2008 (9) TMI 1012 - HC - GST

Issues Involved:
1. Constitutional validity of various sections and clauses of the Assam Agricultural Produce Market Act, 1972, as amended by the Assam Agricultural Produce Market (Amendment) Act, 2000, and the Assam Agricultural Produce Market (Amendment) Act, 2006.
2. Refund of cess collected under the impugned legislations.
3. Legislative competence and repugnancy with central laws.
4. Quid pro quo between the cess collected and services rendered.
5. Authority of the Assam State Agricultural Marketing Board to levy and collect cess.
6. Establishment and operation of check gates for collection of cess.

Detailed Analysis:

1. Constitutional Validity of Various Sections and Clauses:
The petitioners challenged the constitutional validity of Sections 3D, 3E, Clause (ii) and (iii) of Explanation-1 to Section 21, as well as Sections 21(1), 21(2), 21(3), 21A, 23, and 25(xiii) of the Assam Agricultural Produce Market Act, 1972, as amended by the Amendment Acts of 2000 and 2006. The court held that the legal fiction created by Explanation-1 to Section 21, which presumes sale or purchase of agricultural produce in the market area under certain conditions, is valid. This fiction is rebuttable and aims to prevent evasion of cess. The court found that the amendments were in alignment with the Model Act, 1998, and did not violate the legislative intent.

2. Refund of Cess Collected:
The petitioners sought a refund of the cess collected from 13.08.2001 to 08.12.2005. The court held that the petitioners are not entitled to any refund prior to 13.08.2001. For the period after this date, the court directed the formation of a committee to scrutinize the claims for refunds based on the individual facts and documents produced by the parties. The committee will include representatives from the government, the Board, the concerned Market Committees, and the traders.

3. Legislative Competence and Repugnancy with Central Laws:
The petitioners argued that the amendments were repugnant to the Sale of Goods Act, 1930, a central legislation. The court held that the Assam Agricultural Produce Market Act does not occupy the same legislative field as the Sale of Goods Act and is not repugnant to it. The legal fiction in Section 21 does not conflict with the Sale of Goods Act as it is a rebuttable presumption and does not alter the essential attributes of a sale.

4. Quid Pro Quo Between the Cess Collected and Services Rendered:
The court examined whether there was a quid pro quo between the cess collected and the services rendered by the Board and Market Committees. The court found that the Board had undertaken substantial investments in market infrastructure, including godowns, auction platforms, and other facilities. The court held that the cess collected was being utilized for authorized purposes under the Act and there was a reasonable correlation between the cess and the services rendered.

5. Authority of the Assam State Agricultural Marketing Board to Levy and Collect Cess:
The petitioners challenged the authority of the Board to levy and collect cess. The court upheld the validity of Section 21(2), which empowers the Board to levy and collect cess on behalf of any or all Market Committees with the approval of the State Government. The court found that this provision does not violate the scheme of the Act and is necessary to prevent evasion of cess.

6. Establishment and Operation of Check Gates:
The petitioners argued that the establishment of check gates by the Board was illegal. The court held that the establishment of check gates is authorized under Section 21A of the Act, as amended by Act 2000 and Act 2006. The court found that the check gates are necessary to prevent evasion of cess and are not arbitrary or unreasonable.

Conclusion:
The court upheld the constitutional validity of the impugned sections and clauses of the Assam Agricultural Produce Market Act, 1972, as amended. The court directed the formation of a committee to scrutinize claims for refunds of cess collected after 13.08.2001. The court found no repugnancy between the Assam Act and the Sale of Goods Act, 1930. The court also upheld the authority of the Assam State Agricultural Marketing Board to levy and collect cess and the establishment of check gates to prevent evasion of cess. The petitions were partly allowed with no order as to costs.

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