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Issues Involved:
1. Whether khandsari sugar manufactured by the petitioners is an agricultural produce covered by the U.P. Krishi Utpadan Mandi Adhiniyam, 1964. 2. Whether khandsari sugar manufactured by the petitioners is subject to the levy of market fee under the Adhiniyam. 3. Whether there is any discrimination in subjecting khandsari sugar to the levy of market fee under the Adhiniyam while excluding plantation white sugar. Summary: Issue 1: Agricultural Produce The petitioners argued that khandsari sugar produced in their mills by the open pan process is not an agricultural produce under the Adhiniyam. They contended that khandsari sugar undergoes a chemical change and is different from traditional khandsari, gur, jaggery, rab, and shakkar, which are produced without such chemical changes. The respondents countered that khandsari sugar is included in the definition of agricultural produce u/s 2(a) of the Adhiniyam, and the petitioners' product is covered under this definition. The court observed that the Adhiniyam's definition of agricultural produce includes khandsari. However, it noted that khandsari sugar produced by the petitioners is an industrial product, distinct from khandsari produced by traditional methods. The court concluded that khandsari sugar manufactured by the petitioners is not an agricultural produce as contemplated by the Adhiniyam. Issue 2: Levy of Market Fee The petitioners claimed that they are not liable to pay market fees as their product is not covered by the Adhiniyam. They argued that the market fees and license fees are in the nature of payments for services rendered, but the market committees provide no services to them, making the levies effectively a tax. The respondents maintained that the petitioners' product is covered by the Adhiniyam and that the market fees and license fees are valid. The court found that the Adhiniyam is intended to protect agricultural producers, and since khandsari sugar produced by the petitioners is an industrial product, the levy of market fees on it is unwarranted. Issue 3: Discrimination The petitioners argued that there is no significant difference between khandsari sugar produced by them and plantation white sugar produced by other mills, except for the manufacturing process. They claimed that subjecting only khandsari sugar to market fees while excluding plantation white sugar is discriminatory and violates Article 14 of the Constitution. The respondents contended that there is a distinction between khandsari sugar and plantation white sugar, and the Adhiniyam's provisions do not violate Article 14. The court agreed with the petitioners, noting that both khandsari sugar and plantation white sugar are industrial products. The court found that excluding plantation white sugar from the levy while including khandsari sugar constitutes discrimination. Conclusion: The court held that khandsari sugar produced by the petitioners is not an agricultural produce under the Adhiniyam and is not subject to the levy of market fees. It also found that subjecting khandsari sugar to market fees while excluding plantation white sugar is discriminatory. Consequently, the writ petitions were allowed, and the respondents were restrained from realizing market fees and license fees from the petitioners under the Adhiniyam.
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