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Narayan Shukla, J.—Heard Mr. Bharat Ji Agrawal and Mr. S.M.K. Chaudhary, learned senior advocates assisted by Mr. Rahul Agrawal, learned counsel for the petitioner as well as Mr. B.D. Madhyan, learned senior advocate assisted by Mr. M.M. Tripathi and Mr. N.C. Mehrotra, learned counsels for the Krishi Utpadan Mandi Parishad, Gomti Nagar, Lucknow. Through the instant writ petition the petitioner has challenged the different orders passed by the Krishi Utpadan Mandi Samiti, Saharanpur, whereby the mandi fee has been imposed upon the petitioner on purchase of woods/bamboos in different financial years, as also the order dated April 11, 2005, passed by the Director of Rajya Krishi Utpadan Mandi Parishad, State of U.P. in revision No. 98 of 2000 and other connected revisions, upholding the orders passed by the mandi samiti.
The facts of the case as unfolded by the petitioner are described as under:
The petitioner is a manufacturer of paper. To manufacture the paper it uses the woods, bamboos and industrial waste raw materials. It purchases the raw material within the State of U.P. as well as from outside the State of U.P. Though it has not mentioned the names of sellers, but it is stated that the names of sellers are mentioned in the revenue receipts and G.R. as consignor and the petitioner is mentioned as consignee. The sale in question is said to be inter-State sale, which was, as per version of the petitioner, completed outside the State of U.P. in respect of which form C, as prescribed under the Central Sales Tax Act, was issued and Central sales tax at the rate of Rs. 4 per cent was also paid by the petitioner to the ex-U.P. sales.
In order to purchase from outside State, the petitioner issued form 31 to the consignor for sending the goods to the petitioner at Saharanpur. Though earlier the petitioner raised finger over the jurisdiction of mandi samiti to levy mandi fee over the sale and purchase of bamboo on the ground that it is not an agricultural produce, but later on since this controversy has been settled by the honourable Supreme Court, it accepted the bamboo as agricultural produce. Since respondent No. 3 passed the order dated March 29, 2000 levying mandi fee on the purchase of wood and bamboo, the petitioner filed several revisions against the levy of mandi fee for different years. The Director, Mandi Parishad, Lucknow, opposite party No. 2, consolidated all the revisions and dismissed all the revisions by a common order dated April 11, 2005.
The learned counsel for the petitioner submits that respondent No. 2 has failed to appreciate the agreements/purchase orders dated February 5, 2001 and invoice of selling dealer and the relevant documents of ex-U.P. sale of Yamunanagar and the transporter''s agreement of the same date with Kapoor Goods Carriers, Yamunanagar as well as other connected documents. Similarly he has not appreciated the purchase order for purchase of bamboo placed on M/s. Hills Trade Agencies, Guwahati, Assam and the invoice raised by the Assam dealer to the petitioner, which were already on record. Thus, the petitioner has fielded several grounds for shifting the liability of payment upon the seller under section 17(iii)(b)(3) of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964. It is stated by the petitioner that since no sale took place within the market area of U.P. Krishi Utpadan Mandi Samiti, there is no liability of the petitioner for payment of any mandi fee, whereas respondent No. 2 committed error in deciding the point Nos. 2 and 3 by completely overlooking the purchase orders dated April 5, 2001 of M/s. Green Timber Traders, M/s. Zigma Industries, M/s. Hills Trade Agencies as well as the transportation contract of M/s. Kapoor Goods Carrier, etc. Paragraphs 3 and 6 of the agreement dated April 5, 2001, which are relevant for consideration of the issue in question are quoted below:
"3. Transport:
You will hand over the entire quantity for transportation of the goods to our transporter M/s. Kapoor Goods Carriers, who shall take the delivery of the goods from the seller for and on our behalf. The transporter shall ensure while taking the delivery of the goods on our behalf that the same conform to the quantity and quality of the goods, which have been sold by you to us.
The transporter, namely, M/s. Kapoor Goods Carrier shall be our agent and any inaction on the part of the transporter, we shall have full right to indemnify ourselves on account of any fault committed by the transporter as our agent.
Price
Price for the goods payable by us shall be at Rs. 1,560 per tonne plus Central sales tax at four per cent against C form on receipt of the bills.
It is further clearly understood and agreed by you that the price as mentioned above represents and shall be the total consideration payable by us to you in respect of the supplies of goods under this order and you shall not be entitled to claim any additional payments nor claim any escalations whether it be on account of increase of cost of material or otherwise.
The above price is inclusive of local taxes or fee if any, in respect of the supplies of goods under the order."
The similar was the position with regard to the sale agreement entered into in different years. It is further stated that clause 7 of the purchase order dated November 30, 1999/January 5, 2000 clearly provided that the seller will hand over rake load material to M/s. Bamboo Transport Company, Shiv Nagar, Gondia, for transportation of goods to the petitioner-mill. The transporter was assigned to work as the petitioner''s agent, thus the petitioner states that the transaction of sale had completed at the place of seller before the movement of goods, however, the payment was postponed till the goods are verified as the same goods and further the quantity/quality and specification of the goods are also the same. It is also stated that two separate agreements were entered into; one for the purchase of goods with the seller and other with the transporter for transportation of goods. Thus, it is stated that clause 7 of the purchase order dated November 30, 1999 and January 5, 2000 categorically stated that the seller will hand over the rake load material to M/s. Bamboo Transport Company, Shiv Nagar, Gondia for transportation of goods to the petitioner-mill. The transporter was to transport the goods from the place of seller to Saharanpur as the petitioner''s agent and not on behalf of seller.
