IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH JAIPUR ORDER (1) S.B.CIVIL WRIT PETITION NO.5643/2001 M/s.Hindustan Timber Company and another Versus Krishi Upaj Mandi Samiti, Alwar (2) S.B.CIVIL WRIT PETITION NO.5640/2001 M/s.Hari Ram Brijendra Kumar and another Versus Krishi Upaj Mandi Samiti, Alwar (3) S.B.CIVIL WRIT PETITION NO.5641/2001 M/s.Sampat Ram and Sons and another Versus Krishi Upaj Mandi Samiti, Alwar (4) S.B.CIVIL WRIT PETITION NO.5642/2001 M/s.Chhajuram and Sons and another Versus Krishi Upaj Mandi Samiti, Alwar (5) S.B.CIVIL WRIT PETITION NO.658/2002 M/s.Nepal Timber Company and another Versus Krishi Upaj Mandi Samiti, Alwar (6) S.B.CIVIL WRIT PETITION NO.659/2002 M/s.Ram Prasad Ram Swaroop and another Versus Krishi Upaj Mandi Samiti, Alwar DATE OF ORDER --- May 04,2010 PRESENT HONBLE MR.JUSTICE PREM SHANKER ASOPA Mr.Nitin Jain, for the petitioners None present for the respondent BY THE COURT
(1) Since common question of quashing the notices/orders dated 31.5.2001 and 16.6.2001 of charging interest at the rate of 36% per annum on account of not depositing the market fee in due time and further declaring sub-clauses (2), (3) and (4) of Clause 17 of the Bye Laws of the Krishi Upaj Mandi Samiti, Special Category, Alwar (in short `the Samiti’) as unconstitutional, unreasonable and ultra vires provisions of the Rajasthan Agricultural Produce Market Act, 1961 (in short `the Act of 1961′) and the Rules framed thereunder, is involved, all the aforesaid cases which have been clubbed together, have been heard and are being decided together by this common judgment.
(2) The facts of CWP No. 5643/2001 M/s.Hindustan Timber Co. and another V. Krishi Upaj Mandi Samiti are taken as the leading facts.
(3) The petitioner No.1 M/s.Hindustan Timber Co. which is a partnership firm, deals in the business of timber and wooden furniture and purchase timber from various places in Alwar area.
(4) A notice was given by the respondent Samiti to the petitioner No.1 by which it was asked to obtain licence for sale and purchase of agricultural produce and the market fee was notified. Since the petitioner No.1 was not liable to pay any market fee, the aforesaid action of the Samiti was challenged through the Association named Timber Vyapar Sanchalan Samiti, Alwar by filing CWP No. 2/91 before this Court. The petitioner No.1 is also one of the members of the above Association. This Court vide order dated 4.1.1991 while issuing notice of the stay petition, directed the respondents that on its own, the respondent shall not take any coercive method for recovery of licence or market fee from the petitioner Association. Thereafter, vide order dated 4.10.1994, the stay order was modified to the extent that the determination of market fee shall be made by the respondent and thereafter, bank guarantee shall be furnished in respect of determined amount which will be subject to the final decision of the writ petition. The writ petition was dismissed vide order dated 13.7.1995, against which DB SAW No.662/1995 was filed. The said appeal was also dismissed vide judgment dated 8.11.1995. It is further stated in the writ petition that after dismissal of the writ petition and the special appeal, the petitioner No.1 deposited due amout of market fee/cess with the respondent Samiti.
(5) On 31.5.2001, a notice was served upon the petitioner No.1 directing it to deposit a sum of Rs.67,390/- on account of interest on the market fee for the year 1990-91 to 1994-95 on the ground that the same was deposited after the prescribed period of limitation. It was also mentioned in the notice that in case the due amount was not paid within seven days, the same will be recovered as per Sec. 34 of the Act of 1961 as an arrear of land revenue. The amount of interest of Rs.60,711/- on the principle amount of Rs.67,390/- which was already deposited late, has been calculated at the rate of 36% per annum, as per Bye Law No.17(2), 17(3) and 17(4) of the Bye Laws of the respondent Samiti framed under section 37(1) of the Act of 1961, according to which, after the due date for payment, for first three months the interest at the rate of 2% per month will be charged on the principal amount of mandi fee; in case after three months the market fee along with interest is not deposited, then the principal amount with interest at the rate of 3% will be realised till the closing of the financial year but in case of non deposit of the dues relating to market fee for the month of January and February of any year after three months, interest will be charged at the rate of 2% per month. It is then stated in the writ petition that interest could nonly be charged when there is a specific provision in the Act or the Rules framed thereunder and there is no such provision under the Act of 1961 or the Rules of 1963 for charging interest on delayed payment and further the provision of charging interest is a substantive provision, therefore, the bye laws which have been made without taking prior sanction of the Director of Agriculture are ultra vires provisions of the Act of 1961 and the Rules of 1963.
