Food
Corporation of India Vs. State of Kerala [1997] INSC 2
(6 January 1997)
CJI,
SUJATA V. MANOHAR, K. VENKATASWAMI
ACT:
HEAD NOTE:
THE 6
AND 28TH DAY OF JANUARY, 1997 Present:
Hon'ble
the Chief Justice Hon'ble Mrs. Justice Sujata V.Manohar Hon'ble Mr. Justice K. Venkataswami
D.D. Thakur, B.D. Agarwal, A.S. Nambiar, Dr. A.M. Singhvi, H.L. Aggarwal, U.N. Bachawat,
A.N. Jayaram, H.N. Salve, O.P. Rana, Sr. Advs., (A.K. Verma, P.D. Tyagi) Advs
for M/s. JBD & Co., G.I. Gopalkrishnan, Y. Prabhakara Rao, N.N. Bhatt,
Sunil Ambwani, Prashant Kumar, M.T. George, Sunil Gupta, Ms. Nisha Bagchi, Ms Indu
Malhotra, G.K. Bansal, Sanjay Bansal, A. Misra, Mukul Mudgal, R.B. Misra, Sudhanshu,
N.M. Sakharadande, K.Ram Kumar, C. Balasubramaniam, Pradeep Misra, Vishwajit
Singh, Ms. Niti Dikshit, T. Mahipal, Irshad Ahmad, Advs. with them for the
appearing parties.
The
following Judgment of the Court was delivered:
(With
Civil Appeal Nos. 897/87. 892-93/87. 991/90. 1130/87. 1995/87. 2532/87. S.L.P.(C)
Nos. 10126/87 10137/87. 10161/87. 10162/87, 10248/87, 10508/87. C.A No. 894/90,
S.L.P. (C) No. 10150/87, 10157/87, 10152/87, 10153/87, 10154/87, 8772-74/87,
6775/91, 7477/91, 7478/91, 8541/91, 15719/94 and 13131/91) C.A. Nos. 544-554/97
@ S.L.P.(C) Nos. 10126/87, etc. and C.A. Nos. 555-563/97 @ S.L.P.(C) Nos.
8772-74/87, etc.
Venkataswami
.J.
Leave
granted in all the special leave petitions.
In all
these cases. common questions of law arise and arguments were also addressed on
that footing and consequently, they are disposed of by this common judgment.
The
principal common question of law that arises for consideration can be broadly
stated as follows:- "Whether the Food Corporation of India (hereinafter called "the
FCI") is liable to pay sales/purchase tax to the States while purchasing foodgrains
or in distributing fertilizers pursuant to orders issued under Section 3 of the
Essential Commodities Act, 1955?" There is a difference of opinion among
the High Courts on this question. A division Beach of the Allahabad High Court (Lucknow
Bench) has taken the view that the FCI is liable to pay purchase tax in the
light of the provisions of the U.P. Sales Tax Act, 1948 (hereinafter called
"the Act").
A Division Beach of the Punjab and Haryana
High Court, however, has taken a view that the FCI is not liable to pay tax, on
the purchase of foodgrains. We may at once state here that the Lucknow Bench of
the Allahabad High Court in taking the view that the FCI is liable to pay tax
after elaborately dealing with the case law up to the date of the judgment has
come to a conclusion that the decision of this Court in M.s Chitter Mai Narain Das
vs. Commissioner of Sales Tax (1970 (3) SCC 809) in view of subsequent
decisions of larger benches of this Court does not hold good. The Division
Bench of the Punjab and Haryana High Court, however,
has taken exactly the opposite view holding that the decision of this Court in Chitter
Mal's case holds good notwithstanding subsequent decisions of this Court and on
that basis held that the FCI was not liable to pay tax. The Andhra Pradesh and Kerala
High Courts while dealing with the liability of the FCI to pay tax on the
distribution of fertilizers have taken the view that the FCI is liable to pay
tax. It is under this background, arguments were advanced before us supporting
and opposing the view taken by this Court in Chitter Mal's case.
Undoubtedly
this Court in Chitter Mal's case positively has taken a view that there was no
sale within the meaning of the definition of the word `sale' under Section 2(h)
of the U.P. Sales Tax Act, 1948, when the stocks of wheat supplied by the
appellants (in that case dealers in foodgrains) in compliance with the
provisions of U.P. Wheat Procurement (Levy) Order, 1959 to the Regional Food
Controller. Armed with that decision of this Court, Mr. Thakur, learned Senior
Counsel addressed elaborate arguments distinguishing the subsequent decision of
larger benches of this Court projection a `liberal interpretation' of the
definition of `sale' occurring in various State statutes and tried to persuade
us to hold that the ratio laid down by this Court in Chitter Mal's case holds
the field. On the other hand, learned Senior Counsel, appearing for the States,
placing reliance on the subsequent decisions of larger benches of this Court
tried to persuade us to hold that the ratio laid down by this Court in Chitter Mal's
case is no longer good law.
As an
illustrative of the cases, we would like to refer to the facts in the common
judgment of the Lucknow bench of the Allahabad High Court
in W.P. 2077/1986 (corresponding to C.A. No. 2532/1987) and then apply the same
to other cases.
The
facts as notices by the High Court in the common judgment are given below in
brief.
The
Food Corporation of India is a `Corporation' incorporated
under the Food Corporation Act, 1964, (Central Act No.37 of 1964). As one of
its functions it maintains a national pool of foodgrains. The different States
have to make their contributions to this pool. The State issued different
orders under the Essential Commodities Act known by different names as Levy
Orders, Procurement Orders or Requisition Orders, for purchasing part of the
produce or stocks of the foodgrains in question from farmers or millers. The
procurement is made through different agencies.
On
obtaining the required quantity of the goodgrains, it is purchased by the Food
Corporation of India from the State Governments for the
purpose of maintaining the national pool of foodgrains. The Sales Tax
Department of U.P. sought to levy purchase tax upon the Food Corporation of India on the point it makes purchases
from the State of U.P. The Food Corporation of India denied its liability to pay the
said tax.
