CWP No 7123 of 2995 1 IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH CWP No.7123 of 2005 Date of Order: 16.9.2009 M/s Tara Chand Sham Lal, New Grain Market, Sangrur ...Petitioner Versus State of Punjab and others ....Respondent CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE JASWANT SINGH Present: Mr. J.R. Singla, Advocate for the petitioner. Mr. P.K. Jain, Addl.A.G, Punjab for the respondent. Mr. J.P. Bhatt, Advocate for the FCI 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporter or not? 3. Whether the judgment should be reported in the Digest? M.M. KUMAR,J This order shall dispose of a bunch* of petitions in which similar questions of law and facts have been raised. The short issue raised is whether the petitioners are liable to pay market fee under Section 23 of the Punjab Agricultural Produce Markets Act, 1961 (for brevity “the Act”) read with Rules 29 and 29 B of the Punjab Agricultural Produce Markets (General) Rules, 1962 (for brevity '1962 Rules') . In order to appreciate the legal controversy, it would be necessary to provide factual background. The facts are being stated from CWP No.7123 of 2005. The petitioner had obtained license from Market CWP No 7123 of 2995 2 Committee, Sangrur for sale, purchase and storage of agricultural produce. A tender was issued by the Senior Regional Manager, Food Corporation of India, Punjab for open sale of surplus wheat lying in its various food storage centres. Petitioner-firm purchased wheat from the Food Corporation of India in 1996-97 in pursuance of the aforesaid tender. It has made offer to purchase 2000 quintals of wheat and deposited the sale price with the District Manager, FCI, Sangrur. Accordingly, release orders were issued by the District Manager, FCI, Sangrur directing the Food Storage Depot, FCI, Barnala and Moonak to release the wheat to the petitioner-firm. Thereafter, the wheat was weighed and delivery was made to the petitioner as per release orders at Barnala and Moonak. Another fact has also remained un- rebutted namely the Food Corporation of India had deposited market fee and RDF with the Market Committee, Barnala and Moonak at the time when the wheat was purchased by them from the producers through commission agent in the respective market area. It would be apposite to extract the averments made by the petitioner in para Nos.5 & 6 of the petition, which reads thus: “5. That accordingly the Depot Officer, FCI, Food Storage Depot, Barnala and Moonak weighed and made delivery of the wheat to the petitioner as per release orders. In this way, the weighment of the wheat and its delivery took place at the above FCI, Food Storage Depots and not at Sangrur. None of these centers are in the notified area of Market Committee, Sangrur. 6. That the Food Corporation of India had deposited market fee and RDF with the Market Committees, Barnala, Lehragaga, Moonak and Bhawanigarh, at the time when the wheat was purchased by them from the producers.” In the corresponding paras of the written statement, the CWP No 7123 of 2995 3 following averments have been made: “4 & 5. That contention made in this para of the writ petition is not denied. However, the answering respondent had paid the leviable market fee along with regular development fund to the market committee i.e respondent No.3 at the time of initial purchase. 6. That contentions made in this para of the writ petition are admitted.” A perusal of the aforesaid pleadings would put it beyond any doubt that the weighment and delivery of the wheat had taken place at Barnala and Moonak, which was outside the market area of Sangrur. In the written statement, the aforesaid facts have not been denied. Likewise, in para 6, the petitioner has asserted the payment of Market Fee and Rural Development Fund (RDF) to the Market Committees of Barnala and Moonak by the Food Corporation of India when they made initial purchases of the wheat and the aforesaid contention raised by the petitioner has been admitted in unmistakable terms. However, in pursuance of information sent by Mandi Officer vide his letter dated 13.6.1997 and on the directions issued by the Agricultural Marketing Board (for brevity 'the Board') vide letter dated 27.3.2001 to the Market Committee, Sangrur assessment under Rule 31(3),(7) and (9) of the Rules was framed by the Market Committee, Sangrur on 26.11.2001 (P.3) in respect of the wheat purchased by the petitioner from the FCI claiming that the transaction took place in the notified market area of Sangrur. The petitioner was asked