(6) Lastly, it is stated in the writ petition that for collecting Market Fee, the charging provision is contained in Sec. 17 of the Act of 1961 on agricultural produce which is to be recovered under Rules 58 to 61 of the Rules of 1963 and further, in case of non payment the same is to be recovered as per Sec. 34 of the Act of 1961 but in none of the Sections, provision for charging interest is there.
(7) The respondent Samiti has filed reply to the writ petition stating therein that there is no legal restriction not to provide for charging interest. The Bye Laws of the Samiti are in accordance with the provisions of Act of 1961 and the Rules of 1963 and the matter of charging interest on late payment is of common prudence. On the issue of previous sanction of the Director, the respondent Samiti has stated in the reply that the petitioner No.1 has to assert proper facts regarding the previous sanction of the Director but there is no reply to the aforesaid legal averment made in the writ petition.
(8) Submission of counsel for the petitioner No.1 is that charging of interest is a substantive provision which is totally missing in the Act of 1961 and the Rules of 1963, which clearly reveal the intention of the State Legislature as well as the State not to charge interest on the delayed payment of market fee and the recovery is to be made as per Sec. 34 of the Act of 1961 as an arrear of land revenue. Counsel further submits that the rate of interest @ 36% is wholly unreasonable and arbitrary and therefore, the same is violative of Articles 14 and 19(1)(g) of the Constitution of India. Counsel also submits that the previous sanction of the Director is required for enforcing the Bye Laws as per Sec. 37 of the Act of 1961.
(9) On the basis of the above submissions, counsel for the petitioner No.1 then submits that sub-clauses (2), (3) and (4) of Bye Law No.17 of the Bye Laws are ultra vires Sec. 17/34 of the Act of 1961 as well as the Rules of 1963.
(10) In support of his aforesaid submissions, counsel for the petitioner No.1 has placed reliance on India Carbon Ltd. and others V. State of Assam (1997) 6 SCC 479, V.V.S.Sugars V. Govt. of A.P. and others (1994) 4 SCC 192 and Bhikam Chand and others V. State and others (AIR 1966 Rajasthan 142) (DB).
(11) The facts of other connected writ petitions are similar to that of CWP No.5643/2001.
(12) No one appeared to contest the writ petition on 28.4.2010 and today also, even in the second round, no one has put in appearance for the respondent Samiti, therefore, the contents of the reply to the writ petition are taken as submissions on behalf of the respondent Samiti.
(13) I have gone through record of the writ petition and further considered submission of the counsel for the petitioner No.1 and the reply filed by the respondent Samiti.
(14) Before proceeding further, I would like to quote Sec.17 and 34 of the Act of 1961 and Rules 58 to 61 of the Rules of 1963 and the relevant Bye Laws, which are as under:
Sec.17 and 34 of the Rajasthan Agricultural Produce Markets Act,1961
Sec.17
17. Power to collect market fees.- The market committee shall collect market fees from the licensees in the prescribed manner on agricultural produce brought or sold by them in the market area at such rate as may be specified by the State Government by notification in the Official Gazette, subject to a maximum of Rs.2/- per one hundred rupees worth of agricultural produce.
Sec.34
34. Recovery of sums due to Government or market committee.- (1) Every sum due from a market committee to the State Government shall be recoverable as an arrear of land revenue.
(2)(a) Any sum due to a market committee on account of any chargfe, costs, expense, fees, rent or any other amount under the provisions of this Act or any rule or bye-law made thereunder, shall be recoverable from the person from whom such sum is due, in the same manner as an arrear of land revenue by the government on behalf of the market committee.
(b) If any question arises whether any money is due or not, to the market committee within the meaning of clause (a) it shall be referred to the Director or an officer authorised by him and the Director or the authorised officer shall, after making such enquiry as he deems fit, and after giving to the person from whom the money is alleged tobe due, an opportunity of being heard, decide the question and his decision shall be final.
Rules 58-61 of the Rajasthan Agricultural Produce Markets Rules,1963
58. Market area Cess.- (1) A market area committee shall collect cess on agricultural produce bought and sold in the market area at such rate as may be specified by the Government by way of notification.
Provided that no cess shall be levied on any such notified agricultural produce on which cess has been levied in another market area if the seller or the purchaser of such notified produces files a declaration in Form XI, in the prescribed manner, that on such notified agricultural produce, cess has already been levied in another market area of the State.
