Full Judgment Text
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PETITIONER:
STATE OF BIHAR AND ORS.ETC.
Vs.
RESPONDENT:
ASHOK INDUSTRIES & ANR. ETC.
DATE OF JUDGMENT10/02/1987
BENCH:
REDDY, O. CHINNAPPA (J)
BENCH:
REDDY, O. CHINNAPPA (J)
KHALID, V. (J)
CITATION:
1987 AIR 838 1987 SCR (2) 210
1987 SCC (1) 691 JT 1987 (1) 394
1987 SCALE (1)295
ACT:
Bihar Agricultural Produce Markets Act, 1960, S.2(P)(i)
Explanation and s.27 Explanation--’Sale’--What is--Presump-
tion that notified agricultural produce have been bought or
sold in market area-two Explanations, Whether can
Co-Exist--Preference to charging section over definition
section to be given--Provision to be construed harmoniously.
Statutory Interpretation--Fiscal Laws--Due importance to
be given to phraseology used in charging section.
HEADNOTE:
Section 2(P)(i) of the Bihar Agricultural Produce Mar-
kets Act, 1960 defines ’sale’ to mean any transfer of
property in goods for cash or deferred payment or other
valuable consideration. The Explanation to section 2(P)(i)
inserted by the Bihar Agricultural Produce (Markets) amend-
ment Act, 1982 provides that notwithstanding anything con-
tained in any law for the time being in force, ’sale’ shall
be deemed to have taken place for the purpose of this Act
within a market area when the goods are transferred form the
Principal to his selling agent or to the Arhatia within the
market area or outside. The amending Act also added an
Explanation to the charging section, section 27 providing
that all notified agricultural produce leaving a market area
shall, unless the contrary is proved, be presumed to have
been bought or sold in such area.
The respondents challenged before the High Court the
vires of the Explanation to section 2(P)(i) on the ground
that it encroached upon Entry 42 of List I Seventh Schedule
to the Constitution. The High Court refrained from declaring
the Explanation bad but read it down and held that it should
be read in harmony with the Explanation to Section 27 and
directed the marketing committee concerned to make assess-
ment of fees after giving the petitioners an opportunity as
provided in the Explanation to Section 27.
Dismissing the Appeal, this Court,
HELD: 1. In construing the two Explanations preference has
to
211
be given to the Explanation to the charging section over the
Explanation to the definition section consistent with the
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rules of interpretations of such provisions. [214G-H]
2.1 In fiscal laws due importance has to be given to the
phraseology used in the charging section. Section 27 gives
to the market committee the power to levy and collect market
fees on the agricultural produce bought or sold in the
market area at the rate given therein. The Explanation
raises a presumption that all notified agricultural produce
leaving a market area shall be presumed to have been bought
or sold in such an area. But this presumption is rebuttable
because the Explanation gives the affected party an opportu-
nity to satisfy the assessing authorities that there was
neither buying nor selling in a given case. [213F-H]
2.2 In all transactions, the parties get an opportunity
to satisfy the assessing authorities whether such transac-
tions are sales or not. But the Explanation to Section
2(P)(i) introduces complications. This Explanation states by
a deeming fiction that when goods are transferred from the
principal to his selling agent or Arhatia within a market
area or outside the market area, a sale takes place. This
Explanation encompasses within its sweep, sales of all kinds
within the market area or outside or within the State or
outside. [214A-C]
2.3 The Explanation to Section 2(P)(i) has not been well
worded nor properly placed. The Explanation is in excess of
the powers of the State Legislature since the dispute can be
resolved better by allowing the two Explanations to co-exist
by reading them harmoniously. In doing so, it is necessary
to read down the Explanation to Section 2(P)(i) and give
full effect to the Explanation to the charging section. The
Explanation to Section 27 gives an opportunity to the af-
fected persons to satisfy the assessing authorities that the
transaction in question is not a sale. This Explanation
should be deemed to take in all sales including those men-
tioned in the Explanation in Section 4(P)(i). In other
words, even transactions coming within the ambit of Explana-
tion to Section 2(P)(i) have to be governed by the Explana-
tions to Section 27. [214E-G]
3. If the Government wants a stricter control over the
transactions in the market area it is for them to suitably
amend the Explanation in question by excluding its operation
from the Explanation to Section 27. [215B]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2245 to
2249 of 1985.
212
From the Judgment and Order dated 8.11. 1984 of the
Patna High Court in C.W.J. Case No. 2812 of 1982.
V.M. Tarkunde and M.P. Jha for the Appellants.
S.N. Kacker and L.R. Singh for the Respondents.
Vijay Hansaria for Respondent in C.A. No. 2248/85.
The Judgment of the Court was delivered by
KHALID, J. In these appeals, by special leave, the short
question that falls for decision is as to how Explanation to
Section 2(P)(i) inserted by the Bihar Agricultural Produce
Markets (Amendment) Act, 1982, should be read with the
Explanation to Section 27 also inserted by the same Act.
Before the High Court, the vires of Explanation to Section
2(P)(i) was challenged on the ground that it encroached upon
Entry 42 of list I of the Seventh Schedule. The Division
Bench of the High Court after considering the various au-
thorities dealing with the concept of sale, refrained from
declaring the Explanation bad but read it down and held that
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it should be read in harmony with the Explanation to Section
27 and directed the marketing committee concerned to make
assessment of fees after giving the petitioners an opportu-
nity as provided in the Explanation to Section 27.