to deposit market fee, RDF, penalty on market fee and interest due. The petitioner firm filed an appeal under Rule 31(13) of the Rules which was dismissed on 5.9.2003. Thereafter, the order passed by the Appellate Authority was also upheld in revisional jurisdiction under Section CWP No 7123 of 2995 4 42 of the Act. The operative part of the order dated 13.9.2004 (P.5) reads thus: “ I have given a thoughtful consideration to the above arguments advanced by the learned counsel for the parties and have gone through the record placed on the file. I have also perused the various authorities quoted by the learned counsel for the petitioner. It is an undisputed fact that before 4.9.1998 there was no provision in the Act or the Rules for a one time payment of market fee. Before that date every transaction invited the payment of market fee. The petitioner could not produce any document which which could have suggested that the transactions of agricultural produce took outside the jurisdiction of the respondent- Committee. Neither had he produced any such document before the assessing authority. In the absence of thus, I am inclined to accept the arguments advanced by the learned counsel for the respondent that the district office of the FCI was situated in the notified market area of the respondent- committee and the petitioner made all the dealings with this office like applying, agreeing, making payments etc. here. Clearly thus, all the ingredients of sale, purchase were completed here. It is the convenience of the FCI whether it gave delivery from Barnala or Sangrur depending upon the availability of agricultural produce available with it. Section 23 of the Act read with Rule 29 of the Rules provides for the collection of fees to be levied on the agricultural produce brought or sold by a licensee in the notified market CWP No 7123 of 2995 5 area. The learned counsel for the petitioner could not establish that no transactions took place in the notified market area of the respondent- Committee. As far as the provisions of Limitation Act are concerned, it is observed that these provisions are not applicable as the respondent- committee had initiated action in the month of July, 1997 on the transactions which took place in 1996. As far as the imposition of penalty is concerned, I am inclined to accept the view of the learned counsel for the respondent no.12 that not only the petitioner did not inform the respondent- committee about the transactions by filing the mandatory 'M' returns, it chose not to respond to the various notices issued to it beginning from July, 1997. So it is observed that the penalty was rightly imposed on the petitioner. As there was no provision for exemption from paying market fee second time before 1998, there was also no provision for the submission of 'KK' forms. So it really does not matter whether the firm had filed these returns or not. As these returns are applicable only where exemption from paying market fee second time is sought by a licensee so it is immaterial whether he filed 'KK' forms or not. The authorities cited by the learned counsel for the petitioner are clearly distinguishable as there the main issue was non supply of 'KK' forms within the stipulated period. In the present case there was no requirement of filing these returns as every transaction invited levy of market fees.” Sh. J.R. Singla, learned counsel for the petitioner has argued that proviso (a) and (b) appended to Section 23 of the Act is categorical in its CWP No 7123 of 2995 6 terms and has incorporated a principle that no fee would be leviable in respect of any transaction in which delivery of the agricultural produce bought or sold is not actually made; and that a fee shall be leviable only on the parties to a transaction in which delivery is actually made. He has also placed reliance on Rule 29 of the Punjab Agricultural Produce Markets (General) Rules, 1962 (for brevity “1962 Rules”), which provide for levy and collection of fee on the sale and purchase of agricultural produce. The rule in unmistakable term postulates that a Committee would levy fee on the agricultural produce bought or sold by a licensee in the notified market area at the rates fixed by it from time to time. He has also placed reliance on Sub Rule (7) of Rule 29 of 1962 Rules and argued that none of the provisions would be attracted to the facts of the present case. In support of his submission, learned counsel has placed reliance on a judgment of Hon'ble Supreme Court in British India Corporation