JUDGMENT Sunil Ambwani, J.
1. The petitioner is a private limited company with its registered office at 56 and B-33 Site No. IV, Industrial Area, Sahibabad District Ghaziabad. It is engaged in the manufacture and sale business of production of milk products including 'Desi Ghee' in the name and style of 'Paras' in the market area of Krishi Utpadan Mandi Samiti at Ghaziabad (KUMS, Ghaziabad). The petitioner also sells its products through consignee agents. A list of 15 consignee agents with their offices in the States of West Bengal; Gujarat; Goa; Orissa; Maharashtra; Rajasthan; and New Delhi, is enclosed with the writ petition. These consignee agents provide services namely uploading of goods from the truck, storage in the depots of the petitioner, despatch by trucks to redistribution stockists as per sale order, raise sale invoices on behalf of the petitioner-company in the name of re-distribution stockists and collect payments. The dispute in the present case is limited to the imposition of the 'market fee' and 'development cess' on the transactions through consignee agents under Section 17 of the UP Krishi Utpadan Mandi Adhiniyam 1965 (the Adhiniyam) for the period 14.5.2004 to 31.3.2005.
2. In reply to the show cause notice issued to the petitioner on 22.5.2004, directing the petitioner to produce all the documents with regard to production, sale-purchase movement and storage for the concerned year, with reference to an enquiry initiated on the declaration by the petitioner that the stock transfer vide consignment note No. 94 dated 14.5.2004 despatching 5250 KGs Dcsi Ghee to Anand Sales Corporation at Ahmedabad, the gate pass was not necessary as the agricultural produce was not sold in the market area, the petitioner filed a reply on 14.6.2004 explaining the entire transactions of manufacture and transfer of ghee to its godown situated in various parts of the country. The market committee was not satisfied with the explanation and that by the order dated 27.4.2005 the Secretary of the market committee of the KUMS, Ghaziabad found, relying upon the Explanation to Section 17(3)(b) of the Adhiniyam, and the judgment of Supreme Court in Mandi Samiti v. Mahalakshmi Sugar Works dated 2.2.1995 and Krishi Utpadan Mandi Samiti v. Saraswati Cane Crusher dated 25.3.1998 found that it was necessary to obtain gate pass after producing sufficient evidence by way of valid rebuttal of the sale and movement of the agricultural produce, and that the petitioner was required to obtain gate pass.
3. The Secretary KUMS, Ghaziabad also relied upon a judgment of Division Bench of this Court in Heinz India (P) Ltd. and Anr. v. State of UP and Ors. (Writ Petition No. 2323 of 1997 decided on 20.8.2004) on the sales through C&F agents in holding that such transactions are deemed sales and attract market fees. The Secretary, KUMS, Ghaziabad further found that the petitioner did not give sufficient evidence to clarify the position with regard to sale and the orders for movement of ghee, details of payments, sale position, the details of accounts and the position of CMF agents. The day books of C&F agents were not produced. The Secretary KUMS, Ghaziabad consequently imposed market fee at Rs. 9, 39, 200.05 and the development fees at Rs. 2, 34,800/-, total Rs. 11,74,000/- for 3906.80 quintals of 'deshi ghee' taken out from the market area of KUMS, Ghaziabad valued to approximately at Rs. 4, 69,60,035.00 under Section 17(3)(b) of the Adhiniyam and also directed that in future the petitioner shall produce details of its business and obtain gate passes, whenever it is transporting the ghee from the market area of KUMS, Ghaziabad. The petitioner filed a revision under Section 32 of the Adhiniyam against the assessment before the Director, Rajya Krishi Utpadan Mandi Parishad, UP. The revision was heard and dismissed on 31.10.2007, by the Deputy Director (Administration/Marketing), exercising delegated powers of the Director of Rajya Krishi Utpadan Mandi Parishad (in short the Parishad), giving rise to this writ petition.
4. The Deputy Director, Mandi Parishad while affirming the order of the Secretary, KUMS, Ghaziabad, held that the transactions are not by way of stock transfers but are sale within the market area of KUMS, Ghaziabad and that the 'desi ghee' was taken out from the market area only after it was sold.
5. On the question of liability upon a manufacturer, the Deputy Director held that the petitioner is a manufacturer/dealer/trader and is liable to pay market fee on the transaction of sale in the market area. The petitioner did not produce sufficient evidence to validly rebut that the movement of ghee outside the market area was not by way of stock transfer, raising a presumption that the ghee was transported outside the state only after its sale on which the 'market fees' and 'development cess' is due.
6. Heard Shri Yashwant Verma for the petitioner and Shri B.D. Mandhyan, Senior Advocate assisted by Shri Satish Mandhyan for respondents. The parties have exchanged affidavits. With the consent of the parties the writ petition was heard finally at admission stage.
