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TMI Blog1996 (9) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed the said khairwood by subjecting the wood to various physical and chemical processes and converted the khairwood into 'katha'. The appellant No. 1, Himachal Pradesh Marketing Board, and the appellant No. 2, Marketing Committee, Una, constituted by the Himachal Pradesh Marketing Board under the Marketing Act, required the respondent No. 1 Shankar Trading Co. Pvt. Ltd., to obtain licence and pay the requisite market fee @ 1% on the sale of katha which are processed by the said respondent during the marketing year. The said demand for obtaining licence and to pay the requisite market fee was made on the footing that the respondents who produce katha are 'manufacturers' and as they also act as dealers of 'katha' under the Marketing Act, they were required to obtain licence for the trading activities within the market area and to pay the requisite fee for such trading activity. 4. The respondents Nos. 1 to 3 challenged the appellants demand for levy of market fee and also the direction of the appellants asking the respondents to obtain licence under the Marketing Act in the High Court Court of Himachal Pradesh by filing a Writ Petition being Writ Petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Act. 6. The High Court has held that the distinction between the producer and the dealer is that a producer grows, manufactures, rears or produces or manufacture the agricultural produce besides disposing of the same but a dealer only sets up or establishes a place for such purchase or storage or processing of agricultural produce. A dealer does not produce agricultural produce. Accordingly, the writ petitioners cannot be held dealers within the meaning of Section 2(i) of the Marketing Act. The High Court has further held that the Writ Petitioners are not dealers out in fact producers of katha and Section 4(3) of the Marketing Act is not attracted. Hence, they are not required to take any licence under the Marketing Act. The High Court has further held that as the writ petitioners are not required to obtain any licence. Section 21 of the Marketing Act is also not attracted and the writ petitioners therefore are not required to pay market fee under the provisions of Section 21 of the Marketing Act. The direction of the respondents in the writ petition requiring the writ petitioners to obtain a licence and to pay market fee, therefore, cannot be sustained. Such directions were, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here under and the conditions specified in the licence: Provided that a licence shall not be required by a producer who sells himself or through a bonafide agent, not being a commission agent, his own agricultural produce or the agricultural produce of his tenants on their behalf or by a person who purchases any agricultural produce for his private use. 21. The market committee shall levy, on advalor basis, fees on agricultural produce brought or sold by licensees in the notified market area at the rate not exceeding one rupee for every one hundred rupees as may be fixed by the Board: Provided that: (a) no fee shall be leviable in respect of any transaction in which delivery of the agricultural produce bought or sold is not actually made; and (b) a fee shall be leviable only on the parties to a transaction in which delivery is actually made. 8. Mr. E.C. Aggarwala, learned Counsel appearing for the appellants, namely, Himachal Pradesh Marketing Board and the Marketing Committee. Una, has contended that the writ petitioners- respondents cannot claim exemption from obtaining a licence under the said Marketing Act or from paying levy for trading in katha within the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er', but such expression as process of agricultural produce has not been used in the definition of 'produce'- Processing of goods has not also been brought within the purview of proviso to Section 4(3) of the Marketing Act although in Section 4(3) the word process has been used. 10. Mr. Aggarwala has submitted that the expression processing used in the proviso to Sub-section (3) does not envisage that the person who processes the goods for getting and product like the writ petitioners are exempted from the obligation of obtaining licence under the Marketing Act. Mr. Aggarwala has also submitted that the writ petitioners after, manufacturing katha from the khairwood, sell such manufactured product in the market area. Accordingly, the said writ petitioners must be held to be dealers of the said end product katha even if the said end product has been manufactured by the said dealers from khairwood. 