{"id":174292,"date":"2008-04-29T00:00:00","date_gmt":"2008-04-28T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/mumbai-agricultural-produce-vs-hindustan-lever-limited-ors-on-29-april-2008"},"modified":"2015-11-13T14:18:10","modified_gmt":"2015-11-13T08:48:10","slug":"mumbai-agricultural-produce-vs-hindustan-lever-limited-ors-on-29-april-2008","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/mumbai-agricultural-produce-vs-hindustan-lever-limited-ors-on-29-april-2008","title":{"rendered":"Mumbai Agricultural Produce &#8230; vs Hindustan Lever Limited &amp; Ors on 29 April, 2008"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Mumbai Agricultural Produce &#8230; vs Hindustan Lever Limited &amp; Ors on 29 April, 2008<\/div>\n<div class=\"doc_author\">Author: S Sinha<\/div>\n<div class=\"doc_bench\">Bench: S.B. Sinha, Lokeshwar Singh Panta<\/div>\n<pre>           CASE NO.:\nAppeal (civil)  3042 of 2008\n\nPETITIONER:\nMumbai Agricultural Produce Market Committed &amp; Anr\n\nRESPONDENT:\nHindustan Lever Limited &amp; Ors\n\nDATE OF JUDGMENT: 29\/04\/2008\n\nBENCH:\nS.B. Sinha &amp; Lokeshwar Singh Panta\n\nJUDGMENT:\n<\/pre>\n<p>J U D G M E N T<br \/>\nREPORTABLE<\/p>\n<p>CIVIL APPEAL NO.     3042          OF 2008<br \/>\n(Arising out of SLP (C) No.1847 of 2007)<\/p>\n<p>S.B. Sinha,J.\n<\/p>\n<p>1.\tLeave granted.\n<\/p>\n<p>2.\tAppellant is a Market Committee constituted under the Maharashtra<br \/>\nAgricultural Produce Marketing (Regulation) Act, 1963 (for short, &#8216;the<br \/>\nAct&#8217;).  First respondent herein deals in Edible Oils and Vanaspati.  By<br \/>\nreason of a Notification dated 25.9.1987, the State of Maharashtra in<br \/>\nexercise of its power under Section 62 of the said Act added some items in<br \/>\nthe Schedule appended thereto such as sugar, dry fruits, edible oils and<br \/>\nvanaspati to the Schedule of the Act.  Appellant No.1, Market Committee,<br \/>\nstarted collecting market fee as also supervision charges on all notified<br \/>\nagricultural produces marketed on wholesale basis.  The wholesale market in<br \/>\nrespect of condiments, spices, dry fruits etc. was shifted from Greater<br \/>\nBombay to New Bombay on and from 1.1.1991 where a huge market had<br \/>\nbeen constructed by the appellants.\n<\/p>\n<p>3.\tRespondents allegedly, despite the applicability of the provisions of<br \/>\nthe said Act as also the Notification dated 25.9.1987, did not get itself<br \/>\nregistered thereunder contending that &#8216;Vanaspati&#8217; had not been included in<br \/>\nthe Schedule appended thereto.  Some of the traders dealing in edible oil had<br \/>\nalso obtained exemption from payment of market fee and supervision<br \/>\ncharges for a short time.  Such exemption granted was, however, withdrawn.<br \/>\nVarious litigations were initiated before the Bombay High Court<br \/>\nquestioning the validity of the said notification as also levy of market fee<br \/>\nand supervision charges by the Committee.\n<\/p>\n<p>4.\tRespondent Nos.1 and 2 also filed writ petitions in the year 1988<br \/>\ncontending that they were not liable to pay any market fee or supervision<br \/>\ncharges.\n<\/p>\n<p>5.\tThe High Court by reason of a judgment and order dated 16.6.2006<br \/>\nalthough rejected the contention that the respondents were not liable to pay<br \/>\nany market fee, opined that the appellant was not entitled to collect<br \/>\nsupervision charges.  Supervision charges as also interest accrued thereon<br \/>\nwere payable to the State Government.\n<\/p>\n<p>The High Court in its judgment held:\n<\/p>\n<p>&#8220;The impugned orders which have been passed<br \/>\neither during the pendency of the petition or before<br \/>\nthe petition was filed are silent on the quantum of<br \/>\nsupervision charges paid by the respondent No.1-<br \/>\nCommittee to the State Government in respect of<br \/>\nthe sale\/distribution of vanaspati produced by the<br \/>\npetitioners and marketed in the market area of<br \/>\nrespondent No.1, though not from the market yard.