7. Shri Yashwant Varma, learned Counsel for the petitioner asserts that the orders passed by the Secretary KUMS, Ghaziabad and the Deputy Director, Mandi Parishad suffer from serious error of law. The petitioner did not have any confirmed orders and did not sell the agricultural produce at the time when it was taken out of the market area to its consignee agents. The transaction of sale was not complete within the market area or during the course of its transit to the consignee agents. The petitioner had produced the entire evidence available with it at the time of taking out the 'desi ghee' to establish that the movement of goods was not in pursuance to any sale. The petitioner had produced consignment note, bills, transport receipts; Form-F of the Central Excise Act and sale statement of each sale for establishing that the sale did not take place either within or during the course of taking out the goods from the market area. The 'market fee' is attracted on sale of agricultural produce in the market area. The presumption under the Explanation to Section 17(3)(b) of the Adhiniyam is rebuttable. The petitioner produced the entire documents relating to the transit of goods and its ultimate sale outside the State in proof that the goods were not taken out in pursuance to any agreement to sale. The presumption can be rebutted when the sale is ultimately affected. At the time of taking out the agricultural produce from the market area, for the purposes of sale, the presumption may be provisionally rebutted by a declaration, consignment note, bill and transport receipt. The petitioner could not be compelled to prove the negative at the time of taking of goods and applying for issuing a gate pass. The rebuttable presumption only shifts the initial burden of proof upon the trader. Once the trader brings specific evidence, which establishes and rebuts the presumption the market committee cannot realise the market fees and development cess. The terms of the appointment as well as agreement between the petitioner and the consignment agents clearly established that there was no sale of goods contemplated between the parties when the goods were taken out of the market area and therefore imposition of market fee is without authority of law.
8. Shri Yashwant Verma further contends that each and every transaction has to be considered on its own evidence in rebuttal of the presumption and that these cannot be a general order in respect of the period of assessment without examining the evidence. There is no provision of assessment or any machinery provision under the Adhiniyam, and thus each transaction has to be considered on its own merits after giving opportunity to the petitioner and assessing evidence produced before the market committee.
9. Shri B.D. Mandhyan, on the other hand, states that valuable goods like 'deshi ghee' are not transported until the sale is concluded and the price is received by the trader. He submits that the evidence produced by the petitioner was examined both by the Secretary of the market committee as well as Deputy Director of the Mandi Parishad, and that it was found that the goods were taken out without gate pass. The consignment note and bilti did not rebut the presumption that the goods were sold in the market area. Each transaction was examined on its own merits.
10. Section 17 of the Adhiniyam provides:
17. Powers of the Committee.-A committee shall, for the purposes of this Act, have the power to-
(i) issue or renew licences under this Act on such terms and conditions and subject to such restrictions as may be prescribed, or, after recording reasons therefor, refuse to issue or renew any such licence;
(ii) suspend or cancel licences issued or renewed under this Act;
Provided that before cancelling a licence except on the ground of conduct which has led to the conviction of the licensee under Section 37, the Committee shall afford reasonable opportunity to him to show cause against the action proposed;
(iii) Levy and collect:
(a) such fees as may he prescribed for the issue or renewal of licences, and
(b) market fee, which shall be payable on transactions of sale of specified agricultural produce in the market area at such rates, being not less than one percentum and not more than two percentum of the price of the agricultural produce so sold, as the State Government may specify by notification, and development cess which shall be payable on such transactions of sale at the rate of half percentum of the price of the agricultural produce so sold and such fee or development cess shall be realised in the followed manner-
(1) if the produce is sold through a commission agent, the commission agent may realise the market fee and the development cess from the purchaser and shall be liable to pay the same to the Committee;
(2) if the produce is purchased directly by a trader from a producer the trader shall be liable to pay the market fee to the Committee;
(3) if the produce is purchased by a trader from another trader, the trader selling the produce may realise it from the purchaser and shall be liable to pay the market fee to the Committee; and development cess to the Committee:
Provided that notwithstanding anything to the contrary contained in any judgment, decree or order of any court, the trader selling the produce shall be liable and be deemed always to have been liable with effect from June 12, 1973 to pay the market fee to the Committee and shall not be absolved from such liability on the ground that he has not realised it from the purchaser;
Provided further that the trader selling the produce shall not be absolved from the liability to pay the development cess on the ground that he has not realised if from the purchaser;
(4) in any other case of sale of such produce, the purchaser shall be liable to pay the market fee and development cess to the Committee; Provided that no market fee or development cess shall be levied or collected on the retail sale of any specified agricultural produce where such sale is made to the consumer for his domestic consumption only:
Provided further that notwithstanding anything contained in this act, the Committee may at the option of as the case may be, the commission agent, trader or purchaser, who has obtained the licence, accept a lump sum in lieu the amount of market fee or development cess that may be payable by him for an agricultural year in respect of such specified agricultural produce, for such period, or such terms and in such manner as the State Government may, by notified order specify:
Provided also that no market fee or development cess shall be levied on transaction of sale of specified agricultural produce on which market fee or development cess has been levied in any market area if the trader furnishes in the form and manner prescribed, a declaration or certificate that on such specified agricultural produce market fee or development cess has already been levied in any other market area.
