Full Judgment Text
2024 INSC 526
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.10970-10971 OF 2014
STATE OF PUNJAB & ORS. …APPELLANT(S)
VERSUS
M/S PUNJAB SPINTEX LTD. …RESPONDENT(S)
J U D G M E N T
VIKRAM NATH, J.
1. These appeals, by special leave, assail the
correctness of the judgment and orders dated
27.01.2010 and 24.09.2010 passed by the
Punjab & Haryana High Court, respectively in
Civil W.P. No. 14847 of 2009 and C.M. No. 3144
of 2010 in the Writ Petition.
2. The matter pertains to exemption from payment
of Market fee and Rural Development fee sought
by the Respondent herein. The Respondent
company was incorporated on 26.12.2006 and
set up a spinning unit at Bathinda for
Signature Not Verified
Digitally signed by
manufacturing cotton yarn out of raw cotton.
SONIA BHASIN
Date: 2024.07.15
18:44:33 IST
Reason:
Civil Appeal Nos. 10970-10971 of 2014 Page 1 of 19
Thereafter, the Respondent company applied to
the Appellant for grant of exemption from paying
Market fee and Rural Development fee in terms
1
of the Industrial Policy, 2003 and claimed to be
similarly situated as M/s Partap Furane Pvt.
Ltd., which is also engaged in the manufacturing
of cotton yarn, and was granted exemption from
payment of Market fee.
3. Respondent filed Civil W.P. No. 14847 of 2009
before the High Court of Punjab & Haryana
seeking such exemption. Therein, in response to
the notice issued, the Counsel for the State
produced the minutes of meetings of the
Empowered Committee held under the
Chairmanship of the Chief Minister, Punjab, on
17.12.2009, which has been reproduced as
follows:
“i). Integrated Cotton Ginning and
Spinning Units which have not sought
the status of Mega Projects would be
eligible for incentives under the
Industrial Policy, 2003, including
exemption from payment of market fee
as per Para 11.4.2(i). This would be for
1
2003 Policy, hereinafter
Civil Appeal Nos. 10970-10971 of 2014 Page 2 of 19
a period of ten years from the date of
issue of the notification.
a. Units that have availed of the
benefit under the Mega Projects Scheme
but have now sought benefits under the
2003 Policy e.g. Cotton Units seeking
exemption from market fee, would be
eligible for incentives and concessions
only under one specific package i.e.
ether the Industrial Policy of 2003 or the
standard package of the incentives of
Mega Projects finalized in November,
2007 as per their choice."
4. The High Court, vide impugned order dated
27.01.2010, dismissed the Writ Petition in the
following manner:
“ xxx xxx
4. Learned counsel for the State also states
that Market Fee will also cover Rural
Development Fee and further action as
per above decision will be taken within
one month.
5. In view of above, learned counsel for the
petitioner does not press this petition at
this stage.
6. Dismissed as not pressed.”
5. Thereafter, the Appellant, being aggrieved by the
aforesaid statement made by the Counsel on
instructions, filed C.M. No. 3144 of 2010 in CWP
No. 14847 of 2009 seeking modification in order
Civil Appeal Nos. 10970-10971 of 2014 Page 3 of 19
dated 27.01.2010. In the application, the
Appellant stated that the earlier statement made
by the counsel for the State, on the instructions
from the officers of the Industry department,
stating that the Market fee would also cover the
Rural Development fee, was not factually and
legally correct. It was further argued that Market
fee was collected under the provisions of Punjab
2
Agricultural Produce Markets Act, 1961
whereas the Rural Development fee is collected
3
under the Punjab Rural Development Act, 1987 .
Therefore, both the fees being separate, decision
on exemption from Market fee did not
automatically apply to Rural Development fee.
6. In reply to the application, Respondent
submitted that even according to the Agriculture
Department of the Government of Punjab,
exemption from Market fee automatically covers
Rural Development fee and annexed letters dated
09.10.2001, 28.08.2001 and 10.09.2001 to
supply weight to their arguments. The High
Court, vide order dated 24.09.2010, observed
2
1961 Act, hereinafter
3
1987 Act, hereinafter
Civil Appeal Nos. 10970-10971 of 2014 Page 4 of 19
that the abovementioned letters clearly support
the stand earlier taken on behalf of the State and
thus, there is no ground for modification sought.
The application was dismissed accordingly.
Aggrieved by the said orders, the Appellant State
is before us.
7. The core issue of the matter boils down to
whether the exemption from payment of Market
fee granted under Clause (i) of 11.4.2 of 2003
Policy of the Punjab Government can be said to
include exemption from Rural Development fee
as well or not.
8. Before proceeding any further, the relevant
statutory provisions may be noticed.
