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TMI Blog2012 (3) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... Mandi Parishad, Lucknow, dated 3rd July, 1997, under Section 32 of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 (hereinafter called 'the Act'), have been dismissed. The order passed by the Director, Rajya Krishi Utpadan Mandi Parishad pertained to 19 revision petitions of which 8 petitions were filed by Glaxo India Ltd. relevant to the period 1st November, 1990 to 30th September, 1994 while the remaining 11 petitions pertained to Heinz India Pvt. Ltd. relevant to the period between 1st October, 1994 and 31st May, 1996. During the pendency of the Special Leave Petitions, Writ Petition (C) No.144/2005 was filed under Article 32 of the Constitution of India, inter alia, praying for a writ of certiorari, quashing order dated 25th September, 2004 passed by the Deputy Director (Administration) Krishi Utpadan Mandi Parishad, Gomti Nagar, Lucknow in another batch of revision petitions (pertaining to the period between 3rd June, 1996 and 30th April, 2004) and an assessment order dated 7th July, 1998 passed by the Krishi Utpadan Mandi Samiti, Aligarh. A declaration to the effect that the goods removed from the petitioner's unit at Aligarh to places outside the State of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompelled to pay the market fee as demanded it shall be open to them to challenge the same in the manner provided under the Act. This implied that if the claim of the dealers that the goods were not being removed pursuant to any sale transaction was rejected and a demand for payment of Mandi Fee raised, the aggrieved dealer could question that demand in appropriate proceedings. 4. It is evident from a reading of the order passed by the Mandi Parishad that the earlier procedure of issuing free gate passes remained in vogue upto February, 1995, whereafter the Mandi Samiti started issuing gate passes only on payment of the Mandi Fee demanded by it. This change came about as a result of the aforementioned decision of this Court in Shree Mahalaxmi Sugar Works (supra). Subsequently, in Krishi Utpadan Mandi Samiti v. M/s Saraswati Cane Crusher Ors. (Civil Appeal Nos. 1769-1773 of 1998), decided on 25th March, 1998 this Court prescribed the procedure to be followed in the matter of issue of gate passes, making of provisional assessment and the time frame for making a final assessment. We are satisfied that the orders of this Court afore-referred to would need some repair work. We t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs thereafter. 5. Suffice it to say that according to the above decision the dealers could make a claim for the refund of the amount paid by them on furnishing of proof of the fact that the goods had moved out of the mandi area without being subjected to a transaction of sale. 6. What is important for the present is that Heinz made claims for the refund of the amount paid by it towards market fee and furnished to the Mandi Samiti material to support that claim. The material so produced was then evaluated by the Mandi Samiti who came to the conclusion that the same was not sufficient to rebut the statutory presumption that the removal of goods from the Mandi limits was pursuant to a sale effected within such limits. The claim for refund of the amount paid by the appellant-Heinz was accordingly rejected by the Mandi Samiti in terms of the orders referred to earlier. 7. Aggrieved by the order passed by the Mandi Samiti both Glaxo India Ltd. and Heinz India Pvt. Ltd. filed revision petitions before the Director, Mandi Parishad, invoking his jurisdiction under Section 32 read with Section 33 of the Act as a delegate of the Mandi Parishad. By his order dated 24th October, 1996, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t at Aligarh and they were given the delivery on that basis only. xxx xxx xxx xxx xxx xxx 19. In this way by the analysis and close consideration of said paras 16, 17 and 18 it is concluded that under the arrangement given by Hon'ble Supreme Court in 1995 (Supp.3) S.C.C. 433 the sale taking place in the matter of M/s Mahalaxmi Sugar Works, Revisionist's disputed transmitted and its sale taking place at the place of destination by taking stock outside the mandi area in the form of stock transfer and the concept of taking out the sale under explanation of 17(3)(B), it has failed to prove by producing counter valid rebuttal of concept because according to the case went for revision on stock transfer and place of destination it has failed to tell the presence by producing the best chain of evidence for proving.... 9. Writ Petition Nos. 2320(M/S), 2516(M/S), 2517(M/S), 2518(M/S), 2519(M/S), 250(M/S), 226(M/S) and 2527(M/S) of 1997 filed by Glaxo India Ltd., before the High Court of Allahabad challenged the correctness of the above order. Heinz India Pvt. Ltd. also filed Writ Petition Nos. 2323(M/S), 2321(M/S), 2322(M/S), 2324(M/S), 2325(M/S), 2326(M/S), 2474(M/S), 2475 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a long line of decisions rendered from time to time, emphasised the importance of machinery provisions for assessment of taxes and fees recoverable under a taxing statute. In one of the earlier decisions on the subject a Constitution Bench of this Court in Kunnathat Thathunni Moopil Nair etc., v. State of Kerala and Anr. (AIR 1961 SC 552) examined the constitutional validity of the Travancore-Cochin Land Tax Act (15 of 1955). While recognising what is now well-settled principle of law that taxing statute is not wholly immune from attack on the ground that it infringes the equality clause in Article 14, this Court found that the enactment in question was violative of Article 14 of the Constitution for inequality was writ large on the Act and inherent in the very provisions under the taxing section thereof. Having said so, this Court also noticed that the Act was silent as to the machinery and the procedure to be followed in making the assessment. It was left to the Executive to evolve the requisite machinery and procedure thereby making the whole thing from beginning to end purely administrative