before obtaining the requisite gate pass. After protest has been lodged and the provisional assessment has been made, a funo-frame would be needed to deviso making the final assessment. We, therefore, conceive that innately be read in the order of this Court that a final assessment has to be made within a period of two months after provisional assessment so that the cute transition in that respect is over enabling the aggrieved party, if any to challenge the final assessment in the manner provided under the afore Act or under the general law of the land in appropriate form. Having added this concept in this manner in the two-Judge Bench decision of this Court, we declare that what repair has been done instantly would add to the orders of the High Court and the instant corrective decision shall be the governing rule. The Civil Appeal thus stand disposed of.” 12. In the absence of any machinery provision for the purposes of assessment, the Division Bench of this Court in the case of Shri Mahalaxmi Sugar Works Farid Nagar and others v. State of Uttar Pradesh and others (supra) has issued the following direction : “For this purpose we are constrained to observe that due to apathy of State Government in framing the necessary rules and making provision for assessment etc. this Court considers it appropriate to issue following directions to protect the interest of traders and safeguard payment of fee in accordance with law. (1) Every trader proposing to take out the goods manufactured or produced in the market area shall be entitled to issue of gate passes from the Mandi Samiti if he produces documents to establish that the goods were being taken out of the market area. Necessary entries shall be made by Mandi Samiti in records maintained by it. (1) Every trader proposing to take out the goods manufactured or produced in the market area shall be entitled to issue of gate passes from the Mandi Samiti if he produces documents to establish that the goods were being taken out of the market area. Necessary entries shall be made by Mandi Samiti in records maintained by it. (2) A trader taking out goods shall file a statement before the Mandi Samiti within six weeks indicating therein that the goods were sold by the Commission agent or by the petitioners themselves inside or outside the market area. (3) In case the traders do not file the statement the Mandi shall issue notice to the traders after expiry of six weeks to file the statement within 10 days of receipt of notice. (4) If the return is filed the same shall be scrutinized by the Mandi Samiti and if it is satisfied about its correctness, then it shall pass appropriate orders levying fee. If the sale has been made in the market area and exempting in case, it has been made outside the market area. (5) In case the return of trader is found to be incorrect or he omits to file his return despite notice by Mandi Samiti then the Mandi Samiti shall levy market fee on trader on the goods which had been taken out and for which gate pass had been issued.” 13. In the case of Ram Karan v. Krishi Utpadan Mandi Samiti, Saharanpur (supra), the Division Bench of this Court has issued some more direction in addition to the direction issued in the case of Shri Mahalaxmi Sugar Works Farid Nagar and others v. State of Uttar Pradesh and others (supra) as follows : “(1) Every trader proposing to take out the goods manufactured or produced in the market area shall be entitled to issue of gate passes from the Mandi Samiti if he produces documents to establish that the goods were being taken out of the market area. Necessary entries shall be made by Mandi Samiti in records maintained by it; (2) A trader taking out goods shall file a statement before the Mandi Samiti within twelve weeks indicating therein that the goods were sold by the Commission agent or by the petitioners themselves inside or outside the market area; (3) In case the traders do not file the statement, the Mandi Samiti shall issue notice to the traders after expiry of twelve weeks to file the statement within 10 days of receipt of notice; (4) If the return is filed, the same shall be scrutinized by the Mandi Samiti within 3 months of its filing and if it is satisfied about its correctness, then it shall pass appropriate orders levying fee. If the sale has been made in the market area and exempting in case. It has been made outside the market area; (5) In case the return of trader is found to be incorrect or he omits to file his return despite notice by Mandi Samiti then the Mandi Samiti shall levy market fee on trader on the goods which had been taken out and for which gate-pass had been issued; (6) A Mandi Samiti shall have a right to make reassessment in case some material comes into its possession after assessment within six months of passing of the order of assessment for which it shall issue a show cause notice mentioning the grounds therein on the basis of which reassessment is proposed to be made.” 14. It is significant that under Section 17 (iii) (a) of the Adhiniyam every Mandi Samiti has been empowered to ‘levy and collect‘ fees. The Supreme Court in the case of Assistant Collector of Central Excise, Calcutta Division v. National Tobacco Company of India Limited, (1972) 2 SCC 560 has interpreted the word ‘levy’ to include both imposition of tax as well as Assessment. According to the said decision the word ‘levy’ does not include Collection but, as observed above. Mandi Samitis have been empowered under Section 17 (iii) (a) to collect fees also. Similarly, the Supreme Court in the case of Bharat Steel Tubes Limited and another v. State of Haryana and another, (1988) 3 SCC 478 has laid down that where no period of limitation is prescribed under the Statute, assessment should be completed expeditiously within a reasonable time which would depend upon the circumstances of each case. Similarly, the Supreme Court in the case of Bharat Steel