Although
the purchase made by the FCI from the State is a second sale or purchase in
view of Explanation II to Section 3-D(i) of the U.P. Sales Tax Act, it is
deemed to be the first purchase. The Explanation II was added with
retrospective effect by the U.P. Act No. 23 of 1976. It is specifically in
respect of purchase of foodgrains in pursuance of orders made under Section 3 of
the Essential Commodities Act. The Explanation II reads as follows:
"Explanation
II:- For the purpose of this sub- section, in relation to purchases of foodgrains
in pursuance of any orders made under Section 3 of the Essential Commodities
Act, 1955 including any purchase in excess of the levy share, the purchase
first made by a dealer from the State Government or its purchasing agent shall
be the first purchase of such foodgrains and the tax shall accordingly be
levied at the point on such dealer.' An additional tax was also payable at the
rate of five per cent over the turnover by the dealer whose yearly turnover
exceeded rupees ten crores as provided under Section 3-F of the U.P. Sales Tax
Act, which now stands omitted by the U.P. Act No. 4 of 1982 with effect from
7th September, 1981. Section 3-F as it existed was as follows:- "3-F. Every
dealer liable to pay tax under this Act. the aggregate of whose total turnover
of purchases of goods notified under sub-section (1) of section 3-D, the
turnover of sales liable to tax under sub-section (2) of section 3- D and the
total turnover of sales of all other goods in any assessment year exceeds
rupees two lakhs, shall, in addition to the said tax, pay for that assessment
year an additional tax at the rate of one per cent, of his turnover liable to
tax:
Provided
that in case of foodgrains, the date of additional tax payable by any dealer,
the aggregate of whose turnover or turnover of purchases or both, as the case
may be, liable to tax, exceeds rupees ten crores in an assessment year shall be
five percent." Since the turnover of the FCI has been more than ten crores,
it was also required to pay additional tax for the period Section 3-F remained
in operation.
The
appellant has challenged the validity of Explanation II to Section 3-D(i) of
the U.P. Sales Tax Act as well as that of Section 3-F of the Act on the ground
that the said provisions are discriminatory, arbitrary and unreasonable.
In
addressing the arguments challenging the view taken by the Lucknow Bench of the
Allahabad High Court, Mr. Thakur, learned Senior Counsel placed before us the
following six propositions for our decision:-
1.
That levy procurement of foodgrains pursuant to levy orders issued under
Section 3 of Essential Commodities Act by the Government of Uttar Pradesh are
not "sales" within the meaning of Entry 54, List II of Seventh
schedule to the Constitution of India. The legislation authorising such
imposition, proceedings and recovery of Sales Tax is wholly ultra vires the
said Entry 54 of Constitution of India. Levy procurement in effect is
compulsory acquisition by State in exercise of powers of the State under
"Eminent Domain".
2.
That Explanation II added to Section 3D (i) of the U.P. Sales Tax Act by Act
No. 23 of 1976 is ultra vires the Entry No.54 since it assumed, by fiction of
law, the existence of sale, even when there is none, by the State of U.P. and
its nominees in favour of Food Corporation of India and thereafter declare that
fictional sale to be the first sale for the purpose of levy of sales tax.
3.
That Food Corporation of India for the procurement from 1968 to
1976 had been bearing the burden of Sales Tax on the first purchase made by the
Regional Food Controller by reimbursing the same to them. The Tax being single
point tax, the same could not be levied twice. Explanation II retrospectively
levies sales tax at more than one point. It is impermissible under the
provisions of U.P. Sales Tax Act.
4.
That Section 3(F) which levied surcharge of 5% on dealers whose turnover in foodgrains
exceeding Rs. 10 crores was arbitrary and discriminatory and hit by Article 14,
particularly when the same was made effective retrospectively from 1st April
1975.
5.
That the 46th Constitutional Amendment which came into force from 2nd February
1983 was made retrospective only in a limited sphere and not covering the
legislation affection the appellants.
6.
That the interest calculated by the respondents is not payable and, therefore,
in any case the respondents have no right to recover the same.
From
the judgment of the High Court, we do not find any discussion on the
proposition No.6. We, therefore, presume no such plea was taken or if taken no
such plea was argued before the High Court. Therefore, we do not propose to
deal with that proposition. Regarding proposition No.5, this was not seriously
pursued by either side warranting any decision on that.
The
principal argument appears to be that levy procurement did not amount to a sale
and, therefore, the same was not taxable under the U.P. Sales Tax Act, 1948. To
put it differently the argument was that the levy procurement is a compulsory
acquisition and therefore, falls outside the purview of Entry 54 of List II of
7th Schedule to the Constitution of India. Consequently, the levy procurement
is not at all taxable under the U.P. Sales Tax Act. After referring to relevant
provisions in the Essential Commodities Act, 1955 and the levy control orders,
it was pointed out that the persons holding stocks of foodgrains are required
compulsorily by force of the statutory orders to part with the foodgrains in favour
of the State Government or its nominee and such procurement constitutes clearly
a case of compulsory acquisition rather than a sale as popularly understood.
Elaborating this aspect, it was submitted that there was absolutely no contract
between the seller and buyer and failure to comply with the procurement orders
will result in the prosecution and ultimate punishment at the hands of the law
enforcing agency apart from the power to enter upon the premises, search, seize
the foodgrains and confiscate the same. Under those circumstances, it was
contended that the transactions of levy procurement cannot be treated as a sale
within the purview of Entry 54 List II of the Seventh Schedule. In the case of
millers, they have to part with a specified portion of rice, milled from the
paddy given by farmers though the millers have no right or title over the
paddy, they cannot resist the procurement pursuant to the levy order. In the
absence of any volition on the part of the miller, no sale could be attracted
to such transaction. It is also contended that there is no consensus in levy
procurement. After referring to the decision of this Court in M/s New India
Sugar Mills India Ltd, vs. Commissioner Oil Sales Tax Bihar (Air 1963 SC 1207)
and Chitter Mal's case (supra) the learned Senior Counsel submitted that the
cases subsequent to these two decisions taking different view are all under
regulatory orders and as such distinguishable and the ratio laid down therein will
have no application to the procurement under Levy Orders which amounts to
compulsory acquisition. According to the learned counsel, there is nothing left
to be decided for the parties and everything is determined in the levy orders. Even
the place of delivery of the foodgrains if fixed by the control orders. Even if
there is any small matter left to the discretion of the parties, the same being
unimportant, insignificant and peripheral, cannot be said to be determinative
of the existence of the consensus. According to the learned Senior Counsel, it
is the consensus, which is vital aspect for determining the character of the
transaction. The levy orders leave no option to the seller but to sell
compulsorily to the State Government or its nominee. There is no discretion
left to the parties in regard to price or any other matter and, therefore no
area is left out for the parties to operate unlike matters coming under
regulatory orders. According to the learned Senior Counsel. Chitter Mall's case
has rightly laid down the law when it held that the levy procurement is a
compulsory acquisition and not a sale. After referring to the transactions
under regulatory orders and transactions under levy control orders, the learned
Senior Counsel has summarised his submissions on the first proposition as
follows:- "That the transaction of levy procurement are a class by themself
and are wholly distinguishable from the cases where the sale and purchase is
regulated by statutory authorities in exercise of the power available to them
under respective legislations. Whereas in the case of levy orders, there is
absolutely no area left for consensual agreement in the case of regulatory
orders, only statutory controls were imposed for identification of a class of
people who would be eligible either to sell or to purchase goods in keeping
with the welfare policy of the State. Those are not the cases in which the
failure to part with the goods results in the commission of an offence which is
punishable nor does the failure give corresponding right to the authorities to
seize and confiscate the goods and impose penalties as prescribed under the
control orders. Therefore, it cannot be contended that a compulsory acquisition
of foodgrains by Government in exercise of its sovereign powers should
constitute a sale so as to attract the liability under the Sales Tax Act.
