National Co-operative Consumer Federation of India Vs. the Market Committee and ors. - Court Judgment

Excerpt:
- - 1, vide annexure p/3, directed the petitioner to deposit the market fee within a period of four days failing which the best judgment assessment would be made. the appellants .had clearly failed to do so. rule 30(5) of the rules clearly envisages that the agricultural produce brought for processing from a place within the state for which the market fee has already been paid in any of the market committee in the state, shall be exempt from payment of market fee for the second time. this is what was precisely held by a division bench of this court in civil writ petition no. rule 30(1) of the rule clearly lays down that no market fee shall be levied on the sale or purchase of any agricultural produce manufactured or extracted from the agricultural produce in respect of which fee has already been paid in the notified market area where it was so manufactured or extracted. the only obligation upon such a dealer who claims exemption from the payment of market fee is to make a declaration and give certificate in form 'll'.a combined reading of the entire rule 30(1)and (5) of the rules clearly indicates that a dealer or a licensee is not required to pay the market fee second time where he has purchased the agricultural produce for the purposes of manufacturing, extraction or for the purposes of processing. in the nature of things, in view of innumerable transactions that may be entered into between dealers, it will well nigh be impossible for the taxing authorities to ascertain in each case whether a dealer has sold the specified goods to another for the purposes mentioned in the section.n.c. jain, j.1. this judgment of ours will dispose of civil writ petition nos. 13234 of 1991 and c.w.p. no. 2420 of 1992 as a common question of law arises in both the cases. the counsel for the parties are agreed that the facts of the case be picked up from civilwrit petition no. 13234 of 1991 'national cooperative consumer federation ltd.v. the market committee, bhiwani and ors.2. the petitioner during the period 1.9.1987 to 6.2.1989 purchased whole gram of the value of rs. 37,18,813.47p. from the market area of charkhi dadri marketcommittee in bhiwani district and paid the market fee at the time of purchase. the market committee, bhiwani, respondentno. 1, issued a notice annexure p/l, dated 6.1.1989 to the petitioner to deposit the market fee at the rate of rupees two percent on the value of the agricultural produce which was admittedly brought within its area. the petitioner gave reply to the notice stating therein that the market fee has already been paid to the market committee, charkhi dadri in whose jurisdiction the purchase was made and that it was on account of themisunderstanding on the part of the officials of the petitioners that 'll' forms were not submitted. it was further submitted that the officials were under the impression that since charkhi dadri was within the bhiwani district, therefore, ll forms were not required to be submitted. respondentno.1, vide annexure p/3, directed the petitioner to deposit the market fee within a period of four days failing which the best judgment assessment would be made. the reply was again submitted by the petitioner to the effect that the market fee had already been paid but ll forms could not be submitted for the reasons mentioned above. a request was accordingly made to respondentno. 1 not to insist for payment of additional two percent market fee. after some correspondence which took place between the petitioner and respondentno. 1, vide order dated 29.7.1989, annexure p/ll, the market committee, bhiwani created a demand to the tune of rs. 81,813.88p. out of which rs. 7,437.62 p. was penal amount whereas a sum of rs. 74,376.26 p. was market fee. the petitioner filed an appeal under section 10(4) of the punjab agricultural produce market, act, 1961 before the chief administrator, haryana state agricultural marketing board, panchkula. the chief administrator held vide annexure p/13 that it might be true that the market fee had already been paid but the exemption from payment of the market fee could be valid only if the returns in the prescribed forms were submitted. the chief administrator, however, waived the penalty on the ground that the petitioner is the apex body of the consumer cooperatives. the following observations of the chief administrator can beextracted.' i have heard both the parties. there is no dispute on the facts between the parties. though, it is abundantly clear that the mistake on the part of the appellant was due to ignorance of law, such ignorance of law can hardly be cited as defence. it may also be true that most of the material purchased by the appellants during the period under question might have been from within the state of haryana where market fee might already have been paid. but, under the provisions of the act, exemption from paying market fee on such produce would be available only if the returns in the prescribed form are submitted within the prescribed time. the appellants .had clearly failed to do so. however, keeping in mind the fact that the appellant is the apex body of the consumers' cooperatives with the constraints of such large organisations where reaction time is slow, i modify the assessment of the market committee, bhiwani dated 29.7.1989 to the extent that the penalty imposed be waived.'3. the counsel for the petitioner has argued that the market committee, bhiwani could not recover the market fee second time in view of the mandate of rule 30(5) of the punjab agricultural produce market (general) rules, 1962 and that the officials of the petitioner-society did not give the necessary certificate of exemption in form 'll' as they thought that the market committee, charkhi dadri was situated within bhiwani district and in view thereof they were not required to give form 'll'.4. mr. j.k. sibal, senior advocate, the learned counsel for market committee, bhiwani, on the other hand has argued that the petitioner was entitled to claim exemption with the meaning of the proviso to rule 30(5) only if he had produced the exemption certificate in form 'll' within a period of ten days of the receipt of the goods under official despatch number and date from the committee from where the goods have been purchased. the counsel has further argued that in case such an exemption certificate is not produced, the petitioner will have to pay the market fee once over again. the counsel was at pains to argue that no equity is involved in the taxation matters as has been held by the hon'ble supreme court in commissioner of sales tax v. modi sugar mill, air 1961 sc 1047, m/s baidyanath ayurved bhawan v. the excise commissioner, air 1971 sc 378 and kedaranth jute . v. the commercial tax officer, air 1966 s.c.12.5. before examining the respective contentions of the counsel for the parties, it is necessary to have a look at the rules framed under the punjab agricultural produce market rules. the relevant rule 30 which requires the interpretation, reads as under:-' 30. exemption from payment of market fees.