The learned counsel for the petitioner submits that it clearly establishes that the transaction of sale had completed at the place of seller before movement of goods whether by rail or by road, as such movement of goods was clearly inter-State sale, which took place from Maharashtra and Haryana to Saharanpur (State of U.P.).
He further contended that since the movement of goods started from different States, i.e., Haryana and Maharashtra, it shall be inter-State sale and thus it cannot be treated as a sale within the market area of Saharanpur. He cited a decision rendered in the case of Marwar Tent Factory Vs. Union of India (UOI) and Others, , in which the honourable Supreme Court has held that even though the contract was f.o.r., the property in the goods passed on the goods having been delivered to the railways for transportation.
Further in the case of The Co-operative Sugar (Chittur) Ltd. Vs. State of Tamil Nadu, , the honourable Supreme Court has held that since the movement of goods was occasioned in pursuance of prior order and also sale and purchase was directly connected with the movement of the goods, it was an inter-State sale.
In the case of Sahney Steel and Press Works Limited and Another Vs. Commercial Tax Officer and Others, , the question arose as to whether the sale had taken place at the place where delivery of the goods was given to the customer after his inspection after reaching the goods to the place of his destination? The honourable Supreme court held that it is an inter-State sale, since the movement of goods from Hyderabad was occasioned by the purchase order placed by the customer/buyer, hence, the movement from the very beginning from Hyderabad until the delivery is received by the buyer is an inter-State movement and not local sale within the State where the delivery was given by the company to the buyer.
The learned counsel for the petitioner has given much emphasis upon the form C furnished by the petitioner to the seller to establish that this form C is issued only to the person who is importing the goods to the State of U.P.
The learned counsel for the petitioner further submitted that even if for the sake of arguments, it is assumed that the sale took place within the market area of Saharanpur, the petitioner being a purchasing trader would not be liable to pay the mandi fee in view of section 17(iii)(b)(3) of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964.
He also cited a case of M/S. Mahaluxmi Rice Mills and Others Vs. State of U.P. and Others, . In this case the question before the honourable Supreme Court for consideration was "whether the market fee payable to the market committee constituted under the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 shall be paid by the seller or purchaser when agricultural produce is sold by a trader to the Government". The appellants in the said case were traders, who purchased paddy from cultivators and sellers outside the market area for hulling the paddy so purchased to make it rice for sale. In this case the honourable Supreme Court considered the scope of sub-clause (3) of section 17(iii)(b) of the Act 1964 and held that the market committee is entitled to collect market fee from the seller irrespective of whether the seller has realised it from the purchaser or not.
Mr. Bharat Ji Agrawal, learned senior counsel appearing for the petitioner, submitted that the petitioner purchased the bamboos in his ordinary course of business to use the same for manufacturing the paper, therefore, it comes under the definition of "trader" as defined under section 2(y) of the Act, 1964. He further stated that the petitioner being trader, purchased the bamboos from the traders, therefore, as per the provisions of section 17(iii)(b)(3) it is selling trader, who is liable to pay the mandi fee. He also cited a decision of this court rendered in the petitioner''s case itself, i.e., Star Paper Mills Ltd. Vs. Deputy Director (Administration/Marketing), Krishi Utpadan Mandi Parishad and Others, . In this case the purchase of wood was made by the petitioner from the U.P. Forest Corporation. The mandi samiti demanded market fee on purchase of wood from the petitioner. In the writ petition filed by the petitioner, this court held that "it is clear that the petitioner having purchased wood from the Corporation is a trader. Likewise, the Corporation, having sold the wood to the petitioner is also a trader. Consequently, the transaction would fall under section 17(iii)(b)(3) of the Act". He further submitted that the aforesaid judgment was appealed before the honourable Supreme Court. The honourable Supreme Court dismissed the special leave petition on 30th of October, 2009. He further cited a decision of the Division Bench of this court given in the petitioner''s case itself, i.e., Writ-C No. 62443 of 2011 and submitted that in the earlier case, after dismissal of the first writ petition and before decision of the second writ petition, pursuant to the demand of mandi samiti, the petitioner made payment of Rs. 20 lakhs against the mandi fee by cheques. When ultimately the SLP was dismissed by the honourable Supreme Court against the order of this court, as aforesaid, the petitioner prayed for refund of amount of Rs. 20 lakhs, but the same was refused, therefore, the petitioner filed a writ petition, as above, for issuing a writ of mandamus directing the Mandi Samiti to refund the amount along with the interest. The Division Bench of this court held that the petitioner is clearly entitled for refund of the amount as claimed by it from the respondent with simple interest at nine per cent per annum with effect from December 1, 2008, i.e., the date of declaration made by this court charging mandi fee as illegal. Against the aforesaid judgment the mandi parishad has filed a special leave petition before the honourable Supreme Court, which has also been dismissed.
Per contra, respondents 2 and 3 through the counter-affidavit have submitted that as per agreement filed before the mandi samiti, it is clear that the sale of wood took place at the petitioner''s mill gate within the market area of Saharanpur. It is stated that the sale completed at the mill gate after the goods were found according to the descriptions and only thereafter the petitioner paid the sale price. Therefore, merely because the goods have been received from outside market area, it cannot be said that the purchase has taken place outside the market area of Saharanpur. It is also stated that there is a complete lack of pleadings to the effect as to where the sale took place, who conducted the sale and who was the person to decide whether the wood is fit for manufacturing of paper and is according to the order placed. Thus, it is stated that when there is no other place disclosed, it would mean that the sale would be completed when the goods are arrived within the mill premises and final payment is made. The answering respondents have brought on record one purchase order dated November 30, 1999/January 5, 2000 issued to M/s. Linkson Coal & Minerals (P) Limited, Shiv Nagar, Maharashtra for supply of one rake of bamboo under the terms and conditions as mutually agreed, clauses 6, 7, 8, 10 and 11 of which are reproduced hereunder:
"6. Weighment: Test weighment of any 6-7 wagons will be done on our mills weighbridge which will form the basis of total payment of the rake. The weight so computed will be conclusive and final.
