JUDGMENT Deepak Gupta, J. Petitioner No. 1 is a unit of M/s Shankar Trading Company, a body corporate registered under the Indian Companies Act, 1956. The company is involved in manufacturing and sale of katha which is a notified agriculture produce under the H.P. Agriculture Produce Market Act, 1969. (hereinafter referred to as the Act). 2. It is not disputed that the petitioner being a unit of Shankar Trading Company was required to be registered as a licensee under the said Act and this matter stands settled by the judgment of the Apex Court in Himachal Pradesh Marketing Board versus Shankar Trading Company, 1997 (2) SCC 496 . 3. The following issues arise in this case: 1. Whether the stock transfers from the unit of company at Oel in District Una to it's Head office at Delhi or other branches amounts to sale within the meaning of the Act? 2. Whether Rule 80 (7) of the Rules is ultra vires of the Act and even if it is intra vires, whether it should be read down? 3. Whether Katha and khairwood are the same thing and therefore khairwood shall also be treated to be a notified agricultural produce? 4. Whether the Act envisages the imposition of penalty and there could be a rule imposing penalty without any such provision in the Act? 4. The undisputed facts are that the petitioner company manufactures katha out of khairwood within the jurisdiction of the Market Committee, Una at it's works at Oel. The Market Committee prepared a note on 23.12.1996 holding that the transfers from the one branch to another of the company, which the company claimed were stock transfers, were actually sales and accordingly issued a demand notice on 28.12.1996 asking the petitioner company to pay market fee of ` 83,17,360/. This demand notice was superseded by another demand notice dated 16.01.1997 and penalty equal to the market fee was also claimed and the demand was doubled to ` 1,66,34,720/. The petitioner challenged the demand notice by filing an appeal before the H.P. Marketing Board under Rule 41 of the H.P. Agriculture Produce Market Rules, 1971. The respondent Market Committee contended that the appeal lay only to the Chairman and not to the entire Board. The appeal was transferred to the Chairman of the Board. The petitioner challenged the demand notice by filing an appeal before the H.P. Marketing Board under Rule 41 of the H.P. Agriculture Produce Market Rules, 1971. The respondent Market Committee contended that the appeal lay only to the Chairman and not to the entire Board. The appeal was transferred to the Chairman of the Board. The Chairman of the Board allowed the appeal of the company on 17.05.2000 and held that the stocks of katha transferred by the company to the head office of the company did not amount to sale within the meaning of the Act. The assessment made by respondent No. 1 vide note dated 23.12.1996 was quashed. However the Chairman held that the company had failed to fulfill the conditions laid down in Section 21 of the Act and Rule 80 (7) of the Rules and further failed to explain the transfer of a large number of cases from Maheshnagar to its head office. Market fee of ` 75,000/and penalty of the same amount, i.e. total of ` 1,50,000/ was imposed. 5. Thereafter, on 27.08.2003, i.e. more than three years after the order had been passed, a revision petition under Section 39 was filed by the Committee before the Commissioner-cum-Secretary (Agriculture) to the Government of Himachal Pradesh. The revision was allowed and the matter remanded to the Chairman of the H.P. Marketing Board. This order was challenged by the company by filing CWP No. 1008 of 2004. 6. When this writ petition was pending, the H.P. Agriculture Produce Market Act, 1969 was repealed and replaced by the Himachal Pradesh Agriculture & Horticulture Produce Marketing (Development and Regulation) Act, 2005 (hereinafter referred to as the Act of 2005). Thereafter, a fresh demand notice was issued to the company in terms of the new Act on 07.03.2006. The petitioner company then filed CWP No. 298 of 2006 before this Court challenging the issuance of the said demand notice wherein a demand of ` 2,94,66,714/was raised for the period w.e.f. 01.11.1996 to 31.01.2006. In addition to this, penalty equal to the same amount was levied and therefore the demand raised was for ` 5,89,33,428/. 7. The petitioner company then filed CWP No. 298 of 2006 before this Court challenging the issuance of the said demand notice wherein a demand of ` 2,94,66,714/was raised for the period w.e.f. 01.11.1996 to 31.01.2006. In addition to this, penalty equal to the same amount was levied and therefore the demand raised was for ` 5,89,33,428/. 7. This petition was disposed of with the consent of the parties in the following terms: “Based on the aforesaid submissions of the learned counsel for the parties, this petition is disposed of as settled by issuing the hereinbelow mentioned directions: (i) The competent authority, under the applicable law, be it the aforesaid repealed 1969 Act, or the aforesaid 2005 Act, as the case may be and the aforesaid 1971 Rules, shall pass a proper assessment order. (ii) The petitioners, through their authorized representative(s) shall appear before the Secretary of respondent No. 1 in his office at 11 A.M. on 24.07.2006. The petitioners on that day shall produce before the Secretary the entire relevant record, all the relevant documents and papers as well as the written submissions which it may have to offer in its defence. No further opportunity shall be given to the petitioners for the aforesaid. (iii) On a date to be fixed by the Secretary which shall not be later than one week from 24.7.2006, the hearing in the mater shall take place. The hearing, if not concluded in one day, shall be continued on day to day thereafter. (iv) The competent authority shall thereafter pass the assessment order, which shall be a speaking order, and communicate the same to the petitioners.” 