WP/22388/2004 of M/s Sri Sesha Bhagya Lakshmi Rice Mill, Vs The Agricultural Market Committee, on 30 December 2004

ORDER:

The petitioner is a rice mill. It submitted an application to the respondent forissuance of “Export Permit Books”. Through letter dated 30.11.2004, the respondentinformed the petitioner that it would not be issued Permit Book, unless market fee ispaid in respect of the agricultural produce, covered by the used Permit Books, andunless it executes an undertaking, in terms of condition No.8 of the licence, to theeffect that it shall collect the market fee from the purchasers and remit the same tothe committee.

The petitioner contends that the obligation to pay market fee is that of thepurchaser, and it is the duty of the respondent to collect the market fee. It is alsostated that the permits, contained in the Export Permit Book, contain all theparticulars of the sale, such as the description of the purchaser, place and means of export, name of the produce and its weighment, and the fact whether market fee waspaid or not; and in that view of the matter, there ought not have been any difficulty forthe respondent to take steps to collect the market fee. It is also stated that, if anymarket fee is due from the petitioner, the procedure prescribed under the A.P.(Agricultural Produce & Livestock) Markets Act, 1966 (for short “the Act”), and theRules made there under has to be followed, and the petitioner cannot bepressurized to pay that amount, indirectly.

Arguments

The respondent filed a counter affidavit and the letter dated 30.11.2004 issought to be justified. Reference is made to Section 12 of the Act, conditions oflicence, prescribed under the Rules, and Bye-law 24 of the approved Bye-laws ofthe Market Committees. It is alleged that the export permits issued to the licenseesare vital in the matter of ensuring collection and remittance of licence fee, and sincethe petitioner did not comply with the conditions of the licence, the Book of ExportPermits was denied to it.

Learned counsel for the petitioner submits that being a licensee under Section 7 ofthe Act, the petitioner is entitled to be furnished Export Book, and denial of the samewould render the licence inoperative. It is his case that the purpose of issuing ExportPermit Books is to ensure that necessary information is furnished to the MarketCommittees, and it is for the respondent to take steps to collect market fee from thepurchasers. He contends that even otherwise the respondent has not issued anynotice of demand to the petitioner and that the respondent cannot withhold thebooks, as a device, to exert pressure on the petitioner to pay certain amounts, forwhich there did not exist any demand, much less liability.

Learned standing counsel for the respondent submits that a combined reading ofSections 7 and 12 of the Act, conditions of licence prescribed under the Rules, andBye-law 24 of the Bye-laws makes it obligatory for a licensee to remit the licence feefor the sales that have taken place with him. According to him, the respondent wasjustified in withholding the books till the petitioner accounted for and paid the marketfee, for the transactions under the books, which were issued to it earlier.

The Act is a comprehensive legislation, dealing with the regulation of purchase andsale of agricultural produce and livestock products; and establishment of markets.Section 12 is the charging Section, which empowers the collection of market fee at aspecified rate, over the sales and purchases of the notified items in the notifiedmarket area. Section 7 provides for grant of licences to the traders and commissionagents who undertake sale, purchase, storage, or other connected activities inrelation to notified agricultural produce or livestock, in the area. The form of licenceis prescribed under the Rules (Form 8).

For the effective functioning of market committees, bye-laws are also approved. Bye-law 24 thereof provides for issuance of Export Permit Books to the licensees, as wellas their corresponding obligations. From the scheme contained in the aboveprovisions, it is evident that a licensee is entitled to be furnished the Export PermitBook, on payment of costs and on deposit of security amount of Rs.150/-. The basicobject of issuing the Permit Books is to require the licensee to furnish the necessaryinformation “to identify the produce” intended for export. Bye-law 24 (8) mandatesthat fresh Book shall be issued only after the licensee submits the detailed accountsin respect of Permit Books, issued earlier.

The petitioner approached the respondent for issuance of Permit Book on13.10.2004. The respondent is said to have refused to issue the Books on theground that rice, the main item of trade by the petitioner, is a notified commodity andPermit Book would be issued if only it undertakes to pay the market fee on the ricesold by it. The petitioner, along with certain others, filed W.P.No.19443 of 2004,aggrieved by the refusal. The writ petition was disposed of on 22.11.2004, leaving itopen to the petitioner to make a written representation to the respondent, and thelatter was directed to pass appropriate orders therein, within a period of one week. Itwas in this background that the petitioner submitted a written representation on25.11.2004.

The respondent passed the impugned order, refusing to accede to the request of thepetitioner. After referring to the various provisions of the Act, Rules and bye-laws, therespondent summed up the order as under:

“1) . . . . . . . . . As per your monthly returns, you have used permits at the time ofrice sales and not paid market fee to this committee. The fresh Permit Book willnot be issued until the market fee is paid due to the committee on used permitbooks.

2) That you have violated the Section 12 of the Act. You have not paid market feeon the permit books already used so far.

3) That you have failed to give binding letters as per the licence condition No.8,wherein a licensee sells notified agricultural produce of his own, he shall collectmarket fee from the purchaser and remit the same to this committee.”