9. Market Fee is levied under Section 23 of the 1961
Act which is as follows:
“ 23. Levy of fees. – A Committee may,
subject to such rules as may be made
by the State Government in this behalf,
levy on advalorem basis fees on the
agricultural produce bought or sold by
licensees in the notified market area [at
the rate of [one rupee and fifty Paise]] for
every one hundred rupees:
Provided that-
Civil Appeal Nos. 10970-10971 of 2014 Page 5 of 19
no fee shall be leviable in respect of any
transaction in which delivery of the
agricultural produce bought or sold is
not actually made; and
a fee shall be leviable only on the
parties to a transaction in which
delivery is actually made.”
10. Rural Development Fund is levied under Section
5 of the 1987 Act and the constitution of fund is
dealt under Section 6. The relevant provisions
are as follows:
“ Section 5 - Levy and collection of fee
Subject to the rules made under this
Act, there shall be levied for the purpose
of this Act, a fee on ad valoram basis, at
the rate of rupees two for every one
hundred rupees, in respect of the
agricultural produce, bought or sold in
the notified market area.
(2) The fee levied under sub-section (1)
shall be paid by the dealer in such
manner as may be prescribed and shall
be realised by a Market Committee
established under the Punjab
Agricultural Produce Markets Act, 1961
(Punjab Act 23 of 1961) :
Provided that the burden of the fee
shall be passed on by the dealer by
adding it to the purchase price
recoverable by him from the next
Civil Appeal Nos. 10970-10971 of 2014 Page 6 of 19
purchaser of the agricultural
produce or the goods processed or
manufactured out of it.
[(2-A) If any dealer fails to pay the
amount of the fee levied under sub-
section (1), he shall, in addition to
the amount of fee be liable to pay
interest on the amount of fee due
from him at the rate of eighteen per
centum per annum from the date of
default.]
(3) The arrears of fee levied under sub-
section (1) shall be recoverable as
arrears of land revenue.
Section 6 – Constitution of Fund
(1) There shall be constituted a fund to be
called the Punjab Rural Development
Fund which shall vest in the Board.
(2) The Fund constituted under sub-
section (1) shall be administered by
such officer or officers of the Board as
may be appointed by it in this behalf.
(3) The amount of fee (realised by a Market
Committee established under the
Punjab Agricultural Produce Markets
Act, 1961 (Punjab Act 23 of 1961)]
under sub-section (2) of section 5 shall
be credited to the Fund within such
period as may be prescribed and the
grants from the [State Government and
Local Authorities and the loans raised
Civil Appeal Nos. 10970-10971 of 2014 Page 7 of 19
by the Board under section 5-A] shall
also be credited to this Fund.”
11. The relevant provisions of the 2003 Policy under
which such exemptions have been sought are
reproduced as follows:
“ 11.4 Development of Agro & Food
Processing Industry
11.4.1 Definition
For the purpose of this policy, Agro-
Food Processing Industries would mean
an activity involved in the production of
value added/high end products from
primary agricultural/horticultural
crops including floriculture &
vegetables and their residues available
in the State. It will also include
cultivation of processing/superior
quality & high yielding varieties of all
kinds of crops and their post-harvest
operations such as cleaning, grading,
packaging, storage, transportation,
marketing etc. The extent of value
addition should be atleast 50% of the
basic value. However, this will not
include rice, pulse and cereal mills,
decorticating, expelling, crushing,
roasting and frying of oil seeds,
preparing of bread other than by
mechanised bakery, refining and
hydrogenation of edible oils, including
Civil Appeal Nos. 10970-10971 of 2014 Page 8 of 19
manufacture of Vanaspati. It will
further include the non-molasses based
alcohol plants.
11.4.2 Incentives
(i) For agriculture commodities other than
wheat and paddy no market fees shall
be levied on purchases made by agro
and food processing units.
(ii) Similarly for commodities other than
wheat and paddy purchased by food and
agro processing units, no Rural output
tax shall be charged.
…”
12. Heard learned counsel for the parties and
perused the material on record.
13. Learned Counsel appearing for the Appellant
State argued that the Market fees under the 1961
Act and Rural Development fees under the 1987
Act are two different “fees” levied under two
different Acts having different objects and
purpose. That the 2003 Policy does not
specifically exempt Rural Development fees and
therefore, such an assumption cannot be made
by the Respondent. Further, it was submitted
that there are various industries that are
exempted from Market fees and not exempted
from Rural Development fees, including the
Civil Appeal Nos. 10970-10971 of 2014 Page 9 of 19
company M/s Partap Furane Pvt. Ltd. with which
a similarity as being claimed by the Respondent.
