Case: M/s. Arihant Udhyog Vs. State of Rajasthan &amp; Others

3. The appellants had challenged the action of respondent No.3 in demanding the market fee payable under the Rules by filing writ petitions in the High Court. Fifteen such writ petitions were decided by the High Court of Rajasthan vide common judgment dated May 14, 2012 accepting the stand taken by respondent No.3 and it dismissed the writ petitions as bereft of any merit. The writ petitions of other appellants were dismissed by various orders following the said judgment. In view thereof, it would be appropriate to discuss the facts and the reasons given by the High Court for arriving at the said conclusion.4. Before the High Court, lead case was that of Arihant Udyog, which is the position herein as well. Arihant Udyog is aindustry registered as such with the Government of Rajasthan. According to Arihant Udyog, since it is purchasing the agricultural produce from outside the State for industrial purpose, it is not liable to pay any market fee. It is, however, a licensee under the Act, obtained by it under Section 14 thereof. Likewise, all other appellants are also licensees.5. Some relevant provisions of the Act, Rules and the Administrative Circulars require a mention at this stage, which read as14 of the ActPower of market committee to issue Licence.(1) Where a market is established under the provisions of this Act, the market committee may issue and renew Licence, in accordance with the rules andto traders, brokers, weighmen, measurers, processors, surveyors, warehousemen or other persons to operate in the market on payment of the prescribed fees.(2) The market committee may also grant Licence,(a) for direct purchase from the agriculturists for the following purposes,to processor for processing;(ii) to exporters for export of agricultural produce;(iii) for trade of agricultural produce of particular specification; and(iv) for grading, packing and transacting in other way by value addition of agricultural produce: "Provided that no sale or purchase shall be permitted under this clause within the market proper except for the purposes specified in sub clause(i) and (iv)."Section 17 of the ActPower to collect market fees.The market committee shall collect market fees from the Licences in the prescribed manner on agricultural produce bought or sold by them in the market area at such rate as may be specified by the State Government, by notification in the official gazette, subject to a maximum of Rs. 2/per hundred rupees worth of agricultural produce.[Provided also that Mandi Fee leviable on the sale or purchase of Mustard Seed shall be Rs. 1/on one hundred rupees.][Provided also that Mandi Fee leviable on the sale or purchase of Oil Seeds shall be Rs. 1/on one hundred rupees.]Rule 58 of the RulesMarket area Cess(1) A market area committee shall collect cess on agricultural produce bought and sold in the market area at such rate as may be specified by the Government by way of notification:Provided that no cess shall be levied on any such notified agricultural produce on which cess has been levied in any market area if the seller or the purchaser of such notified produce files a declaration in Form XI, in the prescribed manner, that no notified agricultural produce, cess has already been levied in any other market area of the State.Explanation(a) For the purpose of this rule a sale of agricultural produce shall be deemed to have taken place in a [Market area] if it has been weighed or measured or surveyed by a licensed weighman, measurer or surveyor in the Market area for the purpose of sale, notwithstanding the fact the property in the agricultural produce has by reason of such sale, passed to a person in place outside the market area.(b) Further for the Purpose of this rule, all notified agricultural produce taken out or proposed to be taken out of the market area shall, unless the contrary is proved, be presumed to be bought and sold within such market area.(2) The cess levied as per(1) shall not be levied more than once on agricultural produce bought or sold in the market area.(3) The market area committee shall also levy and collect licence fee from traders, brokers, weighman, measurer, surveyors, warehousemen and other persons operating in the market area as provided in thele (4) of Rule 58, before deletion, read as under:"(4) No cess shall be levied on agricultural produce brought from outside the market into the market for use therein by the industrial concerns situated in the market or for export and in respect of which a declaration has been made and a certificate has been obtained inthat if such agricultural produce brought into the market for export is not exported or removed therefrom before the expiry of twenty days from the date on which it was so brought, the market committee shall levy and collect cess on such agricultural produce from the person bringing the produce into the market at such rates as may be specified in thefurther that if the industrial concerns that brought the agricultural produce from outside the market into the market for the purpose of use by them, and who do not make any declaration and do not obtain a certificate inas prescribed above, shall be deemed to be responsible for the contravention of this rule, and shall, on conviction be punished under(3) of Section 36 of the Act with a fine which may extend to Rupees two hundred.As per Section 14 of the Act, a trader is required to obtain a licence and is under lawful obligation to make good the market fee. Insofar as levy of market fee is concerned, power is given to the Market Committee in this behalf to prescribe the market fee on agricultural produce, bought and sold by the licensee in the market area. Rule 58 is the Rule under which this market fee is prescribed. Initially, when the Rules were framed in the year 1963, Rule 58 contained(4) as well, which empowered the Market Committee to exempt payment of market fee in respect of certain market produce. Circular dated March 07, 1992 was issued under(4) of Rule 58 of the Rules whereby agricultural produce was exempted from market fee if the product was purchased outside the State of Rajasthan. However, amendment to Rule was carried out by the State Government vide Notification dated April 27, 2005 vide which(4) of Rule 58 was deleted. Effect thereof was that Circular dated March 07, 1992 issued under(4) of Rule 58 was rendered otiose. Consequently, in terms of Section 17 of the Act, all the agricultural produce, bought and sold in the market area, became liable for payment of market fee. Vires of Notification dated April 27, 2005, vide which(4) of Rule 58 was deleted, were challenged by certain traders by filing writ petitions in the High Court of Rajasthan. The High Court, however, repelled that challenge thereby holding that deletion of(4) of Rule 58 of the Rules was a valid exercise of power.7. The instant matters were argued before the High Court having regard to the aforesaid statutory framework as per which market fee is payable on agricultural produce bought and sold by the licensees in the market area on the rates stipulated in Rule 58 of the Rules. It is in