Agricultural Market Committee A.P.Etc vs M/S M.K.Exports, A.P.Etc.Etc

Agricultural Market Committee A.P. etc. ...Appellants

Versus

M/S M.K. Exports, A.P. etc. etc. ...Respondents

WITH

CRIMINAL APPEAL NOS. 1050-1052 OF 2011

(Arising out of SLP (Crl.) Nos. 5112-5114 of 2010)

CRIMINAL APPEAL NOS. 1053-1054 OF 2011

(Arising out SLP (Crl.) Nos. 5144-5145 of 2010)

CRIMINAL APPEAL NO. 1055 OF 2011

(Arising out of SLP (Crl.) No. 5174 of 2010)

JUDGEMENT

R.M. LODHA, J.

Leave granted.

2. The Agricultural Market Committee, Bhimavaram have

preferred these eight appeals, by special leave, against the

common judgment dated April 21, 2010 passed by the High Court

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of Andhra Pradesh whereby the Single Judge of that Court

allowed the petitions filed by the private respondents under

Section 482 of the Code of Criminal Procedure, 1973 (for short

`Code') and quashed the criminal proceedings against them for

non-payment of market fee assessed under Section 12-B(5) of the

A.P. Agricultural (Produce and Livestock) Markets Act, 1966 (for

short, `the Act').

3. For the sake of convenience, we shall notice the facts

from one of the appeals, viz., Agricultural Market Committee, A.P.

Vs. M/s M.K. Exports, A.P. The respondents - M/s M.K. Exports

in that appeal are traders and were given licence by the

appellants for doing business in prawns, a notified commodity

under the Act. For the assessment years 1998-99 and 1999-2000,

the assessment of market fees was done after giving exemption to

a certain turnover on purchases effected outside the notified area

of the appellants on the basis of the returns submitted by the

respondents under the Act.

4. On May 29, 2002, the appellants issued notices to

the respondents to produce books of accounts for the years 1998-

99 and 1999-2000 within 7 days of the receipt of the notices to

enable them to assess the correct amount of market fees. The

notices were issued on the ground that the assessment for that

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period was done after giving exemption to certain turnover thereby

resulting in under-assessment of market fees.

5. The respondents failed to produce the books of

accounts. The notices were then issued to the respondents on

June 27, 2002 to show cause as to why the exemption given

earlier on certain turnover for the assessment years 1998-99 and

1999-2000 be not disallowed; the re-assessment for these two

years be not done and the market fees be not collected under

Section 12-B(5) of the Act.

6. The respondents challenged the show cause notices

dated June 27, 2002 by filing writ petitions before the High Court of

Andhra Pradesh. The High Court disposed of the writ petitions on

June 14, 2007 and directed the respondents (petitioners therein) to

respond to the show cause notices and the appellants were asked

to pass appropriate order after considering their replies.

7. The respondents filed their reply and raised certain

objections to the re-assessment proceedings initiated under

Section 12-B(5) of the Act.

8. The appellants considered the reply submitted by the

respondents and vide order dated November 26, 2007 re-

determined the turnover for that period and, consequently, re-

assessed the market fees. In that order, the appellants also levied

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penalty equal to two times the market fees due, in addition to

market fees so assessed.

9. The respondents challenged the order dated

November 26, 2007 by filing revision applications before the

Director of Marketing under Section 12-F of the Act. These

revision applications were dismissed on March 26, 2008.

10. Thereafter demand notices were issued by the

appellants to the respondents to pay the market fees determined

under Section 12-B(5). The respondents did not comply with the

demand notices. Notices were then issued to the respondents to

show cause as to why criminal proceedings be not initiated

against them under Section 23 of the Act. The respondents did

not respond to the show cause notices nor made any payment of

outstanding market fees. The appellants were then constrained to

file criminal complaints against the respondents in the Court of

the II Additional Judicial First Class Magistrate, Bhimavaram, West

Godavari District, A.P.

11. The respondents questioned the complaints in the

petitions under Section 482 of the Code before the High Court of

Andhra Pradesh and prayed for quashing the criminal

proceedings.

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12. The only reason that weighed with the High Court in

quashing the criminal proceedings against the respondents was

that non-payment of market fees re-assessed under Section

12-B(5) is not punishable under Section 23 of the Act. Whether or

not the view of the High Court is right in this regard is a question

for determination in these appeals.

13. Section 7 of the Act is a regulatory provision. It

provides that in a notified area, the trading in a notified agricultural

produce, livestock and products of livestock shall be done only

after obtaining the licence from the concerned market committee

and in accordance with the conditions of such licence. Sub-

section (5) thereof provides that a person to whom a licence is

granted shall comply with the provisions of the Act, the rules and

the bye-laws made thereunder and the conditions specified in the

licence.