Transport: That you will hand over the rake load material to M/s. Bamboo Transport Company, Shiv Nagar, Doubling Ground, Gondia for transport of the same to our mills from Amgaon station. Payment as agreed will be made to you on the weight taken at our mills on air dry basis.
Payment: 90 per cent of the total cost will be paid on receipt of the material by the mills and balance will be paid after submission of the bills.
Moisture: Moisture as recorded by our laboratory will be final and acceptable to you and payment will be made accordingly.
Rejection of consignments: That on receipt of the consignments in our wood-yard, our decision regarding the quality of the material will be final and acceptable to you. It will be our sole discretion either to impose deduction for substandard quality or to reject the consignments in toto and ask you to remove it within seven days as stipulated in our rejection note, failing which we will get it removed from our premises at your sole risk, cost and account and you will not be entitled to claim any compensation or damages in any case thereafter. The incidental expenses incurred in removal of the rejected consignments will be payable by you."
It is further stated that though the petitioner has laid great emphasis on clause 3 of the agreement, wherein it is provided that the goods may be handed over to the transporter who shall ensure while taking the delivery of the goods on behalf of the petitioner that the same conforms to the quantity and quality of the goods, but there is no confirmation by the transporter that the goods were according to the descriptions. There is no material at all that the agent has surveyed that the goods were according to the specifications. Neither any such examination was done by the agent nor was made any physical verification about the quantity and quality of the goods.
At this stage Mr. B.D. Madhyan, learned senior counsel, cited a decision of a Division Bench of three honourable judges of the honourable Supreme Court, i.e., The Commissioner of Sales-Tax, Eastern Division, Nagpur Vs. Husenali Adamji and Co., . In this case the respondent was a dealer of match wood "sawar". His place of business was situated at Chanda in erstwhile Central Province. In January, 1948 the respondents entered into an agreement with the Western India Match Co. Ltd., in short "WIMCO" for supply of a minimum quantity of 2,500 tonnes of sawar logs during the season 1947-48. The contractor agreed that any logs supplied by him, which, on arrival at Ambernath, are found in the opinion of the company''s factory manager, not to conform with the specifications herein shall not be accepted or paid for by the company, notwithstanding the fact that such logs may have been accepted by the company''s representatives before being railed to Ambernath. It was also provided that the money so due and payable shall be paid by the company to the contractor when the measurements of the goods have been completed under the supervision of the company''s representative.
Pursuant to the aforesaid agreement, the respondent loaded the different quantities of sawar logs from railway wagon and dispatched the same from railways from chanda or other railway stations in the Central Provinces of Ambernath, i.e., outside the Central Provinces. Indisputedly on many occasions the representative of WIMCO was present at the railway station with the logs, rather sorted out and loaded into the wagons. The honourable Supreme Court expressed the opinion that on a proper construction of a contract sale, the intention of the parties clearly was that the respondent would send the logs by rail from its stations in the Central Provinces to Ambernath, where WIMCO factory''s manager would inspect, measure and receive the same, if in his opinion they were of the description and quality agreed upon. Therefore, it held that the appropriation under section 23 was not complete till the goods reached Ambernath and were appropriated by the company to the contract. The appropriation of the goods by the applicant at the rail heads was conditional on their acceptance by the buyer at Ambernath. Therefore, the property in the logs passed to the buyer at Ambernath.
He further cited a decision of the honourable Supreme Court, i.e., Bengal Timber Trading Co. Ltd. Vs. Commissioner of Sales Tax, Madhya Pradesh, . In this case the honourable Supreme Court held that the place of actual delivery in the light of all the circumstances of the case can only be the destination of the goods and the goods can only be said to be fully delivered and finally accepted after they are acknowledged at the destination by the sleeper control officer.
He further cited another decision of the honourable Supreme Court, i.e., Ram Chandra Kailash Kumar and Company and Others Vs. State of U.P. and Another, . In this case the various traders carrying on business in the State of U.P. within the jurisdiction of several market committees challenged the levy of fee before this court from time to time. There were several rounds of litigation, in which they by and large failed. Ultimately the matter reached the honourable Supreme Court. The honourable Supreme Court discussed the various provisions of Mandi Adhiniyam as well as the Rules framed thereunder. The traders/appellants urged the several points for consideration of the honourable Supreme Court, out of which point No. 13 is relevant with the present case, which is extracted below:
"13. Wood cut and brought from the jungle by a manufacturer of paper such as Star Paper Mills, Saharanpur, could not be subjected to levy of fee."
20 The honourable Supreme Court discussed the aforesaid point in paragraph 24 of its judgment, which is reproduced hereunder:
"24. This item presented some difficulty in solution. A licence is granted to a paper mill and to other kinds of dealers for cutting wood from the jungle and bringing it to their factories for manufacture of various articles such as paper, etc. It was argued that there was no transaction of sale and purchase involved in the above operation. Moreover the wood is cut from the jungle areas which although has been roped in the market area but no service is rendered in that jungle area by any market committee. In our opinion the licence is involved sale of wood and a right to go to that land to cut that wood. The wood may be used by the manufacturer for manufacturing furniture or may be used in the manufacture of paper or any other commodity. That is immaterial. The owner of the jungle wherefrom the wood is cut and brought will be a producer within the meaning of the Act and the licensee-producer of that wood would be a purchaser of an agricultural produce within the meaning of sub-clause (2) of section 17(iii)(b) of the Act liable to pay market fee. It matters little what use is made of the wood by him. The question of quid pro quo and service cannot be decided by a dichotomy of service to every payer of fee as held by this court in Kewal Krishan Puri and Others Vs. State of Punjab and Another, . The matter has to be judged in a broad sense and not in the sense of rendering service to every individual payer of the fee."