The
transactions entered into in exercise of the power under the levy order between
the millers and the dealers on the one hand and the State on the other hand,
and thereafter between the States and the Corporation i.e. FCI and then between
the Corporation and the States was one composite process which owed its origin
to the arrangements arrived at between the State Governments and Central
Government under which the States were required to contribute to the Central
Pool which in turn passes on to the deficit States through the agency of the
Corporation. As such, the process was an integrated process and was not at all bifurcable
or divisible into one or other transaction. Totality of the acts clearly
established that it was not a case where there were any sale of foodgrains. It
was a case of compulsory taking over of a particular percentage of foodgrains
from licenced dealers and millers on payment of an amount of compensation which
too was fixed by the Central Government and not by the State Government
although the same is notified by the State Government. Not only centres at
which the foodgrains were deliverable, were prescribed by the State Government,
the payment of compensation was also pre- determined by the orders themselves. Centres
for each area were also fixed. There was, therefore, no area where the parties
could have any volition." Learned Senior Counsel appearing for the States
in support of the common judgment under appeal and other judgments submitted
that the transactions under levy orders are definitely `sales' and there was no
compulsory acquisition of property as contended by the learned Senior Counsel
for the appellants. According to them, there is an area of consensual
arrangement between the parties and the element of volition is not completely
excluded under the levy orders. It is their further submission that the
decision in Chitter Mal's case stands practically overruled and, therefore, it
is not more good law in view of latter decisions of larger benches of this
Court. Though an argument referring to 46th Amendment of the Constitution was
faintly raised, it was not pursued seriously. To support the contention,
reliance was placed on the following judgments:- M/s Vishnu Agencies (Pvt.)
Ltd. vs. Commercial Tax Officer and Others ((1978) 1 SCC 520); Salar Jung Sugar
Mills Ltd. etc. vs State of Mysore and others (1972) 2 SCR 228); State of
Punjab and Others vs. Dewan's Modern Breweries Ltd. (43 STC 454); Coffee Board,
Karanataka, Bangalore vs. Commissioner of Commercial Taxes, Karanataka and
other ((1988) 3 SCC 262): Oil and Natural Gas Commission vs State of Bihar and
Others (1977) 1 SCR 34).
To
substantiate the argument that there was an element of volition though minimal
between the parties in the transactions under consideration, reliance was
placed on the observations of the full Bench of the Allahabad High Court in
Commissioner of Sales Tax vs. Ram Bilas Ram Gopal (AIR 1970 Allahabad 518).
Though those observations did not find approval by the Bench which decided Chitter
Mal's case, the same found approval by the later larger Bench which decided Vishnu
Agencies case. We shall refer to the relevant portions of the above-said full
Bench passage at the appropriate place. In addition to that, reliance also was
placed on certain portions in the pleadings (to which also we shall make
reference at the appropriate place) to the effect that the FCI has not always
accepted the foodgrains procured under levy orders and there were occasions
when the FCI rejected certain stocks on the ground that they were not upto the
quality prescribed. This also, according to the learned Sr. Counsel negatives
the contention of the learned Sr. Counsel for the appellants that the entire transaction
was single integrated process. The learned Sr. Counsel submitted that the Lucknow
Bench of the Allahabad High Court was fully justified in holding that the
transactions are exigible to tax under the State Sales Tax Act and also in
holding that the judgment of this Court in Chitter Mal's case stands
practically overruled.
We
will first deal with this principal point as the other points depend upon the
answer to this principal point.
We
prefer to take up the decision in Chitter Mal's case of consideration. As
pointed out already in Chitter Mal's case, the issue was whether the supplies
made to the Regional Food Controller under the U.P Wheat Procurement (Levy)
Order, 1959 are sales within the meaning of `sale' under Section 2(h) of the
U.P. Sales Tax Act and. if so, are the assessees liable to pay sales tax on the
price for wheat supplied to the Regional Food Controller" We must at once,
point out that the Food Corporation of India was not a party in that case. The assessee
in that case was a dealer in foodgrains who supplied wheat to the Regional Food
Controller, a nominee of the U.P. Government for procuring wheat under the Levy
Order. The learned Judges, it is apparent from the judgment, were very much
influenced by the view expressed in New India Sugar Mills case (supra) in
arriving at a decision that those supplies were not sales and, consequently,
not exigible to tax. It is pertinent to point out that in the Chitter Mal's
case itself, the learned Judges have noticed that certain amount of volition
was left between the parties. However, it was felt that that volition was not
sufficient to make the transaction contractual.
While
referring to a full bench judgment of the Allahabad High Court in Commissioner
of Sales Tax vs. Ram Bilas Ram Gopal (AIR 1970 Allahabad 518), this Court in Chitter
Mal's case has observed in paras 8 and 9 as follows:- "8. The High Court
relied upon the following observations in Ram Bilas Ram Gopal's case, 1969 All
1.1.424: 1970 All. 518:
"Analysing
Clause 3 of the Levy Order it is clear that a licensed dealer is obliged to
sell to the State Government fifty per cent, of he wheat held in stock by him
at the commencement of the Order, and thereafter fifty per cent, of the wheat
daily procured or purchased by him beginning with the date of commencement of
the Order until such time as the State Government otherwise directs. The price
at which the wheat is sold is the maximum price fixed in the Wheat (Uttar
Pradesh) Price Control Order. 1959, as notified by the Government of India. Delivery
of the wheat has to be given by the dealer to the Regional Food Controller of a
person authorised by him in that behalf. The dealer has no option but to sell
the specified percentage of wheat to the State Government. The State Government
has also no option but to purchase fifty per cent, of the wheat held in stock
by the dealer at the commencement of the Levy Order. As regards the wheat
procured or purchased daily by the dealer thereafter, it is open to the State
Government to say that from any particular date it will not purchase any or all
the specified percentage of wheat.
