Dismissed

Surajdev Trading Company v. Agricultural Produce Market Committee

Karnataka HC7 Dec 2020CRL.RP/860/2011

Case brief

AI extract

What is this about?

The High Court dismissed a criminal revision petition challenging the conviction and sentence for failing to remit market fees. The court held that prices displayed must exclude tax and fees, making the levy valid, and affirmed the mandatory statutory penalty.

What did the court decide?

The Criminal Revision Petition filed under Section 397 and 401 Cr.P.C. was dismissed.

Surajdev Trading Company Vs Agricultural Produce… — Banking and Recovery | Karnataka HC (2020)

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Crl.R.P.No.860/2011

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 7^TH DAY OF DECEMBER 2020

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BEFORE

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THE HON’BLE MRS. JUSTICE K.S.MUDAGAL

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CRIMINAL REVISION PETITION No.860/2011

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BETWEEN :

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SURAJDEV TRADING COMPANY A PARTNERSHIP FIRM AND CARRYING ON BUSINESS IN SHOP NO.20/30 M.G.B. COMPLEX APMC YARD, YESHWANTHPUR – 560 022 BENGALURU REPRESENTED BY ONE OF ITS PARTNERS SRI S.P.BHASIN

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SRI S.P. BHASIN PARTNER OF M/S SURAJDEV TRADING COMPANY CARRYING ON BUSINESS AT SHOP NO.20/30, M.G.B. COMPLEX APMC YARD, YESHWANTHPUR BENGALURU-560 022 … PETITIONERS

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(BY SRI JANARDHANA G., ADVOCATE)

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AND :

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AGRICULTURAL PRODUCE MARKET COMMITTEE, YESHWANTHPUR – 560 022 BANGALORE REPRESENTED BY ITS SECRETARY SRI VENUGOPALA RAJ URS … RESPONDENT (BY SRI T.SWAROOP, ADVOCATE)

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THIS CRIMINAL REVISION PETITION IS FILED UNDER SECTION 397 READ WITH SECTION 401 OF CR.P.C., PRAYING TO SET ASIDE THE ORDER DATED 30.06.2011 PASSED BY THE PRESIDING OFFICER, FTC-VII, BANGALORE CITY IN CRL.A.NO.417/2008 AND THE ORDER DATED 23.04.2008 PASSED BY VIII ADDITIONAL CHIEF METROPOLITAN MAGISTRATE, BANGALORE IN C.C.NO.12033/2003.

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Crl.R.P.No.860/2011

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THIS CRIMINAL REVISION PETITION COMING ON FOR FURTHER HEARING THIS DAY, THE COURT THROUGH VIDEO CONFERENCE MADE THE FOLLOWING:

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O R D E R

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Aggrieved by the order of conviction and sentence passed by the trial Court for the offence punishable under Section 65 read with Section 114 of the Karnataka Agricultural Produce Marketing (Regulation and Development) Act, 1966 (‘the Act’ for short), the petitioners have preferred the above revision petition.

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The petitioners were prosecuted in C.C.No.12033/2003 on the file of VIII Additional Chief Metropolitan Magistrate, Bengaluru on the basis of the complaint Ex.P9 filed by PW.1 under Section 200 of Cr.P.C. It was alleged that the petitioners being traders in the Agricultural Produce Marketing Yard, Yeshwanthapura, Bengaluru have failed to pay the deficit market fee in a sum of Rs.51,981/- for the periods 1999-2000, 2000-2001, 01.04.2001 to 30.11.2001 (2001-2002). It was alleged that as per Section 65 read with Section 114 of the Act, the petitioners were liable to pay the said sum with

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Crl.R.P.No.860/2011

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Rs.51,981/- the three times penalty which amounts to

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Rs.1,55,943/-, in all amounting to Rs.2,07,924/-.

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Petitioner No.1 was the firm represented by petitioner No.2 as its partner. The petitioners were license traders in APMC Yard, Yeshwanthpur dealing in pulses. The trader is defined in Section 2(48) of the Act as follows:

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“2(48) “Trader” means a person who buys notified agricultural produce either for himself or as agent of one or more persons for the purpose of selling, processing, manufacturing or for any other purpose, except for the purpose of domestic consumption;”

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On 10.12.2001, the respondent authorities conducted inspection of the books of accounts and other relevant records in the establishment of the petitioners. On 13.12.2001, the inspection report revealed that the petitioners had not remitted the market fee relating to the Moth Dal and the market fee was not paid at the prescribed rates for the commodities in the other bills. Therefore, the respondent issued Ex.P1 notice dated 13/14.12.2001 requiring the petitioners to produce their stock book, bill book, market fee book, day book, purchasers bills for the year 01.04.1999 to 30.11.2001.

