2018 (11) TMI 212 - HC - GST

Levy of market fee - power of respondent-State to charge tax/cess payable under the provisions of Rajasthan Agriculture Produce Marketing Act, 1961 - Validity of levy after promulgation of Goods and services tax (GST) - whether timber (Imarti Lakadi) is an agricultural produce - their shops and godowns etc. outside the Mandi yard and they do not avail any of the facilities or services provided by the respondent - Mandi. Held that - It is a settled proposition of law that the State can levy market fee under the relevant provisions of a statute, enacted in exercise of powers available to it under Entry 66 of the second list of the VIIth Schedule. It has also been settled by Hon ble the Supreme Court in the case of Sreenivasa General Traders & Ors. vs. State of Andhra Pradesh & Ors., 1983 (9) TMI 315 - SUPREME COURT that irrespective of the fact, whether a dealer carries on business or trade in the market yard or not, the agriculture produce brought by such dealer in the notified area is exigible to market fee, leviable under the Act. Levy of cess/fee on timber - Held that - Suffice it to observe that this stand too is totally contrary to the provisions contained in the Act of 1961. Section 2 (i) of the Act of 1961, unequivocally provides that items mentioned in the Schedule shall be treated to be an agricultural produce. Product timber has been specifically enumerated at Serial No.9 of Schedule appended with the Act of 1961. This being the fact situation, the timber or Imarti Lakadi is unquestionably an agricultural produce, exigible to Mandi fee under the Act of 1961. Moving on to the last point of the petitioner that after promulgation of Goods and Service Tax, the levy of cess under the Act of 1961 cannot continue; we are constrained to observe that even this argument is misconceived. - By a combined effect of Section 174 of CGST Act and RGST Act, the levy governed by only those enactments have been abolished, which have been enlisted in said sections. The market fee leviable under the Act of 1961 neither finds mention in any of the repeal and saving provisions, nor can it be so done, as the market fee is leviable under a separate enactment under the State s power to legislate under Entry 66 of the List-II of the VIIth Schedule. Petition dismissed.

Summary

Issues:
1. Declaration sought regarding the power of the state to charge tax/cess under Rajasthan Agriculture Produce Marketing Act, 1961 from society members.
2. Legality of cess on purchase and sale of timber by society members.
3. Constitutionality of levy and recovery of Mandi cess from society members.
4. Impact of Goods and Service Tax on the impugned cess.
5. Interpretation of the nature of levy under the Act of 1961.
6. Classification of timber as an agricultural produce.
7. Continuation of cess under the Act of 1961 post Goods and Service Tax implementation.

Analysis:

1. The petitioner, a registered society, filed a writ petition challenging the state's power to charge tax/cess under the Rajasthan Agriculture Produce Marketing Act, 1961 from its members.

2. The petitioner's counsel argued that the members engaged in timber trade outside the Mandi yard should not be subject to the cess as they do not utilize the Mandi facilities.

3. The counsel contended that levying Mandi cess on society members not situated in the Mandi yard is arbitrary, violative of Article 14, and restricts their right to trade under Article 19(1)(g) of the Indian Constitution.

4. The court noted that the petitioner's case was based on the assumption that the levy was a 'cess,' while it was actually a 'fee' under Section 17 of the Act of 1961.

5. Referring to legal precedent, the court established that market fee is leviable under Entry 66 of the VIIth Schedule, and traders are liable regardless of their location within the notified market area.

6. The court clarified that timber is considered an agricultural produce under the Act of 1961, making it subject to Mandi fee as listed in the Schedule.

7. The court cited a previous judgment to support the inclusion of timber as an agricultural produce under the legislative competence of the Act.

8. Regarding the impact of Goods and Service Tax, the court explained that the GST regime did not abolish the market fee under the Act of 1961, as it falls under the state's legislative power.

9. The court dismissed the petitioner's arguments, stating that the market fee was not affected by the GST implementation and upheld the legality of levying the fee on society members engaged in timber trade.