(1) no market fee shall be levied on the sale or purchase of any agricultural produce manufacture or extracted from the agricultural produce in respect of which such fee has already been paid in the notified market area in which the same was manufacturer or extracted.(2) the dealer concerned in the sale or purchase of any quantity of agricultural produce from which he manufactures or extracts any other agricultural produce shall maintain in form l true and correct accounts of the sale, purchase or processing, as the case may be, of the said agricultural produce and of any agricultural produce manufactured or extracted from it.(3) the dealer who claims exemption from the payment of market fee leviable on any agricultural produce manufactured or extracted from the agricultural produce in respect of which the market fee has already been paid in another notified market, area, shall make declaration and give certificate to the committee in form ll, where the fee has already been paid within a week of the day bringing of agricultural produce within the notified market area. form ll shall be prepared in quadruplicate from the booklets duly attested and issued by the secretary of the committee against the payment fixed by the committee. it will be the duty of dealer claiming exemption from the market fee under this sub rule to send the original copy of form ll to the committee within whose market area the agricultural produce is brought. the second copy shall be sent to the office of the committee within whose market area such agricultural produce was brought, and the third and fourth copies shall be retained by the dealer purchaser and the dealer seller, respectively and the same shall be kept as a part of the their accounts maintained in respect of marker fees.(4) it shall be the duty of the dealer claiming exemption from market fee undersub-rule (3) and (5) above to produce a copy of the r/r, forwarding note, bilty or challan, as the case may be, duly signed by him or his authorised agent in the office of the committee from whose market area the agricultural produce is brought; the second copy in the office of the committee within whose market area the agricultural produce is brought and the third copy to be retained by him.provided that if no such copy of r/r forwarding note, bilty or challan is produced in the office of the concerned committee, no claim for exemption shall be entertained.(5) the agricultural produce brought for processing from within the state and for which market fee has already been paid in any market in the state, shall be exempt from payment of market fee second time:provided that the dealer who claims exemption under sub-rule (5) from the payment of fee leviable on any agricultural produce brought for processing shall make declaration and give certificate to the committee in form ll duly attested by the secretary of the committee where the fee has already been paid within ten , days of the bringing of agricultural produce within the notified market area and complies with the provisions ofsub-rule (2)6. having given our deep and thoughtful consideration to the arguments of the counsel for the parties, we are of the view that the petitions deserve to succeed. rule 30(5) of the rules clearly envisages that the agricultural produce brought for processing from a place within the state for which the market fee has already been paid in any of the market committee in the state, shall be exempt from payment of market fee for the second time. the word 'shall' in our opinion is mandatory. themandate of the rule is that once market fee has been paid by a licensee or dealer at i any place within the state, such a person would under no circumstances be required to pay it second time. had the legislature intended to levy market fee second time, there was no obstacle in its way to make a provision to the effect that if a person | does not produce the exemption certificate in form 'll', he would be required to ' pay the market fee once over again. although it is laid down in the proviso that exemption certificate in form 'll' is to be produced within a period of ten days from the receipt of the goods, yet it does not lay down in explicit terms that a licensee would be required to pay the market fee again in case such an exemption certificate is not produced. in the absence of such a provision, the only harmonious construction which can be placed on the rule and proviso is that a licensee cannot bebudened with the payment of market fee again if the same has already been paid in any market area within the state but such a licensee would be liable to pay the penalty under the act. this is what was precisely held by a division bench of this court in civil writ petition no. 2863 of 1991 anand canvass mills pvt. ltd. v. state of haryana andors. decided on 5.5.1993. while interpreting rule 30(5) of the rules, it was further held by the division bench in the aforesaid case that the market fee could not be levied second time on the same agricultural produce. a fine of rs. 500/- was imposed by the division bench in the aforesaid case. following the aforementioned judgment, we hereby impose a fine of rs. 500/- it can further be safely held that the compliance of the proviso is not mandatory and is only directory and that the licensee can submit the form ll after the expiry of the period prescribed in the proviso. the petitioners were all the time wanting to submit form ll and for this purpose had been addressing several letters.7. the principle that a licensee or dealer is not to pay the market fee second time can be deduced from a perusal of rule 30(1) of the rules. it has been laid down that no