Therefore,
as regards that wheat the Levy Order leaves it open to one of the parties,
namely, the State Government to decide when it will stop purchasing wheat from
the dealer. That in substance is Clause 3 of the Levy obligations imposed on
the dealer and the State Government. All other details of the transaction are
left open to negotiation. It leaves it open to the parties to negotite in
respect of the time and mode of payment of the price, the time and mode of
delivery of wheat, and other conditions of the contract." Clause 3 of the
Order compels the licensed dealer to deliver to the controller or his authorised
agent every day 50 per cent, of the wheat procured or purchased by him. There
is no scope for negotiations there.
Assuming
that the Controller may designate the place of delivery and the place of
payment of price at the controlled rate, and the licensed dealer acquiesces
therein, or even when in respect of those two matters there is some consensual
arrangement, in our judgment, supply of wheat pursuant to Clause 3 of the Order
and acceptance thereof do not result in a contract of sale. The High Court
observed that:
"......whatever
compulsive or coercive force is used to bring about a transaction under Clause
3 of the Levy Order, it must be traced to legislation. It cannot be attributed
to the State Government as a party to the transaction.
This,
then, is clear. There is nothing in the Levy Order which can be accused of vitiating
the free consent of the parties as defined under Section 14 of the Indian
Contract Act, when entering into the contract of sale." But these
observations assume a contract of sale which the Order does not contemplate. If
there be a contract, the restrictions imposed by statute may not vitiate the
consent. But the contract cannot be assumed.
9. We
may refer to certain decisions of this Court on which reliance was placed at
the Bar. In M/s New India Sugar Mill's case, 1963 SC 1207
under the Sugar and Sugar products Control Order. 1946, a scheme was devised
for equitable distribution of sugar. The consuming States intimated to the
Sugar Controller of India their requirements of sugar and the factory owners
sent statements of stocks of sugar held by them. The Controller made allotments
to various States in question in accordance with the despatch instructions from
the State in question in accordance with the despatch instructions from the
State Governments. Under the allotment orders, M/s New India Sugar Mills Ltd.
in Bihar, despatched stocks of sugar to the
State of Madras. The State of Bihar treated
the transaction as a sale and levied tax thereon under the Bihar Sales Tax Act,
1947. The tax- payer contended that the supplies of sugar, pursuant to the directions
of the controller, did not result in sales and that no tax was exigible on such
transactions.
A
majority of the Court observed the despatches of sugar pursuant to the
directions of the Controller, did not result in sales and that no tax was exigible
on such transactions. A majority of the Court observed that despatches of sugar
pursuant to the directions of the Controller were not made in pursuance of any
contract of sale.
There
was no offer by the tax-payer to the State of Madras, and no acceptance by the
latter; the tax payer was under the Control Order compelled to carry out the
directions of the Controller and it had no volition in the matter.
Intimation
by the State of its requirements of sugar to the Controller or communication of
the allotment order to the assessee did not amount to an offer. Nor did the
mere compliance with despatch instructions issued by the Controller, which the assessee
had not the option to refuse to comply with, amount to acceptance of an offer
or to making of an offer. A contract of sale of goods postulates a voluntary
arrangement regarding goods between the contracting parties. It was held that
in the case before the Court there was no such voluntary arrangement." The
abvoe judgment came up for consideration inter alia in Vishnu Agencies case.
That decision was given by a bench of seven learned Judges. The learned Judges
in the first place did not approve the ratio laid down in New India Sugar Mill
case and further did not approve the view taken in the Chitter Mal's case disagreeing
with the observations of Allahabad full bench case. The learned Judges observed
as follows :- "We would, however, like to clarify that though compulsory
acquisition of property would exclude the element of mutual assent which is
vital to a sale, the learned Judges were, with respect, not right in holding in
Chitter Mal that even if in respect of the place of delivery and the place of
payment of price, there could be a consensual arrangement, the transaction will
not amount to a sale (p.677) (SCC p.314). The true position in law is as stated
above, namely, that so long as mutual assent, express or implied, is not
totally excluded the transaction will amount to a sale. The ultimate decision
in Chitter Mal can be justified only on the view that Clause 3 of the Wheat
Procurement Order envisages compulsory acquisition of wheat by the State
Government from the licensed dealer. Viewed from this angle, we cannot endorse
the Court's criticism of the Full Bench decision of Allahabad High Court in
Commissioner. Sales Tax, U.P. vs.
Ram Bilas
Ram Gopal which held while construing Clauses 3 that so long as there was
freedom to bargain in some areas the transaction could amount to a sale though
effected under compulsion of a statute. Looking at the scheme of the U.P. Wheat
Procurement Order, particularly Clause 3 thereof, this Court in Chitter Mal
seems to ave concluded that the transaction was in truth and substance, in the
nature of compulsory acquisition, in the nature of compulsory acquisition, with
no real freedom to bargain in any area. Shah, J.
expressed
the Court's interpretation of clause 3 in no uncertain terms by saying that
"it did not envisage any consensual arrangement".
We may
also usefully extract a passage from the separate but concurring judgment of
Beg C.J. as he then was.
The
same reads ad follows :- "It is true that a considerable part of the field
over which what are called `sales' take place under either regulatory orders or
levy orders passed or directions given under statutory provisions is restricted
and controlled by these orders and directions. If, what is called a
"sale" is, in substance, mere obedience to a specific order, in which
the so-called "price" is only a compensation for the compulsory
passing of property in goods to which an order relates, at an amount fixed by
the authority making the order, the individual transaction may not be a
"sale" although the compensation is determined on some generally
fixed principle and called "price". This was for example, the position
in New India Sugar Mills vs. Commissioner of Sales Tax, Bihar.
That
was a case of delivery according to an order given by the Government which
could amount to a compulsory levy by an executive order although there was no
legislative "levy order" involved in that case. On the other hand. In
Commissioner, Sales Tax, U.P. vs. Ram Bilas Ram Gopal the Order under
consideration was actually called a levy order, but the case was
distinguishable from New India Sugar Mills vs. Commissioner of Sales Tax, Bihar
(supra) on facts.