in character completely ignoring the legal position that the assessment of a tax on p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge Land Holdings Tax Act (31 of 1957). Dealing with the argument that the Act did not make a specific provision about the machinery for assessment or recovery of tax, this Court held: ....if a taxing statute makes no specific provision about the machinery to recover tax and the procedure to make the assessment of the tax and leaves it entirely to the executive to devise such machinery as it thinks fit and to prescribe such procedure as appears to it to be fair, an occasion may arise for the Courts to consider whether the failure to provide for a machinery and to prescribe a procedure does not tend to make the imposition of the tax an unreasonable restriction within the meaning of Article 19(5). An imposition of tax which in the absence of a prescribed machinery and the prescribed procedure would partake of the character of a purely administrative affair can, in a proper sense, be challenge as contravening Article 19(1)(f). (emphasis supplied) 15. In The State of Andhra Pradesh and Anr. v. Nalla Raja Reddy and Ors. (AIR 1967 SC 1458), this Court was examining the constitutional validity of Andhra Pradesh Land Revenue (Additional Assessment) and Cess Revision Act (22 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dministrative in character, is open to challenge before a Writ Court in appropriate proceedings. Whether or not the enactment levying the tax makes a machinery provision either by itself or in terms of the Rules that may be framed under it is, however, a matter that would have to be examined in each case. In our opinion, it is not necessary to dilate any further on this aspect in the context of the provisions of Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 having regard to the fact that the question whether the said Act provides a suitable machinery for assessment and recovery of the fee has been examined by this Court in Ram Chandra Kailash Kumar Co. Ors. v. State of U.P. Anr. 1980 (Supp) SCC 27. That decision arose out of a writ petition filed before the High Court of Allahabad challenging the constitutional validity of the Adhiniyam. The High Court had dismissed the challenge to the constitutional validity of the enactment which order was then assailed before this Court in an appeal by special leave. This Court formulated as many as 24 distinct points for determination based on the grounds that were urged in support of the challenge. One of the points that fell for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te touching the correctness of any such adjudication or assessment by the committee is examinable by the Board in terms of Section 32 of the Act. Since the Board is a multi-member body any exercise in the nature of review or revision of the order passed by the Committee on the claim for refund cannot be undertaken by the Board itself, the practice that is followed is that such revisions are heard and decided by the Director to whom the revisional powers of the Board are delegated in terms of Section 33 of the Act. What according to Mr. Chandra is surprising is that even the Director does not hear the matters himself. The actual disposal of the revision is left to a junior officer to whom the Director may assign the case for disposal. Hearing by any such junior officer who is neither by training nor by qualification suited for such determination of complicated issues regarding the liability of the purchaser or seller of goods within a market area makes the entire process of determination farcical. A machinery for adjudication of disputes can be said to have been provided for only if the same ensures a fair and objective adjudication of the matters in disputes at the hands of the aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorised by the Director. This, argued Mr. Chandra, resulted in dilution of the sanctity and efficacy of the revisional exercise not because it was dehors the statute but because the exercise of quasi-judicial powers were entrusted to an officer at the lower rung of the hierarchy. 23. Section 2(h) defines the term 'Director' as under: 'Director' means an officer appointed by the State Government as Director of Mandis and includes any other officer authorised by the Director to perform all or any of his functions under this Act. 24. It is manifest from a plain reading of the above that the expression 'Director' wherever used in the Act including Section 33 thereof includes an officer authorised by the Director to perform all or any of his functions under the Act. Significantly enough neither before the High Court nor before us was it contended that the officer who had handled and disposed of the revision petitions filed by the dealers, was not duly authorised in terms of Section 2(h) or that the power of the Board under Section 32 of the Act was not duly delegated to the Director. It is not, therefore, a case of inherent lack of jurisdiction. All t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer who is well-versed in dealing with legal issues concerning assessment and/or determination of the liability under the Act. Beyond that it is neither necessary nor proper for us to say anything. Question No.1 is answered accordingly. Re: Question No.2 25. Explanation to Section 17(iii) of the Act raises a presumption to the effect that any specified agricultural produce taken out of or proposed to be taken out of a market area by or on behalf of a licensed trader has been sold within such area; the price of the produce so presumed to be sold is then determinable in the manner prescribed. The Explanation reads: Explanation.- For the purpose of clause (iii), unless the contrary is proved, any specified agricultural produce taken out or proposed to be taken out of a market area by or on behalf of a licensed trader shall be presumed to have been sold within such area and in such case, the price of such produce presumed to be sold shall be deemed to be such reasonable price as may be ascertained in the manner prescribed. 