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Crl.R.P.No.860/2011

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The petitioners did not comply the notice

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under Ex.P1. Therefore, the respondent issued another notice as per Ex.P2 dated 17/21.01.2002 calling upon the petitioners to produce those books for inspection within three days, failing which entails cancellation of their license and action as per Sections 66 and 73 of the Act.

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On 22.01.2002, the petitioners submitted

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the records requisitioned under Exs.P1 and P2 with covering letter as per Ex.P3. In Ex.P3, the petitioners admitted the non-remittance of the market fee with regard to Moth Dal from 30.11.2001 till 01.12.2001 with the justification of their ignorance that the market fee is leviable on Moth Dal.

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Under Ex.P4 notice dated 04/06.04.2002,

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the respondent notified the petitioners that the market fee remitted for the periods 1999-2000, 2000-2001, 2001-2002 (21.01.2002) was not in accordance with market fee stipulated in the Act and was deficit by Rs.51,981/- and required the petitioners to pay deficit

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Crl.R.P.No.860/2011

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market fee of Rs.51,981/- plus three times penalty on

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the same in all Rs.2,07,924/-.

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In response to Ex.P4, the petitioners issued reply Ex.P5 dated 15.04.2002 claiming that they have paid the fees in accordance with the rate fixed and calculation by the respondent was incorrect and requested for recalculation.

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In response to Ex.P4, the respondent on 30.11.2002 called upon the petitioners to remit the deficit market fee of Rs.51,981/- and Rs.2,038/towards market fee on Moth Dal in all to pay Rs.54,019/- with penalty. Respondent further cautioned the petitioners that failure to pay the market fee and penalty entails the action against the petitioners under Sections 73 and 114 of the Act. For that, the petitioners got issued notice Ex.P7 dated 05.12.2002 through their Advocate claiming that the petitioners have already paid the market fee for the aforesaid three periods. Under

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the said notice, they remitted the Moth Dal fee of Rs.2,038/- under the cheque.

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Crl.R.P.No.860/2011

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Ultimately, the respondent under Ex.P8 the resolution of the market committee dated 21.02.2003 resolved to prosecute the petitioners for the offence punishable under Section 65 read with Section 114 of the Act for default in payment of market fee in a sum of Rs.58,981/- and authorised its secretary to file the complaint. Accordingly, PW.1 filed the complaint as per Ex.P9 to prosecute the petitioners for the offences punishable under Sections 65 and 114 of the Act.

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The trial Court on taking cognizance summoned the petitioners and tried them. The petitioners admitted that they were licensed traders in APMC Yard, Yeshwanthapura, Bengaluru and they were required to pay 1% market fee on their turn over. They also admitted that they carried out transactions as shown in Exs.P10 to P12 the statements of accounts.

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The petitioners claimed that the rates of the commodities notified in their price list was inclusive of the market fee recovered from the buyers and showing the break up in the bill they have already remitted the fees. Whereas the respondent contends that the

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Crl.R.P.No.860/2011

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petitioners have to display the basic rate of the commodities first and pay 1% market fee on that rate and the rate displayed cannot be said to be inclusive of the market fee.

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Ex.P13 the bill was taken as sample bill. The

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petitioners themselves admitted that they calculated the market fee on the same principle in all the transactions for the periods 1999-2000 to 2001-2002. In first column of Ex.P13 the quantity of the commodities was shown. Second column pertains to particulars of the commodities. Third column pertains to less excess, the fourth column contains rate and the fifth column contains amount.

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For the purpose of convenience and better understanding, Ex.P13 is extracted below:

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Qnty.	Particulars	Rate	Amount (Rs.)
25	Toor Dhall 50 Kg 777 Green	1290.00	31310.68
20	Moong Dhall 50 Kg (T.P.) Star	1345.00	26633.66
	R.M.C.		579.45
	K S T		626.21
45	Total		59150.00

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Crl.R.P.No.860/2011

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Qnty.	Particulars	Rate	Amount (Rs.)
20	Moth Dall 50 Kg Tract	1088.35	21766.99
5	Toor Dhall 50 Kg Vinuk	981.55	4907.77
	R.M.C.		266.75
	K S T		533.49
25	Total		27475.00

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The petitioners claim that the sale price of

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Toordal was Rs.31,310.68 and the Moong Dal was Rs.26,633.66/-. They claim that the rate of Rs.1,290/and Rs.1,345/- for Toor Dal and Moong Dal was inclusive of 1% market fee. They further claimed that accordingly the market fee payable was Rs.579.45/and they remitted that showing that separately in Ex.P13. They claim that in the same fashion for the entire period they have paid the fees.

