Full Judgment Text
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CASE NO.:
Appeal (civil) 3042 of 2008
PETITIONER:
Mumbai Agricultural Produce Market Committed & Anr
RESPONDENT:
Hindustan Lever Limited & Ors
DATE OF JUDGMENT: 29/04/2008
BENCH:
S.B. Sinha & Lokeshwar Singh Panta
JUDGMENT:
J U D G M E N T
REPORTABLE
CIVIL APPEAL NO. 3042 OF 2008
(Arising out of SLP (C) No.1847 of 2007)
S.B. Sinha,J.
1. Leave granted.
2. Appellant is a Market Committee constituted under the Maharashtra
Agricultural Produce Marketing (Regulation) Act, 1963 (for short, ’the
Act’). First respondent herein deals in Edible Oils and Vanaspati. By
reason of a Notification dated 25.9.1987, the State of Maharashtra in
exercise of its power under Section 62 of the said Act added some items in
the Schedule appended thereto such as sugar, dry fruits, edible oils and
vanaspati to the Schedule of the Act. Appellant No.1, Market Committee,
started collecting market fee as also supervision charges on all notified
agricultural produces marketed on wholesale basis. The wholesale market in
respect of condiments, spices, dry fruits etc. was shifted from Greater
Bombay to New Bombay on and from 1.1.1991 where a huge market had
been constructed by the appellants.
3. Respondents allegedly, despite the applicability of the provisions of
the said Act as also the Notification dated 25.9.1987, did not get itself
registered thereunder contending that ’Vanaspati’ had not been included in
the Schedule appended thereto. Some of the traders dealing in edible oil had
also obtained exemption from payment of market fee and supervision
charges for a short time. Such exemption granted was, however, withdrawn.
Various litigations were initiated before the Bombay High Court
questioning the validity of the said notification as also levy of market fee
and supervision charges by the Committee.
4. Respondent Nos.1 and 2 also filed writ petitions in the year 1988
contending that they were not liable to pay any market fee or supervision
charges.
5. The High Court by reason of a judgment and order dated 16.6.2006
although rejected the contention that the respondents were not liable to pay
any market fee, opined that the appellant was not entitled to collect
supervision charges. Supervision charges as also interest accrued thereon
were payable to the State Government.
The High Court in its judgment held:
"The impugned orders which have been passed
either during the pendency of the petition or before
the petition was filed are silent on the quantum of
supervision charges paid by the respondent No.1-
Committee to the State Government in respect of
the sale/distribution of vanaspati produced by the
petitioners and marketed in the market area of
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respondent No.1, though not from the market yard.
In the absence of the petitioners having an outlet or
a depot or a trading centre in the market yard of
respondent no.1, the other place is only the
premises of the petitioners as admittedly the
respondent no.1 has not established any other
collection centres or subsidiary markets by
exercising powers under Section 5 and Section
30A of the Act. We are, therefore, of the
considered view that the respondent No.1-
Committee has no powers to cause recovery of
supervision charges from the petitioners as at
present and the impugned orders to that extent are
unsustainable."
In regard to the payment of interest, it was held :
"We are afraid Clause (y) below Rule 120 does not
come to the rescue of the Market Committee in
support of its case that it has the power to charge
interest varying from 12% to 21% on the delayed
dues of market fees and supervision charges under
bye-law No.14(A). Section 31 as well as sections
34A to 34C clearly provide for only penal charges
and bye-law no.14 cannot be termed so as to cover
condition of trading and marketing in the market
area. We have also noticed that on issuance of the
notice by the Market Committee, the petitioners
have taken due steps and during the pendency of
the petitions or before the impugned orders for
recovery were passed, they have deposited certain
sums. In both the petitions, it is not a case of
inordinate delay in responding to the demands and,
in fact, the demands have been substantially met
within few months. No reasons have been given in
the impugned orders as to why the Market
Committee felt it appropriate to recover interest
and not the penal charges from the petitioners.
We, therefore, hold that the respondent No.1 has
no powers to charge interest at the rate of 12% or
any higher rate upto 21% on the delayed payment
of market fees and supervision charges and it was
not even otherwise justified to levy such charges in
the instant cases."
6. Mr. Bhatt, learned senior counsel appearing on behalf of the appellant,
would submit that the question as to whether any supervision charges were
payable or not had not been raised by the respondents and in that view of the
matter, the High Court committed a serious error in arriving at the
aforementioned conclusion.
7. Mr. Gopal Jain, learned counsel for the respondents, however, would
support the impugned judgment.
8. Levy of market fee and supervision charges stand on different
footings. Whereas market fee is payable on the transactions carried out in
the market area, the power to realize the supervision charges is vested in the
State. For the said purpose, it has to issue a general or special order. Staff
must be appointed by the State for the purpose of carrying out supervision of
the market areas. Only when the pre-requisites contained in Section 34A of
the Act are fulfilled, the question of recovery of such charges from the
person purchasing such produce in such market or market area would arise.