It was
held in the case of Ram Bilas (supra) that the core of what is required for a
"sale" was not destroyed by the so-called "levy" order
which was legislative. It is true that passages from the judgment of Pathak, J.
in the case of Ram Bilas Ram Gopal (supra) were cited and specifically
disapproved by a bench of this Court in Chitter Mal Narain Das vs. Commissioner
of Sales Tax. But, perhaps the view of this Court in Chitter Mal Narain Das
(Supra) goes too far in this respect. It is not really the nomenclature of the
order involved, but the substance of the transaction under consideration which
matters in such cases." In Dewan's Breweries case (supra), the question
for consideration was whether the supplies of Indian made foreign liquor by
distilleries and brewery company from its wholesale depots to permit holders on
the permit issued by the Excise and Taxation Officer are sales and liable to
sale tax under the Punjab General Sales Tax Act, 1948. The contention was that
there was no sale at all as the prices were fixed by the competent authorities
and dealers had to charge the fixed price from its retailers holding licences
and there was no volition in the distribution of liquor which was received from
the manufacturing concern at Jammu.
This
contention was negatived by the Court. In the course of the argument, attention
of the learned Judges was invited to Chitter Mal's case. In that connection,
the learned Judges observed as follows:- "This case, in our opinion, is
squarely covered by a recent decision of this Court delivered by a Bench of
seven Judges in Vishnu Agencies (Pvt. Ltd.) vs. Commercial Tax Officer. The
High Court in the case of Jagatjit Distilling and Allied Industries Ltd. had
mainly relied upon the decision of this Court to hold that the transactions in
that case were not sales. The said decisions are New India Sugar Mills Ltd. vs.
Commissioner of Sales Tax, Bihar and Chittar Mal Narain Das vs. Commissioner of
Sales Tax, U.P. In the case of Vishnu Agencies, the former case was considered
in paragraphs 37 to 39 of AIR volume at pages 463-464 (pages 51-52 of 42 STC)
and it was held that the view expressed in the majority judgment was not good
law and the one contained in the minority judgment was approved.
Chittar
Mal's case was also considered in paragraphs 44-45 at pages 467 (pages 56-57 of
42 STC) and it was distinguished on the ground that the said decision `can be
justified only on the view that clause 3 of the Wheat Procurement Order
envisages compulsory acquisition of wheat by the State Government from the
licensed dealer". But then the criticism in that case of the Full Bench
decision of Allahabad High Court in Commissioner of Sales Tax, U.P. vs. Ram Bilas
Ram Gopal, "which held while construing clause 3 that so long as there was
freedom to bargain in some areas the transaction could amount to a sale though
effected under compulsion of a statute' was not endorsed. It is, therefore,
plain that to that extent Chitter Mal's case is no longer good law."
(Emphasis supplied) In Coffee Board, Karnataka, Bangalore, vs. Commissioner of
Commercial Taxes, Karnataka and others (1983 (3) SCC 263), this Court had
occasion to consider more or less an identical issue. In that case also
arguments identical to the one advanced before us on behalf of the appellants,
were advanced. This Court repelled such arguments. As this case dealt with an
issue more or less similar to the one on hand, we propose to extract liberally
form this judgment. The question involved in that case was as to the exigibility
of tax on sale, if there be any, by the growers of coffee to the Board. The
principal features of the legislation connected therewith as noticed in that
judgment were :- "(a) Compulsory registration of all lands plated with
coffee (Section 14 of the Coffee Act). (b) Mandatory delivery of all coffee
grown in the registered estates except the quantities permitted by the Board to
be retained for domestic consumption and for seed purposes, (see section 25 (1)
of the Coffee Act). Estates situated in remote areas specified in the
notification issued by the Central Government under the proviso to Section
25(1) of the Coffee Act are exempt from this provision, (c) Seizure by the
Board of Coffee wrongly withheld from the pool.
Prosecution
for failure to deliver and confiscation of quantity not delivered.
(d)
Delivery to be effected at such times and at such places as designated by the
Board (section 25(2) : the extinguishment on delivery of all rights of the
growers in respect of the coffee delivered to the Board excepting the right to
receive payment under Section 34 of the Act (section 25(6)). (e) Sale of coffee in the pool by the Board in the domestic
market and for export through auctions and other channels in regulated
quantities and at convenient intervals (section 26(1). (f) Payment to growers
in such amounts and at such times as decided by the Board (section 34).
The
payment o be made on the basis of the value as determined by the price
differential scale (section 24(4)), and in proportion to the value of such
coffee to the total realisations in the pool (section 34(2). (g) Sale or contracts to sell coffee by growers in the years
in which internal sale quota was not allotted were prohibited by Section 17 of
the Act. All contracts for the sale of coffees at variance with the provisions
of the Act were declared as void by Section 47 of the Act." The contention
in that case was that there was no sale and it was nothing but a compulsory
acquisition of the coffee by the Coffee Board. In repelling that contention,
this Court in the said case observed as follows :- "18. In 1966 this Court
in the case of State of Kerala vs. Bhavani Tea Produce Co. (unanimous decision
of a Bench of five learned Judges) which arose under the Madras Plantations
Agricultural Income Tax Act. 1955 held that when growers delivered coffee under
section 25 of the Act to the Board all their rights therein were extinguished
and the coffee vested exclusively in the Board. This Court observed that when
growers delivered coffee to the Board, though the grower "does not
actually sell" the coffee to the Board, there was a sale by operation of
law. This was in connection with section 25 of the Act. The Court, however, did
not hold that there was a taxable `sale' by the grower to the Board in the year
in question. The sale, according to this Court in that case took place in
earlier years in which the Agricultural Income Tax Act did not operate. All the
States in which coffee is grown and all the persons concerned with the coffee
industry, it is asserted on behalf of the Additional Solicitor General,
understood this decision as laying down that the `sale by operation of law'
mentioned therein only meant the `compulsory acquisition' of the coffee by the
`Coffee Board. (Emphasis supplied)
19. We
are, however, bound by the clear ratio of this decision. The Court considered
this question:
`was
there a sale to the Coffee Board?" at page 99 of the Report and after
discussing clearly said the answer must be in the affirmative. It was rightly
argued, in our opinion, by Dr. Chitale on behalf of the respondents that the
question whether there was sale or not or whether the Coffee Board was a
trustee or an agent could not have been determined by this Court, as it was
done in this case unless the question was specifically raised and determined.
We cannot also by-pass this decision by the argument of the learned Additional
Solicitor General that Section 10 of the Act had not been considered or how it
was understood by some.
