The recent legal judgment scrutinizes the interpretation of market fee levy under the Karnataka Agricultural Produce Marketing Act, focusing on Section 65(2) and pertinent case laws. The court’s analysis holds relevance for traders dealing with imported and processed agricultural produce within market areas, clarifying the obligations and exemptions under the Act. The decision highlights the importance of understanding the statutory provisions and legal precedents governing market fee collection within the state’s agricultural markets.
Facts
- The respondent is a trader selling cleaned and processed spices under the name M/s. Selva Foods within the market area of the appellant.
- They buy spices from various Agricultural Market Committees within Karnataka and import spices from outside the State for processing and selling.
- An order was passed confirming a demand for payment, which was later challenged in a writ petition on grounds of lack of proper opportunity.
- The High Court allowed the writ petition, remanding the matter back for fresh consideration by the appellant Market Committee.
- Initially, the respondent’s license was cancelled for non-payment of market fee and penalty amounts.
- The High Court allowed another writ petition filed by the respondent against the demand for payment.
- The intra-court appeal by the Market Committee was dismissed, upholding the High Court’s decision.
- In 2008, authorities found that the respondent had not paid market fees for purchasing and selling imported methi and mustard seeds within the appellant’s market area.
- Amount of Rs.28422/- paid pursuant to interim order subject to decision of authority.
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Issue
- The relevant provision of the Karnataka Agricultural Produce Marketing (Regulation and Development) Act of 1966 being referred to is Section 65.
- Section 65 of the Act pertains to the levy of market fees.
- The specific subsection being considered is subsection (2) of Section 65.
- This subsection likely outlines the details and procedures related to the levy of market fees within the Act.
- Further examination and analysis of this subsection will be essential for determining the legality and implications of the market fees in question.
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Arguments
- Market fee exemption is not applicable to importers of processed goods sold within the market area.
- Market fee is payable on agricultural produce purchased from outside the State and sold within the Market Committee area.
- Processed agricultural produce, even if imported, is liable for market fee after processing.
- The interpretation of relevant provisions by the court was deemed erroneous and not in line with the plain reading of the Act.
- The respondent, a trader as per the Act, purchased agricultural produce from within and outside the State of Karnataka.
- The charging Section of the Act, Section 65(2), states that market fee cannot be collected on produce processed within the appellant Market Committee’s area if purchased from outside the State.
- Case laws such as Gujarat Ambuja Exports Limited v. State of Uttarakhand, ITC Ltd. v. State of Karnataka, and G. Giridhar Prabhu v. Agricultural Produce Market Committee support the respondent’s contentions.
- The respondent, by purchasing and processing agricultural produce within the market area, asserts they are not liable to pay market fee.
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Analysis
- Section 65 of the Act empowers the Market Committee to levy and collect market fees from every buyer in the market area at the specified rate.
- The Market Committee is responsible for collecting market fees from buyers, based on the agricultural produce purchased, as per the bye-laws.
- The market fee should not exceed two rupees per one hundred rupees of the value of the produce, except in the case of livestock where it can be up to five rupees per head for cattle and one rupee per head for sheep or goat.
- Certain exemptions from market fee payment apply, such as in the case of processed agricultural produce sold in a different market area within the State or exported outside the State.
- Market fee rates vary for different types of buyers like cooperative societies, spot exchanges, contract farming sponsors, and private markets.
- User charges may be collected for certain agricultural produce like flowers, fruits, and vegetables in lieu of market fees, subject to approval by the Director of Agricultural Marketing.
- Different scenarios are outlined for the payment of market fees by buyers, depending on the buyer-seller relationship and the origin of the produce.
- Imported agricultural produce for processing and sale within the State is not exempt from market fee payment, as clarified in the explanation and Section 2-A.
- Processed items from agricultural produce imported into Karnataka are subject to market fee within the market area of the appellant’s Market Committee.
- Importers are responsible for collecting market fee from purchasers and remitting it to the Market Committee.
- Even processed goods are considered notified items under the Act.
- After importing, they process and sell the goods within the market area.
- Agricultural produce brought into market area for manufacturing or processing activities, not for sale, is exempt from market fees.
- Activity of stocking and processing imported agricultural produce in market area does not attract market fees.
- Buyers defined under the Act cannot ignore the provisions related to payment of market fees.
- Judgment holds that processing raw cashew nuts for sale domestically and internationally falls under the definition of a trader liable for collecting market fees.
- Imported agricultural produce processed and sold within the market area is not exempt from market fees
- Sale within the market area attracts market fee, not the first purchase outside the market area
- Merely importing agricultural produce for cleaning and processing without selling within the market area is not liable for market fees
Decision
- Validity of the item under the Schedule is not under challenge.
- The appeal is allowed, and consequently, Writ Petition No.11816 of 2009 stands dismissed.
- No order as to costs.
- The impugned judgment and order passed in W.A. No.18000/2011 dated 11.01.2013 is set aside.
- The goods sold are also notified agricultural produce specified in the Schedule.
Case Title: APMC YASHWANTHAPURA THROUGH ITS SECRETARY Vs. M/S SELVA FOODS THROUGH ITS MANAGING PARTNER (2021 INSC 887)
Case Number: C.A. No.-007706-007706 / 2021
