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Issues involved:
The validity of the Haryana Rural Development Act 6 of 1986 was challenged based on constitutional grounds, specifically regarding the imposition of a 1% fee as a development fund on agricultural produce traders. Summary: Challenge to the Act's Validity: The appellants contended that the Act was a colorable exercise of power by the State Legislature, imposing a fee that essentially functioned as a tax, lacking the necessary quid pro quo as mandated by the Constitution. They argued that the fee did not correlate with the services intended for the dealers, making the Act ultra vires. Legal Basis for the Act: The State Legislature justified the Act under Entry 28 read with Entry 66 in List II of the 7th Schedule of the Constitution, aiming to enhance agricultural production and marketing by utilizing the fund collected through the 1% fee on agricultural produce transactions. Purpose and Scope of the Act: The Act defined market areas and outlined the utilization of the fee for rural development purposes, including infrastructure improvements, welfare initiatives, and market enhancements. The Act aimed to benefit agricultural producers, dealers, and purchasers through general development in rural areas, despite no direct benefit to individual fee payers. Precedents and Legal Interpretations: Previous judgments, such as Ramesh Chandra v. State of U.P., emphasized the broad correlationship between fee imposition and overall industry benefits, rather than individual trader benefits. The distinction between a tax and a fee, as well as the requirement of a reasonable relationship between the fee collected and services rendered, were highlighted. Validity of Sections Upheld: The Supreme Court upheld the validity of Sections 5(1) and 11 of the Act, affirming that the fee levied was not a tax but a legitimate fee for the rural development fund's specified purposes. The Court dismissed the appeals, emphasizing the Act's constitutionality and the lawful utilization of the collected fund. In conclusion, the Supreme Court upheld the validity of the Haryana Rural Development Act 6 of 1986, emphasizing its constitutional basis and the legitimate imposition of a fee for rural development purposes.
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