8. The petitioner thereafter filed its response to the demand notice. The matter was taken by the Agriculture Produce Market Committee, Una. It was found that order dated 06.01.2007 passed by the Committee was not proper. This order was challenged by the petitioner company in this Court. The petitioner thereafter filed its response to the demand notice. The matter was taken by the Agriculture Produce Market Committee, Una. It was found that order dated 06.01.2007 passed by the Committee was not proper. This order was challenged by the petitioner company in this Court. The matter was disposed of by this Court vide judgment dated 07.03.2007 issuing the following directions: “(i) The competent authority, under the applicable law, be it the repealed H.P. Agricultural Produce Market committee Act of 1969, or the H.P. Agricultural Produce Market committee Act of 2005, as the case may be and the aforesaid 1971 Rules, shall pass a proper assessment order; (ii) The petitioners, through their authorized representative(s) shall appear before the Secretary of respondent No. 1 in his office at 11 a.m. on 3rd April, 2007. In terms of the earlier order, the parties have already filed the pleadings. However, in case they desire to file any other documents or pleadings, they may do so within one week from 3rd April, 2007; (iii) On a date to be fixed by the Secretary which shall not be later than two weeks from 3rd April, 2007, the hearing in the mater shall take place. The hearing, if not concluded in one day, shall be continued on day to day thereafter; (iv) The competent authority shall thereafter pass the assessment order, which shall be a speaking order, and communicate the same to the petitioners. This order shall be passed positively on or before 15th May, 2007.” 9. Thereafter, the assessment order was passed by the Secretary, Agriculture Produce Market Committee, Una on 14.05.2007. A perusal of the order shows that the company produced all the records demanded from it. The Assessing Officer held that the transfer of the stock from the market area for the purpose of sale cannot be without the payment of market fee and, therefore, held the stock transfers to be sale within the meaning of Section 21 of the Act and Rule 80 (7) of the Rules framed thereunder. He also held that company was also liable to pay market fee on the sale and purchase of khairwood since, according to him, khairwood and katha are one and the same thing. He assessed the liability of the company to pay market fee at ` 2,60,05,146. He also held that company was also liable to pay market fee on the sale and purchase of khairwood since, according to him, khairwood and katha are one and the same thing. He assessed the liability of the company to pay market fee at ` 2,60,05,146. After holding the company so liable vide his order dated 14.05.2007, he issued notice to the company on 14.05.2007 itself returnable for the next day, i.e. 15.05.2007, under Rule 82 (9) of the H.P. Agriculture Produce Market Rules, 1971 to show cause why penalty be not imposed and on the next date itself passed an order imposing penalty of the same amount, i.e. ` 2,60,05,146/. Vide order dated 21.05.2007, the company was directed to deposit a sum of ` 5,20,10,292/. These orders are the subject matter of challenge in the present petition on various grounds. 10. The first ground which was half heartedly raised was that the order in question has not been passed by the competent authority and is not a speaking order. We are of the considered view that the orders in question are speaking orders and cannot be struck down on this ground. We are also clearly of the view that the competent authority to settle the assessment is the Secretary of the Market Committee. 11. It is contended that the power to impose and pass assessment orders under the Act of 1969 was the job of the Market Committee alone and since the impugned assessment orders have been passed by the Secretary of the Committee, they are illegal. 12. There is no manner of doubt that under the Act of 1969, assessments had to be made by the Market Committee. However, under the Act of 2005, assessment has to be made by the Secretary of the Market Committee. The repealing Section 86 of the Himachal Pradesh Agriculture & Horticulture Produce Marketing (Development and Regulation) Act, 2005, reads as follows: “86. However, under the Act of 2005, assessment has to be made by the Secretary of the Market Committee. The repealing Section 86 of the Himachal Pradesh Agriculture & Horticulture Produce Marketing (Development and Regulation) Act, 2005, reads as follows: “86. The Himachal Pradesh Agricultural Produce Markets Act, 1969 is hereby repealed: Provided that such repeal shall not affect (a) the previous operation of the Act so repealed or anything duly done or suffered thereunder, or (b) the right, privilege, obligation or liability acquired, accrued or incurred under the repealed Act, or (c) any penalty, forfeiture or punishment incurred in respect of any offence committed against the repealed Act, or (d) any investigation, legal proceeding or remedy in respect of any such right, privilege obligation, liability, penalty, forfeiture or punishment as aforesaid; and