Ltd v. The Market Committee, Dhariwal and another, AIR 1983 SC 162 and argued that the provisions of Section 23 of the Act and Rule 29(7) of 1962 Rules as interpreted by their Lordships would squarely apply to the facts of the present case. According to the learned counsel the issue stands concluded in favour of the petitioner and against the respondents. He has then submitted that once FCI has already paid market fee and RDF then second time no fee on the same goods in the same market area would be attracted. Mr. J.R.Singla, learned counsel for the petitioner, in the alternative has submitted that a reasonable period of three years should be the maximum period for raising the demand for market fee and once transaction belongs to the year 1996 it was wholly unreasonable to frame an assessment on 26.11.2001 (P.3). CWP No 7123 of 2995 7 Shri P.K. Jain, learned Additional Advocate General, Punjab, however, has supported the view taken by the Assessing Authority-cum- Secretary, Market Committee, Sangrur as has been upheld by the Appellate Authority as well as the Revisional Authority. According to the learned counsel, there was no provision under the Act or the Rules providing for one time payment of market fee. He has maintained that every single transaction would attract the exigibility of market fee. He has convassed another issue that it is the convenience of the FCI to give delivery at Barnala or Moonak. Accordingly, he has asserted that there is no legal infirmity in the order passed by the Assessing Authority, which has been upheld in appeal as well as in revision. Having heard the learned counsel for the parties we are of the considered view that these petitions deserved to be allowed. The assessment order dated 26.11.2001 (P.3) reveal that the petitioner firm had purchased wheat from the FCI in the year 1996-97 and failed to submit any return in form 'M' regarding this purchase as per the requirement of Rule 31(1) of the rules. On the basis of information sent by the District Mandi Officer vide his letter dated 13.6.1997 followed by a letter dated 27.3.2001 written by the Board to frame assessment under Rule 31(4), 31(7) and 31(9) of the Rules to effect recovery of chargeable market fee and RDF, the Assessing Authority had issued a letter dated 22.6.2001 to the petitioner. On account of non receipt of any reply another notice was issued to them for producing the account books in respect of the aforesaid period on 4.9.2991 at 10.00 AM. However, without any details of the transaction, the Assessing Officer proceeded to frame assessment in respect of the market fee, imposed penalty and interest. Likewise, the assessment was framed for payment of RDF CWP No 7123 of 2995 8 alongwith interest and penalty. Thereafter the appeal filed by the petitioner was also dismissed by the Deputy General Manager on 5.9.2003 and even the revision filed under Section 42 of the Act met the same fate. Dealing with the argument of the petitioner that the period of limitation of three years for framing assessment as provided by Section 113 of the Limitation Act, 1963 was applicable, the revisional authority has held that the aforesaid provision would not apply as the Committee had initiated action in the month of July, 1997 on the transactions which have taken place in the year 1996. The aforesaid view cannot be sustainable because in July, 1997 no action was initiated. In that year the District Mandi Officer had sent letter No. 2934 dated 31.6.1997 to the Market Committee, Sangrur for recovery of requisite market fee/ RDF. It was merely inter departmental correspondence as no communication was addressed to the petitioner. Thereafter on 27.3.2001 when the Board had issued a direction for framing assessment under Rules 31(4), 31(7) and 31(9) of the Rules for recovery of the chargeable market fee and RDF. In pursuance of the aforesaid letter of the Board, the assessment was framed on 26.11.2001 in respect of the transaction which has taken place in the year 1996. It is thus obvious that a period of about 5 years had passed when the assessment was finalised. The period of limitation in respect of various causes has been provided by the Limitation Act, 1963. As per Article 113 of the Schedule appended to the Act in cases where no period of limitation is provided the maximum period of limitation postulated is three years. The question then is whether for framing assessment the period of three years could be the maximum period. A perusal of the various provisions of the Act and the Rules would