this context the question raised was as to whether the appellants had bought the agricultural produce within the market area. In all these cases the seller of the goods is situated outside the State of Rajasthan. Those goods, after purchase, are brought in the market area and delivery thereof is taken there. In case the title in goods in question had passed on to the buyers (appellants herein) outside the State of Rajasthan and only delivery was taken within the market area, market fee will not be payable as the ingredient of buying and selling the goods in the market area would not be established in such a contingency. On the contrary, if the title in the goods passed in favour of the licensees/ appellants while taking the delivery of the goods in the market area, market fee would become payable.8. Insofar as Arihant Udhyog is concerned, it had filed the copy of an invoice, through which the goods were delivered, asto the writ petition. As per this invoice, the seller is one Jawahar Exim Ltd. of Jalgaon in Maharashtra, which is admittedly outside the State of Rajasthan. As per this invoice `Toor Whole (an agricultural produce) was sold by the said seller to the appellant which was loaded in a truck. Truck number is mentioned in the invoice, so also weight of the goods, rate at which the goods are sold and total amount of the invoice. This invoice is dated March 22, 2006. It contains the following three terms and conditions:"1. Goods once sold & delivered will not be taken back.2. Responsibility of the seller ceases as soon as the goods are delivered.3. Interest @ 24% per annum is payable on all payments received after 10 days."9. Condition No.2 prescribes that responsibility of the seller would cease as soon as goods are delivered. It would mean that till the goods are delivered, the seller would remain responsible. Admittedly, the goods were to be delivered only at Jodhpur (i.e. within the market area), which is so stipulated in the invoice. On the basis of the aforesaid conditions, the High Court held that as per the provisions of Sale of Goods Act, 1930 the ownership in the goods stood transferred to the appellant only on the delivery of the goods, which delivery took place within the market area at Jodhpur and, therefore, the transaction of buying and selling was completed at Jodhpur. On this analogy, the High Court came to the conclusion that the market fee is payable.

Reasoning:
14. From the aforesaid arguments it becomes clear that applicability of Section 17 of the Act read with Rule 58 of the Rules would depend upon the question as to whether agricultural produce is bought and sold by the licensee in the market area. It is also the common case of the parties that the answer to the aforesaid issue would depend upon the question as to when and at what stage the title in the goods passes. If the entire transaction takes place outside the State of Rajasthan and the ownership in the goods also passes outside Rajasthan, then the market fee is not payable. It is also the common case of the parties that answer to the aforesaid question would depend upon the applicability of Section 4 read with Section 19 of the Sale of Goods Act, 1930, which provisions are to be applied keeping in view the terms and conditions on which the goods are sold. That is the exercise which is done by the High Court by looking into the terms on which the goods were sold by Jawahar Exim Ltd. to Arihant Udyog. Insofar as Arihant Udhyog is concerned, this was the only invoice produced before the High Court and is also made Annexurein the present proceedings. On going through the same, we do not find any fault in the approach of the High Court.A conjoint reading of the aforesaid provisions makes it clear that title in goods is transferred from the seller to buyer only on the sale of goods. As to when such a sale fructifies and the property passes is to be ascertained from the intention of the parties having regard to the terms of the contract. If no such intention can be gathered from the terms of the contract, the property in goods passes where the goods are in a deliverable state and there is unconditional contract for sale of specific goods.21. In the case of Arihant Udhyog, intention is to be gathered from the terms and conditions, which have already been noted above. It mentions that responsibility of the seller ceases as soon as goods are delivered, which means the seller remained responsible till the delivery of goods. Therefore, intention was to retain the title in the goods till its delivery inasmuch as till that time it is the seller who was responsible for the goods. This condition would clearly spell out that if the goods are destroyed or lost in transit, i.e. before their delivery, responsibility will be that of the seller. Such a responsibility can be only if the ownership remains of the seller. No other document was produced by Arihant Udhoyg which could demonstrate the intention that property in goods passed in their favour before these goods were delivered.Having said so, we find that the High Court has passed impugned common judgment deciding as many as fifteen writ petitions. Other writ petitions are also dismissed taking into consideration the terms and conditions of the contract of sale between Arihant Udhyog and its seller. This is clearly a wrong approach. In each case the High Court was supposed to go into the contract for sale between the licensees and their sellers and in view of the terms and conditions contained in each of the case, the High Court was supposed to decide as to whether in their cases also ownership in goods transferred only in the market area within the State of Rajasthan.We have gone through the said judgment and find that no such principle, as sought to be advanced by the appellants, is laid down therein. That was a case where the respondent had purchased castor seeds from suppliers outside the market area but weighment and payment whereof was made at the mill site within the market area. The Court concluded that the respondent company had become owner of the goods only once the exact weight of the castor seeds was ascertained and purchase voucher was obtained and, therefore, the sale had taken place within the market area and the respondent was liable to pay market fee thereon. To that extent, the aforesaid judgment is against the appellants. However, there was one more issue involved in the said case. The respondent industry was using the castor seeds for manufacturing of oil therefrom. In this manufacturing,seed cake emerged as aThe Market Committee wanted to levy market fee on thisalso, which was held to be impermissible. The Court also held that the item mentioned in Schedule to the Act was `oil cake which is different and distinct fromcake.27. This plea of the appellant, therefore, is of no consequence. In the impugned judgment the High Court has rightly repelled this argument by observing that once the goods bought are agricultural produce on which market fee is leviable in terms of Schedule attached to the Act, then the market fee is payable. If it is used as raw material for manufacturing purpose thereafter would be of no consequence.