market fee would be levied second time if it has already been paid. rule 30(1) of the rule clearly lays down that no market fee shall be levied on the sale or purchase of any agricultural produce manufactured or extracted from the agricultural produce in respect of which fee has already been paid in the notified market area where it was so manufactured or extracted. the only obligation upon such a dealer who claims exemption from the payment of market fee is to make a declaration and give certificate in form 'll'. a combined reading of the entire rule 30(1)and (5) of the rules clearly indicates that a dealer or a licensee is not required to pay the market fee second time where he has purchased the agricultural produce for the purposes of manufacturing, extraction or for the purposes of processing.8. the case law cited by mr. j.k. sibal, senior advocate, needs to be adverted to.9. in kedarnath jute manufacturing's case (supra), the hon'ble supreme court while interpreting section 5(2)(a)(ii) of the bengal finance (sales tax) act, 1941 and rule 27-a of the bengal sales tax rules, 1941 observed as under:-'(9) sub-rules (3) and (4) of r.27 a are not helpful to the appellant. they provide only safeguards against abuse of the declaration forms by the purchasing dealers; they do not enable the selling dealers to either directly apply or to compel the purchasing dealers to apply for duplicate forms; nor do they enjoin the appropriate authority to give the selling dealer a duplicate form to replace the lost one. we realise that the section and the rules as they stand may conceivably cause unmerited hardship to an honest dealer. he may have lost the declaration forms by a pure accident, such as fire, theft, etc. and yet he will be penalised for something for which he is not responsible. but it is for the legislature of for the rule-making authority to intervene to soften the rigour of the provisions and it is not for this court to do so where the provisions are clear and unambiguous.(10) there is an understandable reason for the stringency of the provisions. the object ofsection 5(2)(a)(ii) of the act and the rules made thereunder is self evident. while whey are obviously intended to give exemption to a dealer in respect of sales to registered dealers of specified classes of goods, it seeks also to prevent fraud and collusion in an attempt to evade tax. in the nature of things, in view of innumerable transactions that may be entered into between dealers, it will well nigh be impossible for the taxing authorities to ascertain in each case whether a dealer has sold the specified goods to another for the purposes mentioned in the section. therefore, presumably to achieve the two-fold object, namely, prevention of fraud and facilitating administrative efficiency, the exemption given is made subject to a condition that the person claiming the exemption shall furnish adeclaration from in the manner prescribed under the section. the liberal construction suggested will facilitate the commission of fraud and introduce administrative inconveniences, both of which the provision of the said clause seek to avoid.(11) the decision of this court in state of orissa v. m.a. tulloch and co. ltd. (1964) 15 stc 641 (sc), does not help the appellant. that decision was concerned withsection 5(2)(a)(ii) of the orissa sales tax, 1947. that section was similar in terms tosection 5(2)(a)(ii) of the act in question, but there was no provision to that section in the orissa act similar to the one found in the present section. that makes all the difference, for it is the proviso that imposes the condition. but underrule 27(2) made under the orissa act 'a dealer shall produce a true declaration in writing by the purchasing dealer or by such responsible person as may be authorised in writing in this behalf by such dealer that the gods in question are specified in the purchasing dealer's certificate of registration as being required for resale by him or in the execution of any contract.' this court held that the said mandatory provision was inconsistent withsection 5(2)(a)(ii) of the orissa sales tax act; and to avoid that conflict it reconciled both the provisions by holding that the rule was only directory and, therefore, it would be enough if it was substantially complied with. the said provisions may afford a guide for amending the relevant provisions of the act and the rules made thereunder, but do not furnish any help for construing them.'a reading of the entire judgment of the apex court does not even remotely indicate , that there was any provision in the rules framed under the bengal finance (sales tax) act, 1941 that the dealer would not be liable to pay tax once over again. the present is the situation in the case in hand where a specific provision is there as has been discussed by us. in view thereof, the judgment given in kedarnath jute manufacturing's case (supra) has got no application to the facts of the present case.10. the other two judicial pronouncements namely modi sugar mills' case (supra) and m/s baidyanath ayurved bhawan's case (supra) are in no way near to the facts of the instant case. of course, it was held in the aforesaid judicial pronouncements that equitable considerations are entirely out of place and that the taxing statute cannot be interpreted on any presumption and assumption and further that the courts must look at the wording of the statute and interpret them. the judg-ments of the apex court in our considered view rather favour the licensees in as-muchas this court cannot ask the petitioners to pay the market fee second time on the basis of presumption and assumption. on the other hand this court has interpreted the entire rule 30 on the basis of the wording incorporated in the rules.11. for the reasons recorded above, the civil writ petition nos. 13234 of 1991 and 2420 of 1992 deserve to be allowed. the petitioners are held not liable to pay the market fee second time. the impugned orders and notices are hereby quashed. in view of the intricacy of the matter, the parties are left to bear their own costs. fine of rs. 500/- is imposed in each case which be deposited with the market committee, bhiwani in the case of national cooperative consumer federation of india ltd., bhiwani (c.w.p. no. 13234 of 1991) and with market committee, rohtak in the case of m/s jyoti laxman roller flour mills pvt. ltd., rohtak (c.w.p. no. 2420 of 1992).