Explanation.- (a) For the purpose of this rule a sale of agricultural produce shall be deemed to have taken place in a market area if it has been weighed or measured or surveyed by a licensed weighman, measurer or surveyor in the market area for the purpose of sale, notwithstanding the fact the property in the agricultural produce has by reason of such sale, passed to a person in place outside the market area.
(b) Further for the purpose of this rule, all notified agricultural produce taken out or proposed to be taken out of the market area shall, unless the contrary is proved, be presumed to be bought and sold within such market area.
(2) The cess levied as per sub-rule (1) shall not be levied more than once on agricultural produce bought or sold in the market area.
(3) The market area committee shall also levy and collect licence fee from traders, brokers, weighman, measurer, surveyors, warehouse men and other persons operating in the market area as provided in the bye-laws.
(4) (xxx)
(5) The seller who is himself the producer of the agricultural produce offered for sale and the buyer who buys such produce for his own private and/or household use, shall be exempted from payment of any cess under this rule.
59. Recovery of cess and fees.- (1) The cess on agricultural produce shall be payable as soon as it is bought and sold in the market area as may be specified in the byelaws.
(2) The market fee shall be paid by the purchaser in the following manner:
(i) If the specified agricultural produce is sold through an `A’ class broker the `A’ class broker shall charge market fees from the purchaser and deposit the same with the Market Committee in accordance with the procedure specified in the bye-laws.
(ii) If the specified agricultural produce is not sold through an `A’ class broker, the seller shall charge market fees from the purchaser and deposit the same with the Market Committee in the manner specified in the bye-laws.
(iii) In case the seller is not a licensee, the market fees shall be deposited by the purchaser in the manner specified in the bye-laws.
Explanation.- The word `purchaser’ means and includes a person who as a trader or broker or any other operator has obtained a licence for the purchase of agricultural produce in the market area.
(3) Deleted.
(4) The licence fee shall be paid along with the application for licence but in cases the market area committee refuses the grant of a licence, the fees recovered shall be refunded to the applicant.
(5) The market area committee may levy a subscription for collecting and disseminating among the subscribers, information as to any matter relating to statistics or/making in respect of the notified agricultural produce.
60.Receipt.- (1) The Market Committee shall maintain a register showing the cess and the fees collected by it. A receipt duly signed by the person authorised by the Market Committee shall be granted to every person in respect of cess and fees collected from him under these rules or the bye-laws.
(2) Every person authorised by the Market Committee to collect cess shall pass receipt to the payees, keeping counterfoils of the receipt so granted and shall render account of all receipts at least once a day to the personduly authorised in this behalf by the Market Committee.
60. Collection of cess.- The mode of collection of cess shall be prescribed by the Market Committee in the bye-laws.
Relevant Bye-laws
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4.??? ??????? ??? ?? ???? ?????? 17/1??? ????????? ???? ?? ??? ????? ????? ??? ???? ????? ?? ?? ????? ????? ???? ??????? ?? ??????? ??????? ??? ?????? ??? ????? ?????????? ?? ?????? ????? ???? ?? ????? ?? ???? ??? ?????? ?? ???? ?????? ????????? ???? ?? ???? ????? ???? ?? ??? ????? ???? ???? ???? ?? ??? ???? ?? 3 ??????? (??? ???????) ?? ?? ?? ????? ?? ???
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(15) I would also like to quote the relevant paras of the aforesaid judgments cited by counsel for the petitioner No.1. The same are as under:
India Carbon Ltd. and others V. State of Assam (1997) 6 SCC 479
Paras 13 and 14
13. Now, the words “charging or payment or interest” in Section 9(2) occur in what may be called the letter part thereof. Section 9(2) authorises the sales tax authorities of a State to assess, reassess, collect and enforce payment of the Central sales tax payable by a dealer as if it was payable under the State Act; this is the first part of Section 9(2). By the second part thereof, these authorities are empowered to exercise the powers they have under the State Act and the provisions of the State Act, including provisions relating to charging and payment of interest, apply accordingly. Having regard to what has been said in the case of Khemka & Co., it must be held that the substantive law that the States’ sales tax authorities must apply is the Central Act. In such application, for procedural purposes alone, the provisions of the State Act are available. The provision relating to interest in the latter part of Section 9(2) can be employed by the States’ sales tax authorities only if the Central Act makes a substantive provision for the levy and charge of interest on Central sales tax and only to that extent. There being no substantive provision in the Central Act requiring the payment of interest on Central sales tax the States’ sales tax authorities cannot, for the purpose of collecting and enforcing payment of Central sales tax, charge interest thereon.