26. It is fairly evident that the presumption is rebuttable in nature; for it holds good only till the contrary is not proved by the dealer. The quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efute, or take away the effect of something. When a plaintiff in an action produces evidence which raises a presumption of the defendant's liability, and the defendant adduces evidence which shows that the presumption is ill-founded, he is said to rebut it. 31. Both in England and America, law permits raising of presumptions both conclusive and rebuttable. There is considerable judicial authority in both jurisprudential systems, dealing with the question of the standard of proof required to rebut a presumption whether statutory or at common law. In England, the civil standard of proof is defined by Lord Denning in Miller v. Minister of Pensions [1947] 2 All ER 372, thus: ..........It need not reach certainty, but it must carry a high degree of probability. Proof beyond reasonable doubt does not mean proof beyond the shadow of doubt. The law would fail to protect the community if it admitted fanciful possibilities to deflect the course of justice. If the evidence is so strong against a man as to leave only a remote possibility in his favour which can be dismissed with the sentence of course it is possible, but not in the least probable the case is proved beyond reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andard of proof depends upon the degree of confidence which the American society thinks the fact finder should have in the correctness of factual conclusions for a particular type of adjudication. [See Addington v. Texas, 441 U.S. 418, 423 (1979)]. Proof may be required by a preponderance of the evidence, by clear and convincing evidence or by proof that is beyond reasonable doubt. Proof by 'clear and convincing evidence' lies between standard of 'preponderance of the evidence' at one end and 'beyond a reasonable doubt' at the other. Clear and convincing evidence has been described as evidence that produces in the mind of the trier of the fact an abiding conviction that the truth of the factual contentions is highly probable. [See 32A Corpus Juris Secundum Evidence ' 1624]. 35. We may at this stage refer to a few decisions of this Court on the subject. In Izhar Ahmad Khan v. Union of India and Ors. (AIR 1962 SC 1052), this Court was examining the provisions of Schedule III Rule 3 of the Citizenship Rules, 1956 which made it obligatory on the enquiring authority to infer the acquisition of citizenship of a foreign country from the fact that the passpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xxx xxx xxx xxx xxx Thus, the rule of rebuttable presumption adds statutory force to the natural and inherent probative value of fact A in relation to the proof of the existence of fact B and in adding his statutory value to the probative force of fact A, the rule, it is conceded, makes a provision within the scope and function of the law of evidence. If that is so, how does it make a difference in principle if the rule adds conclusive strength to the probative value of the said fact A in relation to the proof of the existence of fact B? In regard to the category of facts in respect of which an irrebuttable presumption is prescribed by a rule of evidence, the position is that the inherent probative value of fact A in that behalf is very great and it is very likely that when it is proved in a judicial proceeding, the judicial mind would normally attach great importance to it in relation to the proof of fact B. The rule steps in with regard to such facts and provides that the judicial mind should attach to the said fact conclusiveness in the matter of its probative value. It would be noticed that as in the case of a rebuttable presumption, so in the case of an irrebuttable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh Sales Tax Act, 1948 which was alleged to be ultra vires of the Constitution inasmuch as it permitted the authorities to raise a rebuttable presumption regarding the sale of goods having taken place inside the State of U.P. if the transit pass is not handed over to an officer at the check-post or the barrier near the place of exit from the State. Such a presumption with an object of preventing evasion of tax, it was contended, as regards the proof of a set of circumstances which would make a transaction liable to tax was tantamount to conferring on the authority concerned the power to levy a tax which the legislature could not otherwise levy. Repelling the contention this Court held that a rebuttable presumption has the effect of shifting the burden of proof, for the authority concerned, before levying sales tax arrives at the conclusion about the exigibility of the tax by a judicial process and only upon his satisfaction that the goods have been sold inside the State. In doing so, the authority no doubt relies upon the statutory rules and presumption contained in Section 28-B of the Act. But such presumption can be rebutted by the person against whom action is taken under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons. The first and foremost is that the presumption is raised in relation to a fiscal statute. While the amount payable is not a tax it is nevertheless a statutory levy which is attracted the moment the transaction of sale takes place within the market area. Goods, admittedly produced within the market area and not consumed within such area are presumed to be leaving pursuant to a transaction of sale unless the contrary is proved. That the goods are produced within the market area is not in dispute in the instant case. That they left the market area is also admitted. In the ordinary course, therefore, the presumption would be that the goods left pursuant to a sale unless the appellants are in a position to prove the contrary. 