any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed as if this Act has not been enforced: Provided further that subject to the preceding proviso any thing done or any action taken (including any appointment, or delegation made, notification, notice, order, instruction or direction issued, rules, regulations, byelaws, form, scheme framed, certificate obtained, permit or license granted, registration affected, fee levied), under the repealed Act shall, in so far as it is in force immediately before the coming into force of this Act and is not inconsistent with the provisions of this Act be deemed to have been done or taken under the corresponding provisions of this Act and shall continue to be in force accordingly, unless and until superseded by anything done or any action taken under this Act.” 13. A perusal of the aforesaid Section clearly shows that this Section lays down that repeal shall not affect any investigation or legal proceedings in respect of such obligation. Under the Act of 2005, the Secretary of the Market Committee is the competent authority to levy market fee. The old Market Committee does not exist and, therefore, we are of the view that the order passed by the Secretary of the Market Committee cannot be set aside on this ground. 14. Furthermore, we are going into the merits of the case and after so many years of litigation, it would not be pertinent to set aside an assessment order only on the basis of the question of forum. 14. Furthermore, we are going into the merits of the case and after so many years of litigation, it would not be pertinent to set aside an assessment order only on the basis of the question of forum. It would also be pertinent to mention that the petitioner company did not raise this objection before the Secretary of the Market Committee in its reply submitted by it. 15. The second important issue raised is whether market fees can be levied upon stock transfers. Before appreciating the rival contentions of the parties, it would be relevant to quote Section 21 of the Act of 1969 which reads as follows: “21. The market committee shall levy, on advalorem basis, fees on agricultural produce bought or sold by licensees in the notified market area at the rate not exceeding one rupee for every one hundred rupees as may be fixed by the Board: Provided that (a) no fee shall be leviable in respect of any transaction in which delivery of the agricultural produce bought or sold is not actually made; (b) a fee shall be leviable only on the parties to a transaction in which delivery is actually made.” 16. Learned counsel for the petitioners submits that the Market Committee can levy fees only on specified agriculture produce which is bought or sold by the licensee in the notified market area and rely upon the proviso which clearly provides that no fee shall be leviable in case of a transaction in which delivery of the agricultural produce bought or sold is not actually made. 17. The Apex Court in Krishi Utpadan Mandi Samiti, Ghaziabad and another versus Metal Craft and others, (2008) 7 Supreme Court Cases 780, was dealing with a case arising out of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964. There also the market fee was payable on transactions of sale of specified agricultural produce in the market area. The Apex Court held as follows: “18. Under Section 17 (iii) (b) the measure of levy of the fee is on the price of the goods sold. It obviously means that there must be a complete transaction of sale or a concluded sale. If there is only an agreement and the agreement fails, the remedy for the aggrieved party is to file suit for damages. Obviously, no fee can be charged on damages. It obviously means that there must be a complete transaction of sale or a concluded sale. If there is only an agreement and the agreement fails, the remedy for the aggrieved party is to file suit for damages. Obviously, no fee can be charged on damages. The action for levy of fee can arise only on a concluded sale and as the sale has not taken place within the market area of Ghaziabad, no mandi fee can be levied. 19. The stand of the appellant is that the market fee is levied on “transaction of sale” and not on “sale” only and, therefore, what is to be seen is where the transaction took place and not the situs of the sale. If this argument is accepted then even an agreement to sale without the presence or existence of the agricultural produce will come within the ambit of the charging provision. It would also mean that if the agreement takes place outside the boundaries of the State of Uttar Pradesh, the provisions would still become applicable.” 18. Faced with this situation, Mr. E.C. Aggarwala, learned counsel for the petitioners, frankly and candidly admitted that if there is only a transfer of stock of specified agriculture produce from one branch of the company to branch office, the same cannot be treated as a sale. He, however, urged that the goods which were transferred from Una to Delhi were not stock transfers but clear cases of sale by Mahesh Udyog in favour of the third parties which were camouflaged to appear as the stock transfers only with a view to avoid the payment of market fees. Therefore, according to Mr. Aggarwala, there was no stock transfer by the petitioner and the transactions which took place were actually sales of specified agricultural produce to third parties. 