14. The requirement of the 1st respondent’s sales tax authorities that the appellants should pay interest at the rate of 24% p.a. on delayed payments of Central sales tax under the provisions of Section 35(A) of the State Act must, therefore, be held to be bad in law. (emphasis supplied)
V.V.S.Sugars V. Govt. of A.P. and others (1994) 4 SCC 192
Paras 4 to 6
4.The said Act is a taxing statute and a taxing statute must be interpreted as it reads, with no additions and no subtractions, on the ground of legislative intendment or otherwise.
5.On the plain wording of clause (a) of sub-section (3D) of Section 21 of the Act as amended, we find it difficult to agree with the High Court. The provisions thereof say that sub-section (5) shall not apply in relation to tax levied under sub-section (1) of Section 21 on purchase of sugarcane. The provisions came into force on the date of the commencement of the Amending Act. The provisions are open ended and are intended to apply upon the commencement of the Amending Act with no limitation in time.
6. This Court in India Carbon Limited & Ors. vs. State of Assam (1997 (6) SCC 479) has held, after analysing the Constitution Bench judgment in J.K. Synthetic vs. CTO (1994 (4) SCC 276), that interest can be levied and charged on delayed payment of tax only if the statute that levies and charges the tax makes a substantive provision in this behalf. There being no substantive provision in the Act for the levy of interest on arrears of tax that applied to purchases of sugarcane made subsequent to the date of commencement of the Amending Act, no interest thereon could be so levied, based on the application of the said Rule 45 or otherwise.
(emphasis supplied)
Bhikam Chand and others V. State and others (AIR 1966 Rajasthan 142) (DB).
Para 52
In the present case the letter of the Director of Agriculture, quoted by us above, only purports to send the Model Bye-laws to the various Krishi Upaj Mandi Samitis and the model bye-laws had been approved by the Director. This, to our mind, will not do away with the necessity on the part of the several marketing committees to first apply their mind to the model bye-laws and, after making changes wherever they considered it necessary, to seek the previous sanction of the competent authority for the consideration of the bye-laws. Thereafter, on receipt of the sanction, it was for the marketing committees to again consider and pass the bye-laws in the light of the previous sanction that they might have received. Thereafter, the bye-laws, as passed, have again to be submitted to the competent authority for approval. What was done in the present case by the Director of Agriculture does not fulfil the requirements of law. There is an obvious purpose in insisting upon the requirement of previous sanction. Each marketing committee will consider the bye-laws in the light of its own requirements and those that may differ from area to area. After they have applied their mind and framed the draft bye-laws they are to receive a proper attention at the hands of the competent authority before it gives the sanction to the introduction of the bye-laws. It is then that the bye-laws have to be passed by the marketing committee concerned and they will acquire the force of law only after they are approved by the competent authority the second time. This obviously having not been done in any of the cases before us we have no choice, but to hold that the bye laws made are null and void.
(emphasis supplied)
(16) A bare perusal of the aforesaid relevant provisions of law and the judgments would reveal that the provision for charging interest is a substantive provision and unless the same is made in the legislative enactment, it cannot be charged. Further, in this particular case, there is no specific averment in the reply to the writ petition that the previous sanction of the Director was taken by the Samiti before enforcing the Bye Laws.
(17) The reply of the Samiti, which has been taken as its submission to contest the writ petition, that there is no legal restriction not to provide for interest in the Bye Laws and the Bye Laws are for the better implementation of the Act of 1961 and the Rules of 1963 and the matter of interest is a thing of common prudence that interest is levied on the delayed payment, are contrary to the aforesaid judgments wherein the issue of charging interest has been well settled and it has been held that charging interest is a substantive provision.
(18) Apart from above, charging interest at the rate of 36% is highly unreasonable, excessive and exorbitant and therefore, the same is liable to be struck down being violative of Article 14 and 19(1)(g) of the Constitution of India.
(19) Thus, submissions of counsel for the respondent Samiti have no force whereas submissions of counsel for the petitioner No.1 have force.
(20) Accordingly, all the aforesaid writ petitions are allowed and sub-clause (2), (3) and (4) of Bye Law No.17 of the Bye Laws of the respondent Samiti are declared ultra vires provisions of the Act of 1961 and the Rules of 1963.
(21) Consequently, the impugned notices/orders dated 31.5.2001 and 16.6.2001 for payment of interest, in all the aforesaid respective writ petitions, are quashed and set aside.
(Prem Shanker Asopa) J.
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