Mr. B.D. Madhyan, learned senior advocate, submitted that in this case the licence was granted to the petitioner''s mill as well as to other kinds of dealers for getting wood from jungle and bringing it to their factories for manufacturing of various articles such as paper, etc. Therefore, it was argued on behalf of the appellants that there was no transaction of sale and purchase involved in the above operation. However, the honourable Supreme Court expressed the opinion that the licence is involved sale of wood and a right to go to that land to cut that wood. The wood may be used by the manufacturer for manufacturing furniture or may be used in the manufacture of paper or any other commodity. That is immaterial. The owner of the jungle wherefrom the wood is cut and brought, has been declared as a producer and the licensee has been declared as a purchaser, therefore, he is liable to pay the market fee under section 17(iii)(b)(2) of the Act.
On the basis of the findings of the honourable Supreme Court he submitted that once the petitioner has been declared as purchaser and also made liable to pay market fee being covered under section 17(iii)(b)(2) of the Act, the petitioner''s status shall not change in the transaction of sale even at a later stage and he shall remain liable to pay the market fee being covered under the aforesaid clause.
He further drew attention of this court towards the definition "trader" as is defined under section 2(y) of the Act and submitted that the trader can be said to be a person who in the ordinary course of business is engaged in buying or selling agricultural produce, whereas in the present case buying of wood/bamboo is not an ordinary course of petitioner''s business. He neither sells it as it is nor does convert into another agricultural produce, rather he uses it to manufacture the paper, which is not an agricultural produce. Therefore, it cannot be said to be an ordinary course of his business.
He further submitted that the petitioner purchases the wood being bulk purchaser and not a trader, therefore, the law laid down by the honourable Supreme Court in M/S. Mahaluxmi Rice Mills and Others Vs. State of U.P. and Others, is not attracted in the present case.
He further drew attention of this court towards the various purchase orders brought on record by the petitioner. One purchase order dated 5/13 April, 2001 was issued by the petitioner to M/s. Green Timber Traders, Saharanpur Road, Yamunanagar. Clauses 3 and 6 of the said order are reproduced hereunder:
Transport:
You will hand over the entire quantity for transportation of the goods to our transporter M/s. Kapoor Goods Carriers, who shall take the delivery of the goods from the seller for and on our behalf.
The transporter shall ensure while taking the delivery of the goods on our behalf that same conform to the quantity and quality of the goods, which has been sold by you to us.
The transporter, namely, M/s. Kapoor Goods Carrier shall be our agent and for inaction on the part of the transporter, we shall have full right to indemnify ourselves on account of any fault committed by the transporter as our agent.
Price:
Price for the goods payable by us shall be at Rs. 1,560 per tonne plus Central sales tax at four per cent against C form on receipt of the bills.
It is further clearly understood and agreed by you that the price as mentioned above represents and shall be the total consideration payable by us to you in respect of the supplies of goods under this order and you shall not be entitled to claim any additional payments nor claim any escalations whether it be on account of increase of cost of material or otherwise.
The above price is inclusive of local taxes of fees if any, in respect of the supplies of goods under the order.
Another purchase order of the same date issued to M/s. Kapoor Good Carrier, Saharanpur Road, Yamunanagar is on record. The relevant clauses 2, 5 and 7 are reproduced as under:
Weighment:
The weighment recorded at our mills weighbridge will be final and conclusive and will form the basis for payment of our transportation cost. In case of any shortage in the quantity delivered to you by M/s. Green Timber Traders the same shall be deducted from your bill.
Destination:
From the place/places of works of the above supplier at Yamunanagar to our mills at Saharanpur.
Payment
The payment at Rs. 150 per MT shall be made on submission of bills subject to deduction of tax at source at applicable rates.
Another purchase order is of the same date issued to M/s. Zigma Industries, W-9, Industrial Area, Yamunanagar.
Another purchase order of the same date issued to Tejinder Singh and Sons, 1, Industrial area, Yamunanagar. Clauses 2, 5 and 7 of the same are reproduced hereunder:
Weighment
The weighment recorded at our mills weighbridge will be final and conclusive and will form the basis for payment of your transportation cost. In case of any shortage in the quantity delivered to you by M/s. Zigma Industries the same shall be deducted from your bill.
Destination
From the place/places of works of the above supplier at Yamunanagar to our mills at Saharanpur.
Payment
The payment at Rs. 200 per MT shall be made on submission of bills subject to deduction of tax at source at applicable rates.
Another purchase order is dated April 11, 2001/May 25, 2001 issued to M/s. Hills Trade Agencies, B/3, 2nd Floor, Zahkar Commercial Complex, A.T. Road, Guwahati (Assam). Clauses 2, 3 and 6 of the same are reproduced hereunder:
Quality and specification
The goods shall conform to our specification and that bamboo should be free from rot, crook, burn, knot, borer effect and unripe (kachha) and should be in length of about two meters. The bamboo should be duly bundled with sabal string and it should be of current production year.
Transport
You will hand over the entire quantity for transportation of the goods to our transporter Shri Ranbir Singh Gandhi, who shall take the delivery of the goods from the seller for and on our behalf.
The transporter shall ensure while taking the delivery of the goods on our behalf that same conform to the quantity and quality of the goods, which has been sold by you to us.