19. The Apex Court in Heinz India Private Limited and another versus State of Uttar Pradesh and others, (2012) 5 Supreme Court Cases 443, has laid down certain guidelines in this regard. The Apex Court after discussing the entire law and dealing with the presumption like the one raised in the present Act, held as follows: 37. It is fairly evident that the presumption is rebuttable in nature; for it holds good only till the contrary is not proved by the dealer. The Apex Court after discussing the entire law and dealing with the presumption like the one raised in the present Act, held as follows: 37. It is fairly evident that the presumption is rebuttable in nature; for it holds good only till the contrary is not proved by the dealer. The question is what is the standard of proof required to rebut the statutory presumption and whether the Market Committee, the Director or the High Court applied the correct legal standard for holding that the presumption was not effectively rebutted. 38. Relying upon the decision of this Court in Sodhi Transport Co & Ors. v. State of U.P. & Ors. (1986) 2 SCC 486 , Mr. Sudhir Chandra contended that the standard of proof applicable was that applied in civil actions which are decided on the preponderance of probability and not the higher standard of "proof beyond reasonable doubt" applied in criminal cases. The appellants had according to the learned counsel discharged the burden of rebutting the presumption by adducing evidence which tended to show that the ghee manufactured by them had not been sold within the market area to attract the levy of market fee on the price thereof. He urged that the produce had been removed out of the market area on transfer of stock basis without any element of sale in such transfers. Reliance was in support placed by Mr. Chandra upon an agreement which Heinz had executed with its Clearing and Forwarding (C&F) Agent in the State of Rajasthan apart from other material adduced before the Market Committee, in a bid to prove that the stocks in question had not been sold within the market area. 20. After discussing the contention of the parties, the Apex Court went on to hold as follows: 56. Mr. Chandra, however, laid considerable emphasis on the words "tending to show that the real fact is not as presumed", to argue that the test applied by this Court in rebuttable presumptions had been the test of 'preponderance of probability'. We do not think so. It is wellsettled that a decision is an authority for the point it decides. It is equally wellsettled that the text of the decision cannot be read as if it were a statute. We do not think so. It is wellsettled that a decision is an authority for the point it decides. It is equally wellsettled that the text of the decision cannot be read as if it were a statute. That apart the expression used by this Court is "evidence fairly and reasonably tending to show", which signifies that it is not just any evidence, howsoever shaky and nebulous that would satisfy the test of preponderance of probability to rebut the statutory presumption but evidence that can by proper and judicial application of mind be said to be fairly and reasonably showing that the real fact is not as presumed. In other words the evidence required to rebut a statutory presumption ought to be clear and convincing, no matter the degree of proof may not be as high as proving the fact to the contrary beyond a reasonable doubt. 57. The heightened standard of proof required to rebut a presumption raised under the statute at hand is in our view applicable for two distinct reasons. The first and foremost is that the presumption is raised in relation to a fiscal statute. While the amount payable is not a tax it is nevertheless a statutory levy which is attracted the moment the transaction of sale takes place within the market area. Goods, admittedly produced within the market area and not consumed within such area are presumed to be leaving pursuant to a transaction of sale unless the contrary is proved. That the goods are produced within the market area is not in dispute in the instant case. That they left the market area is also admitted. In the ordinary course, therefore, the presumption would be that the goods left pursuant to a sale unless the appellants are in a position to prove the contrary. 58. The second reason for applying a higher standard of proof than mere preponderance of probability is that the nature of transaction pursuant to which the goods are removed from the market area is within the exclusive knowledge of the appellants or the persons to whom such goods are being dispatched. In other words, the circumstances in which the transactions, which the statute presumes to be sales, but which the appellants claim are simple transfer of stocks are within the exclusive knowledge of the appellants. In other words, the circumstances in which the transactions, which the statute presumes to be sales, but which the appellants claim are simple transfer of stocks are within the exclusive knowledge of the appellants. The entire evidence relevant to the transactions, being available only with the appellants and the true nature of the transactions being within their special knowledge, there is no reason why the rebuttal evidence should not satisfy the higher standard of proof and clearly and convincingly establish that the fact presumed is not the actual fact. Our answer to Question No.2 accordingly is that the evidence intended to rebut the statutory presumption under Section 17 of the Adhiniyam ought to be clear and convincing evidence showing that what is presumed under the provision is not the real fact. 21. The Assessing Authority did not have the benefit of the law as laid down by the Apex Court. The Assessing