This
decision in our opinion concludes all the issues in the instant appeal."
While referring to the Vishnu Agencies case (supra), the following was observed
in that case :- "26. All parties drew our attention to the decision in the
case of Vishnu Agencies Pvt. Ltd. There the Court was concerned with the Cement
Control Order and the transactions taking place under the provisions of that
control order. The Cement Control order was promulgated under the West Bengal
Cement Control Act, 1948 which prohibited storage for sale and sale by a seller
and purchase by a consumer of cement except in accordance with the conditions
specified in accordance with the conditions specified in licence issued by a
designated officer. Its also provided that no person should sell cement at a
higher price than the notified price and no person to whom a written order had
been issued shall refuse to sell cement "at a price not exceeding the
notified price". any contravention of the order became punishable with
imprisonment or fine or both. Under the A.P. Procurement (Levy and Restrictions
on Sale) Order 1967. (Civil appeal Nos. 2488 to 2497 of 1972) every miller
carrying on rice milling operation was required to sell to the agent or an
officer duly authorised by the government, minimum quantities of rice fixed by
the Government at the notified price, and no miller or other person who gets
his paddy milled in any rice mill can move or otherwise dispose of the rice
recovered by milling at such rice mill except in accordance with the directions
of the Controller. Breach of these provisions became punishable. It was held
dismissing the appeals that sale of cement in the former case by the allottees
to the permit-holders and the transaction between the growers and procuring
agents as well as those between the rice millers on the one hand and the
wholesalers or retailers on the other, in the latter case, were sales exigible
to sales tax in the respective States. It was observed by Beg C.J. that the
transactions in those cases were sales and were exigible to tax on the ratio of
Indian Steel and Wire Products Ltd., Andhra Sugars Ltd., and Karam Chand Thapar.
In cases like New India Sugar Mills, the substance of the concept of a sale
itself disappeared because the transaction called price did not amount to a
sale when all that was done was to carry out an order so that the transaction
was substantially a compulsory acquisition. On the other hand, a merely
regulatory law, even if it circumscribed the area of free choice, did not take
away the basic character or core of sale from the transaction. Such a law which
governs a class obliges a seller to deal only with parties holding licenses who
may buy particular or allotted quantities of goods at specified prices, but an
essential element of choice was still left to the parties between whom
agreements took place. The agreement, despite considerable compulsive elements
regulating or restricting the area of his choice, might still retain the basic
character of a transaction arose from the a general order or law applicable to
a class. In the latter type of cases, the legal tie which binds the parties to
perform their obligations remains contractual. The regulatory law merely adds
other obligations, such as the one to enter into such a tie between the
parties. Although the regulatory law high specify the terms, such a price, the
regulations is subsidiary to the essential character of the transaction which
is consensual and contractual. The parties to the contract must agree upon the
same thing the same sense. Agreement on mutuality of consideration, ordinarily
arising form an offer and acceptance, imports to it enforceability in courts of
law.
Mere
regulation or restriction of the field of choice does not take away the
contractual or essentially consensual binding core or character of the
transaction.
Analysing
the Act, it was observed that according to the definition of "sale"
in the two Acts the transactions between the appellants in that case and the allottees
or nominees, as the case may be, were patently sales because in one case the
property in the cement and in the other property in the paddy and rice was
transferred for case consideration by the appellants.
When
the essential goods are in short supply, various types of orders are issued
under the Essential Commodities Act, 1955 with a view to making the goods
available to the consumer at a fair price. Such orders sometimes provide that a
person in need of an essential commodity like cement, cotton, coal or iron and
steel must apply to the prescribed authority for a permit for obtaining the
commodity. Those wanting to engage in the business of supplying the commodity
are also required to possess a dealer's licence. The permit holder can obtain
the supply of goods, to the extent of quantity specified in the permit and from
the named dealer only and at a controller price. The dealer who is asked to
supply the stated quantity to the particular permit-holder has no option but to
supply the stated quantity of goods at the controlled price. Then the decisions
in State of Madras vs. Gannon Dunkerley & Co. Ltd. and New India Sugar Mills
vs. CST, were discussed and the correctness of the view taken in the former
case was doubted and the majority opinion in the latter case was overruled.
28.
Since all persons including the Coffee Board are prohibited from
purchasing/selling coffee in law, there could be no sale or purchase to attract
the imposition of sales;
purchase
tax it was urged. Even if there was compulsion there would be a sale as was the
position in Vishnu Agencies. This Court therein approved the minority opinion
of Hidayatullah, J. in New India Sugar Mills vs. CST. In the nature of the
transactions contemplated under the Act mutual assent either express or implied
is not totally absent in this case in the transactions under the Act. Coffee
growers have a violation or option, though minimal or nominal to enter into the
coffee growing trade. coffee growing was not compulsory. If any one decides to
grow coffee or continue to grow coffee, he must transact in terms of the
regulations imposed for the benefit of the coffee growing industry. Section 25
of the Act provides the Board with the right to reject coffee if it is not up
to the standard. Value to be paid as contemplated by the Act is the price of
the coffee. Fixation of price is regulation but is a matter of dealing between
the parties.
There
is no time fixed for delivery of coffee either to the board or the curer. These
indicate consensuality which is not totally absent in the transaction.
43.
The true principle or basis in Vishnu Agencies case applies to this case. Offer
and acceptance need not always be in an elementary form, nor does the law of
contract or of sale of goods require that consent to a contract must be
express. Other and acceptance can be spelt out from the conduct of parties
which cover not only their acts but omissions as well. the limitations imposed
by the Control Order on the normal right of dealers and consumers to supply and
obtain goods, the obligations imposed on the parties and the penalities
prescribed by the order do not militate against the position that eventually,
the parties must be deemed to have competed the transaction under an agreement
by which one party binds itself to supply the stated quantity of goods to the
other at a price not higher than the notified price and the other party
consents to accept the goods on the terms and conditions mentioned in the
permit or the order of the allotment issued in its favour by the concerned
authority.
46.