(iii-a) realise interest calculated in the manner prescribed in the bye-laws at the rate of two per cent per mensem on the unpaid amount of market fee from the date immediately following the period prescribed for payment of market fee in the bye laws;
(iv) operate and utilise the Market Committee Fund for all or any other purposes of this Act;
(v) raise from the State Government or the Board or, subject to previous sanction by the Board, from any other Committee or a recognised financial institution, moneys required for discharging its functions under this Act;
(v-a) advance loans to the Board on such terms and conditions as max be mutually agreed upon between the Board and the Committee;
(v-b) advance loans to any other Committee subject to previous sanction of the Director on such terms and conditions as the Board may determine;
(vi) employ, subject to the provisions of Section 23, officers and servants of the Committee;
(vii) appoint Sub Committees, each consisting of two or more of its members, for exercising such powers, performing such duties and discharging such powers performing such duties and discharging such functions as may be assigned to them by the Committee; and
(viii) exercise such other powers as may be prescribed.
Explanation- For the purpose of Clause (iii), unless the contrary is proved, any specified agricultural produce taken out or proposed to be taken out of a market area by or on behalf of a licensed trader shall be presumed to have been sold within such area and in such case, the price of such produce presumed to be sold shall be deemed to be such reasonable price as may be ascertained in the manner prescribed.
11. There is no provision of making assessment of market fees and development cess under the Adhiniyam or Rules framed thereunder. There is no assessment authority with quasi judicial powers entitled to receive evidence, compel attendance of witnesses, and for production of documents. There is no period prescribed for making assessment, deposit of market fee and appellate authority. The advise given by a Constitution Bench of Hon'ble Supreme Court in Ram Chandra Kailash Kumar & Co. and Ors. v. State of U.P. and Anr. 1980 Supp SCC 27 (para 7) to provide machinery in the rules for adjudication of disputes has not been accepted for last twenty nine years. It is contended by the market committee that the market fee is paid on transaction of sale in the market area and that the presumption raised under the explanation to Section 17(3)(b) of Adhiniyam, authorises the market committee to collect the market fees at the time of issuance of gate pass for taking out the goods outside market area. It is not denied by the market committee that such presumption is a rebuttable presumption-and that the manufacturer or the trader taking out the goods outside the market area must produce, if he wants to refund the market fees or its adjustment that the sale did not take place either within the market area or that the movement of goods was not in pursuance to any sale nor the sale took place during the course of movement of the goods. He must rebut the presumption by leading evidence to the satisfaction of the market committee proving that the goods were sold outside the market area.
12. The Adhiniyan or the Rules framed thereunder however do not provide for nature of evidence or the documents, which a manufacturing trader or a trader must produce to satisfy the market committee. The Secretary of the market committee, being an executive authority, is not competent to make such an assessment. Further the fact, that there is no provision of appeal, makes the entire exercise arbitrary and subject to whim and fancy of the Secretary of the market committee, who has no judicial training or experience and very often and invariably does not accept that any movement of agricultural produce from the market area can be made without its sale or in pursuance to the sale. The Secretary, KUMS Ghaziabad has no power to take documentary or oral evidence and to summon the documents or enforce attendance of witnesses. In fact, he does not know what is primary and secondary evidence, and whether any evidence is relevant or admissible in law. The KUMS Ghaziabad is an executive authority of much lower in hierarchy with absolute no understanding of law at all. When market committee has not been elected or constituted for almost three decades, the market committees are functioning on adhoc basis with the District Magistrate as the market committees and Secretary, exercising all the powers including the quasi-judicial powers of making assessment of imposition of market fees and development cess. These liabilities many a time exceed huge amounts, the imposition of which not only affects the right to trade but also impedes the inter-state trade. Inspite of repeated judicial pronouncements, requesting the state legislature to provide for machinery provisions for making assessment and entrusting these powers to quasi-judicial authorities having training in law, the State Government has not made any amendment in the provisions of the Adhiniyam. It goes on making assessments and decides the revisions where no such powers exist for revising the assessment orders and that both the assessing and revising authorities decide matters with no understanding and training of law. This adhoc arrangement has continued for decades, throwing up thousand of cases to be decided by the High Court.