<br \/>\nIn the absence of the petitioners having an outlet or<br \/>\na depot or a trading centre in the market yard of<br \/>\nrespondent no.1, the other place is only the<br \/>\npremises of the petitioners as admittedly the<br \/>\nrespondent no.1 has not established any other<br \/>\ncollection centres or subsidiary markets by<br \/>\nexercising powers under Section 5 and Section<br \/>\n30A of the Act.  We are, therefore, of the<br \/>\nconsidered view that the respondent No.1-<br \/>\nCommittee has no powers to cause recovery of<br \/>\nsupervision charges from the petitioners as at<br \/>\npresent and the impugned orders to that extent are<br \/>\nunsustainable.&#8221;\n<\/p>\n<p>\tIn regard to the payment of interest, it was held :<br \/>\n&#8220;We are afraid Clause (y) below Rule 120 does not<br \/>\ncome to the rescue of the Market Committee in<br \/>\nsupport of its case that it has the power to charge<br \/>\ninterest varying from 12% to 21% on the delayed<br \/>\ndues of market fees and supervision charges under<br \/>\nbye-law No.14(A).  Section 31 as well as sections<br \/>\n34A to 34C clearly provide for only penal charges<br \/>\nand bye-law no.14 cannot be termed so as to cover<br \/>\ncondition of trading and marketing in the market<br \/>\narea.  We have also noticed that on issuance of the<br \/>\nnotice by the Market Committee, the petitioners<br \/>\nhave taken due steps and during the pendency of<br \/>\nthe petitions or before the impugned orders for<br \/>\nrecovery were passed, they have deposited certain<br \/>\nsums.  In both the petitions, it is not a case of<br \/>\ninordinate delay in responding to the demands and,<br \/>\nin fact, the demands have been substantially met<br \/>\nwithin few months.  No reasons have been given in<br \/>\nthe impugned orders as to why the Market<br \/>\nCommittee felt it appropriate to recover interest<br \/>\nand not the penal charges from the petitioners.<br \/>\nWe, therefore, hold that the respondent No.1 has<br \/>\nno powers to charge interest at the rate of 12% or<br \/>\nany higher rate upto 21% on the delayed payment<br \/>\nof market fees and supervision charges and it was<br \/>\nnot even otherwise justified to levy such charges in<br \/>\nthe instant cases.&#8221;\n<\/p>\n<p>6.\tMr. Bhatt, learned senior counsel appearing on behalf of the appellant,<br \/>\nwould submit that the question as to whether any supervision charges were<br \/>\npayable or not had not been raised by the respondents and in that view of the<br \/>\nmatter, the High Court committed a serious error in arriving at the<br \/>\naforementioned conclusion.\n<\/p>\n<p>7.\tMr. Gopal Jain, learned counsel for the respondents, however, would<br \/>\nsupport the impugned judgment.\n<\/p>\n<p>8.\tLevy of market fee and supervision charges stand on different<br \/>\nfootings.  Whereas market fee is payable on the transactions carried out in<br \/>\nthe market area, the power to realize the supervision charges is vested in the<br \/>\nState.  For the said purpose, it has to issue a general or special order.  Staff<br \/>\nmust be appointed by the State for the purpose of carrying out supervision of<br \/>\nthe market areas.  Only when the pre-requisites contained in Section 34A of<br \/>\nthe Act are fulfilled, the question of recovery of such charges from the<br \/>\nperson purchasing such produce in such market or market area would arise.<br \/>\nThe costs of supervision is to be calculated by the Market Committee<br \/>\nin such a manner so as to enable it to levy the said fee under Section 31.<br \/>\nSub-section (2) of Section 34B of the Act provides that the cost of<br \/>\nsupervision collected by a Market Committee shall be paid to the State<br \/>\nGovernment in the prescribed manner.