Authority straightaway came to the conclusion that stock transfers amount to sale on account of the presumption raised under the Rule. The presumption is rebuttable as held by us above and therefore, we are of the considered view that the matter must be remanded back to the Assessing Authority to be decided afresh. After the Assessing Authority considers the entire evidence and the law on the point, the Assessing Authority shall have to deal with each and every transaction and come to a conclusion whether it is a stock transfer or not. He shall have to give reasons for every transfer and only thereafter can he make assessment. Both the parties will have to be given an opportunity to lead evidence to prove their respective cases in accordance with law laid down in Krishi Utpadan Mandi Samiti, Ghaziabad and another versus Metal Craft and others, (2008) 7 Supreme Court Cases 780, and Heinz India Private Limited and another versus State of Uttar Pradesh and others, (2012) 5 Supreme Court Cases 443. 22. The next issue strenuously argued by Mr. R.L. Sood, learned Senior Counsel appearing for the petitioners, was with regard to the validity of the Rules, especially Rule 80 (7) of the Rules of 1971. 23. Rules 80 (7) and 80 (8) of the 1971 Rules read as follows: “80. Levy and collection of fees on the sale and purchase of agricultural produce ............................. R.L. Sood, learned Senior Counsel appearing for the petitioners, was with regard to the validity of the Rules, especially Rule 80 (7) of the Rules of 1971. 23. Rules 80 (7) and 80 (8) of the 1971 Rules read as follows: “80. Levy and collection of fees on the sale and purchase of agricultural produce ............................. (7) For the purpose of this rule, agricultural produce shall be deemed to have been bought or sold in a notified market area: (i) if the agreement of sale or purchase thereof is entered into the said area; or (ii) if in pursuance of the agreement of sale or purchase, the agricultural produce is weighed in the said area; and (iii)if in pursuance of the agreement of sale or purchase, the agricultural produce is delivered in the said area to the purchaser or to some other person on behalf of the purchaser. (8) If in the case of any transaction, any two or more of the acts mentioned in subrule (7) have been performed within the boundaries of two or more notified market areas, the market fee shall be payable to the Committee within whose jurisdiction the agricultural produce has been weighed in pursuance of the agreement of sale or, if no such weighment has taken place, to the Committee within whose jurisdiction the agricultural produce is delivered.” 24. One of the grounds for challenging these rules was that the same had not been placed before the Legislative Assembly as required under the Act, but when the matter was being heard, it was fairly admitted by Mr. R.L. Sood, learned Senior Counsel, that the rules were placed before the Legislative Assembly. An Assembly Bulletin was produced before this Court and placed on record which clearly shows that the rules had been produced before the Legislative Assembly and approved by it on 14.08.1974. 25. It would also be pertinent to mention that in the writ petition there is no challenge to Rule 80 (7) of the 1971 Rules. Faced with this situation, Mr. R.L. Sood, learned Senior Counsel, submitted that Rule 80 (7) must be read down to include actual sale transactions alone and merely because the goods were taken outside the market area would not be sufficient to hold that a sale transaction has taken place. The Act only lays down that market fee is leviable on sale. R.L. Sood, learned Senior Counsel, submitted that Rule 80 (7) must be read down to include actual sale transactions alone and merely because the goods were taken outside the market area would not be sufficient to hold that a sale transaction has taken place. The Act only lays down that market fee is leviable on sale. The Rule goes on to State that the agricultural produce shall be deemed to have been bought or sold in the notified market area if it is weighed in the area, or if in pursuance of the agreement of the sale and purchase, the agricultural produce is delivered within the market committee area. 26. There is no manner of doubt that these Rules travel beyond the scope of the Act. Section 21 of the Act only permits the Market Committee to levy market fee on sale or purchase of the specified agricultural produce in the notified market area. It is also essential that there should be actual delivery of goods. Rule 80 (7), however, raises a presumption that the agricultural produce shall be deemed to have been bought or sold in the market area if the agreement of sale or purchase is entered into within the market area or if in pursuance of an agreement of sale the agricultural produce is weighed in the area or if in pursuance of the agreement to sale, the agricultural produce is delivered in the area. This presumption only is that even in case of an agreement of sale, if there is delivery or weighment of goods or if the agreement is entered into within the market area, the same shall be deemed to be a sale, even though the property in goods may not have been illegally transferred. 