13. With the explanation added to the Adhiniyam by U.P. Act No. 12 of 1987 (w.e.f. 31.3.1987), the submission, that market fee as indirect tax has to be paid on the sale, and purchase in the market area and should be collected in the manner provided in Section 17(3) and deposited on issuing Form-9R and if taken out of the market area at the time of issuing gate pass is no longer a simple or attractive defence as it was before addition of the Explanation to the Adhiniyam. The Explanation provides a rule of evidence and obliges a manufacturing trader or a trader to submit proof of sale outside the market area. The trade or business is a complicated affairs. It is no longer confined to a willing purchaser, making contract with a willing seller and striking a deal at the spot for the movement of goods thereafter. The sales are affected through commission agents with varieties of rights and obligations. There are direct or indirect sales and consignment sales where the goods are stocked at various stock yards for the purposes of sale and sold and delivered as and when the orders are received. The Sales of Goods Act also provide that where the goods are not in existence, sale be made effective under the agreement, when the goods are actually manufactured. The sales also take place in the course of inter-state trade. There are sales in which there is only value addition to the goods purchased and sold with the price of the addition of value. In modern world the complexities of trade and commerce are not to be easily understood by a layman. The e-governance, electronic transactions and digital signature have made trade and commerce more complicated. In this scenario it may not be possible for the secretary of any market committee appointed with only graduation as qualification to understand the issues. The good governance is an essential requirement of rule of law. The State Government must wake up and provide for machinery provisions in rules for assessment of 'market fees' and 'development cess' under the Adhiniyam.
14. The words 'may presume' and 'shall presume' and 'conclusive proof are defined in Section 4 of the Indian Evidence Act 1872,
4. "May presume"- Whenever it is provided by this Act that the Court may presume a fact, it may either regard such fact as proved, unless and until it is disproved, or may call for proof of it.
"Shall presume"- Whenever it is directed by this Act that the Court shall presume a fact, it shall regard such fact as proved, unless and until it is disproved:
"Conclusive proof"- When one fact is declared by this Act to be conclusive proof of another, the Court shall, on proof of the one fact, regard the other as proved, and shall not allow evidence to be given for the purpose of disproving it.
15. The Court may presume the existence of certain facts. Section 114 of the Indian Evidence Act, 1972 provides:
114. Court may presume existence of certain facts- The Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case.
16. Sections 4 and 114 of the Evidence Act apply to the Courts. The principles however would apply both the quasi-judicial and administrative proceedings and would also apply to assessments of indirect taxes where the statute raises a presumption which is rebuttable. There is a difference between the presumption and legal fixation. A presumption gives rise to legal fixation in case of legally rebuttable presumption, unless the contrary is established. A fictitious state of affairs is presumed to exist, if it is an actual reality. Section 114 of the Evidence Act empowers the Court to presume existence of certain facts. Where the law itself provides the presumption of certain facts as in the Explanation to Section 17(3)(b) of the Adhiniyam, an inference has also to be drawn from the course of events in business. The characteristic of such common course of business is that in a given set of circumstances, if certain events occur in the manner in which the business is conducted, or certain act or omissions is performed by the individual or by large groups of persons, the presumption may be raised.
17. In cases of conclusive presumptions namely 'shall presume' as is provided in Explanation to Section 17(3)(b) of the Adhiniyam, on the movements of the goods from the market area, no option is left to the authority. It is, however, bound to take the facts as proved, until they are rebutted i.e. until evidence is given to disprove it and the party interested in disapproving it produces such evidence, if he can. The illustration of such presumptions may be found in Sections 79, 80, 81, 83, 85, 89, and 105 of the Evidence Act. These may also be found under Section 201(3) of the Agra Tenancy Act and Section 4(2) of the Madras Prohibition Act 1937, and Section 4 of the Bankers' Books Evidence Act 1891. This however does not mean that there is any artificial probative effect given to the movement of goods as conclusive proof. The Explanation to Section 17(3)(b) does not say that movement of goods is conclusive proof of the fact of sale. The difference between 'presumption' and 'conclusive proof was pointed out in Somawanti v. State .
18. The presumption under the Explanation to Section 17(3)(b) of the Adhiniyam is a rebuttable presumption and that in the absence of any period of assessment or the machinery provisions each transaction has to be examined-on its own facts. The presumption would only shift the burden of proof upon the manufacturing trader. The degree of proof however would depend upon each case and nature of transaction and would be different in sale of ascertained and un-ascertained goods and sale by consignment or sales in which the property in goods continue to remain with the seller as an equitable interest until the conclusion of the transactions.
19. The Explanation to Section 17 (3) was added to the Adhiniyam by UP Krishi Utpadan Mandi Adhiniyam (Amendment) Act No. 12 of 1987 w.e.f. 31.3.1987, and since then the question of discharge of rebuttable presumption and the nature df evidence to rebut such presumption has engaged attention of this Court and Apex Court in various decision.
20. In Krishi Utpadan Mandi Samiti v. Saraswati Cane Crusher and Ors. (Civil Appeal Nos. 1769-1773 of 1998 decided on March 25, 1998, the Supreme Court held:
Thc Krishi Utpadan Mandi Samiti being aggrieved against the encroachment made on the law by the attempt of the High Court was successful in having leave granted in Civil Appeal Nos. ____/1995 arising our of SLP (C) Nos. 11215, 10874/87, 1301/88, 14537-38/1987) and obtaining the following order from a two-Member Bench.