14. On the other hand, Mr. Aman Lekhi, Ld. Senior
Counsel appearing for the Respondent argued
that the expression ‘Market fees’ has been used
in the Policy of 2003 because both the 1961 Act
and the 1987 Act contemplate levy of fees in a
notified market area and not in the sense of fees
levied under the 1961 Act as has been argued by
the Appellant State. Respondent has extensively
argued that there is a clear convergence of
interests of both the 1961 Act and 1987 Act and
that the 2003 Policy exempts the recovery of the
fees under both laws as incentives for the
Development of Agro and Food Processing
Industries.
15. Respondent further argued that the High Court
had rightly dismissed the application for review
of the Order dated 27.01.2010 by relying upon
Note dated 28.08.2001 which was issued by the
Punjab Rural Development Board, Chandigarh
(recording therein the decision of the Chief
Minister of Punjab) that exemption on an item
from Market fees will automatically be extended
Civil Appeal Nos. 10970-10971 of 2014 Page 10 of 19
to fees under the 1987 Act. Since the Respondent
relied heavily on the Note dated 28.08.2001
before us as well as the High Court, it becomes
pertinent for the State to duly counter such
submission.
16. In this regard, the State submitted that the
letters dated 28.08.2001, 09.10.2001,
10.09.2001 are clarified with the letters dated
02.11.2010 and 21.02.2011 respectively. The
Letter dated 02.11.2010 has been issued by the
Department of Agriculture referring to the Govt.
Memo dated 09.10.2001 and states that it has
been found that the letter dated 09.10.2001 was
not issued with the approval of the Competent
Authority and is accordingly withdrawn.
17. Further, the Memo dated 21.02.2011 is another
letter issued by the Department of Agriculture
which also refers to the earlier memo dated
02.11.2010. The relevant parts of the latter
memo are reproduced below:
“… … …. …. …
4. It is clarified that because in the
recovery of Rural Development Fee, the
rules regarding recovery of Market Fee
are applicable Mutatis Mutandis,
Civil Appeal Nos. 10970-10971 of 2014 Page 11 of 19
therefore, the items which are directly
exempted under certain conditions i.e:
under rule 29 and 30, the same will be
applicable in the recovery of Rural
Development Fee, meaning that the
exemption will be applicable on Rural
Development Fee on the same items.
5. Besides, the exemption from Market
fee under rules 30-C, is also granted by
the State Govt. in exercise of the powers
on case to case basis through a separate
notification. Such cases are mainly
covered under Industrial Policy 2003 or
Guidelines for Mega projects 2007.
Under these concessions, eligible units
can be exempted from Market Fee or both
from Market Fee and Rural Development
Fee. In such cases, exemption from
Market Fee will not be automatically
applicable on Rural Development Fee,
rather, the exemption from Rural
Development Fee will applicable if the
competent authority issues a specific
order/ notification in this respect.”
18. However, the Respondent was quick to bring to
our notice that the communication dated
02.11.2010 only withdraws the Memo dated
09.10.2001 and not the Note dated 28.08.2001.
Further, it was also argued that the Appellant’s
reliance on communication dated 21.02.2011 is
Civil Appeal Nos. 10970-10971 of 2014 Page 12 of 19
wholly misconceived as that communication is
subsequent to the petition of the Respondent
being disposed of by the High Court.
19. It is clear that the issue as to whether the 2003
Policy only grants exemption from the Market
fees as levied under the 1961 Act and does not
grant exemption from the Rural Development
fees under the 1987 Act, has not been
adjudicated by the High Court on merits. The
said adjudication could not happen as the
Counsel for the State had stated before the High
Court that Market fee will also cover Rural
Development fee and the High Court dismissed
the petition as not pressed. This is pertinently
where the trail of errors began. However, it did
not come to an end over there. Even in the
modification application preferred by the State,
the High Court failed to delve into the merits of
the matter and rather instantly went on to rely
on the letters dated 09.10.2001, 28.08.2001 and
10.09.2001 referred by the Respondent, thereby
dismissing the application for modification. The
High Court, only recorded the submissions of the
State counsel and thereafter referring to the three
Civil Appeal Nos. 10970-10971 of 2014 Page 13 of 19
notes/letters of 2001 of the Agriculture
Department and dismissed the application.
Neither the arguments were discussed and
analysed nor the contents of three notes/letters
were discussed.
Scope of exemption under the 2003 Policy
20. Appellant State had argued that the Market fees
and Rural Development fees are collected under
two different statutes which have two different
objects and the said Acts have different purposes
for utilization of the fees collected under the
respective Acts. Whereas, the Respondent does
not deny the fact that the fees are distinct under
two separate statutes, yet they emphatically
argued that both the Acts have intersecting
statutory provisions and an overlap in the
purpose and object of the two statutes shows a
clear convergence of interests of both the Acts
and therefore, the term “Market fees” in the 2003
Policy exempts recovery of the fees under both
the 1961 Act and 1987 Act.