Because coffee is grown on the estate, the owner of the land can be presumed to
have consented to surrender his produce to the Board it was submitted. But the
surrender is thus clearly an act of violation. The planting of the seeds of a
coffee plant by a grower can be regarded as his act of volition in respect of
the surrender to the Board of the coffee yielded by the plant." In Oil and
Natural Gas Commission's case (supra), this Court referred the arguments
similar to the one advanced before us and repelled the same in the following manner
:- "The Commission is described by the Solicitor General to be a statutory
body which has no option either with regard to the production or supply and the
directions and the directions and decisions of the Government leave no choice
with the Commission in regard to supplies This Court in Salar Jung Mills Ltd.
etc.
vs. State of Mysore and Others laid down the following propositions : first,
statutory orders regulating the supply and distribution of goods by and between
the parties under control orders in a State do not absolutely impinge on the
freedom to enter into contract. Second, directions, decisions and orders of
agencies of the Government to control production and supply of commodities, may
fix the parties to whom the goods are to be supplied, the price at which these
are to be supplied, the time during which these are to be supplied and the
persons who have to carry out these directions. In such cases at cannot be said
that compulsive directions rob the transactions of the character of agreement.
The reason is that the transfer of property which constitutes the agreement in
spite of the compulsion of law is neither void nor voidable. It is not as a
result of coercion. The state supplies the consensus and the modality of
consensus is furnished by the statutes. There is privity of contract between
the parties.
The
other third, fourth, fifth and sixth propositions are these.
Third,
such a transaction is neither a gift nor a loan. It is a transfer of property
from one person to another. There is consideration for the transfer.
There
is assent. The law presumes the assent when there is transfer of goods from one
to the other.
Fourth,
a sale may not require the consensual element and that there may, in truth, be
a compulsory sale of property with which the owner is compelled to part for a
price against him will and the effect of the statute in such a case is to say
that the absence of the sale is to proceed without it, in truth, transfer, is
brought into being which ex facie in all its essential characteristics is a
transfer of sale. Fifth, delimiting areas for transactions or denoting parties
or denoting price for transactions are all within the area of individual
freedom of contract with limited choice by reason of ensuring the greatest good
for the greatest number of achieving proper supply at standard or fair price to
eliminate the evils of boarding and scarcity on the one hand and ensuring
availability on the other.
Sixth,
after all the transactions in substance represent the out- going of the
business and the price would come into computation of profits." One other
important aspect to be noted is that though the main judgment of this Court in Vishnu
Agencies case dealt with West Bengal Cement Control Act by the same reasonings,
this Court has rejected similar arguments relating to transactions under the
A.P. Paddy Procurement (Levy) Order. In other words, the ratio laid down by
this Court in respect of Control Orders were applied to the issues under levy
Orders. Therefore, the distinction sought to be made by the learned counsel
appearing for the appellant that the subsequent judgment of larger Benches of
this Court are relating to Control Orders and they do not apply to levy Orders
is without substance. We have noticed the latter trend in the judgments of this
Court in particular the Coffee Board's case (supra) was not making out any
serious distinction between the transactions under the Control Orders on the
one hand and Levy Orders on the other.
We
would also like a emphasise one other relevant factor at this stage which has
also been noticed by the High Court. Placing reliance on the averments in
paragraph 13 of the counter affidavit filed on behalf of the FCI, learned
counsel appearing for the State before the High Court pointed out that it was
open to the FCI to reject the foodgrains offered by the State Government it the
FCI thought that the foodgrains did not conform to the standard of quality as
required by it. The relevant averment made in para 13 of the counter affidavit
was to the effect that the FCI had rejected 142 MT of wheat which was offered
by the State Government. This shows that the FCI had reserved the right to
accept or reject the offer of the State. This also negatives the contention of
the learned counsel appearing for the appellants that the transaction in
question is one single integrated process and there is no break in it.
On
facts and in the light of observations of Full Bench of the Allahabad High
Court (supra) we are satisfied that some area of consensual arrangement and
some field for volition is left untouched by the Legislation in all disputed
transactions. The disputed transactions are sales, may be, under the compulsion
of a statue. Nevertheless, they are sales exigible to tax. Whatever coersive
force is used to bring about the transactions, the same must be traced to
legislation and not to the State Government as a party to such transactions.
We,
therefore, answer the principal common point holding that the levy procurement
is a sale/purchase and therefore, falls within the purview of Entry 54. List II
of Seventh Schedule to the Constitution. The States were competent to levy
sales/purchase tax on such transactions.
In the
light of the rulings of this Court referred to above in detail, we are unable
to agree with the submission of the learned Senior Counsel for the appellants
that there was no area left for consensual agreement in the parties to the
procurement transactions. The view taken by the Full Bench of the Allahabad
High Court in Ram Bilas Ram Gopal case is the correct view, and the High Court
of Allahabad (Lucknow Bench) was right in applying the same in the judgment
under appeal. We also hold that the view of the Punjab and Haryana High Court
challenged before us in some of these cases taking a different view does not
lay down the correct law.
To put
the matter beyond controversy, we hold, with respect, that the decision in Chitter
Mal's case is no longer good law in the light of later larger Bench decisions
of this Court referred to above.
Now
coming to the second proposition regarding the constitutionality of Explanation
(II) added to Section 3(D)(1) of the U.P. Sales Tax Act, it must be answered
against the assessee following our answer to proposition No.1 and in favour of
the Revenue. We have held that the transactions in questions are all sale and exigible
to tax under the State Sales Tax Act. The contention that the Explanation newly
added was ultra vires Entry 54 List II of the Seventh Schedule to the
Constitution, on the assumption that the disputed transactions are not sales
and, therefore, by a fiction the impugned Explanation cannot deem a sale which
is not a sale, is without substance. The learned counsel fairly concedes that
it is open to the State Legislature to shape a point at which tax is levied, if
may be equally permissible to the legislature to treat a particular sale or
purchase as the first sale or purchase, but it cannot by legislative device or
fiction of law make something as a sale/purchase which in fact is not. This
argument has to fail in view of our answer to proposition No.1 in favour of the
Revenue. We, therefore, do not find any substance in the proposition No.2
advanced by the learned Senior counsel for the appellants.
Regarding
the third proposition concerning retrospective effect and consequently,
compelling the appellants to pay tax twice on the same transaction, the learned
counsel appearing for the State has filed a written note explaining the
position in the following manner:- "2. From 15.11.1971 to 18.5.1973, on
the one hand State Government and its agencies were liable to pay tax on their
purchase and on the other hand Food Corporation of India was also liable to pay
tax on his purchase as tax on Foodgrains, was at all points of purchases.
Therefore,
Explanation-II of Section 3D(i) of U.P. Sales Tax Act which deals only with
first purchase, does not affect this period.
From
2.9.1976 to 30.4.1977 tax on foodgrains was at the point of sale to consumer.