\n<\/p>\n<p>9.\tThe fact that Vanaspati is an item which has validly been added to the<br \/>\nSchedule appended to the Act and the Rules framed thereunder is now not in<br \/>\ndispute. The judgment of the High Court rendered in this regard has been<br \/>\naccepted by the respondent.  It deposited the amount of market fee on<br \/>\nvarious dates as detailed herein below :\n<\/p>\n<p>&#8220;Date of Payment<br \/>\nAmount Deposited<br \/>\n2.03.1998<br \/>\nRs.4,00,000\/-\n<\/p>\n<p>31.03.1998<br \/>\nRs.18,00,000\/-\n<\/p>\n<p>21.07.1998<br \/>\nRs.62,84,779\/-\n<\/p>\n<p>7.09.1998<br \/>\nRs.6,000\/-&#8221;\n<\/p>\n<p>10.\tIt, however, appears that the validity of the levy and collection of the<br \/>\nsupervision charges was specifically raised by the respondent herein on the<br \/>\nground that no service whatsoever of any kind was being rendered in the<br \/>\nsaid market area.  The High Court, by reason of its judgment, opined that the<br \/>\ncosts for supervision were incidental charges to be recovered and paid to the<br \/>\nGovernment in respect of the staff employed by it.  It is not a power vested<br \/>\nin the Committee and, thus, the conditions precedent therefor were required<br \/>\nto be shown to be existing, i.e., that the Government had employed staff and<br \/>\nhad been rendering services by way of supervising the buying and selling of<br \/>\nthe agricultural produces in the market area.\n<\/p>\n<p>11.\tThe power to recover the charges for the supervisory staff employed<br \/>\nat the expenses of a section of the industry is not a general power.  It is<br \/>\nprovided for specifically in terms of the Act.   When the statute mandates<br \/>\nthat the cost of supervision would be borne by the licensee, it does not<br \/>\nconstitute levy of tax.  It may be a part of contract. It may have to be paid as<br \/>\na liability to comply with the provisions of the statute and statutory Rules<br \/>\nvalidly made.  The cost has to be determined.  It may have to be<br \/>\napportioned.  It cannot be levied or calculated in such a manner so as to<br \/>\ncause unjust enrichment in favour of the State.\n<\/p>\n<p>12.\tThe quantum of recovery, however, need not be based on<br \/>\nmathematical exactitude as such cost is levied having regard to the liability<br \/>\nof all the licensees or a section of them.  It would, however, require some<br \/>\ncalculation.\n<\/p>\n<p>13.\tA finding of fact has been arrived at by the High Court that no service<br \/>\nwas being rendered by the State.  If no service is being rendered, even no fee<br \/>\ncould have been levied.  It has been so held by a Constitution Bench of this<br \/>\nCourt in <a href=\"\/doc\/123308\/\">Jindal Stainless Ltd. and Anr. v. State of Haryana and Ors.<\/a> [(2006)<br \/>\n7 SCC 241] in the following terms :\n<\/p>\n<p>&#8220;40. Tax is levied as a part of common burden.<br \/>\nThe basis of a tax is the ability or the capacity of<br \/>\nthe tax payer to pay.  The principle behind the levy<br \/>\nof a tax is the principle of ability or capacity.  In<br \/>\nthe case of a tax, there is no identification of a<br \/>\nspecific benefit and even if such identification is<br \/>\nthere, it is not capable of direct measurement.  In<br \/>\nthe case of a tax, a particular advantage, if it exists<br \/>\nat all, is incidental to the State&#8217;s action.  It is<br \/>\nassessed on certain elements of business, such as,<br \/>\nmanufacture, purchase, sale, consumption, use,<br \/>\ncapital, etc. but its payment is not a condition<br \/>\nprecedent.  It is not a term or condition of a<br \/>\nlicence.  A fee is generally a term of a licence.  A<br \/>\ntax is a payment where the special benefit, if any,<br \/>\nis converted into common burden.