From this it is clear that there is a presumption against the dealers. In view of this presumption, it is open to the appellants-Krishi Utpadan Mandi Samiti to raise demands against the dealer before passes could be issued. If there is a valid rebuttal in that the sale did not take place within the notified market area, the dealers will be entitled to the passes otherwise not. Of course, when the dealers are compelled to pay the market fee as demanded, it is open to them to challenge it in the matter provided under the Act.
The Krishi Utpadan Samiti prays that on the basis of the afore-decision of this Court, these matters can be disposed of. Objection thereto has been raised by the traders on the ground that the procedure devised by this Court does not satisfy the requirement of a hearing and of an adjudication, which could facilitate challenge being made to the assessment in the manner provided under the Act and that the matter seems to be resting on presumptions alone. It is perhaps for this reason that these matters when coming up before a two-Member Bench were ordered to be laid for consideration before a three-Member Bench, has been done. And this has made us do the exercise, in delving deep into the matters and evolve a solution.
We are satisfied that the orders of this Court afore-referred to would need some repair work. We treat the said order to be conceiving of a provisional assessment where after doors are opened for a final assessment. We conceive that when demands are raised by the Krishi Utpadan Mandi Samiti against a trader before he could ask for transit of goods outside the market area, the trader would be entitled to tender a valid rebuttal to say that no sale had taken place within the notified area and that if the explanation is accepted there and then by the Mandi Samiti, no question of payment would arise as also of withholding the gate passes. If prima facie evidence led by the trader is not accepted by the Mandi Samiti, the trader or the dealer can be compelled to pay the market fee as demanded before issuance of gate pass. If the trader makes the payment without demur, the matter ends and the assessment finalised. But in case he does so and raises protest, then the assessment shall be taken to be provisional in nature making it obligatory on the trader to pay the fee before obtaining the requisite gate pass. After protest has been lodged and the provisional assessment has been made, a time-frame would be needed to devise making the final assessment. We, therefore, conceive that it innately be read in the order of this Court that a final assessment has to be made within a period of two months after provisional assessment so that the entire transaction in that respect is over enabling the aggrieved party, if any, to challenge the final assessment in the manner provided under the afore Act or under the general law of the land in appropriate fora. Having added this concept in this manner in the two-Judge Bench decision of this Court, we declare that what repair has been done instantly would add to the orders of the High Court and the instant corrective decision shall be the governing rule. The Civil Appeals would thus stand disposed of.
Since the assessments thus far made against the traders, who arc involved in the instant appeals, would have to be treated as provisional awaiting final assessment, we permit the concerned traders to move the respective Mandi Samiti within two months from today to hear their objections and proceedings onward be regulated in accordance with procedure devised herein before. None the. less we add that should the basis of provisional assessment be knocked off, the Samiti would refund the market fee to the traders/dealers within two months thereafter.
21. The Supreme Court directed that the final assessment has to be made within a period of two months after provisional assessment so that entice transaction in that respect is over, expecting the aggrieved party, if any, to challenge the final assessment in the manner provided under the aforesaid Act or under the general law of land in appropriate for a and by these directions, the Supreme Court repaired its earlier orders in the case.
22. The matter thereafter engaged the attention of a Division Bench of this Court again in Metal Craft v. Raiva Krishi Utpadan Mandi Parishad, Lucknow and Ors. (2001) 3 UPLBEC 2130. It was held that measure of levy of the fee is on the price of the goods sold. It obviously means a completed transaction of sale or a concluded sale. If there is only an agreement and the agreement fails, the remedy for the aggrieved party is to sue for damages. Obviously no fee can be charged on damages. The occasion for levy of fee can arise only on a concluded sale and as the sale has not taken place within the market area of Ghaziabad, no mandi fee can be levied. In paras 19 and 25 of the judgment, the Division Bench said as follows:
19. It is noteworthy that the charging Section 17(iii)(b) empowers the Committee to levy and collect market fee which shall be payable on the transaction of sale of specified agricultural produce in the market area at such rates, being not less than 1 percentum and not more than 2 percentum of the price of the agricultural produce so sold. The measure of levy of the fee is, therefore, on the price of the good sold. It obviously means a completed transaction of sale or a concluded sale. If there is only an agreement and the agreement fails, the remedy for the aggrieved party is to sue for damages. Obviously no fe can be charged on damages. The occasion for levy of fee can arise only on a concluded sale and as the sale has not taken place within the market area of Ghaziabad, no mandi fee can be levied. We are supported in our conclusion by the following observations of the Apex Court in Sales Tax Officer v. Budhya Prakash Jai Prakash :
The substance of the matter is that the sales tax is a levy on the price of the goods, and the reason of the thing requires that such a levy should not be laid, unless the stage has been reached when the seller can recover the price under the contract. It is well settled that an action for price is maintainable only when there is a sale involving transfer of the property in the goods to the purchaser. Where there is only an agreement to sell, then the remedy of the seller is to sue for damages for breach of contract and not for the price of the goods. The position, therefore, is that a liability to be assessed to Sales Tax can arise only if there is a completed sale under which price is paid or is payable and not when there is only an agreement to sell which can only result in a claim for damages. It would be contrary to all principles that damages for breach of contract are liable to be assessed to sales tax on the ground that they are in the position as sale price.