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DW.1 in his chief examination states that

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the rate of commodities for the benefit of consumer was mentioned as required under the Essential Commodities Act, 1955. In the cross-examination, he claimed that apart from the Act, he is also governed by the Essential Commodities Act and the Sales Taxes Act. Accordingly, he displayed the rates inclusive of market fee and KST.

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Crl.R.P.No.860/2011

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However, when he was questioned whether he obtained permission of the APMC to notify in the price list the rates of commodities inclusive of market fee and sales tax in the rate column, he asserted that, that was not necessary.

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Therefore, the whole question is whether the contention of the petitioners that they were entitled to notify the rates including the market fee and they did accordingly is acceptable.

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Section 65(2) of the Act which authorizes the market committee to levy and collect the market fee rates reads as follows:

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“65. Levy of market fees.-

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(1) x x x x x x x

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(2) The market committee shall levy and collect market fees from every buyer in respect of agricultural produce bought by such buyer in the market area, at such rate as may be specified in the bye-laws which shall not be more than two rupees per one hundred rupees of the value of such produce bought except in case of livestock where the market fee shall not be more than five rupees per head of cattle other than sheep or goat, and in the case of sheep or goat such fee shall not be more than one rupee per head in such manner and at such times as may be specified in the bye-laws:

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Provided that in the case of any co-operative society doing business in agricultural produce within a market yard, market fee shall be levied and collected at the rate of eighty percent of the market fee payable under this Act:

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Provided further that, if on any agricultural produce market fee has already been levied and

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Crl.R.P.No.860/2011

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collected under sub-section (2) in any market area within the State and such agricultural produce is processed and sold in any other market area within the State or exported out side the State it shall be exempted from the levy of market fee.

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Explanation.- Nothing in this proviso shall apply

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to.-

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(i) any processed agricultural produce imported from out side the State and sold in any market area within the State ; or (ii) any agricultural produce imported or caused to be imported by any person either on his own account or as an agent for another person, from out side the State into any market area within the State for the purpose of processing or manufacturing except for one's own domestic consumption.

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Provided also that in case of a buyer in a spot exchange established by a licensee or a licensee for direct purchase of notified agricultural produce or a contract farming sponsor buying from a contract forming producer, market fee shall be levied and collected at the rate of seventy percent of the market fee payable under this Act.

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Provided also that in case of any private markets established under Section 72-A of the Act, market fee shall be levied and collected at the rate of thirty three percent of market fee payable under this Act, provided that no market fee is leviable on flowers, fruits and vegetables. Instead the Market committee may collect user charges in respect of the above articles, user charges for such services provided by the Market Committee from the buyer of the produce at such rates as may be specified in the bye-laws as approved by the Director of Agricultural Marketing.”

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19. Reading of the above provision goes to show

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that bye-laws specify the rate of market fee subject to

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the rate prescribed in the said Section. The bye-law of

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APMC, Yeshwanthapura was produced before the trial

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Court and the same is found in the trial Court records. Admittedly, as per the said bye-law at the relevant

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Crl.R.P.No.860/2011

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time, the rate of market fee specified was 1% on the value of the commodities. Section 65(2-A)(iii) of the Act says that if the produce is purchased by a trader from another trader, the trader selling the produce shall realize it from the purchaser and shall be liable to pay the market fee to the committee.

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Accordingly, the petitioners were liable to collect the market fee and remit the same to the respondent. If the trader fails to remit the market fee, what course of action was to be taken is explained under Section 114 of the Act which reads as follows:

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“114. Penalties for evasion of payment of fee, etc.- Whoever evades the payment of any fee, or other amount due from him under this Act or the rules, or the regulations or bye-laws, shall, on conviction, be punished with fine which shall be a sum equal to three times the amount of fee or other amount due or three thousand rupees whichever is more and in the case of a continuing evasion with a further fine which may extend to two hundred rupees for every day during which the evasion is continued after conviction therefore.”

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Rule 85 of the Karnataka Agricultural

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Product Marketing (Regulation and Development) Rules, 1968 reads as follows:

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“ 85. Keeping of books and issue of receipts, etc. - Every market functionary operating in the market area and holding a licence from the committee

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Crl.R.P.No.860/2011

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in that regard, shall, as the committee may from time to time direct. –

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(i) keep and maintain such registers, documents and books in such form as may be prescribed in the bye-laws;

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(ii) issue receipts for the money and goods received under his own signature or the signature of his authorized representative and countersigned by the payer or the deliverer, as the case may be, or by the authorized representative of such person in such form as may be prescribed in the bye-laws and maintain the carbon copies thereof.”

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As per the aforesaid Rules, the functionary

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operating in the market area has to maintain the documents like market fee books, bill books, etc in the form prescribed in the bye-law of the committee.