\n<\/p>\n<p>41. On the other hand, a fee is based on the<br \/>\n&#8220;principle of equivalence&#8221;.  This principle is the<br \/>\nconverse of the &#8220;principle of ability&#8221; to pay.  In the<br \/>\ncase of a fee or compensatory tax, the &#8220;principle of<br \/>\nequivalence&#8221; applies.  The basis of a fee or a<br \/>\ncompensatory tax is the same.  The main basis of a<br \/>\nfee or a compensatory tax is the quantifiable and<br \/>\nmeasurable benefit.  In the case of a tax, even if<br \/>\nthere is any benefit, the same is incidental to the<br \/>\ngovernment action and even if such benefit results<br \/>\nfrom the government action, the same is not<br \/>\nmeasurable.  Under the principle of equivalence, as<br \/>\napplicable to a fee or a compensatory tax, there is<br \/>\nan indication of a quantifiable data, namely, a<br \/>\nbenefit which is measurable.&#8221;\n<\/p>\n<p>14.\tThe principle of equivalence, therefore, is the foundation for levy of a<br \/>\nfee.  It must be held to be the foundation of a statutory charge like<br \/>\nsupervisory charges.  It was for the State to prove it.  Once the State has<br \/>\nfailed to bring record the foundational facts, it is not for the appellant who is<br \/>\nmerely a statutory authority for collecting the same as an agent of the State<br \/>\nto contend that the same was payable.  The State of Maharashtra is not<br \/>\nbefore us.\n<\/p>\n<p>\t<a href=\"\/doc\/1600306\/\">In Aashirwad Films v. Union of India (UOI) and Ors.<\/a> [(2007) 6 SCC<br \/>\n624], it has been held :\n<\/p>\n<p>&#8220;It is also required to be realized that imposition of<br \/>\nreasonable tax is a facet of good governance.&#8221;\n<\/p>\n<p>15.\tCost of supervision, if borne by the State has to be recovered by it.<br \/>\nThe burden was, therefore, on the State to justify the levy.  Even the general<br \/>\nor special order, if any, purported to have been issued by the State has not<br \/>\nbeen brought on record.  On what basis, the supervision charges were being<br \/>\ncalculated is not known.  The premise for levy or recovery of the amount of<br \/>\nsupervisory charges is not founded on any factual matrix. Only the source of<br \/>\nthe power has been stated but the basis for exercise of the power has not<br \/>\nbeen disclosed.\n<\/p>\n<p>16.\tWe, therefore, are of the opinion that there is no infirmity in the<br \/>\nimpugned judgment.\n<\/p>\n<p>17.\tSo far as the question of payment of interest is concerned, it must be<br \/>\nreferable to the statute. When the statute controls the levy, the interest<br \/>\npayable thereupon, as envisaged thereunder must also govern the field.  The<br \/>\ngeneral principle of restitution may not apply in this case.\n<\/p>\n<p>18.\tThe High Court having exercised its discretionary jurisdiction in the<br \/>\nmatter, we do not find any reason to take a different view.  The impugned<br \/>\njudgment, therefore, needs no interference.  The appeal is dismissed with no<br \/>\norder as to costs.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Mumbai Agricultural Produce &#8230; vs Hindustan Lever Limited &amp; Ors on 29 April, 2008 Author: S Sinha Bench: S.B. Sinha, Lokeshwar Singh Panta CASE NO.: Appeal (civil) 3042 of 2008 PETITIONER: Mumbai Agricultural Produce Market Committed &amp; Anr RESPONDENT: Hindustan Lever Limited &amp; Ors DATE OF JUDGMENT: 29\/04\/2008 BENCH: S.B. Sinha [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-174292","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Mumbai Agricultural Produce ... vs Hindustan Lever Limited &amp; Ors on 29 April, 2008 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/mumbai-agricultural-produce-vs-hindustan-lever-limited-ors-on-29-april-2008\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Mumbai Agricultural Produce ... vs Hindustan Lever Limited &amp; 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