25. The main reason given by the revisional authority for upholding the levy of market fee is that the order for export of rice was received by the petitioner firm at Ghaziabad, the consignor of the rice was the petitioner firm and the sale price of the rice was ultimately received by it at Ghaziabad. In our opinion, these facts alone cannot justify the levy of market fee. Assuming that instead of purchasing rice from Haryana, Punjab and Madhya Pradesh the petitioner firm had purchased the same from a foreign country like Burma or Pakistan and had sold the same to a firm in South Africa the aforesaid three factors would have remained the same. Can it be said that Mandi Samiti was still entitled to levy market fee though the rice was neither produced in India nor it was ever brought inside the country?. The word market with reference to which the legislation has been made cannot be ignored, and as mentioned earlier, it presupposes the existence of goods therein. This being the admitted position that the rice was never brought or was in existence within the market area of Mandi Samiti, Ghaziabad, or for that manner within the State of U.P. and in view of our finding that the sale took place only when the rice was loaded on the ships at the port, we are clearly of the opinion that there was no transaction of sale within the market area of Mandi Samiti, Ghaziabad. Therefore, the Mandi Samiti is not entitled to levy any market fee upon the petitioner and the impugned levy has to be set aside.
23. The matter again came to be considered by Division Bench of this Court in I.T.C. Ltd. v. Mandi Parishad U.P. and Ors. 2007 (3) ADJ 383 (DB). The Division Bench after considering the entire case law on the spot and provisions of Section 17, the rule of levy of market fees and for issuance of gate, passes after Rule 50A of the UP Krishi Mandi Niyamawali 1965 provided a method and concluded as follows:
66. Our conclusion are as follows:
(a) Cut tobacco is processed form of raw tobacco and is a specified agricultural produce.
(b) The presumption under Section 17(iii) of the Act can be raised against a licensed or unlicensed trader, if the conditions mentioned therein are satisfied.
(c) The explanation to Section 17(ii) of the Act read with Rule 50A of the Rules is neither violative of Part XIII of the Constitution, nor beyond legislative competence.
(d) In case of no sale-in contradiction to the claim of a sale outside the market area of the mandi samitee-if necessary documents rebutting the presumption are also filed along with the declaration then gate pass has to be issued. However, this does not prohibit the Mandi Samitee to exercise any power granted under the Act or to pass reasoned orders holding otherwise after opportunity to the person concerned. In case it is held otherwise then the market fee and development cess can be recovered in accordance with law. In that event, the order can also be challenged in accordance with law.
(e) In the present case the petitioner had filed sufficient documents to rebut the presumption of sale.
(f) The order dated 31.3.2006 is illegal.
67. In view of our findings, the order dated 31.3.2006 is quashed. The petitioner may appear before the Mandi Samitee, Saharanpur on 23.4.2007. The Mandi Samitee may pass fresh reasoned order if any sale of cut tobacco has taken place within the market area. The gate pass shall be issued in accordance with the conclusions mentioned in the preceding paragraph. With these observations and directions both the writ petitions are disposed of.
24. Once again the similar matter came up for consideration before this Court in Heinz India (P) Ltd. v. State of UP and Ors. Writ Petition No. 2323 of 1997 and other connected petitions and decided by learned Single Judge sitting at Lucknow, the writ petitions were disposed of with the following directions:
Categorically the discussion held above may be summarized as below:
1. The documents relied upon by the petitioners are not enough to prove the petitioners case of sales being conducted outside the market area.
2. Relevant documentary evidence before dispatch of consignments from Aligarh has been withheld. Such necessary proof would have depleted a clear picture of the consignments-whether a sale or transfer of stock.
3. It is not established as to where the orders for purchaser of ghee were received - whether at Aligarh or at the destination station. However, in certain cases, sale was conducted from Aligarh.
4. Full proof evidence of the payments to rebut the presumption of sale in the market area not adduced.
5. Who conducted the sales at destination stations and in what manner, not revealed.
6. Where the accounts were maintained, is not disclosed.
7. Invoices filed before the Court were not issued and maintained in due course of business. Their genuineness was not free from doubt.
8. The provisions of Clause 13 of the agreement (writ petition No. 2323(M/S) of 1997 with C & F Agent postulate that company is competent to sell goods directly to the purchasers without dealing through the C & F agent. It shows redundancy of the Agency.
9. Even some C&F Agents purchased the goods, against the terms of the agreement.
10. C & F Agents have no independent right to conduct sale. The company or its authorized officers would finalise the deal but that is no evidence of any authorized officer being there at the destination stations. The only resultant inference is that the factory staff at Aligarh struck all the sale transactions.