The transporter, namely, Shri Ranbir Singh Gandhi shall be our agent and any inaction on the part of the transporter, we shall have full right to indemnify ourselves on account of any fault committed by the transporter as our agent.
Price
Price for the goods payable by us shall be at Rs. 1,450 ADMT plus Central sales tax at four per cent against C form on receipt of the bills.
It is further clearly understood and agreed by you that the price as mentioned above represents and shall be the total consideration payable by us to you in respect of the supplies of goods under this order and you shall not be entitled to claim any additional payments nor claim any escalations whether it be on account of increase of cost of material or otherwise. The above price is inclusive of local taxes or fees if any, in respect of the supplies of goods under the order."
In the light of the aforesaid clauses, he submitted that in all the purchase orders the places of delivery of goods have been shown the petitioner''s mill and the price has been made payable on receipt of bills.
He further submitted that the status of the seller has not been identified as to whether he was the producer or trader. He submits that with the change of status of the seller, the liability for payment of fee also changes and since the seller''s status is not identifiable, he cannot be ascertained to be a selling trader.
He further drew attention of this court towards the finding of the revisional authority and submitted that the revisional authority has observed that from the evidence produced by the revisionist, it is not ascertainable as to what was the site of sale made between 1998-2002 as it is not disclosed in form C and form 31, rather it only establishes that the woods were transported to the Saharanpur State of U.P. from out of State.
He further stated that the revisional authority also acknowledged the bill, vouchers and the agreements entered into with the transporters, which verify that the purchase order had been issued from Saharanpur to the seller at the place out of State and the woods had been received at the revisionists mill gate and the specifications of goods had also been verified at Saharanpur. Moreover, the weight of goods had also been made at mill gate. The revisionist has failed to produce any verification certificate issued by its agent. At the event of rejection of the goods being failed to satisfy the specification the sellers have been made liable to suffer it not the transporter. The petitioner/revisionist has also not produced any evidence of payment of compensation or recovery of damages to the transporter and recovery of damages from the transporter.
The learned counsel for the respondents contended that once the revisional authority has discussed the matter and his finding is based on the evidences available before him, it is not feasible for this court to embark upon the exercise of re-appreciating the entire material to substantiate its own finding particularly when the findings recorded by the revisional authority are not erroneous or perverse and the view taken by him is reasonably plausible view. In support of his submission he also cited a decision of the honourable Supreme Court rendered in the case of Heinz India Pvt. Ltd. and Another Vs. State of U.P. and Others, , relevant paragraph 66 of which is reproduced hereunder:
"66. That the court dealing with the exercise of power of judicial review does not substitute its judgment for that of the Legislature or executive or their agents as to matters within the province of either, and that the court does not supplant ''the feel of the expert'' by its own review, is also fairly well-settled by the decisions of this court. In all such cases judicial examination is confined to finding out whether the findings of fact have a reasonable basis on evidence and whether such findings are consistent with the laws of the land. (See Union of India (UOI) and Another Vs. S.B. Vohra and Others, , M/s. Shri Sitaram Sugar Co. Ltd. and another Vs. Union of India and others, and Thansingh Nathmal and Others Vs. A. Mazid, Superintendent of Taxes, ."
In rejoinder reply on the identity of the sellers the learned counsel for the petitioner submitted that the purchase orders, invoices and the bill vouchers indicate the name of the seller, the name of the transporter, who take delivery on behalf of the petitioner at the premises of the seller and being an agent of the petitioner. The transporter himself was authorized to ascertain the quality and quantity of the goods on behalf of the petitioner and in case of any discrepancy between the goods as delivered by the seller and as received by the petitioner, it was the transporter who was made liable to deduction in the costs of the transportation payable by the petitioner. He further submitted that the terms of contract, invoices and other documents show that the sellers have not written off their rights over the raw material being sold to the petitioner. The petitioner had nominated the transporter to take delivery on its behalf as its agent. The delivery was taken by the transporter on behalf of the petitioner at the place of dispatch outside the State of U.P. as if the petitioner himself has gone to the place of seller for taking delivery and brought the goods itself to its factory at Saharanpur. He further submitted that the transporters had inspected the consignment on behalf of the petitioner and taken delivery, therefore, the transporters had been made responsible for any short-fall in quantity or deterioration in quality, whereas the authorities have erred in not looking on the entire contract and conduct of the parties for ascertaining the true nature and character of the transaction. He further submitted that section 9(2) of the Mandi Adhiniyam permits a person from carrying on a business or work as trader without obtaining a licence from the mandi samiti. Section 9(2) of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 is reproduced hereunder:
"9. Effects of declaration of market area.--(1) ...
(2) No person shall, in a principal market yard or any sub-market yard, carry on business or work as a trader, broker, commission agent, warehouseman, weighman, palledar or in such other capacity as may be prescribed, in respect of any specified agricultural produce except under and in accordance with the conditions of a licence obtained therefore from the committee concerned."
Section 37 imposes punishment for contravention of provisions of section 9. Section 37 is extracted below:
"37. Penalty.--(1) Any person who contravenes any of the provisions of section 9 or section 10 or the rules or bye-laws made thereunder shall, on conviction, be punished,--
(a) for the first offence, with fine which may extend to five thousand rupees;
(b) for a second and any subsequent offence of the same nature with imprisonment which may extend to one year, or with fine which may extend to ten thousand rupees or with both and in case of continuing contravention, with a further fine up to rupees one thousand for every day subsequent to the date of second conviction or any subsequent conviction for which the contravention has continued:
Provided that in the absence of special and adequate reasons to the contrary mentioned in the judgment of the court the fine for the first offence shall not be less than two hundred and fifty rupees and for the second or subsequent offence, shall not be less than five hundred rupees.