In this Judgment, we do not propose to go into the
question whether sale as explained in the Explanation to
Section 2(P)(i)) would include interstate trade etc. and on
that reasoning strike down the Explanation. We propose to
consider the scope of the two Explanations to see whether
they can co-exist.
The Original Act was called the Bihar Agricultural
Produce Markets Act, 1960, (for short the Act). This Act was
enacted to regulate the buying and selling of crops by
providing suitable and regulated markets, to eliminate
middlemen and to help the cultivators and the buyers in the
disposal of the commodities. The Act enabled the marketing
committee to levy a fee for transactions talking place in
the market area. To get at persons who manage to escape the
levy of market fee by ingenious transactions, the Act was
amended by inserting a new definition Section 2(P)(i) along
with an Explanation and also adding an Explanation to Sec-
tion 27. What we have to decide in this case is as to how
these two Explanations have to be construed. In other words
whether one Explanation excludes the other or whether one is
the compliment of the other.
213
It is necessary first to quote the two provisions under
consideration. Section 2(P)(i) along with the Explanation
reads as follows:
"2(P)(i)--’Sale’ means any transfer of proper-
ty in goods for cash or deferred payment or
other valuable consideration and shall include
transfer or acquisition of goods on hire
purchase or under any other system in which
payment of valuable consideration is made by
installment notwithstanding the fact that the
seller retains title in goods as valuable
security of payment of consideration or for
any other person.
Explanation--Notwithstanding any-
thing contained in any law for the time being
in force sale shall be deemed to have taken
place for the purpose of this Act within a
market area when the goods are transferred
from the Principal to his selling agent or to
the Arhatia within the market area or outside
the market area."
Section 27 is the charging section. It reads as follows
along with the Explanation:
"Section 27--Power to levy fees--(1) The
market committee shall levy and collect market
fees on the agricultural produce brought or
sold in the market area, at the rate of rupee
one per Rs. 100 worth of agricultural produce.
Explanation: All notified agricultural produce
leaving a market area, shall unless the con-
trary is proved be presumed to have been
bought or sold in such area."
In fiscal laws due importance has to be given to the
phraseology used in the charging section. Section 27 gives
to the market committee the power to levy and collect market
fees on the agricultural produce bought or sold in the
market area at the rate given therein. The Explanation
raises a presumption and that is that all notified agricul-
tural produce leaving a market area shall be presumed to
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have been bought or sold in such an area. But this presump-
tion is rebuttable because the Explanation gives the affect-
ed party an opportunity to satisfy the assessing authorities
that there was neither buying nor selling in a given case.
This Section with its Explanation thus creates no difficul-
ty. It is
214
when we come to the definition section, extracted above,
that the difficulty arises. ’Sale’ is defined in Section
2(P)(i). If the definition had stopped there, there would
have been no difficulty in construing Section 27 and its
Explanation. In all transactions the parties get an opportu-
nity to satisfy the assessing authorities whether such
transactions are sales or not. But the Explanation to Sec-
tion 2(P)(i) introduces complications. This Explanation
states by a deeming fiction, that when goods are transferred
from the principal to his selling agent or Arhatia within a
market area or outside the market area a sale takes place.
This Explanation encompasses within its sweep, sales of all
kinds within the market area or outside or within the State
or outside. That is the reason why its validity was chal-
lenged by the respondents before the High Court.
The learned counsel for the appellants contended that
the Explanation to Section 2(P)(i) could stand independent
of the Explanation to Section 27 since they have different
fields of operation. According to him, if this Explanation
is made subject to the Explanation to Section 27, this
Explanation would be rendered redundant and futile. The
learned counsel for the respondents, on the other hand
pleaded that since both the Explanations were brought on the
Statute Book by the same amendment, they must be read harmo-
niously and the Explanation to the definition section should
be read subject to the Explanation to the charging section.
We have considered the rival contentions carefully. We
feel that the Explanation to Section 2(P)(i) has not been
well worded nor properly placed. We are steering clear of
the contention that the Explanation is in excess of the
powers of the State Legislature since we feel that the
dispute can be resolved better by allowing the two Explana-
tions to co-exist by reading them harmoniously. In doing so,
it is necessary to read down the Explanation to Section
2(P)(i) and give full effect to the Explanation to the
charging section. The Explanation to Section 27 gives an
opportunity to the affected persons to satisfy the assessing
authorities that the transaction in question is not a sale.
This Explanation should be deemed to take in all sales
including those mentioned in the Explanation to Section
2(P)(i). In other words, even transactions coming within the
ambit of Explanation to Section 2(P)(i) have to be governed
by the Explanation to Section 27. In construing the two
Explanations we have give preference to the Explanation to
the charging section over the Explanations to the definition
section consistent with the rules of interpretation of such
provisions. If that be so, the Judgment of the High Court
has to be upheld and these
215
appeals have to be dismissed. We do so. As directed by the
High Court the marketing committee concerned can make as-
sessment of fees only after giving the respondents an oppor-
tunity to show cause as laid down in the Explanation to
Section 27. If the Government wants a stricter control over
the transactions in the market area it is for them to suit-
ably amend the Explanation in question by excluding its
operation from the Explanation to Section 27.
In the circumstances of the case, there will be no order as
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to costs.
M.L.A. Appeal dis-
missed.
216