21. We note that the Appellant has correctly pointed
out that the two Acts have different objects. The
Civil Appeal Nos. 10970-10971 of 2014 Page 14 of 19
preamble of 1961 Act clearly stipulates that it is
a statute to provide for law relating to better
regulation of purchase, sale, storage and
processing of agricultural produce and for
establishment of markets in the State. Whereas,
the 1987 Act, on the other hand, is enacted for
providing relief for the loss of agricultural
produce, accelerating rural development,
improve facilities for purchasers of agricultural
produce and augment agricultural production.
Rural Development Fund is admittedly collected
by the Market Committees, but forms part of the
Rural Development Fund constituted under
Section 6 of 1987 Act.
22. It is not uncommon for different statutes,
concerning similar area of law, to have
convergence of interests to some degree.
However, this would not imply that benefits
extended to one statute will be presumed to flow
to the other statute as well.
23. The 2003 Policy does not specifically exempt
Rural Development fees and therefore, such an
argument by the Respondent is highly
presumptive, far-fetched and a clear attempt at
Civil Appeal Nos. 10970-10971 of 2014 Page 15 of 19
over-reaching the scope of the 2003 Policy. If
such an assumption is allowed, it would
considerably broaden the canvas of the
incentives available under the 2003 Policy, which
was never intended. In fact, such a loose
interpretation of the State policies would lead to
an ambiguity to the State’s intent and render it
opposite to the public policy.
24. In view of the aforesaid, holding that the
exemption from Market fees is inclusive of Rural
Development fees shall be contrary to the
statutory provisions and objective behind both
the Acts as well as the 2003 Policy. Thereby, the
two fees cannot be equated or assumed to be
same or similar for the purposes of exemption.
Effect of communication made by the State via
various notes/letters
25. As mentioned before, the Respondent has heavily
relied on letters dated 09.10.2001, 28.08.2001
and 10.09.2001 published by the Department of
Agriculture to seek such an exemption. The
Appellant has submitted before us that the letter
dated 28.08.2001 was only issued by the office
Civil Appeal Nos. 10970-10971 of 2014 Page 16 of 19
Superintendent in the Appellant’s office and was
not a decision by the Government and has
consequently been withdrawn as not being an
authorized letter vide letter dated 02.11.2010.
26. It is apparent that the letter dated 02.11.2010
has been issued by the Department of
Agriculture and duly withdrew the Note dated
09.10.2001. With regard to the Respondent’s
argument that the letter dated 28.08.2001 still
remains applicable as not explicitly withdrawn,
we note that the Memo dated 09.10.2001 itself
referred and relied upon Note dated 28.08.2001
and, hence, any subsequent communication
withdrawing Memo dated 09.10.2001 shall ipso
facto apply to the earlier referred letters as well
including the note dated 28.08.2001.
27. In furtherance, the Department of Agriculture
has also issued a Memo dated 21.02.2011 to
clarify and reiterate that when exemption from
Market fees is granted, as in the instant case,
such exemption will not be automatically
applicable on Rural Development fee. Therefore,
the Respondent’s reliance on such earlier letters,
Civil Appeal Nos. 10970-10971 of 2014 Page 17 of 19
improper as they were, will not help them claim
exemption from Rural Development fee.
28. From an in-depth analysis of the statutes and
policies produced before us, it is apparent that
no unit, other than those approved as Mega
Project, has been allowed exemption from the
payment of Rural Development fee, unless
explicitly provided by the authorities. The
Respondent herein, M/s Punjab Spintex Limited,
has admittedly not been approved as a Mega
Project and, therefore, not eligible for such
exemption from Rural Development fee.
Conclusion
29. We accordingly hold that the Market fees and
Rural Development fees are distinct and, there
being no exemption from Rural Development fees
mentioned in the 2003 Policy, it only
encompasses exemption from Market fees in its
ambit. The two fees under the two different
statutory frameworks cannot be equated as one
by the Respondent and they cannot assume that
exemption from “Market fees” would subsume in
itself “Rural Development fees” also.
Civil Appeal Nos. 10970-10971 of 2014 Page 18 of 19
30. Accordingly, the appeals are allowed. The
impugned orders dated 27.01.2010 and
24.09.2010 are set aside. Civil W.P. No. 14847 of
2009 is dismissed as being bereft of any merits.
31. Pending application(s), if any, is disposed of.
……………………………………J.
(VIKRAM NATH)
……………………………………J.
(PRASHANT KUMAR MISHRA)
NEW DELHI
JULY 15, 2024
Civil Appeal Nos. 10970-10971 of 2014 Page 19 of 19