(2) Any person who contravenes any of the provisions of this Act or the rules or bye-laws made thereunder, except the provisions of section 9 or 10 shall be punishable with fine which may extend to two thousand rupees and in the case of continuing contravention with a further fine up to rupees two hundred for every day subsequent to the date of the first conviction for which the contravention has continued.
(3) Whenever any person is convicted of an offence punishable under this Act, the Magistrate shall in addition to any fine which may be imposed, recover summarily and pay to the market committee, the amount of fee or any other amount, due from him under this Act or the Rules or bye-laws made thereunder and may in his discretion also recover summarily and pay to market committee cost of the prosecution."
It is contended that no dispute regarding the status of seller was ever raised before or adjudicated by the authorities below, therefore, the petitioner has not adduced the factual evidences about the status of sellers. However, the petitioner has brought on record form C, which was issued in respect of inter-State transaction of purchase of wood carried out by the petitioner from the sellers. Form C is issued only in respect of transactions between two persons registered as dealers under the Central Sales Tax Act. Therefore, the sellers are indisputedly the traders for the sale transactions in dispute. He further submits that once the Division Bench of this court in Writ Petition No. 62443 of 2011 held that the petitioner is a trader, that finding is binding upon the single judge and the doctrine of res judicata applies. In support of his submission, he cited the following decisions:
(1) Sree Narayana Dharmasanghom Trust Vs. Swami Prakasananda and Others, .
(2) Gorie Gouri Naidu (Minor) and another Vs. Thandrothu Bodemma and others, .
(3) K.A. Abdul Jaleel Vs. T.A. Shahida, .
(4) In Re: Mehar Singh Saini, Chairman, HPSC and Others, .
One more issue was also framed and discussed by the revisional authority, which is extracted as under:
"Issue No. 3.--Whether the purchases made by the petitioner are exempted from the levy in view of paragraph 13 of the circular dated November 11, 1998?"
The circular speaks that the goods which are arriving in the market area from a place outside the State of U.P., on which no market fee has been levied in any market area in the State, no mandi fee shall be charged if the said goods is used for the production of another commodity which is not an agricultural produce. The revisional authority has given the finding over it that this notification is applicable only when the purchaser is the manufacturer of any other agricultural produce, which is not notified as agricultural produce from the raw materials purchased by him, then on purchase of such goods no mandi fee/development cess shall be payable, whereas in the present case the petitioner manufactures paper from the raw material of agricultural produce, which is notified as an agricultural produce, therefore, the said notification shall not apply in the present case. However, the learned counsel for the petitioner submits that the petitioner is entitled to the benefit of the said notification as the circular issued by the respondent is binding upon the Department and its officers, as has been held by the honourable Supreme Court in the case of M/s. Ranadey Micronutrients etc. Vs. Collector of Central Excise, as well as in the case of Collector of Central Excise, Patna Vs. Usha Martin Industries, etc., .
Thus, the learned counsel for the petitioner ultimately argued that firstly the sale in question is an inter-State sale, which took place beyond the market area of the mandi samiti of State of Uttar Pradesh, therefore, the mandi fee is not leviable on such a sale transaction; secondly, for the sale as assumed to have taken place within the market area then that being between two traders, it is the selling trader, who is liable to pay the mandi fee as per provisions of section 17(iii)(b)(3) of the Act; thirdly, keeping in view the notification dated November 11, 1998 the mandi fee is not payable on purchase of agricultural produce as raw materials to produce other than the agricultural produce. On the aforesaid backdrop, he submitted that the orders impugned passed by the authorities of the mandi parishad suffer from fact and law and, therefore, deserve to the quashed.
In the light of the facts and circumstances of the case, as above, I find that the present case is fully covered by the decision of the honourable Supreme Court rendered in the case of The Commissioner of Sales-Tax, Eastern Division, Nagpur Vs. Husenali Adamji and Co., and Bengal Timber Trading Co. Ltd. Vs. Commissioner of Sales Tax, Madhya Pradesh, .
It is no longer res integra that the bamboos are "agricultural produce" as is defined under section 2(a) of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964. In order to examine the effect of inter-State sale on levy of mandi fee when I read over the Central Sales Tax Act, 1956 (hereinafter referred to as "the Central Sales Tax Act") and the Central Sales Tax (Registration and Turnover) Rules, 1957 (hereinafter referred to as "the Rules") framed under section 13(1) of the Central Sales Tax Act, 1956, I found that section 8(1) of the Act provides that every dealer, who in the course of inter-State trade or commerce sells to the Government any goods; or sells to a registered dealer other than the Government, goods of the description referred to in sub-section (3), shall be liable to pay tax under this Act. Sub-section (4) provides that "provisions of sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner,--
(a) a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority; or
(b)...
Provided that the declaration referred to in clause (a) is furnished within the prescribed time or within such further time as that authority may, for sufficient cause, permit."
Rule 12 of the Rules, 1957 provides that the declaration referred to in sub-section (4)(a) of section 8 shall be in forms C.
Thus, I find that these provisions relate to imposition or exemption of/from trade tax on furnishing the declaration in form C, which has no concern with the levy of mandi fee.
The next question for consideration is whether the sale in question took place within the territory of market area of the State of U.P. or beyond it. In order to establish that the sale was completed outside the market area of State of U.P. the petitioner has brought on record several purchase orders issued to the different traders, namely, M/s. Green Timber Traders, M/s. Zigma Industries, M/s. Tejinder Singh & Sons, M/s. Hills Trade Agencies and also one letter issued to M/s. Kapoor Goods Carrier, Yamunanagar. By means of purchase order issued to M/s. Green Timber Traders, the petitioner directed the trader to hand over the entire quantity for transportation of the goods to his transporter M/s. Kapoor Goods Carriers to take delivery of goods on his behalf, who has been called by the petitioner his agent. However, the price has been made payable by the petitioner on receipt of the bills.