27. To this extent, the Rules do travel beyond the scope of the Act. At the same time, we cannot lose sight of the fact that Section 33 of the Act of 1969 empowers the State Government to make rules consistent with the Act to carry out the purposes of the Act. The Rules framed under this Section have to be placed before the Legislative Assembly. The Rule in question, though it does travel beyond the scope of Section 21, is one which is made out for carrying out the purposes of the Act. The Rule also envisages that an agreement of sale must be there. The Rules framed under this Section have to be placed before the Legislative Assembly. The Rule in question, though it does travel beyond the scope of Section 21, is one which is made out for carrying out the purposes of the Act. The Rule also envisages that an agreement of sale must be there. Sometimes the sale may not actually conclude in the market area and therefore, to meet such a situation, the Rule was framed. This Rule was placed before the Assembly and approved by it. The body which framed the Act and the body which approved the Rules are one and the same. Therefore, we are of the opinion that the Rule has become a part of the Statue and is, therefore, a legal and valid Rule. The challenge to the said Rule is without any merit and is accordingly rejected. 28. Once we have held the Rule to be valid, it does not mean that merely because the goods are weighed or an agreement is made within the jurisdiction of the Market Committee, every transaction must be a sale. If the goods are weighed and transferred as stock transfers from the works of the company to its branches or head office without any other reason, they would still not amount to a sale. The Rule only raises a presumption. The Assessing Act always rebut the presumption and show that though the goods were weighed or transferred out of the market area, the same is only a stock transfer and not a sale. 29. Mr. R.L. Sood, learned Senior Counsel appearing for the petitioners, submits that it is only katha which is included in the Schedule to the Act as Item No. 13. The English name is shown as Catechu and the Hindi name is katha. According to him, khairwood and katha are totally different items and the Assessing Officer has wrongly held the petitioner company liable to pay market fee on the khairwood purchase or sale by it in the market area. 30. Mr. E.C. Aggarwala, learned counsel for the respondents, strenuously urged that khairwood and katha are one and the same thing and market fees can be levied on the sale and purchase of khairwood by the petitioner company. Admittedly, the petitioner buys khairwood at various places in Himachal Pradesh and if the contention of Mr. 30. Mr. E.C. Aggarwala, learned counsel for the respondents, strenuously urged that khairwood and katha are one and the same thing and market fees can be levied on the sale and purchase of khairwood by the petitioner company. Admittedly, the petitioner buys khairwood at various places in Himachal Pradesh and if the contention of Mr. Aggarwala is to be accepted then it would be liable to pay market fees on the sale of khairwood. 31. Both the parties have placed reliance on the judgment of the Apex Court in Himachal Pradesh marketing Board and others versus Shankar Trading Co. Pvt. Ltd. and others, (1997) 2 Supreme Court Cases 496. The Apex Court held as follows: “21. “Katha” has been included as an agricultural produce by the amendment of the Schedule to the Marketing Act on 231987. If a farmer growing “khairwood” in his farm undertakes the manufacturing processes as indicated by the writ petitioners and obtains the end product “katha” and then stores the same for selling within the specified market under the Marketing Act and ultimately sells the katha, there would have been no necessity for such farmer to obtain licence for such storing and selling katha.” It is only katha which is the specified produce. The question is does it include khairwood? 32. The Apex Court went on to hold as follows: 22. Under the scheme of the Marketing Act, it is only the actual producer of an "agricultural produce", obtained by various activities of agriculture, horticulture etc. as indicated in Section 2(a) of the Marketing Act, who is exempted from the requirement of obtaining a licence for processing or storing his "agricultural produce" in a place within the specified market. Such producer is also not liable to pay levy under Section 21 of the Marketing Act if he sells the "agricultural produce" since grown or reared by him after processing. Although "katha" has been specified as an "agricultural produce" after the amendment of the Schedule to the Marketing Act, the writ petitioners are not producing the said agricultural produce namely katha by processing the agricultural produce grown by them in their farm. They, in fact, are purchasing khairwood, an agricultural produce grown by others, and then subject such khairwood to various physical and chemical processes for obtaining an end product "katha" 23. They, in fact, are purchasing khairwood, an agricultural produce grown by others, and then subject such khairwood to various physical and chemical processes for obtaining an end product "katha" 23. Some "agricultural produce" which is obtained in its natural form requires processing for being used as an item for consumption. Such processing may, in some case, be quite simple e.g. pulses from the grains. Income case, a delicate processing is required entailing some physical and chemical processing e.g. hide from the raw skin of an animal. 