Case: APMC Yashwanthapura through its Secretary Vs. M/s. Selva Foods through its Managing Partner

3. The respondent herein is a trader engaged in the business of selling cleaned and processed spices in the name and style of M/s. Selva Foods within the market area of the appellant. They buy spices like turmeric, chilli, coriander, methi and mustard seeds etc., from the market areas of various Agricultural Market Committees within the State of Karnataka and they also import such spices from outside the State. After importing such agricultural produce, they undertake cleaning and processing of the spices and sell the processed items within the market area of the appellant.4. During the year 2008, authorities of the Market Committee have inspected the records of the respondent and found that respondent had purchased methi and mustard seeds from outside the State of Karnataka and after importing they sold the processed goods within the market area of the appellant and has not paid the market fee. When At first instance, order dated 12.08.2008 was passed by the appellantAPMC cancelling the licence of the respondent on the ground that the market fee of Rs.28,422/- and the penalty amount was not paid. When such order was questioned in Writ Petition No.11211 of 2008 the High Court has allowed the writ petition on the ground that the respondent was not given proper opportunity and remitted the matter back for fresh consideration, to the appellant. Further it was observed, the amount of Rs.28422/- which was paid pursuant to interim order would be subject to decision of the authority.5. Subsequently after giving opportunity, order dated 24.03.2009 was passed confirming the earlier demand and directed the payment of Rs.85,266/- which was payable out of the total demand of Rs.1,13,688/-. Questioning such demand again writ petition was filed in the High Court in W.P. No.11816 of 2009 which is allowed by the learned Single Judge of the High court as against which the appellant Market Committee has preferred intra-court appeal in Writ Appeal No.18000 of 2011 which is dismissed by the impugned judgment and order dated 11.01.2013. As against the same this appeal is preferred.

Reasoning:
11. In this case, it is not in dispute that the respondent is a trader as defined under provisions of the Act and has purchased spices, which are notified as agricultural produce, not only from market areas within the State of Karnataka but also from outside the State of Karnataka. After such imports, they process the goods and sell the processed goods within the market area. Even the processed goods are notified items as per the schedule under the Act.12. A reading of Section 65 of the Act, which is the charging section, it is clear that, the Market Committee shall levy and collect the 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. As per the second proviso to Section 65(2) of the Act, if on any agricultural produce market fee has already been levied and 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 outside the State, it shall be exempted from the levy of market fee. However, a reading of the explanation, makes it clear, the applicability of second proviso excluded to any agricultural produce imported from outside the State and processed and sold in any market area within the State; or any other agricultural produce imported or caused to be imported by any person either on his own account or as an agent for another person, from outside the State into any market area within the State for the purpose of processing or manufacturing except for ones own domestic consumption. Further, as per Section (2-A)(ia), if the produce is sold by an importer to the purchaser, the importer to realise the market fee from the purchaser and shall be liable to pay the same to the committee. A harmonious reading of the Section 65(2) of the Act, its second proviso, and explanation to the same and clause (2-A)(ia), makes it clear that if any dealer imports agricultural produce from outside the State into any market area within the State of Karnataka for the purpose of processing and sale, the applicability of second proviso to sub-section (2) of Section 65 of the Act stands excluded. The explanation to sub-section (2) of Section 65 of the Act, makes it clear that even the processed items from the agricultural produce imported from outside the State of Karnataka, attract market fee on sales within the market area of the appellant – Market Committee. It is also clear from the aforesaid Section, it is the obligation of the importer to realise the market fee from the purchaser and pay the same to the Market Committee.13. In the case of G. Giridhar Prabhu & Ors.1 while interpreting the provisions of Karnataka Agricultural Produce Marketing Regulation Act, 1966 this Court has held that a person purchasing the raw cashew nuts, then extracting cashew kernels by means of manufacturing process for the purpose of sale in domestic and international market, is held to be a trader within the meaning of sub-section (2) of Section 48 or importer under Section 2(14-A) of the Act, therefore, would be liable to collect the market fee from his buyers and to pay such fees to the Marketing Committee.14. In the case of Gujarat Ambuja Exports Limited & Anr. (2016) 3 SCC 601  while considering the provisions of Uttarakhand Agricultural Produce Marketing (Development and Regulation) Act, this Court has held that agricultural produce which is brought into market area not for the purpose of sale, but only for the purpose of manufacture or further processing activities, cannot be subjected to market fees. Similarly, in the case of ITC Ltd. 2005 SCC OnLine Kar 86 : 2005 AIHC 2950 , learned Single Judge of the High Court of Karnataka has held that mere activity of stocking and processing of even the imported notified agricultural produces, which are imported into the market area do not attract payment of market fees.15. We also endorse the view in the aforesaid judgments but in the case on hand respondent is a buyer as defined under sub-section (2) of Section 65 of the Act and we cannot ignore the second proviso and Explanation to Section 65(2) of the Act. It is not a case where the respondent is denying sale of the imported agricultural produce within the market area of the appellant after processing. In that view of the matter it is not entitled for exemption from payment of market fees. At the same time we make it clear that if one merely imports notified agricultural produce from outside the State for the purpose of cleaning and processing without selling the processed produce within the market area is not liable to pay market fee. As much as in this case without disputing the factum of sale within the market area post the import, the respondent has defended the proceedings only on the ground that once the agricultural produce is processed it will not attract market fee as such the same cannot be accepted. It is the sale within the market area that attracts levy of market fee, and not the first purchase that was outside the market area. Notably the goods sold are also notified agricultural produce specified in the Schedule. Validity of the item under the Schedule is not under challenge.