Another letter dated April 5/13, 2001, which is in connection with the same transaction issued to the transporter M/s. Kapoor Goods Carrier shows that the weighment recorded at the petitioner''s mills weighbridge shall be made to be final and conclusive and that shall also be made the basis for payment of transportation costs. The destination is assigned from the place/places of works of the supplier at Yamunanagar to petitioner''s mill at Saharanpur and in the same terms the payment has been made subject to submission of bills.
The purchase order issued to M/s. Zigma Industries shows that in the same very terms one transporter, M/s. Tejinder Singh and Sons was authorized as the petitioner''s agent to take over the delivery of the goods and the price was made payable in the same terms on receipt of bills. In connection with this transaction another letter was issued to the transporter M/s. Tejinder Singh and Sons, in which it was provided that the weighment recorded at the petitioner''s weighbridge will be final and conclusive and will form the basis for payment of transportation costs. The destination is shown from the place/places of works of the supplier at Yamunanagar to the petitioner''s mill at Saharanpur and the mode of payment has been made on submission of bills.
The third purchase order relates to M/s. Hills Trade Agencies. In this transaction the transporter was assigned as Shri Ranbir Singh Gandhi to take delivery of the goods from the seller on behalf of the petitioner.
Thus, from the aforesaid documents it is evident that the transporters were assigned to carry the goods on behalf of the petitioner being his agent, but ultimately the payment of price of goods was made by the petitioner subject to production of bills as well as the weighment recorded at the petitioner''s mill weighbridge. The purchase orders also assigned some particular quality and specifications of goods but as per findings of the revisional authority there was no any discussion on record about the satisfaction of the agent with respect to the quality and specifications of goods, thus it establishes that it was the ultimate wish of the petitioner to finalize the sale.
The honourable Supreme Court in the case of The Commissioner of Sales-Tax, Eastern Division, Nagpur Vs. Husenali Adamji and Co., as well as in Bengal Timber Trading Co. Ltd. Vs. Commissioner of Sales Tax, Madhya Pradesh, has held that place of actual delivery of goods can only be the destination of the goods.
At this stage it is worth to reproduce the provisions of section 4 of the Sale of Goods Act, 1930, which is extracted as under:
"4. Sale and agreement to sell.--(1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be contract of sale between one part-owner and another.
(2) A contract of sale may be absolute or conditional.
(3) Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell.
(4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred."
In light of the ingredients of section 4 of the Sale of Goods Act, 1930 when I examine the terms of purchase orders, I find that it was completely an agreement which had become complete on fulfillment of conditions imposed therein, therefore, it can, unequivocally, be said that the sale completed at the petitioner''s mill, which falls within the market area of State of U.P.
The next question for consideration is whether the sale took place between two traders and further who is liable to pay market fee. In this respect before examining the status of the parties it is appropriate to mention the relevant provisions of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964, section 2(y) of which defines "trader" as under:
"2. (y) ''trader'' means a person who in the ordinary course of business is engaged in buying or selling agricultural produce as a principal or as a duly authorized agent of one or more principals and includes a person, engaged in processing of agricultural produce."
Section 17(iii) of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 is also quoted hereunder:
"17. Powers of the committee.--A committee shall, for the purposes of this Act, have the power to--
(i) and (ii) ...
(iii) levy and collect,--
(a) such fees as may be prescribed for the issue or renewal of licences; and
(b) market fee which shall be payable on transactions of sale of specified agricultural produce in the market area at such rates, being not less than one per centum and not more than two and a half per centum of the price of the agricultural produce so sold as the State Government may specify by notification, and development cess which shall be payable on such transactions of sale at the rate of half per centum of the price of the agricultural produce so sold, and such fee or development cess shall be realised in the following manner:
(1) if the produce is sold through a commission agent, the commission agent may realise the market fee and the development cess from the purchaser and shall be liable to pay the same to the committee;
(2) if the produce is purchased directly by a trader from a producer, the trader shall be liable to pay the market fee and development cess to the committee;
(3) if the produce is purchased by a trader from another trader, the trader selling the produce may realise it from the purchaser and shall be liable to pay the market fee and development cess to the committee:
Provided that notwithstanding anything to the contrary contained in any judgment, decree or order of any court, the trader selling the produce shall be liable and be deemed always to have been liable with effect from June 12, 1973 to pay the market fee to the committee and shall not be absolved from such liability on the ground that he has not realised it from the purchaser:
Provided further that the trader selling the produce shall not be absolved from the liability to pay the development cess on the ground that he has not realized it from the purchaser;
(4) in any other case of sale of such produce, the purchaser shall be liable to pay the market fee and development cess to the committee:
Provided that no market fee or development cess shall be levied or collected on the retail sale of any specified agricultural produce where such sale is made to the consumer for his domestic consumption only:
Provided further that notwithstanding anything contained in this Act, the committee may at the option of, as the case may be, the commission agent, trader or purchaser, who has obtained the licence, accept a lump sum in lieu of the amount of market fee or development cess that may be payable by him for an agricultural year in respect of such specified agricultural produce, for such period, or such terms and in such manner as the State Government may, by notified order specify:
Provided also that no market fee or development cess shall be levied on transactions of sale of specified agricultural produce on which market fee or development cess has been levied in any market area if the trader furnishes in the form and manner prescribed, a declaration or certificate that on such specified agricultural produce market fee or development cess has already been levied in any other market area.
(iii-a) ...
(v) ...