The costs of supervision is to be calculated by the Market Committee
in such a manner so as to enable it to levy the said fee under Section 31.
Sub-section (2) of Section 34B of the Act provides that the cost of
supervision collected by a Market Committee shall be paid to the State
Government in the prescribed manner.
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9. The fact that Vanaspati is an item which has validly been added to the
Schedule appended to the Act and the Rules framed thereunder is now not in
dispute. The judgment of the High Court rendered in this regard has been
accepted by the respondent. It deposited the amount of market fee on
various dates as detailed herein below :
"Date of Payment
Amount Deposited
2.03.1998
Rs.4,00,000/-
31.03.1998
Rs.18,00,000/-
21.07.1998
Rs.62,84,779/-
7.09.1998
Rs.6,000/-"
10. It, however, appears that the validity of the levy and collection of the
supervision charges was specifically raised by the respondent herein on the
ground that no service whatsoever of any kind was being rendered in the
said market area. The High Court, by reason of its judgment, opined that the
costs for supervision were incidental charges to be recovered and paid to the
Government in respect of the staff employed by it. It is not a power vested
in the Committee and, thus, the conditions precedent therefor were required
to be shown to be existing, i.e., that the Government had employed staff and
had been rendering services by way of supervising the buying and selling of
the agricultural produces in the market area.
11. The power to recover the charges for the supervisory staff employed
at the expenses of a section of the industry is not a general power. It is
provided for specifically in terms of the Act. When the statute mandates
that the cost of supervision would be borne by the licensee, it does not
constitute levy of tax. It may be a part of contract. It may have to be paid as
a liability to comply with the provisions of the statute and statutory Rules
validly made. The cost has to be determined. It may have to be
apportioned. It cannot be levied or calculated in such a manner so as to
cause unjust enrichment in favour of the State.
12. The quantum of recovery, however, need not be based on
mathematical exactitude as such cost is levied having regard to the liability
of all the licensees or a section of them. It would, however, require some
calculation.
13. A finding of fact has been arrived at by the High Court that no service
was being rendered by the State. If no service is being rendered, even no fee
could have been levied. It has been so held by a Constitution Bench of this
Court in Jindal Stainless Ltd. and Anr. v. State of Haryana and Ors. [(2006)
7 SCC 241] in the following terms :
"40. Tax is levied as a part of common burden.
The basis of a tax is the ability or the capacity of
the tax payer to pay. The principle behind the levy
of a tax is the principle of ability or capacity. In
the case of a tax, there is no identification of a
specific benefit and even if such identification is
there, it is not capable of direct measurement. In
the case of a tax, a particular advantage, if it exists
at all, is incidental to the State’s action. It is
assessed on certain elements of business, such as,
manufacture, purchase, sale, consumption, use,
capital, etc. but its payment is not a condition
precedent. It is not a term or condition of a
licence. A fee is generally a term of a licence. A
tax is a payment where the special benefit, if any,
is converted into common burden.
41. On the other hand, a fee is based on the
"principle of equivalence". This principle is the
converse of the "principle of ability" to pay. In the
case of a fee or compensatory tax, the "principle of
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equivalence" applies. The basis of a fee or a
compensatory tax is the same. The main basis of a
fee or a compensatory tax is the quantifiable and
measurable benefit. In the case of a tax, even if
there is any benefit, the same is incidental to the
government action and even if such benefit results
from the government action, the same is not
measurable. Under the principle of equivalence, as
applicable to a fee or a compensatory tax, there is
an indication of a quantifiable data, namely, a
benefit which is measurable."
14. The principle of equivalence, therefore, is the foundation for levy of a
fee. It must be held to be the foundation of a statutory charge like
supervisory charges. It was for the State to prove it. Once the State has
failed to bring record the foundational facts, it is not for the appellant who is
merely a statutory authority for collecting the same as an agent of the State
to contend that the same was payable. The State of Maharashtra is not
before us.
In Aashirwad Films v. Union of India (UOI) and Ors. [(2007) 6 SCC
624], it has been held :
"It is also required to be realized that imposition of
reasonable tax is a facet of good governance."
15. Cost of supervision, if borne by the State has to be recovered by it.
The burden was, therefore, on the State to justify the levy. Even the general
or special order, if any, purported to have been issued by the State has not
been brought on record. On what basis, the supervision charges were being
calculated is not known. The premise for levy or recovery of the amount of
supervisory charges is not founded on any factual matrix. Only the source of
the power has been stated but the basis for exercise of the power has not
been disclosed.
16. We, therefore, are of the opinion that there is no infirmity in the
impugned judgment.
17. So far as the question of payment of interest is concerned, it must be
referable to the statute. When the statute controls the levy, the interest
payable thereupon, as envisaged thereunder must also govern the field. The
general principle of restitution may not apply in this case.
18. The High Court having exercised its discretionary jurisdiction in the
matter, we do not find any reason to take a different view. The impugned
judgment, therefore, needs no interference. The appeal is dismissed with no
order as to costs.