11. The C & F Agents did not comply with the terms of Clause 23 of the agreement which required them to obtain receipts of delivery from the purchasers.
12. No account of the daily or periodical stock of goods with its extent and details of replenishment at the C & F deports furnished.
13. Details of the financial accounts of the destination stations or that of the factory location, with balance sheet etc. not furnished. Thus, the best evidence required for requisite rebuttal was suppressed.
The long and short of the discussions made above is that the petitioners have miserably failed to rebut the presumption of sale in the market area at Aligarh and therefore, the Directory and the assessing authorities rightly levied the Mandifee on the consignments of Ghee transported by Glaxo and its successor Heinz India Private Limited to other States. The judgments passed by the Revisional Authority are not perverse so as to be inteifered with by this Court; rather all the questioned judgments are well discussed and reasoned. In the result, the petitioners are not entitled to claim any relief.
Accordingly, all the petitions being devoid of merit are hereby dismissed with costs.
25. In Godfrey Philips India Limited v. The Director. Mandi Parishad, U.P., Lucknow Writ Petition No. 46501 of 2004, decided on 29.4.2005, a learned Single Judge of this Court considered the similar questions and gave an exhaustive judgment to support the conclusion as follow:
From the above discussion it is fully established that there was no material to come to the conclusion that any sale of raw tobacco took place in market area in favour of the "INTCO" by the petitioner. There being no sale within the market area of Ghaziabad, market fee under Section 17(iii)(b) cannot be levied and both the authorities committed error in levying the market fee.
There remains only one question to be considered i.e. As to whether the Director was justified in proceeding to examine the liability of payment of market fee on manufacture of cigarettes. Suffice it to say that Mandi Samiti has not levied any market fee on manufacture of cigarettes. The market fee was levied on the stock of raw tobacco brought in the market area by LPS as stock transfer. The Director was exercising his jurisdiction under Section 32 which was only with regard to examining the legality and propriety of the order of the Mandi Samiti. Under this jurisdiction it was not open for the Director to proceed to examine the question of levying the market fee on manufactured cigarettes which was not even claimed by the market Committee The exercise by the Director was wholly uncalled for. There was no occasion to examine the question by the Director as to whether the market fee is leviable on Machine rolled cigarettes and the decision on the said issue by the Director can also be sustained.
In view of foregoing discussions the order dated 30.12.2000 of the Market Committee, the order dated 13.10.2004 of the Director impugned in the writ petition and the demand letter dated 19.10.2004 cannot be sustained and are hereby quashed. The respondents are also directed to refund the amount of Rs. 25,00,000/- (Twenty five lacs) deposited in cash and amount of the Bank guarantee of Rs. 83, 19, 804/- (Rupees eighty three lacs nineteen thousand, eight hundred four) which was in pursuance of the levy of the market fee by the Market Committee. Parties shall bear their own costs.
The writ petition is allowed accordingly.
26. In the present case, the Secretary KUMS Ghaziabad made an assessment order on the evidence produced by the petitioner for the periods 14.5.2004 to 31.3.2005 for 47 transactions of 3900.80 quintals valued approximately on Rs. 4, 69, 60,035.00 and taken out of market area without obtaining gate pass. The Secretary KUMS Ghaziabad, in his order dated 27.4.2005, did not consider the documents submitted by the petitioner at all. He proceeded with a bias that the goods were transported out of the market area without obtaining gate pass and that the documents were not produced immediately after a notice was issued on 22.5.2004. The Secretary KUMS, Ghaziabad thereafter proceeded to make a declaration, that the firm did not present any such evidence/documents to prove that he has not sold 'desi ghee' within the market area of Krishi Utpadan Mandi Samiti Ghaziabad. He also proceeded on the assumption that since it has been held in M/s Saraswati Cane Crusher by Hon'ble Supreme Court that valid rebuttal has to be produced at the time of issuance of gate pass, the fact that the goods were taken out without gate pass, is conclusive proof that they were sold within the market area of Ghaziabad. The entire approach is arbitrary, biased, authoritative and is based on misreading of law and precedents. The Court would not like to blame the officer as he has no training and understanding of law at all.
27. In Revision No. 921 of 2007 decided by the Deputy Director (Admin-istratidh/Marketing) Mandi Parishad on 31.10.2007, after discussing the evidence, the Deputy Director a delegatee of the Director found that revisionist firm is a manufacturing dealer/trader and then proceeded to hold that the firm was given opportunity but it did not produce evidence in rebuttal. In only one paragraph preceding, the operative portion the Deputy Director held that apart from being a trader, the revisionist is also a manufacturer, who has obtained a licence from the Mandi Samiti Ghaziabad and that since he is a trader/dealer in accordance with the decision of Hon'ble Supreme Court in Mahalaxmi Rice Mill v. State of UP Civil Appeal No. 555-557/1999 dated 19.8.1998, and sends the goods outside the State after its sale within the market area, he is liable to pay market fees and development cess according to the rules. He also found that the issues other than those, which have been discussed by him cannot be raised in revision. In the operative portion of the order, the Deputy Director reiterated that the revisionist is a manufacturing trader and falls within the definition of trader/dealer in accordance with the Mahalakshmi Sugar Work's case and that the firm could not produce the evidence to validly rebut that the goods were sent by stock transfer and thus the presumption that the 'desi ghee' sent outside the market area was sold. The market committee will ask market fees and development cess. Once again the same approach as was made by the Secretary was repeated.