The Explanation II of Section 3D(i) of U.P. Sales Tax Act, which deals only
with first purchase does not affect this period. However, if any tax has been
levied upon Food Corporation of India for this period, it is on account of their failure to supply the
requisite forms etc., whereupon the liability, under the law, devolves on them.
There is no challenge specifically to any such assessment.
3. For
the period commencing from 1968-69 and afterwards (excluding the period
15.11.71 to 18.5.73 and 2.9.76 to 30.4.77) provision of Explanation-II of
section 3D(i) is applicable because this Explanation-II in section 3D(i) has
been inserted with complete retrospective effect by the U.P.
Sales
Tax (Amendment and validation) Act, 1976 (U.P. Act No.23 of 1976) published on
20.5.76. Therefore, Food Corporation of India had been taxed rightly because under the provision of Explanation-II of
section 3D(i), the tax is collected only at one point viz. from the Food
Corporation of India. Credit is however given where Food
Corporation of India furnishes proof that it has already
paid the tax to Food Department (RFCs) and its agencies and they (Food
department and its agencies) have deposited that tax. By this procedure
assessing authority has given credit of the following sums:-
________________________________________ Year Amount of Tax 1969-70 Rs.
931249.92 1971-72 Rs. 2132428.63 1972-73 Rs. 8059065.00
---------------------------------- Total Rs. 11122743.55
________________________________________ In future also if Food Corporation of
India gives the proof that it has paid further tax to Food Department (RFCs)
and its agencies and they have deposited that tax to sales tax department (excluding
the period between 15.11.71 to 18.5.73 because in this period tax was not at
all points of purchases) the above procedure will be followed and after
verification benefit of the deposit of tax will be given to Food Corporation of
India.
Thus,
there is no question of multiple taxation for any period other than 15.11.1971
to 18.5.1973." In view of the above, the appellants can work out remedy
before the concerned authorities in accordance with law. There is nothing to be
decided by this Court.
Now
coming to the fourth proposition, the grievance appears to be that the
appellant has been singled out for harsh treatment and there was no other
dealer in foodgrains in the State of U.P.
whose annual turnover would exceed Rs.10 crores. It is now well-settled that it
is within the competency of the State Legislature to classify the dealers and
to impose surcharge upon those who were placed in one category taking into
consideration their economic superiority. A classification on the basis of
gross turnover was held by this Court in the earlier case as reasonable one vide
M/s Hoechst Pharmaceuticals Ltd. vs. State of Bihar (AIR 1983 SC 1019).
We do
not think that we should spend more time on this as the High Court had dealt
with fairly elaborately on this issue and we see no reason to differ from the
view taken by the High Court. Accordingly, the fourth proposition also is
answered against the appellant. We have already dealt with the fifth and sixth
propositions.
There
is a group of special leave petitions preferred by millers. They challenged
before the High Court the demand of market fee under the U.P. Krishi Utpadan Mandi
Adhiniyam.
1964
on rice. The basis of their challenge was that there was no safe to demand the
market fee when the rice was procured under the levy orders. According to the
appellants in these matters there was compulsory acquisition of stocks under
the levy orders and therefore, there was no safe. In the earlier paragraphs, we
have dealt with and have arrived at a finding that the disputed transactions
are sales. The same view was taken by the High Court and consequently, the writ
petitions filed by the millers were dismissed. We affirm the view of the High
Court.
The
Food Corporation of India have distributed fertilizers to the
State Governments/their nominees under Fertilizer (Control) Order. The levy of
sales tax on such distribution of fertilizers was challenged by the food
Corporation of India. The High Courts of Andhra Pradesh and Kerala upheld the
levy and aggrieved by that, the Food Corporation of India have filed civil appeals. The
argument advanced before the High Court on behalf of the FCI was discharging a
statutory obligation vested in it under the Control Order and there is no
element of volition or consensus of agreement in those transactions. This was negatived
by the High Courts holding that there is no provision in the Control Order
excluding the exercise of violation of the freedom of contract totally. Only
the price of fertilizers was controlled, quoted standard has been prescribed
for mixture of fertilizers and persons carrying on the business of selling
fertilizers are required to obtain licences. It was also noticed by the High
Court that there was no statutory compulsion in the matter of sale or purchase
of fertilizers and parties are left to enter into consensual contractual
agreement in the exercise of their volition subject only to the restrictions
regarding price fixation, quota requirements etc.
We
have in the earlier paragraphs noticed that the appellants have conceded that
there are sales in the transactions falling under Control Orders. The challenge
was only regarding transaction falling under Levy Orders. Wee have held that
the transaction falling under Levy Orders would amount to sales. Therefore, we
have no difficulty or hesitation in approving the view taken by the high Court
that the activity of distribution of fertilizers amounts to sale exigible to
sale tax.
We
have noticed in the course of the discussion that the Punjab and Haryana high Court has taken a
different view and we have also held that the view taken by the Punjab and Haryana High Court was not the
correct one, the State of Punjab
aggrieved by the decision of the Punjab and Haryana High Court has filed appeals. Our discussion concerning the
six propositions would equally apply to the appeals filed by the State of
Punjab and one additional point arises in the appeals filed by the State of
Punjab, namely, whether the gunny bags used in the course of the disputed
transactions as a packing material are liable to be included in the taxable
turnover or not? The Punjab and Haryana High Court held that the gunny bag in
these transactions are not exigible to tax as the contents, namely, rice/paddy
are not liable to tax as there was no sale at all. An additional ground given
by the High Court was that there was nothing to show whether there was any
agreement between the parties for the sale of gunny bags. Now that we have held
that the disputed transactions are exigible to tax, one reason given by the
High Court as mentioned above, cannot be supported.
Further,
the facts are not clear regarding the agreement. In the circumstances, we
consider that the matter has to be left open to be decided by the Assessing
Officer while finalising the assessment in the light of the judgment.
In the
result all the civil appeals except Civil Appeal Nos. 890, 892, 893 and 1995 of
1978 filed by the State of Punjab and Haryana
are dismissed. The appeals filed by the States of Punjab and Haryana are
allowed as indicated above.
There
will be no order as to costs.
The
issue as to who has to pay the market fee has been argued and answered by the
High Court but was not argued before us. Hence, it was not decided. Therefore,
the civil appeals arising out of S.L.P.(C)Nos. 8772-74/87, 6775/91, 747/91,
7478/91, 8541/91, 15719/94 and 13131/91 preferred by the Rice Miller will be
posted for further arguments on this issue in Court.
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