(v-a) ...
(v-b) ...
(vi) ...
(vii) ...
(viii) ..."
It is not in dispute that the petitioner is manufacturer of paper and to manufacture the paper he uses the bamboos as raw materials. The learned counsel for the petitioner contended that since the petitioner purchases the woods which are the agricultural produce to manufacture the paper, it is his ordinary course of business to purchase the woods for the purpose of manufacturing the paper, therefore, it is covered under the definition of "trader". He also drew attention towards the judgment of Ram Chandra Kailash Kumar and Company and Others Vs. State of U.P. and Another, , in which the honourable Supreme Court has held that the wood may be used by the manufacturer for manufacturing furniture or may be used in the manufacture of paper or any other commodity that is immaterial.
On the other hand learned counsel for the petitioner submitted that the documents brought on record, viz., purchase orders show that the sellers are not manufacturers, rather they are the traders. That being so the sale in question shall be treated the sale from one trader to another trader and therefore, as is provided under section 17(iii)(b)(3) the trader selling the produce shall be liable to pay the market fee not the trader purchasing the goods. He also submitted that the question of status of traders has been raised at first time before this court, therefore, prior to this stage no occasion arose to bring on record the relevant documents to establish the status of the trader selling the produce. In support of his submission he has given emphasis over the decisions of this court rendered by the honourable single judge as well as honourable Division Bench in the petitioner''s case itself.
In the said case on the submission of the petitioner that UPFC is a trader, which was not denied by the mandi samiti, the honourable Supreme Court held that the Corporation is a trader. The petitioner was also admitted as a trader, therefore, the sale having been found between two traders was put under clause (3) of section 17(iii)(b) of the Act. Accordingly the UPFC selling trader was held liable to pay the mandi fee. The Division Bench of this court in the matter of refund of fee, already deposited, in the light of the aforesaid decision of honourable single judge held that the demand of mandi fee from the petitioner was illegal and without jurisdiction and therefore, the petitioner was made entitled to get refund of amount as claimed by him from the respondents.
After going through the decision of Ram Chandra Kailash Kumar and Company and Others Vs. State of U.P. and Another, I find that in the said case it was the sale between the producer and the licensee/manufacturer of paper (petitioner), therefore, in the light of the provisions of section 17(iii)(b)(2) of the Act, the honourable Supreme Court held that the licensee for cutting the wood was held purchaser and also liable to pay the market fee, but does not determine the petitioner''s status as trader for all the times as the determination depends case to case.
The petitioner has also sought the protection from payment of market fee under circular dated November 11, 1998 issued by the Rajya Krishin Utpadan Mandi Parishad, U.P., a bare perusal of paragraph 13 of the aforesaid circular shows that it provides that on the first arrival of specified agricultural produce in the market area for sale, storage or processing on which no market fee has been levied in any market area, whether brought from place in the same market area, or from any other market area or from outside the State or the country, shall be called as "primary arrival" as is defined under rule 2(1)(xviii) of the U.P. Krishi Utpadan Mandi Niyamavali, 1965. The circular provides that on the produce other than the notified agricultural produce after processing the agriculture produce called as primary arrival, no market fee shall be leviable, thus it speaks about the exemption of market fee on the produce after processing the goods registered as primary arrival, whereas the case on hand relates to levy of market fee on the produce registered as primary arrival itself, therefore, I am of the view that the said circular has no application in the present case to provide any exemption from the market fee impugned.
The learned counsel for the respondents has also made an effort to establish that the petitioner is a bulk purchaser and submitted that since it was not an ordinary course of business of the petitioner to purchase the produce and sell it again, therefore, he is not covered under the term trader, however, upon going through the definition of "trader" as is given under section 2(y) of the Act, I find that the person, who in ordinary course of business is engaged in buying or selling agricultural produce has been defined as a trader. It is not in dispute that the petitioner purchases the agricultural produce and uses to manufacture the paper, therefore, only the business of buying which is established in the case in hand by the petitioner is sufficient to cover him under the definition of trader. This court in the case, referred to above, has also acknowledged the petitioner''s status as trader, therefore, I am of the view that indisputedly the petitioner is a trader. So far as the status of sellers is concerned, definitely the petitioner has not disclosed the status of the sellers in the pleadings on record, whereas he was under duty to disclose the status of sellers as to whether he is a producer or trader. A bare perusal of the provisions of section 17(iii)(b) shows that the status of seller is the cardinal factor to determine the liability for payment of market fee.
Moreover, I am of the view that the seller recognized as a dealer by the Trade Tax Department in the transaction of inter-State sale cannot be acknowledged as trader of the agricultural produce unless he establishes so for the purpose of levy of market fee, thus without pleading being on record with regard to the status of the sellers, it is difficult for this court to acknowledge them either as producer of agricultural produce or the trader of the same.
The provisions of section 17(iii)(b)(2) relates to the liability of payment of market fee on purchase of agricultural produce by a trader from a purchaser and clause (3) relates to the liability of payment of market fee on purchase of an agricultural produce by a trader from another trader. In the event of purchase made under clause (2) the purchaser has been made liable and under clause (3) the traders selling the agricultural produce has been made liable to pay the market fee with the option to realise it from purchaser.
However, there is another clause (4) of section 17(iii)(b), which provides that in any other case of sale of such produce, the purchaser shall be liable to pay the market fee and development cess to the committee. Since the status of the trader of selling produce is not ascertained, I am of the definite opinion that the sale in question is covered under clause (4) of section 17(iii)(b) of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964. Therefore, it is the petitioner/purchaser, who is liable to pay the market fee as levied. No interference is warranted in order passed by the revisional authority. In the result the writ petition is dismissed.