Tubes Limited and another v. State of Haryana and another, (1988) 3 SCC 478 has laid down that where no period of limitation is prescribed under the Statute, assessment should be completed expeditiously within a reasonable time which would depend upon the circumstances of each case. In these circumstances, it is imperative that adequate provisions should be made in this behalf for hearing and redressal of the grievances etc. of the persons who are required to pay the fees. 15. Section 17 (iii) of the Act gives the power to levy and collect which also includes the assessment. The explanation to Section 17 provides that “the price of such produce presumed to be sold shall be deemed to be such reasonable price as may be ascertained in the manner prescribed.” The proviso of Rule 66 (1) says that when the specified agricultural produce is presumed to have been sold in accordance with the explanation given under clause (viii) of Section 17 of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964, the price of such produce shall be the price which prevailed for that type of produce in that market just on the previous working day. Therefore, the mandi fee was payable on the price of such produce which prevailed in that market just on the previous working day. In case, if it is found that the mandi fee has not been paid on the price which was prevailed in the market just on the previous working day, the Committee has a authority to issue notice and pass assessment order and raise the demand. Such order may be considered as a provisional order in view of the Division Bench decision of this Court. If the licensee accepts the order, the mandi fee shall be deposited and in case if he disputes the same then it has a right to file the objection and then on a consideration of the said objection, the final assessment order is to be passed. 16. It is true that at the time of transactions when the gate passes are being issued on the payment of mandi fee in the presence of the Inspector, it would be more reasonable that the objection can be raised about the rate and the market price on the basis of which the assessment may take place subsequently. 16. It is true that at the time of transactions when the gate passes are being issued on the payment of mandi fee in the presence of the Inspector, it would be more reasonable that the objection can be raised about the rate and the market price on the basis of which the assessment may take place subsequently. It is not necessary that at the time of objection the gate pass may be denied on this ground. In the present case, it appears that no objection has been raised, at the time of transactions, by the Inspector, who was present at the time of transactions and mandi fee has been paid on the price mentioned in 6R but in my view, mere not raising the objection will not preclude the Committee to raise the objection subsequently on the basis of the material on record. Although, it would be more appropriate that the objection should be raised at the time of transactions itself. Therefore, in my view, the demand raised by the Secretary, Mandi Samiti on the ground that the mandi fee has not been paid on a prevalent price was within his jurisdiction. Present is not the case of any reassessment. Learned counsel for the petitioners are not able to show that before 30.4.2008 any other demand has been raised. Therefore, it is a case of original assessment. In the absence of any machinery being provided, in view of the direction given by the Division Bench of this Court in the case of Ram Karan v. Krishi Utpadan Mandi Samiti, Saharanpur (supra), the order passed by the Secretary, Mandi Samiti dated 30.4.2008 can be considered only as a provisional assessment. The case of the petitioners are that they have filed the objection to the aforesaid assessment while the case of the respondents is that no objection has been filed. However, there is no dispute that no final assessment order has been passed after the order dated 30.4.2008. In the circumstances, I am of the view that the objection of the petitioners requires to be considered by the Secretary, Mandi Samiti and on a consideration of the said objection, the final assessment order to be passed. However, there is no dispute that no final assessment order has been passed after the order dated 30.4.2008. In the circumstances, I am of the view that the objection of the petitioners requires to be considered by the Secretary, Mandi Samiti and on a consideration of the said objection, the final assessment order to be passed. In this view of the matter without going into the controversy whether the petitioners have filed objection or not, the petitioners are directed to file a fresh objection within a period of one month and the Secretary, Mandi Samiti is directed to decide the objection and pass the final assessment order. 17. Before parting, I would say that it is unfortunate that despite the direction given by the Apex Court and two Division Benches of this Court, referred to hereinabove, the machinery provisions have not been provided in the Act like the other taxing statutes. In the circumstances, State Government is directed to take appropriate steps within a period of three months to provide machinery provisions in the Act for the assessment, collection, recovery, reassessment etc. 18. In the result, the writ petitions are allowed. The impugned order dated 20.9.2008 passed by the revisional authority is set aside. The petitioners are directed to file objection within a period of 30 days to the order dated 30.4.2008 and the Secretary, Mandi Samiti is directed to pass the final assessment order after considering the objection of the petitioners in accordance to law expeditiously. 19. Copy of this order be provided to learned Standing Counsel within 10 days to serve the Principal Secretary, Agricultural Product, Lucknow, U.P. for the compliance of aforesaid directions. ————