1987 (9) TMI 45 - SC - Income Tax

Writ in the nature of mandamus directing the respondents not to compel the petitioners to take out licences and to pay market fee under the U.P. Utpadan Mandi Adhiniyam, 1964? Held that - The petitioners, in our opinion, by producing khandsari sugar and selling it within the market area are also traders within the meaning of section 2(y) and also as contemplated by sub-section (1) of section 9. The petitioners are, therefore, producer-traders . There is no substance in the contention that the petitioners are not liable to pay the market fee. Writ dismissed.

Summary

Issues:
- Whether the petitioners are required to take out licenses and pay market fees under the U.P. Utpadan Mandi Adhiniyam, 1964.
- Whether the petitioners, as producers of khandsari sugar, are exempt from taking out licenses under the Act.
- Whether the petitioners are liable to pay market fees under the Act.

Analysis:
1. License Requirement:
The petitioners sought a writ of mandamus to prevent the respondents from compelling them to obtain licenses and pay market fees under the U.P. Utpadan Mandi Adhiniyam, 1964. The Act aims to regulate the sale and purchase of agricultural produce and the establishment of markets in Uttar Pradesh. Section 9(1) of the Act prohibits setting up places for sale, purchase, storage, etc., without a license. The petitioners argued that as producers of khandsari sugar, they should be exempt from this requirement. However, the court held that the Act's purpose would be defeated if producers selling in the market area were exempt. The proviso to section 9(1) exempts only producers who process agricultural produce for domestic consumption, not those selling in the market area.

2. Producer-Trader Classification:
The petitioners contended that section 9(1) applies only to producer-traders, defined as those engaged in buying or selling agricultural produce. They relied on a previous decision that defined a producer-trader as one who both produces and trades in agricultural produce. The court disagreed, stating that by producing and selling khandsari sugar in the market area, the petitioners qualified as producer-traders under the Act. The court's interpretation aligned with the legislative intent and the Act's objectives.

3. Market Fee Liability:
Regarding market fee liability, the petitioners argued that if they sell through a commission agent, only the agent is responsible for paying the fee. However, as there was no evidence in the petition to support this claim, the court dismissed this argument. Consequently, the petitioners were held liable to pay the market fee under the Act.

In conclusion, the court dismissed the writ petition, ruling that the petitioners must obtain licenses and pay market fees as required by the U.P. Utpadan Mandi Adhiniyam, 1964. The judgment clarified the obligations of producers selling in market areas and affirmed their classification as producer-traders under the Act.