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TMI Blog1987 (3) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... (hereinafter referred to as the "1986 Act"), and have prayed for the issuance of the writ of mandamus declaring the impugned Act as unconstitutional and for a direction to the respondent-State and the Assessing Authorities to refund the amounts deposited by them along with interest. A copy of the 1986 Act has been annexed by the petitioners as annexure P-2 with the writ petition. A brief history of the legislation of the 1986 Act would be necessary to be stated in order to appreciate the respective contentions of the parties. In 1983, the State of Haryana enacted the Haryana Rural Development Fund Act, 1983 (Haryana Act No. 12 of 1983) (hereinafter called the "1983 Act"). Under this Act it was envisaged to levy a cess at the rate of 1 per cent on every sale and purchase of agricultural produce in the market area located in the State of Haryana. A number of writ petitions were filed in the Punjab and Haryana High Court to challenge the constitutional validity of the 1983 Act which were accepted by the learned single Judge of this Court by his judgment dated October 13, 1984, reported as Om Parkash v. Giri Raj Kishore AIR 1985 P H 52. The learned single Judge held that the 1983 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t features of the 1986 Act. To start with, the very preamble of the 1986 Act provides for the establishment of the Haryana Rural Development Fund Administration Board for augmenting agricultural production and improving its marketing and sale. Under section 3 of the 1986 Act, the State Government is empowered to establish and constitute the Haryana Rural Development Fund Administration Board which shall consist of a chairman and other official and non-official members. The Board shall be a body corporate having perpetual succession and a common seal with power to acquire and hold property. The term of office of the non-official members of the Board has been fixed as three years and the State Government shall exercise superintendence and control over the Board and its officers. The Board has also been given the powers to frame by-laws for regulating the transaction of its business and other matters to be specified. According to section 5, there shall be levied on the dealers a fee on ad valorem basis at the rate of one per centum of the sale proceeds of agricultural produce bought or sold or brought for processing in the notified market area. The expression "dealer" has been defined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment, decree or order of any court, it shall be lawful for the State Government to retain the cess so levied and collected from the dealer if the burden of such cess was passed on by the dealer to the next purchaser of the agricultural produce or the goods processed or manufactured out of it in respect whereof such cess was levied or collected. According to sub-section (3) of this section, if any dispute arises as to the refund of any cess retained by the Government by virtue of sub-section (1) and the question is whether the burden of such cess was passed on by the dealer to the next purchaser, it shall be presumed that such burden was passed on by the dealer. Sub-section (4) of this section empower the State Government that if the amount of cess retainable by the Government under subsection (1), has not been paid by, or has been refunded to, any dealer, the same shall be recoverable by the Government as arrears of land revenue. Mr. Kuldip Singh, Bar-at-Law, learned Senior Advocate, appearing on behalf of the petitioners, has challenged the constitutionality of the aforesaid provisions of the 1986 Act, and his submissions can be broadly classified in the following contentions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fee is regarded as a sort of return or consideration for services rendered, it is absolutely necessary that the levy of fees should, on the face of the legislative provision, be correlated to the expenses incurred by Government in rendering the services." The second reason which weighed with the Honourable Judges of the Supreme Court while striking down the 1983 Act was that there did not exist any correlation between the amount paid by way of cess and the services rendered to the person from whom it was collected. Refuting the aforesaid contention of Mr. Kuldip Singh, the learned Advocate-General, Haryana, appearing on behalf of the State, has elaborately referred to the various provisions of the 1983 Act as well as of the 1986 Act. By a comparison of the various provisions of the two Acts, he has sought to canvass that the legislative infirmities in the 1983 Act and the deficiencies which were highlighted by the Supreme Court in its judgment, due to which the cess imposed by the 1983 Act could not satisfy the test of fee, have been completely removed by the State Legislature while re-enacting the 1986 Act. According to the learned Advocate-General, scrupulous care has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic service is indistinguishable from public service, and in essence is directly a part of it, different considerations may arise. In such a case, it is necessary to enquire what is the primary object of the levy and the essential purpose which it is intended to achieve. Its primary object and the essential purpose must be distinguished from its ultimate or incidental results or consequences. That is the true test in determining the character of the levy: [1950] AC 87 (Attorney-General for British Columbia v. Esquimalt and Nanaimo Ry. Co.) Ref. to." Next in chronological order is the five Judges' judgment of the Supreme Court in Kewal Krishan Puri v. State of Punjab AIR 1980 SC 1008, in which the validity of certain provisions of the Punjab Agricultural Produce Markets Act, 1961 (Punjab Act No. 23 of 1961) was challenged. Giving a broad meaning to the term "fee" and widening its scope further, the Supreme Court held as under: "Generally speaking a fee is defined to be a charge for a special service rendered to individuals by some governmental agency. A question arises'special service' rendered to whom, which kind of individuals? The argument that service rendered must be corre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred, such relation need not be direct, a mere casual relation may be enough. Further, neither the incidence of the fee nor the service rendered need be uniform. That others besides those paying the fees are also benefited does not detract from the character of the fee. In fact, the special benefit or advantage to the payers of the fees may even be secondary as compared with the primary motive of regulation in the public interest. necessary nor expedient to weight too meticulously the cost of the services rendered, etc., against the amount of fees collected so as to evenly balance the two. A broad correlationship is all that is necessary. Quid pro quo in the strict sense is not the one and only true index of a fee; nor is it necessarily absent in a tax." Taking his argument still further, the learned Advocate-General, Haryana, has taken the stand that a fee will not become a tax even if the element of quid pro quo is absent in the levy. To substantiate his contention, reliance has been placed by him on the judgment of the Supreme Court in Sreenivasa General Traders v. State of Andhra Pradesh AIR 1983 SC 1246, wherein their Lordships have held as under: "The traditional view tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified." Applying the ratio of the aforesaid judgments of the Supreme Court to the facts of the present case and the various provisions of the 1986 Act, it becomes crystal clear that- (1) the object of the 1986 Act is only to levy fee for the services to be rendered to the dealers operating in the market areas; (2) the fee levied is justified and bears a close relationship with the services rendered; and (3) the test of element of quid pro quo is adequately satisfied as the 1986 Act provides for rendering of sufficient services to the dealers in particular and other public in general. Thus, the requirements laid down in the Supreme Court judgment in Om Parkash Agarwal's case AIR 1986 SC 726 are fully satisfied. Therefore, there is no difficulty in holding that the 1986 Act is constitutionally valid and the challenge against the same is wholly devoid of force. Consequently, the first contention of the learned counsel for the petitioners is rejected. Refuting the second contention of the petitioners, that is, section 11 of the 1986 Act is in any case bad in law inasmuch as it provides for the retention of the cess/fee levied and collected under the 1983 Act even though the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to retain the cess so levied and collected from the dealer if the burden of such cess was passed on by the dealer to the next purchaser of the agricultural produce or the goods processed or manufactured out of it in respect whereof such cess was levied or collected. (2) No suit or other proceed(2) No suit or other proceedings ings shall be instituted, mainshall be instituted, maintained or tained or continued in any court continued in any court for the refund for the refund of whole or any of whole or any part of the fee part of the cess retained by the retained by a committee under subGovernment under sub-section (1) section (1) and no court shall enforce and no court shall enforce any any decree or order directing the decree or order directing the refund of whole or any part of such refund of whole or any part fee. of such cess. (3) If any dispute arises as (3) If any dispute arises as to to the refund of any cess retained the refund of any fee retained by a by the Government by virtue of committee by virtue of sub-section (1) sub-section (1) and the question and the question is whether the buris whether the burden of such cess den of such fee was passed on by the was pass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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