40. The second reason for applying a higher standard of proof than mere preponderance of probability is that the nature of transaction pursuant to which the goods are removed from the market area is within the exclusive knowledge of the appellants or the persons to whom such goods are being dispatched. In other words, the circumstances in which the transactions, which the statute presumes to be sales, but which the appellants claim are simple transfer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectly the law that regulates his decision-making power and must give effect to it. Whether he has or not is par excellence a justiciable question to be decided, in the event of dispute, by those persons, the judges, by whom the judicial power of the State is exercisable. By 'irrationality' I mean what can by now be succinctly referred to as 'Wednesbury unreasonableness'. It applies to a decision which is so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at it. Whether a decision falls within this category is a question that judges by their training and experience should be well equipped to answer or else there would be something badly wrong with our judicial system... ... I have described the third head as 'procedural impropriety' rather than failure to observe basic rules of natural justice or failure to act with procedural fairness towards the person who will be affected by the decision. This is because susceptibility to judicial review under this head covers also failure by an administrative tribunal to observe procedural rules that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by oblique ends or is otherwise void on well- established grounds. The constitutional balance cannot be upset. 45. There is almost complete unanimity on the principle that judicial review is not so much concerned with the decision itself as much with the decision-making process. (See Chief Constable of North Wales Police v. Evans [1982] 3 All ER 141). As a matter of fact, the juristic basis for such limitation on the exercise of the power of judicial review is that unless the restrictions on the power of the Court are observed, the Courts may themselves under the guise of preventing abuse of power, be guilty of usurping that power. Justice Frankfurter's note of caution in Trop v. Dulles 356 U.S. 86 (1958) is in this regard apposite when he said: All power is, in Madison's phrase, 'of an encroaching nature'. Judicial power is not immune against this human weakness. It also must be on guard against encroaching beyond its proper bounds, and not the less so since the only restraint upon it is self- restraint. 46. That the Court dealing with the exercise of power of judicial review does not substitute its judgment for that of the legislature or executive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through the absence of evidence, or of sufficient evidence, to support it, or through account being taken of irrelevant matter, or through a failure for any reason to take account of a relevant matter, or through some misconstruction of the terms of the statutory provision which the decision maker is required to apply. But while the evidence may have to be explored in order to see if the decision is vitiated by such legal deficiencies it is perfectly clear that in case of review, as distinct from an ordinary appeal, the court may not set about forming its own preferred view of evidence. 50. In its order dated 13th September, 1995 the Mandi Samiti, Aligarh, has upon examination of the evidence adduced before it recorded a finding that the same did not inspire confidence for a variety of reasons. The Samiti has found that the appellants had failed to produce any evidence as to when and where any transaction regarding sale and purchase of ghee manufactured within Mandi area was finalised. No evidence was adduced by the appellants to show as to who had been instrumental in finalising such sale transactions out of its officers and employees. If the product was being sold under the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the ghee. This is because if the transport of ghee outside Aligarh, was a stock transfer and not pursuant to a sale made within the market area, the payment of freight would have been the responsibility of the company for there is no transfer of the ownership in that case to any third party. The company should have in that case firmly established that the transport charges payable in regard to the transport of the stocks of ghee out of the mandi area were paid by it and by no one else. Keeping in view the fact that the company is doing business worth crores of rupees and maintains regular accounts book, both in the ordinary course of its business as also for tax purposes, there was no reason why the company should have failed to establish that the transport charges were paid by it. The Director exercising powers of the Mandi Parishad also held that there was a break in the chain of reasons in as much as the appellants did not bring forth the link evidence giving details of the sale transactions pursuant to which C F agents had made the delivery of the goods. 52. The orders passed by the Mandi Samiti and the Director exercising powers of the Mandi Parishad thus clearly sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted each piece of evidence and found the same to be insufficient to hold that the sale transactions had, in fact, taken place outside the mandi area so that the presumption arising under Section 17(iii) of the Act stood rebutted. The Director exercising powers of the Mandi Parishad has in its order dated 25th September, 2004 once again evaluated the evidence and concurred with the view taken by the Mandi Samiti. 57. In the light of the legal position stated in the earlier part of this order, it is neither feasible for us to embark upon an exercise of re- appreciating the entire material or to substitute our own findings for those recorded by the Mandi Samiti and the Director/Mandi Parishad. So long as the finding recorded by the Mandi Samiti and the Mandi Parishad are not irrational or perverse, and so long as the view taken by them is a reasonably possible view, this Court would not interfere. 58. In course of arguments at the Bar, we repeatedly asked Mr. Chandra as to why the appellants had failed to adduce the material which would throw a flood of light as to the true nature of the transaction within or outside the mandi area. Mr. Chandra's reply was that the material ..... 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