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As admitted by both side, trading of the commodities in the market is governed by Essential Commodities Act also. The petitioners themselves in their evidence claimed that they were required to maintain accounts, display prices and the stocks as per the Essential Commodities (Maintenance of Accounts, Display of Prices and Stocks) Order, 1981. (‘the Order’ for short).

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Relying on Rule 6(1) of the Order, learned

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Counsel for the respondent argued that the petitioners

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Crl.R.P.No.860/2011

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were required to maintain and prominently display in his place of business a list of prices including all taxes, cess, duty, toll and other similar charges payable. Therefore, he claimed that the petitioners displayed in their bills Ex.P13 in statement of accounts Exs.P10 to 12, the rates inclusive of taxes in the next column, then showed the break up of the market fee and KST payable/paid.

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Clause 6(1) of the said Order reads as

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follows:

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“6. Display of list of prices. -(1) Every dealer who sells or offers, for sale any commodity shall maintain and prominently display in his place of business a list of prices (including all taxes, cess duty, toll and other similar charges payable under any law for the time being in force) of each commodity in his possession and available for sale, and shall whenever required by any purchaser or prospective purchaser allow him to examine such statement or list;

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Provided that the dealer may display the prices of the commodities which he deals on a board kept in front of his shop:

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Provided further that the display of price of commodities specified in Schedule II to this Order may be made in the manner specified therein. (2) The list of prices maintained and displayed under sub-clause (1) shall specify the commodity in English or in Kannada or in any other language understood by the majority of the purchasers in the area concerned and the price of the commodity shall be specified in the international form of Indian numerals.

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(3) Subject to the provisions of sub-clause (2) a dealer may maintain and display the list of prices

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Crl.R.P.No.860/2011

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in more than one language or in any other language as he may desire:

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(4) Provided that when any commodity declared as commodity for the purpose of this Order or any person becomes a dealer, this day time after the commencement of this order, the provisions of the order shall apply from the day on which commodity is so declared as such commodity, or on the day when such persons become a dealer as the case may be.

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26. Clause 2(i) of the said Order prescribes the

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form for display of prices, list of prices of commodities,

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which reads as follows:

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“2(i). “List of prices” means price lists issued by the manufacturers catalogue of prices, or list of prices maintained from time to time by any dealer in the form prescribed in Schedule I indicating the prices of commodities in which the dealer carries on business;”

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Thus it says that the prices or the list of prices

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shall be maintained in the form prescribed under Schedule I indicating the prices of commodities. Form I prescribed in Schedule I of the Order is as follows:

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SCHEDULE I

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[See sub-clause(c) of Clause 2(k) and Section 5(5)] List of prices of Commodities

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Sl.No.	Name of	Quantity of	*Unit of*	*Price*
	Commodity	stock, if any	*price*	*including all*
				*taxes*
1	2	3	4	5

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Reading of the Form prescribed in Schedule

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I makes it clear that the trader shall first mention the

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unit price of the commodity in Column No.4 and shall

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Crl.R.P.No.860/2011

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mention the price including all taxes in the next Column i.e. Column No.5. Therefore, the petitioners cannot claim that the unit price mentioned in Ex.P13 or their other records could be inclusive of market fee, taxes payable also. Therefore, the contention of the petitioners that rate displayed by them in Ex.P13 and other documents were inclusive of the market fee was unsustainable.

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It was not the case of the respondent that the petitioners have not at all paid any fees. The respondent gave deduction to whatever amount was paid. For ex: in Ex.P13 the respondent had adjusted sum of Rs.579.45 in claiming deficit fee of Rs.12.05 ps.

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The trial Court relied upon the judgment of the Supreme Court in Sales Tax Officer v. Budh Prakash

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Jai Prakash¹ wherein it was held 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 made, unless the stage has been reached when the seller can recover the price under the contract. It was further held

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1 AIR 1954 SC 459

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that 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.

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In this case also, the market fee could be levied only on the concluded sales. Therefore, it is not open to the petitioner to claim that the prices notified were inclusive of the sale taxes and market fee. If once the petitioners’ contention that they had notified the price inclusive of the basic commodity rates, the taxes and the market fee fails, the only conclusion is that the judgments and orders of the Courts below sustain.

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Since the word used in Section 114 is ‘ Shall’ , the said Section does not give any discretion to the Court to reduce the penalty to less than three times. In the light of the discussion made above, this Court does not find any illegality, impropriety or incorrectness in the orders of the Courts below. Therefore, the petition is dismissed.

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KSR

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Sd/JUDGE

Surajdev Trading Company v. Agricultural Produce Market Committee

Case brief

What is this about?

What did the court decide?

Surajdev Trading Company v. Agricultural Produce Market Committee

Case brief

What is this about?

What did the court decide?

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