Case Note & Summary
The Supreme Court allowed the appeal filed by APMC Yashwanthapura against the judgment of the Karnataka High Court which had held that the respondent, M/s. Selva Foods, was not liable to pay market fee on processed spices imported from outside the State. The respondent was a trader engaged in buying spices like turmeric, chilli, coriander, methi, and mustard seeds from various market areas within Karnataka and also importing such spices from outside the State. After importing, they cleaned and processed the spices and sold the processed items within the market area of the appellant. In 2008, the Market Committee inspected the respondent's records and found that the respondent had purchased methi and mustard seeds from outside Karnataka and sold the processed goods within the market area without paying market fee. The Committee initially cancelled the respondent's licence, but the High Court set aside that order for lack of opportunity and remitted the matter. After a fresh hearing, the Committee passed an order dated 24.03.2009 confirming the demand of Rs.85,266/-. The respondent challenged this order in a writ petition, which was allowed by the Single Judge, and the Division Bench dismissed the appeal. The Supreme Court examined Section 65 of the Karnataka Agricultural Produce Marketing (Regulation and Development) Act, 1966, which is the charging section for market fee. The Court noted that the second proviso to Section 65(2) exempts from levy agricultural produce on which market fee has already been levied and collected within the State and which is processed and sold in another market area or exported. However, the Explanation to the proviso expressly excludes from this exemption any agricultural produce imported from outside the State and sold in any market area within the State, or any agricultural produce imported from outside the State for processing or manufacturing except for domestic consumption. The Court held that the respondent's case fell within the Explanation, and therefore the exemption was not available. The Court further held that under Section 65(2-A)(ia), when produce is sold by an importer to a purchaser, the importer is liable to realize and pay the market fee to the committee. The Court rejected the respondent's reliance on the judgments in Gujarat Ambuja Exports and ITC Ltd., distinguishing them on facts. The Court set aside the impugned judgment and restored the order of the Market Committee dated 24.03.2009, directing the respondent to pay the market fee.
Headnote
A) Agricultural Law - Market Fee - Levy on Imported Processed Produce - Section 65(2), (2-A) of Karnataka Agricultural Produce Marketing (Regulation and Development) Act, 1966 - The respondent imported spices from outside Karnataka, processed them, and sold within the market area. The Court held that the second proviso exemption does not apply to such imports due to the Explanation, and market fee is leviable under Section 65(2-A)(ia) on the importer. (Paras 12-14) B) Agricultural Law - Interpretation of Statute - Charging Section and Exemption - Section 65(2) and second proviso with Explanation - The charging section imposes market fee on every buyer. The second proviso exempts produce already taxed within the State, but the Explanation clarifies that imports from outside the State for processing or manufacturing (except domestic consumption) are not exempt. (Paras 12-13) C) Agricultural Law - Liability of Importer - Section 65(2-A)(ia) - When produce is sold by an importer to a purchaser, the importer must realize and pay market fee to the committee. The Court rejected the respondent's argument that no fee is payable on imported processed goods. (Para 14)
Issue of Consideration
Whether market fee is leviable under Section 65 of the Karnataka Agricultural Produce Marketing (Regulation and Development) Act, 1966 on processed agricultural produce imported from outside the State and sold within the market area of the appellant Market Committee.
Final Decision
The Supreme Court allowed the appeal, set aside the impugned judgment of the High Court, and restored the order of the Market Committee dated 24.03.2009 directing the respondent to pay the market fee.
Law Points
- Market fee is leviable on processed agricultural produce imported from outside the State and sold within the market area
- Explanation to Section 65(2) of Karnataka APMC Act excludes exemption for such imports
- Importer is liable to pay market fee under Section 65(2-A)(ia)