24. Under the scheme of the Marketing Act, which is primarily intended to benefit the actual growers of "agricultural produce", the producer or grower of "agricultural produce", even when required to undertake some processing whether simple or otherwise, of the natural "agricultural produce" to make its consumption worthy, does not cease to be a producer of the "agricultural produce" because the natural produce even after being subjected to processing, remains "agricultural produce" within the meaning of Section 2(a) of the Marketing Act. That apart, the definition of "producer" under Section 2(h) has taken care of such processing activity. So far as "katha" is concerned, it is a scheduled agricultural produce. It will, therefore, be immaterial if for obtaining katha from natural agricultural produce as grown in the farm namely khairwood, some detailed and delicate manufacturing processes are to be undertaken. In our view, in view of inclusion of "katha" as a specified agricultural produce, there is no scope to contend, that katha is not such an agricultural produce which may be obtained from the khairwood after some processing as commonly understood, but katha can be obtained by subjecting the natural produce khairwood to a series of delicate physical and chemical processing and the end product "katha" has not only a distinct identity but has also physical characteristic and chemical composition, different from khairwood so that a farmer producing katha from khairwood grown by him does not get the benefit which a farmer or grower would have otherwise got under the Marketing Act. The fine distinction between simple processing to make natural agricultural produce fit for consumption and delicate manufacturing process required for obtaining katha, a completely separate end product as sought to be made by the writ petitioners cannot be accepted because of inclusion of katha in the Schedule. 25. The fine distinction between simple processing to make natural agricultural produce fit for consumption and delicate manufacturing process required for obtaining katha, a completely separate end product as sought to be made by the writ petitioners cannot be accepted because of inclusion of katha in the Schedule. 25. The writ petitioners even though are producing katha, a specified agricultural produce by processing khairwood, a natural product grown in the farm, in our view, cannot claim exemption from the requirement of obtaining a licence under Section 4(3 and payment of levy under Section 21 because they themselves have not grown the khairwood but have purchased the "agricultural produce" khairwood grown by others and then processed the same to obtain katha even though katha itself is a specified agricultural produce.” 33. Mr. Aggarwala relies upon the observations made in last lines of para 24 wherein the Apex Court held that the fine distinction sought to be made between simple processing and delicate manufacturing process urged by the company could not come to it's aid and it would have to obtain a license. 34. Mr. Aggarwala has relied upon a lot of material downloaded from the net and otherwise to show that Catechu or katha and khairwood are the same thing. In our view, this submission is totally ill founded. Katha or Catechu is extracted from the wood of the khair tree. The Botanical name of the khair tree is Acacia, which is a forest based species and one of the species is Acacia Catechu. It is common knowledge that katha is not khairwood by itself. Katha is manufactured from heart wood of the khair or Acacia wood which is cut into fine chips and around 89 kilograms of chips are kept in wire net cage to avoid direct contact with heated surface of the extractor. These cages with about three times amount of water, I.e. about 27 litres, are placed in extractors and the chips are boiled in water for about three hours. Thereafter, the extract from each extractor is mixed after filtration and then kept in the shade and finally katha crystallizes. After the material has completely crystallized, the mass is passed through manual filter press and washed in cold water to improve its quality. Then the substance is placed on wooden frames and provided with canvas cloth to separate traces of cutch. Thereafter, the katha is ready to be cut. After the material has completely crystallized, the mass is passed through manual filter press and washed in cold water to improve its quality. Then the substance is placed on wooden frames and provided with canvas cloth to separate traces of cutch. Thereafter, the katha is ready to be cut. 35. A number of precedents have been cited but we are not going to discuss each of them since we are clearly of the view that katha and khairwood are not one and same thing. Katha is an entirely different end product which is produced when the heart wood of the khair tree is processed as detailed hereinabove. 36. We need not multiply the authorities because the Apex Court in Civil Appeal No. 2396 of 2002, titled Chhotanagpur Rope Works versus State of Bihar and another, decided on 20.07.2010, has settled the law. It held as follows: “The short question that arises in these cases is whether “jute rope” or “jute core rope” is “agricultural produce” within the meaning of the definition of “agricultural produce” under Section 2 (1) (a) of the Bihar Agricultural Produce Markets Act, 1960 (Act XVI of 1960) (hereinafter referred to as 'the Act'). By reversing the findings of the learned single Judge, the Division Bench of the High Court has held that “jute rope” or “jute core rope” is “agricultural produce”. We are of the opinion that the judgment of the Division Bench of the High Court cannot be sustained. Initially, Section 2 (1) (a) of the Act defined “agricultural produce” in the following terms: “Section 2(1)(a): “agricultural produce” includes all produce, whether processed or non-processed of agriculture, horticulture, animal