show that no period for framing assessment has been provided. It cannot be CWP No 7123 of 2995 9 concluded that the Punjab Agricultural Produce Market Act, 1961 is a self contained code for the purposes of engrafting period of limitation. Thus a reasonable period for framing of assessment has to be carved out. A similar situation had arisen before the Hon'ble Supreme court in the case of State of Punjab v. Bhatinda District Cooperative Milk Producers Union (2007) 11 SCC 363. In that case no period of limitation for exercise of jurisdiction by the revisional authority was provided. Accordingly, Hon'ble the Supreme Court implied the period of limitation to be three years by keeping in view the provisions for framing the assessment under Section 11(1),(2) and (3) of the Punjab General Sales Tax Act, 1948. In paras 18 and 19 of the judgement it has been observed as under: “18. It is trite that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. What, however, shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder and other relevant factors. 19. Revisional jurisdiction, in our opinion, should ordinarily be exercised within a period of three years having regard to the purport in terms of the said Act. In any event, the same should not exceed the period of five years. The view of the High Court, thus, cannot be said to be unreasonable. Reasonable period, keeping in view the discussions made hereinbefore, must be found out from the statutory scheme. As indicated hereinbefore, maximum period of limitation provided for in sub-section(6) of Section 11 of the Act is five years.” The question of limitation is a jurisdictional question and goes to the CWP No 7123 of 2995 10 root of the whole matter. Therefore, we are of the view that the assessment could not have been framed after a lapse of three years. The fixation of period of three years would be advisable because even under the provisions of Section 11(1),(2) and (3) of the Punjab General Sales Tax Act,1948 the period for framing assessment is three years. Likewise under Sections 26 and 27 of the Punjab Value Added Tax Act read with Rule 36of the VAT Rules, the return is required to be filed by every taxable person quarterly within a period of 30 days from the date of expiry of each quarter. The period under the VAT Act is far shorter than the one prescribed under Sales Tax Act. We are further of the view that the sale and purchase of agricultural produce is a seasonal business which is heavily transacted during the Kharif and Rabi season of a year. Therefore, maximum period for assessment of market fee could reasonably be fixed at three years. When the facts of the present case are examined in the light of the aforesaid transaction it emerges that period of three years had expired either in 1999 or the maximum in the year 2000. Therefore, no assessment could have been framed on 26.11.2001 (P.3). Moreover, the assessment has been framed on vague and incomplete facts. It does not mention the date of transaction but it merely mentions the year 1996-97. Therefore, the writ petition deserves to be allowed on this ground also. In all other connected petitions also, the order of assessment would be time barred as it has been passed after a period of more than four nay five years. The other issue raised by the counsel for the petitioner based on the judgement of the Hon'ble Supreme Court in British India corporation's case (supra) is not required to be gone into because of the view taken on the question of limitation. Accordingly, the assessment order passed on CWP No 7123 of 2995 11 21.11.2001 (P.3) is declared as illegal and is hereby quashed. The writ petition is allowed in the above terms. A copy of this order be placed on the file of connected petitions. ( M.M. KUMAR ) JUDGE September 16, 2009 ( JASWANT SINGH ) manoj/okg JUDGE 1. CWP No.7123 of 2005 M/s Tara Chand Sham Lal, Sangrur v. State of Punjab etc 2. 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CWP No.7124 of 2005 M/s Ravinderjit Singh Rajinder Kumar v. State of Punjab 16. CWP No.7125 of 2005 M/s New Punjab Traders, Sangrur v. State of Punjab and ors 17. CWP No.7127 of 2005 M/s Sehaj Ram Ram Kishan, Sangrur v. State of Punjab CWP No 7123 of 2995 12 18. CWP No.7134 of 2005 M/s Babu Ram Charanjit Lal, Sangrur v. State of Punjab 19. CWP No.7149 of 2005 M/s Sham Lal & sons, Sangrur v. State of Punjab and ors 20. CWP No.7150 of 2005 M/s Sat Pal Raj Kumar v. State of Punjab and ors 21. CWP No.6234 of 2005 M/s Atma Ram Charan Dass, Sangrur v. State of Punjab and ors