11. Mr. Aggarwala has also submitted that if an agriculturist is engaged in the business of disposing of his own agricultural produce, he ceases to be an agricultural producer. In support of such contention, Mr. Aggarwala has referred to a decision of this Court in Ramesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roach as made by the appellants, is clearly contrary to and not supported by the express terms of various provisions of the marketing Act and the Rules framed thereunder. In this connection, attention of the Court was drawn to the definition of 'Agricultural Produce' (Section 2(a), 'Dealer' (Section 2(i), 'Producer' (Section 2(h), 'Commission Agent' (Rule 2(iv) of the Rules framed under the marketing Act), 'Seller' (Rule 2(xiii), and the provision relating to exemption (Section 4(3), 'Market fee' to be levied (Section 21) and Rule 80(7) dealing with the meaning of terms 'bought and sold'. Mr. Rao has submitted that the harmonious reading of the said provisions indicates that the definition of producer relates to and include all those who manufacture or process any of the specified agricultural produce. The proviso to Sub-section (3) of Section 4 of the Marketing Act exempts the producer who sells his own agricultural produce which includes an agricultural produce as such or in the processed form. It has been contended by Mr. Rao that by no stretch of reasoning, a manufacturer or producer of agricultural produce (a scheduled it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also used and utilised for the manufacturing of forest medicines. In order to obtain katha (Catechu), khair wood is processed into various physical and chemical processes to obtain the end product katha. Para 9 : The method of manufacturing process for the manufacture of katha (Catechu) is as follows: (a) Long logs of khairwood are converted into small logs in saw mills. (b) In order to remove the park and sao wood either manual process is adopted or khair logs are pealed through pealing machine. (c) The khair wood so pealed/debarked is known as heart wood. (d) Heart wood is again converted in small pieces in saw-mill. (e) Small pieces of wood are converted into small chips in chipping machine. (f) Standard size chips are removed/separated from odd size chips. (g) odd size chips are converted into standard chips in Disintegrator machine. (h) Standard size chips are dolled in closed vats. (i) mother liquor so obtained is concentrated in Pan with steam. (j) Tick liquor obtained is allowed for fermentation with treatment with chemicals. (k) The fermentation material is allowed to cool in cold storage. Cold storage are operated with the help of Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tem before it is used as a raw material in manufacturing. Manufacture includes any process incidental or ancillary to completion of manufacturing a product. Mr. Rao has also submitted that the word process used in Section 2(a) has to be interpreted in the light of Section 2(h) in the context in which the said word appears in Section 3(a). Mr. Rao has also submitted that the word process has to be assigned its natural meaning i.e. an item subjected to such handling/treatment to make it fit for use or consumption of an item as it is. The dictionary meaning of the word storage is to keep goods in godown/warehouse for charges. It cannot be held that a person by keeping a manufactured item on completion of manufacturing process undertaken by him in the business premises till its sale is effected is indulging in activity of carrying on an independent business of storage. The Marketing Act does not deal with charging the market fee on storage of scheduled item by a manufacturer of such scheduled item. The word storage appearing in Section 2(i) dealing with definition of dealer must be construed in the context of definition of Godown keeper . According to Section 2(f), godown keeper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gricultural produce namely katha by processing the agricultural produce grown by them in their farm. They, in fact, are purchasing khairwood an agricultural produce grown by others and then subject such khairwood to various physical and chemical processes for obtaining an end product 'katha'. 23. Some 'agricultural produce' which is obtained in its natural form requires processing for being used as an item for consumption. Such processing may, in some case, be quite simple e.g. pulses from the grains. In some case, a delicate processing is required entailing some physical and chemical processing e.g. hide from the raw skin of an animal. 24. Under the scheme of the Marketing Act, which is primarily intended to benefit the actual growers of 'agricultural produce', the producer or grower of 'agricultural produce', even when required to undertake some processing whether simple or otherwise, of the natural 'agricultural produce' to make it consumption worthy, does not cease to be a producer of the agricultural produce because the natural produce even after being subjected to processing, remains 'agricultural produce' within the meani ..... X X X X Extracts X X X X X X X X Extracts X X X X
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