Case: Krishi Utpadan Mandi Samiti Vs. M/S. Baidyanath Ayurved Bhawan(P)Ltd&amp;Anr

processing, manufacturing and selling.” (Emphasis supplied) 13. In The State of A.P. v. M/s. H. Abdul Bakhi and Bros., AIR 1965 SC 531 , while dealing with a similar issue, i.e. defining `Dealer under the provisions of Andhra Pradesh General Sales Tax Act, 1950, held that a person who buys goods for consumption in a process of manufacturing is also a dealer. The Court held that a person who consumes a commodity purchased by him in the course of his trade, or use in manufacturing another commodity for sale, could be regarded as a `Dealer. 14. In Krishi Upaj Mandi Samiti & Ors. v. Orient Paper & Industries Ltd., (1995) 1 SCC 655 , the similar provisions of M.P. Krishi Upaj Mandi Adhiniyam, 1973, were considered by this Court. In the said case, the question arose as to whether the market fee can be levied on agricultural produce brought for sale or sold in the market area in case the mill did not produce the agricultural produce for sale but produce them for use as its raw material for manufacturing the end product. That was a case where the bamboos were purchased for manufacturing of paper. The Court held that once the agricultural produce is brought in the market area and sold therein, it becomes liable to be levied with market fee, as no person can be permitted for sale or purchase of the agricultural produce within the market area without a licence even a raw material for manufacturing some other product. The Court further held as under: “.....It is immaterial for this purpose whether the bamboos are purchased by the respondent-Mills for selling them or for using them as their raw material in the manufacture of paper. The liability of the respondent-Mills to pay the market fees is in no way negated on that account....” (Emphasis added) 15. This case stands squarely covered by the judgment of Constitution Bench of this Court in Ram Chandra Kailash Kumar & Co. & Ors. v. State of U.P. & Anr., AIR 1980 SC 1124 , wherein the provision of the Act 1964, which is involved in the instant case was considered and the Court held as under: “If paddy is purchased in a particular market area by a rice miller and the same paddy is converted into rice and sold then the rice miller will be liable to pay market fee on his purchase of paddy from the agriculturist-producer under sub- clause (2) of Section 17 (iii) (b). He cannot be asked to pay market fee over again under sub- clause (3) in relation to the transaction of rice. Nor will it be open to the Market Committee to choose between either of the two n the example just given. Market fee has to be levied and collected in relation to the transaction of paddy alone.” 16. In Virendra Kumar & Ors. v. Krishi Utpadan Mandi Samiti & Ors., (1987) 4 SCC 454 , this Court considered a case where it was claimed that petitioners had been producers in respect of agricultural produce (khandsari), and thus they were not required to take out any license under Section 9(1) of the Act 1964. This court rejected the argument observing that Section 9(1) would not be applicable to a producer of agricultural produce only in case the producer processed, reared, or caught for domestic consumption. In case the agricultural produce is not for domestic consumption, but for sale thereafter in the market area, such a producer will not come within the exception of Section 9(1) of the Act 1964. 17. In view of the above, we are of the considered opinion that as the retail trader cannot sell the agricultural produce in quantity more than prescribed in the circular and also such retailer himself cannot purchase and store more than prescribed in the circular, therefore, the meaning of “domestic consumption” has to be understood in such restricted sense. Thus, meaning thereby for personal use i.e. for the use of family members of the purchaser and not for any production activity, otherwise prescribing the limits of purchase and storage by the retail trader becomes redundant. The parties could not bring to the notice of the High Court the relevant provisions of the Act 1964 which were necessary to be considered to adjudicate upon the issue in controversy. Purchase of agricultural produce in bulk cannot be termed to have been made for “domestic consumption.” The Court cannot travel beyond the pleadings. The meaning of “domestic trade” and “foreign trade”, had not been in issue in the instant case. The “domestic consumption” under the Act 1964 has to be given a very restricted and limited meaning i.e. for personal use of the purchaser, i.e. for the consumption by the family and not for commercial and industrial activities.18. Shri Subramonium Prasad, learned counsel appearing for the respondents, has placed very heavy reliance upon the judgment of this Court in M/s. Kesarwani Zarda Bhandar v. State of Uttar Pradesh & Ors., AIR 2008 SC 2733 , wherein it has been held that market fee is leviable on specified agricultural produce and not on agricultural produce simplicitor. Zarda, the end product of the manufacturing process is not a specified agricultural produce and it can be subjected to payment of market fee provided it is held to be “Tobacco”. Zafrani Zarda, does not answer the description of specified agricultural produce as defined under Section 2(a) of the Act. If it is held that Zafrani Zarda is merely a processed form of “Tobacco”, it could be subjected to levy of market fee, but if it is manufactured it would not.The aforesaid judgment has no application in the instant case for the reason that issue involved in this case is relating to requirement of having a license under Section 9(2) of the Act 1964 for the purchase of a specified agricultural produce from the market area. The appellants have never asked the respondent company to pay market fee on the end product Chawanprash.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 1

Reasoning from the judgment:
1[ds]17. In view of the above, we are of the considered opinion that as the retail trader cannot sell the agricultural produce in quantity more than prescribed in the circular and also such retailer himself cannot purchase and store more than prescribed in the circular, therefore, the meaning ofas to be understood in such restricted sense. Thus, meaning thereby for personal use i.e. for the use of family members of the purchaser and not for any production activity, otherwise prescribing the limits of purchase and storage by the retail trader becomes redundant. The parties could not bring to the notice of the High Court the relevant provisions of the Act 1964 which were necessary to be considered to adjudicate upon the issue in controversy. Purchase of agricultural produce in bulk cannot be termed to have been made forhe Court cannot travel beyond the pleadings. The meaning of, had not been in issue in the instant case. Theer the Act 1964 has to be given a very restricted and limited meaning i.e. for personal use of the purchaser, i.e. for the consumption by the family and not for commercial and industrial activities.18. Shri Subramonium Prasad, learned counsel appearing for the respondents, has placed very heavy reliance upon the judgment of this Court in M/s. Kesarwani Zarda Bhandar v. State of Uttar Pradesh & Ors., AIR 2008 SC 2733 , wherein it has been held that market fee is leviable on specified agricultural produce and not on agricultural produce simplicitor. Zarda, the end product of the manufacturing process is not a specified agricultural produce and it can be subjected to payment of market fee provided it is held to beZafrani Zarda, does not answer the description of specified agricultural produce as defined under Section 2(a) of the Act. If it is held that Zafrani Zarda is merely a processed form ofit could be subjected to levy of market fee, but if it is manufactured it would not.The aforesaid judgment has no application in the instant case for the reason that issue involved in this case is relating to requirement of having a license under Section 9(2) of the Act 1964 for the purchase of a specified agricultural produce from the market area. The appellants have never asked the respondent company to pay market fee on the end product Chawanprash.