28. The orders of the Secretary, KUMS Ghaziabad and the Deputy Director, Mandi Parishad do not show application of mind by either of the authorities to the facts or the law. They have referred to the cases of Mandi Samiti v. Mahalakshmi Sugar Works and Krishi Utpadan Mandi Samiti v. Saraswati Cane Crusher decided by Hon'ble Supreme Court but have completely failed to understand their import. Both the Secretary and the Deputy Director have not cared to understand the nature of transaction and evidence led to rebut the presumption raised in Explanation to Section 17(3)(b) of the Adhiniyam. The movement of the goods, without gate pass, may be a violation of the bye laws or the rules for issuing the gate pass for which the penalty may be elsewhere; the assessment of market fee, however, on a declaration that the goods were not sold within the market area, required the assessment of the evidence produced by the petitioner. The petitioner had not only made a declaration, but had also produced consignment notes, bills, transport receipts, Form-F of the Central Sales Tax and the sales statement of each sale in proof to establish that the sale did not take place either within or before the goods were taken out or during the course of movement of the goods from the market area. The assessment order and the revisional orders are wholly illegal and hence cannot be sustained.
29. Both the parties then addressed the Court on the issue of charging market fees on a declaration and the nature of evidence, which may be produced by a trader at the time of applying for gate pass for taking out the goods. Shri B.D. Mandhyan submits that the transaction of the valuable goods is not possible unless the goods are sold and the value is received. He does not conceive of a situation where the goods may be moved by stock transfer or sale may take place outside the market area. He would submit that in all the cases the agricultural produce moves only on receipt of confirmed orders on payments. The delivery of these goods from the godown of the consignment agents would not shift the situs of sale. He submits that the entire argument is raised only to avoid the liability of payment at the time of issuance of the gate pass and that the Supreme Court has made it clear that unless there is valid rebuttal at the time of taking out the goods the market committee shall presume that the goods were sold within the market area.
30. It appears that inspite of various judgements and the law applicable to ' the presumptions raised in law, and the rule of rebutting such presumption the market committee still insist that the movement is conclusive proof and that no further evidence is admissible to rebut such presumption. The entire approach ignores the development of law by the Supreme Court and this Court in the judgements cited in the preceding paragraphs.
3l. The market fee is levied on the sale of agricultural produce in the market area. The Explanation only raises a rule of presumption which may be rebutted by manufacturing trader or the trader as the case may be. The Court cannot presume that the movement of goods cannot be occasioned unless the sale is affected. The nature of evidence to be produced at the time of gate pass is a contentious matter which has not been resolved in the last three decades. A number of attempts made by the courts have not succeeded in proper understanding of law by the officers and employees of the market committees and Mandi Parishad. In the circumstances, in addition to the directions, which have been given by the judgements cited above, the Court directs that the petitioner will furnish to Secretary, KUMS Ghaziabad a 'revolving bank guarantee' of the amount of market fees on yearly basis based on the average of the historical sales and payments of the market fees in the last three years. The bank guarantee will be furnished on the first of April and unless revoked, it shall be revalidated every year. The market committee will issue gate passes on a declaration made by the petitioner that the goods are moving by way of stock transfer and have not been sold. They will produce the consignment note, and the proof of despatch giving names and addresses of the stockists. These documents will constitute sufficient proofs of rebuttal at the stage of a request for gate pass. The market committee will assess the market fees on yearly basis after 31st March of the next year and consider documents furnished by way of rebuttal of the presumption of sale in respect of each and every transactions separately. It will not be sufficient to say that the gate pass was not obtained or obtained without payment of market fees or that documents are not sufficient. The order would show application of mind and reasoning for both accepting or rejecting the proofs on the furnished in respect of each and every transactions separately.
32. The writ petition is allowed. The order passed by Secretary, KUMS Ghaziabad dated 21.10.2007 and the order passed by the Deputy Director, Rajya Krishi Utpadan Mandi Parishad Meerut dated 27.7.2005 are set aside. The Krishi Utpadan Mandi Samiti Ghaziabad will make a fresh assessment of the market fee in respect of period in question after taking into account and discussing the documents produced in evidence for rebuttal of the presumption of sale in the market area for each transaction separately after providing an opportunity of hearing to the petitioner or his authorised agent.