From the above, it is evident that the respondent refused to issue the Permit Book tothe petitioner on two grounds, namely, that the petitioner did not pay the market feefor the transactions covered by the books already used, and that the petitioner failedto furnish an undertaking, in terms of condition No.8 of the licence. Therefore, itneeds to be seen whether the grounds on which the respondent refused to issue thebooks in accord with the provisions of the Act, Rules and Bye-laws.

What is leviable under the Act is a fee and not tax. By and large, the duty ofthe licensee is to furnish information about the sale or purchase of the notifiedagricultural produce and to remit the market fee wherever it is collected. Market feeis leviable mostly on a purchase, and the obligation is mainly upon the purchaser topay it. A reading of bye-law 24 (7) discloses that a licensed trader or commissionagent shall not allow any agricultural produce or livestock to leave the notified area,without payment of the market fee, and that he shall submit the purchase returns tothe market committee every month, before 25[th] of the succeeding month. It enablesthe market committee to take action under Rule 52 of the Market Rules against thedefaulters. Rule 52 in turn prescribes procedure for suspension or cancellation oflicence, if it is established that the licence was obtained through wilfulmisrepresentation or fraud, or if the conditions of the licence and the provisions ofthe rules or bye-laws of the Market Committee are violated. Licence is also liable tobe cancelled, if the licensee has become an insolvent, or is convicted of any offenceunder the Act. Sub-rule (2) makes it obligatory for the committee to give anopportunity to the licensee before such action is taken.

The Act does not contain any provision, which enables the market committeedirectly, to recover the dues of market fee. Under sub-section (4) of Section 12-C ofthe Act, the dues of market fee can be recovered, as if it were arrears of landrevenue. For this purpose, the authorities of the market committee have to approachthe Revenue Department. Section 23 of the Act provides for penalty against thelicensees who fail to pay the fee, levied under Section 12 of the Act. The Court,which is conferred with the jurisdiction to try the offence, is empowered to passorders for summary recovery of the amount of market fee and licence fee chargeableunder Section 7, or dues of fee levied under Section 12 of the Act. Thus, excepttaking steps for suspension or cancellation of the licence, as provided for under Rule52, or initiation of prosecution and other steps under Section 23 of the Act, themarket committee or its delegates have no power in the matter of recovery of marketfee.

Even where an enactment provides for the mechanism for recovery of dues of tax orfee directly, by the department or agency concerned, any action in that direction canbe, only after a demand is made in accordance with the relevant provisions, and thelicensee or an assessee does not comply with the demand. The question of takingany penal or coercive action, without issuing any demand notice or assessmentorder, does not arise. In the instant case, the respondent refused to issue PermitBook to the petitioner on the ground that it did not pay the market fee, for thetransactions covered by the monthly returns and permits used by him, and that thepetitioner failed to execute an undertaking in terms of condition No.8 of licenceconditions.

As for the first ground, it needs to be noticed that the step taken by the respondent isclearly beyond his powers and outside the scope and scheme of the Act, Rules andBye-laws. When the bye-laws provide for the issuance of books for a particularpurpose and also indicate the consequences, in the event of any lapse on the part ofa licensee, the respondent cannot be permitted to pressurize the petitioner to pay themarket fee, in relation to the previous transactions. Apart from there not being anypower in the respondent, there does not exist any quantification, much less, demand of the alleged dues of the market fee, from the petitioner. What is impermissibledirectly under law, cannot be permitted to be done indirectly. The proposition is toowell settled, to be supported by any precedent. Issuance of Export Permit Booksdoes not depend on the whims and fancies or ipsi dixit of the respondent. As long asthe petitioner holds a licence under Section 7 of the Act, he is entitled to be issuedsuch books, as of right. Therefore, the first ground taken by the respondent indenying the books to the petitioner does not have any legal basis.

The second ground is equally untenable. The conditions of licence arebinding on every licensee. The rules or bye-laws do not provide for execution of anagreement or an undertaking, by a licensee. Hence, The respondent cannot insiston the execution of an undertaking. If the conditions of the licence require thepetitioner to do a particular act, the petitioner is under obligation to do the same,even in the absence of any undertaking. On the other hand, if there is no obligationon the part of the petitioner under the relevant provisions or conditions of licence, itcannot be required to execute an undertaking. Either way, the insistence by therespondent on the petitioner to execute an undertaking cannot be supported in law.

Conclusion

For the foregoing reasons, the writ petition is allowed, and the impugnedorder is set aside. The respondent is directed to issue Export Permit Book to thepetitioner, on payment of costs for the same, within one week from the date of receiptof a copy of this order. It is, however, made clear that if the respondent finds that thepetitioner has not remitted the market fee, as provided for under law, it shall be opento him to take necessary steps prescribed under the relevant provisions of the Actand Rules. There shall be no order as to costs.

_________________

28[th] December, 2004

Note: L.R. copy to be marked.C.C. in one week.

(B/o)

pan

(One fair copy to the Hon’ble Sri Justice L.Narasimha Reddy, for his Lordships’ kindperusal)

To

1 The Secretary, Agricultural Market Committee, Ongole, Prakasam District.

2. 8 L.R.Copies.

3. The Secretary, A.P.Advocates’ Association, Library, High Court buildings, Hyderabad.

4 Two C.D. Copies.