2014 (1) TMI 1671 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of Mandi Samiti to levy mandi fee on inter-State sale of bamboo and wood.
2. Liability of petitioner to pay mandi fee under section 17(iii)(b)(3) of the U. P. Krishi Utpadan Mandi Adhiniyam, 1964.
3. Application of notification dated November 11, 1998, regarding exemption from mandi fee.

Summary:

Jurisdiction of Mandi Samiti to levy mandi fee on inter-State sale of bamboo and wood:
The petitioner, a manufacturer of paper, challenged the imposition of mandi fee by the Krishi Utpadan Mandi Samiti on the purchase of wood and bamboo, claiming that the transactions were inter-State sales completed outside the State of U.P. The petitioner argued that the sale was completed at the seller's location, with the transporter acting as the petitioner's agent for delivery. Various purchase orders and transport agreements were cited to support this claim. The petitioner contended that the sale was inter-State as the goods moved from Maharashtra and Haryana to Saharanpur, U.P., and cited several Supreme Court judgments to support this argument.

Liability of petitioner to pay mandi fee under section 17(iii)(b)(3) of the U. P. Krishi Utpadan Mandi Adhiniyam, 1964:
The petitioner argued that even if the sale took place within the market area of Saharanpur, the liability to pay mandi fee should fall on the seller as per section 17(iii)(b)(3) of the U. P. Krishi Utpadan Mandi Adhiniyam, 1964. The petitioner cited previous judgments where it was held that the selling trader is liable to pay the mandi fee. The respondents countered that the sale was completed at the petitioner's mill gate within the market area of Saharanpur, as the final payment and verification of goods were done at the mill. The revisional authority found that the sale took place within the market area, making the petitioner liable to pay the mandi fee.

Application of notification dated November 11, 1998, regarding exemption from mandi fee:
The petitioner claimed exemption from mandi fee under a notification dated November 11, 1998, which exempts goods used for producing non-agricultural commodities from mandi fee. The revisional authority held that this notification applies only when the processed goods are non-agricultural produce, which was not the case here as the petitioner was using agricultural produce (wood/bamboo) to manufacture paper. Therefore, the notification did not apply.

Conclusion:
The court concluded that the sale was completed within the market area of Saharanpur, and the petitioner was liable to pay the mandi fee as per section 17(iii)(b)(4) of the U. P. Krishi Utpadan Mandi Adhiniyam, 1964. The petitioner's claim for exemption under the notification dated November 11, 1998, was also rejected. The writ petition was dismissed, upholding the revisional authority's order.