1987 (2) TMI 468 - SC - VAT and Sales Tax

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? Held that - Appeal dismissed. As directed by the High Court the marketing committee concerned can make assessment of fees only after giving the respondents an opportunity 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 suitably amend the explanation in question by excluding its operation from the explanation to section 27.

Summary

Issues: Interpretation of statutory provisions regarding market fees levied on agricultural produce transactions.

The Supreme Court analyzed the interpretation of the explanation to section 2(p)(i) and the explanation to section 27 of the Bihar Agricultural Produce Markets Act, 1960. The Court considered the challenge raised before the High Court regarding the encroachment of the explanation to section 2(p)(i) on entry 42 of List I of the Seventh Schedule. The High Court refrained from declaring the explanation bad but read it down, directing the marketing committee to assess fees after giving the affected parties an opportunity as provided in the explanation to section 27. The Court aimed to determine whether the two explanations could co-exist harmoniously. The Act was initially enacted to regulate agricultural transactions, enabling the market committee to levy fees. The amendment introduced a new definition of "sale" in section 2(p)(i) and an explanation to section 27, creating a need to interpret these provisions to avoid conflict.

The Court scrutinized the wording and placement of the two explanations, emphasizing the importance of the phraseology used in the charging section, i.e., section 27. While section 27 empowered the market committee to levy fees on agricultural produce transactions, the explanation provided a rebuttable presumption regarding the origin of the produce. The definition of "sale" in section 2(p)(i) introduced complexities by deeming certain transactions as sales, leading to a challenge on its validity. The appellants argued for the independence of the explanation to section 2(p)(i) from the explanation to section 27, while the respondents advocated for a harmonious reading of both explanations due to their simultaneous enactment.

The Court concluded that the explanation to section 2(p)(i) was not well-worded or properly placed but avoided the argument of legislative overreach. Instead, the Court opted to allow the co-existence of both explanations by reading them harmoniously. It held that the explanation to section 27 should govern all sales, including those falling under the explanation to section 2(p)(i). By prioritizing the explanation to the charging section over the definition section, the Court upheld the High Court's judgment, dismissing the appeals. The marketing committee was directed to assess fees only after providing the affected parties with an opportunity to contest, as per the explanation to section 27. The Court suggested that if stricter control over market transactions was desired, the government could consider amending the explanation to exclude its operation from the explanation to section 27.

In conclusion, the Supreme Court's judgment clarified the interpretation of statutory provisions related to market fees on agricultural produce transactions, emphasizing the need for a harmonious reading of conflicting explanations to ensure effective implementation of the Act.