2013 (11) TMI 1564 - SC - Indian Laws

Whether APMC, Baroda is liable to claim the market fee on the castor seeds purchased by the respondent Company on the plea that the same were purchased within the market area of APMC, Baroda which castor seeds are used by the said industrial concern for manufacture of castor oil within the market area of APMC, Baroda? Whether purchase of the castor seeds for use of the respondent industrial concern for manufacturing castor oil falls within Rule 48(2) of the Rules to get exemption from payment of market fee? Whether the Division Bench was justified in setting aside the finding of fact recorded by the learned Single Judge, holding that the castor seeds purchased by the respondent Company are within the market area of APMC? Whether the Division Bench is justified in recording the finding on the second issue in connection with LPA No. 195 of 2006 that the respondent concern is not liable to pay any market fee on the de-oiled cakes sold by it which are stated to be the by-product in the course of manufacturing castor oil which is not one of the items enumerated in the Schedule to the Act and the notification issued by the Directorate?

Issues Involved:

1. Liability of APMC to claim market fee on castor seeds purchased by the respondent company within the market area.
2. Applicability of Rule 48(2) of the Gujarat Agricultural Produce Markets Rules, 1965, for exemption from market fee.
3. Justification of the Division Bench in setting aside the findings of the learned Single Judge regarding the purchase of castor seeds within the market area.
4. Liability of the respondent company to pay market fee on de-oiled cake.
5. Validity of Rule 48(2) in light of Sections 28-A and 59 of the Gujarat Agricultural Produce Markets Act, 1963.

Issue-wise Detailed Analysis:

1. Liability of APMC to Claim Market Fee on Castor Seeds:

The appellant APMC was constituted under the provisions of the Bombay Agricultural Produce Markets Act, 1939, and the area of Baroda City and Baroda Taluk was declared as the market area under the Gujarat Agricultural Produce Markets Act, 1963. The respondent company, manufacturing castor oil from castor seeds purchased within the market area, was liable for paying market fees. The High Court's learned Single Judge held that the sale of castor seeds took place within the market area, thereby justifying APMC's levy of market fee. This was based on the fact that the castor seeds were weighed and payment was made within the market area, indicating that the sale was completed within the market area.

2. Applicability of Rule 48(2) for Exemption from Market Fee:

Rule 48(2) exempts agricultural produce brought from outside the market area for use by industrial concerns within the market area from market fees. The respondent company argued that the castor seeds were brought from outside the market area and used for manufacturing within the market area, thus qualifying for exemption. However, the learned Single Judge concluded that the exemption did not apply as the sale was completed within the market area. The Division Bench, on the other hand, held that the castor seeds were brought from outside the market area, thus qualifying for exemption under Rule 48(2).

3. Justification of the Division Bench in Setting Aside Findings of the Learned Single Judge:

The Division Bench set aside the learned Single Judge's findings, holding that the sale was completed outside the market area and the castor seeds were brought into the market area for industrial use, thereby qualifying for exemption under Rule 48(2). The Division Bench relied on the fact that the respondent company had complied with the requirements of Rule 48(2) by obtaining the necessary declarations and certificates. The Supreme Court, however, found that the Division Bench erred in reversing the learned Single Judge's findings, which were based on proper appreciation of facts and evidence indicating that the sale was completed within the market area.

4. Liability of the Respondent Company to Pay Market Fee on De-oiled Cake:

The learned Single Judge held that de-oiled cake, a by-product of castor oil manufacturing, was not the same as oil cake and was not listed in the Schedule of the Act, thus not subject to market fees. The Division Bench concurred with this finding, noting that de-oiled cake contains less than 1% oil and is a distinct product from oil cake. The Supreme Court upheld this finding, agreeing that de-oiled cake is not an agricultural produce listed in the Schedule and therefore not subject to market fees.

5. Validity of Rule 48(2) in Light of Sections 28-A and 59 of the Act:

The appellant APMC challenged the validity of Rule 48(2), arguing that it was ultra vires Sections 28-A and 59 of the Act. The Division Bench did not address this issue in detail, focusing instead on the applicability of Rule 48(2) to the facts of the case. The Supreme Court remanded the matter to the High Court to examine the validity of Rule 48(2) in light of the amended provisions of the Act and to decide on the legality of the impugned order of the revisional authority.

Conclusion:

The Supreme Court allowed the appeal regarding the levy of market fee on castor seeds, holding that the sale took place within the market area and APMC was justified in levying the market fee. The appeal regarding the levy of market fee on de-oiled cake was dismissed, upholding the finding that de-oiled cake is not subject to market fees. The matter concerning the validity of Rule 48(2) was remanded to the High Court for further examination.

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