2017 (6) TMI 1390 - SC - Indian Laws

Levy of market fee on the said produce - goods were bought and sold at the market place or not - HELD THAT - Applicability of Section 17 of Rajasthan Agricultural Produce Markets Act, 1961 read with Rule 58 of Rajasthan Agricultural Produce Market Rules, 1963 would depend upon the question as to whether agricultural produce is bought and sold by the licensee in the market area. It is also the common case of the parties that the answer to the aforesaid issue would depend upon the question as to when and at what stage the title in the goods passes, if the entire transaction takes place outside the State of Rajasthan and the ownership in the goods also passes outside Rajasthan, then the market fee is not payable. It is also the common case of the parties that answer to the aforesaid question would depend upon the applicability of Section 4 read with Section 19 of the Sale of Goods Act, 1930, which provisions are to be applied keeping in view the terms and conditions on which the goods are sold. The very distinction between the sale and agreement to sell enumerated in the aforesaid provision points out that a sale takes place when the property in goods is transferred from the seller to the buyer. If transfer of property in the case is to take place at a future time or subject to conditions that are stipulated in the contract of sale of goods, then the contract is merely an agreement to sell. Section 19 is contained in Chapter-Ill of the Sale of Goods Act, title whereof is Effects of the Contract (Transfer of Property as between Seller and Buyer) . The title in goods is transferred from the seller to buyer only on the sale of goods. As to when such a sale fructifies and the property passes is to be ascertained from the intention of the parties having regard to the terms of the contract. If no such intention can be gathered from the terms of the contract, the property in goods passes where the goods are in a deliverable state and there is unconditional contract for sale of specific goods. Once the goods bought are agricultural produce on which market fee is leviable in terms of Schedule attached to the Act, then the market fee is payable. If it is used as raw material for manufacturing purpose thereafter would be of no consequence. It is to be first ascertained whether agricultural produce was bought and sold in the market area or not is the question which needs to be determined in each case after applying the principles of law - The High Court would be required to ascertain this on the basis of terms and conditions of sale in each case and that would determine the fate of each of the writ petitions filed by the Appellants. This exercise is not done and after dealing with the case of Arihant Udhyog, other writ petitions are also dismissed. Thus, except Arihant Udhyog, where we have upheld the judgment of the High Court, orders of the High Court in other cases are set aside and writ petitions are remanded back to the High Court to decide them in the light of the law stated by us in this judgment. Appeal dismissed.

Summary

Issues Involved:
1. Liability to pay market fee under the Rajasthan Agricultural Produce Markets Act, 1961.
2. Determination of the point of sale and transfer of ownership.
3. Applicability of market fee to agricultural produce brought for processing and not for sale.
4. Validity of deletion of Sub-rule (4) of Rule 58 of the Rajasthan Agricultural Produce Market Rules, 1963.

Detailed Analysis:

1. Liability to Pay Market Fee:
The central issue was whether the appellants, who purchased agricultural produce and brought it to the market area governed by the Rajasthan Agricultural Produce Markets Act, 1961 and the Rajasthan Agricultural Produce Market Rules, 1963, were liable to pay the market fee. The appellants argued that the sale was concluded outside Rajasthan, and thus, they were not liable to pay the market fee. The respondents contended that the sale was completed within the market area, making the appellants liable for the fee.

2. Determination of the Point of Sale and Transfer of Ownership:
The High Court examined the terms of the sale contracts to determine when and where the ownership of the goods transferred. In the case of Arihant Udhyog, the invoice indicated that the seller’s responsibility ceased upon delivery in Jodhpur, within the market area. The High Court concluded that the ownership transferred upon delivery in the market area, making the transaction subject to the market fee. The Supreme Court upheld this finding, noting that the intention to transfer ownership was evident from the terms of the contract, which indicated that the seller retained responsibility until delivery.

3. Applicability of Market Fee to Agricultural Produce Brought for Processing:
The appellants argued that since the agricultural produce was brought for processing and not for sale, the market fee should not apply. They relied on the case of Gujarat Ambuja Exports Limited v. State of Uttarakhand, where it was held that market fee is not payable on agricultural produce brought for manufacturing or processing. The Supreme Court, however, found that the High Court correctly rejected this argument, stating that once the goods are agricultural produce on which market fee is leviable, the fee is payable regardless of the subsequent use of the produce.

4. Validity of Deletion of Sub-rule (4) of Rule 58:
The appellants challenged the deletion of Sub-rule (4) of Rule 58, which previously exempted agricultural produce brought from outside the state for industrial use from market fee. The High Court had upheld the deletion as a valid exercise of power. The Supreme Court noted that the deletion rendered the previous exemption otiose, thereby making all agricultural produce brought into the market area liable for the market fee.

Separate Judgments:
The Supreme Court distinguished the case of Arihant Udhyog from other appellants. While the judgment against Arihant Udhyog was upheld, the Court remanded the cases of other appellants back to the High Court. The High Court was directed to examine the terms of each sale contract individually to determine the point of transfer of ownership and the applicability of the market fee.

Conclusion:
The appeal of Arihant Udhyog was dismissed, affirming the High Court's decision that the market fee was payable. Other appeals were allowed, and the cases were remanded to the High Court for individual examination of the terms of sale contracts to ascertain the point of transfer of ownership and liability for the market fee. The Supreme Court clarified that the market fee is applicable to agricultural produce brought into the market area, irrespective of its subsequent use for processing or manufacturing.