husbandry and forest specified in the Schedule.” Subsequently, in the year 1982, that definition of “agricultural produce” was substituted by the following definition: “Agricultural produce” means produce whether processed or non-processed, manufactured or not, of Agriculture, Horticulture, Plantation, Animal Husbandry, Forest, Sericulture, Pisciculture (includes live stock or poultry) as specified in the Schedule.” We are of the view that both under the initial definition and in the amended definition also, it is necessary for a commodity to be in the Schedule to the Act if it is to be included within the definition of “agricultural produce”. We may note that item VII (Fibres) of the Schedule to the Act, among other items, mentions “Jute”, “Gunny Bags” and “Sutli”. We may note that item VII (Fibres) of the Schedule to the Act, among other items, mentions “Jute”, “Gunny Bags” and “Sutli”. Gunny bag is an item which is the result of manufacture and it does not, by itself, grow on the agriculture field. Thus, even those agriculture produce which are the result of manufacture which were sought to be brought within the definition of “agricultural produce” by legal fiction were placed in the Schedule to the Act. It follows that manufactured or processed items which are not in the Schedule to the Act are not to be treated as “agricultural produce” for the purposes of the Act. Mr. S.B. Sanyal, the learned Senior Advocate appearing for respondent No. 2 herein, submits that in the new definition of “agriculture produce” the words “as specified in the Schedule” govern only the words “live stock or poultry”. With respect, we do not agree with this contention. We are of the opinion that they cover the entire items mentioned in the definition of “agriculture produce”. Mr. Sanyal further submits that “Sutli” is a “rope”. We are not inclined to agree. “Rope” is a thick article, whereas “Sutli” is very thin. Thus, we reject that contention urged by Mr. Sanyal.” 37. The Apex Court in the case before it held that there is a difference between Sutli which is thin and rope which is thick. Both were manufactured out of Jute, but since Sutli was not included in the Schedule, the Apex Court held that market fee could not be levied upon it. 38. Applying the same principle, though in a converse manner, we are clearly of the view that katha and khairwood cannot be equated and held to be the same thing since khairwood can never be called katha. Khair is only a piece of wood and after it goes through a complex procedure of manufacture, is katha extracted from it. 39. We may, at this stage, point out that it has been strenuously urged before us that no penalty could be levied and there is no power to levy penalty under the Rules. In view of the fact that we are remanding the case, we do not feel that it would be appropriate to decide this question at this stage. 39. We may, at this stage, point out that it has been strenuously urged before us that no penalty could be levied and there is no power to levy penalty under the Rules. In view of the fact that we are remanding the case, we do not feel that it would be appropriate to decide this question at this stage. However, we would like to make it absolutely clear that in the present case, the Assessing Officer acted in a high handed and arbitrary manner while levying the penalty. He passed orders on 14.05.2007, issued notice for imposition of penalty on the same date and penalty was imposed on the next date itself, i.e. 15.05.2007. In our opinion, when show cause notice has to be given, that must be of a reasonable period and the party to whom such notice has been given must have reasonable opportunity to put forth its case. Therefore, the imposition of penalty is illegal. But we make it clear that we have not decided the question whether penalty can be imposed or not and it shall be open to the petitioner to raise this issue before the Assessing Officer and subsequent proceedings, if any. 40. Some other issues with regard to limitation and reopening of certain assessments which, according to the petitioner company, could not be reopened have been raised. Since we are remanding the case, we are not deciding these issues and the petitioner company shall be free to raise these issues before the Assessing Authority. 41. We, therefore, partly allow the writ petition and quash the impugned orders of the Assessing Officer assessing the market fee as well as the penalty. We also hold that the finding of the Assessing Officer that khairwood falls within the scope of the entry katha is totally illegal and no market fee can be levied on khairwood. 42. Having set aside the assessing orders and the order of penalty, we remand the matter to the Assessing Officer, who shall now consider the same in line of the judgment of the Apex Court in Krishi Utpadan Mandi Samiti, Ghaziabad and another versus Metal Craft and others, (2008) 7 Supreme Court Cases 780, and Heinz India Private Limited and another versus State of Uttar Pradesh and others, (2012) 5 Supreme Court Cases 443. The Assessing Authority shall have to decide whether the transactions in question are mere stock transfers or sales to third parties. 43. The parties are directed to appear before the Secretary of the Market Committee on 25th February, 2013, and the Secretary, Market Committee shall hear the case on day to day basis and dispose of the same latest by 31st May, 2013. In view of the fact that we have set aside the order of assessment, the FDRs pledged by the petitioner company are ordered to be returned to it.