14. The provision in relation to levy of fees by the market

committee is made in Section 12 of the Act. Section 12 reads as

under:-

"Section 12 - Levy of fees by the market

Committee -(1) The market committee shall levy fees

on any notified agricultural produce, live stock or

products of live stock purchased or sold in the notified

market area at such rate, not exceeding two rupees as

may be specified in the bye-laws) for every hundred

rupees of the aggregate amount for which the notified

agricultural produce, live stock or products of live

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stock is purchased or sold, whether for cash or

deferred payment or other valuable consideration.

Explanation I:- For the purposes of this section, all

notified agricultural produce, livestock or products of

livestock taken out of a notified market area shall,

unless the contrary is proved, be presumed to have

been purchased or sold within such area.

Explanation II: In the determination of the amount of

fees payable under this Act, fractions of ten paise

equal to or exceeding five paise shall be disregarded".

15. Sections 12-A to 12-G were inserted in the Act by Act

4 of 1987. Section 12-A reads as under:-

"12-A. Every trader in the notified area, who is

liable to pay fees under Section 12, shall submit

such return or returns relating to his turnover in

such manner, within such period and to such

authority, as may be specified by the market

committee in its bye-laws.

Explanation: For the purposes of Sections 12-A to

12-G (both inclusive) the terms, -

(i) "market fees" shall mean the fees levied

under sub section (1) of Section 12;

(ii) "turnover" shall mean the aggregate amount

for which the notified agricultural produce,

livestock or products of lievestock, are

purchased or sold, whether for cash or

deferred payment or other valuable

consideration".

16. The entire machinery for assessment of market fees is

provided in Section 12-B. The said Section is as follows:-

"12-B. Assessment of market fees: (1) If the

assessing authority is satisfied that any return

submitted under Section 12-A is correct and

complete, it shall assess the amount of market fees

payable by the trader on the basis thereof; but if

the return appears to it to be incorrect or

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incomplete, it shall, after giving the trader an

opportunity of providing the correctness and

completeness of the returns submitted by him and

after making such inquiry as it considers

necessary, assess to the best of its judgment the

amount of market fees due from the trader. An

assessment under this section shall however, be

made only within a period of three years from the

expiry of the year to which the assessment relates.

(2) Where the return submitted by a trader includes

the turnover or any of the particulars thereof which

would not have been disclosed but for an

inspection of accounts, registers or other

documents of the trader made by an officer

authorized under this Act before the submission of

such returns, the Assessing authority may, after

giving an opportunity to the trader for making a

representation in this behalf, treat such return to be

an incorrect or incomplete return within the

meaning of sub-section (1) and proceed to take

action on that basis.

(3) While making an assessment to the best of

Judgment under sub-section (1) the assessing

authority may also direct the trader to pay, in

addition to the market fees assessed a penalty

equal to two times the market fees due on the

turnover that was not disclosed by the trader in his

return.

(4) Where any trader liable to pay market fees

under this Act,-

(i) fails to submit return before the date

specified in that behalf; or

(ii) produce the accounts, registers and other

documents after inspection; or

(iii) submits a return subsequent to the date of

inspection;

the assessing authority may, at any time within a

period of three years from the expiry of the year to

which the assessment relates, after issuing a

notice to the trader, and after making such inquiry

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as it considers necessary, assess to the best of its

judgment, the amount of market fees due from the

trader, on his turnover for that year and may direct

him to pay in addition to the market fees so

assessed, a penalty equal to two times the market

fees due.

(5) Where for any reason, the whole or any part of

the turnover of the trader has escaped assessment

to market fees or has been under assessed or

assessed at a rate lower than the correct rate, the

assessing authority may, at any time within a

period of three years from the date on which any

order of assessment was served on the trader,

(a) determine to the best of its judgement the

turnover that has escaped assessment and

assess the turnover so determined;

(b) assess the correct amount of market fees

payable on the turnover that has been under

assessed;

(c) assess at the correct rate the turnover that

has been assessed at a lower rate, after

issuing a notice to the trader and after

making such inquiry as it considers

necessary. The assessing authority, in

addition to the market fees so assessed, also

direct the trader to pay a penalty equal to two

times the market fees".

17. It would be, thus, seen that Section 12-A is self-

contained. If assessing authority is satisfied that return submitted

under Section 12-A is correct and complete, it shall assess the

market fees payable by the trader on the basis thereof. Sub-

section (5) of Section 12-B, however, provides for reassessment,

inter alia, where the whole or any part of the turnover of the

trader has escaped assessment to market fees or has been

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under- assessed or assessed at a rate lower than the correct

rate.

18. Section 12-C(1) provides that market fees assessed

under the Act and the penalty levied shall be paid by the trader in

such manner and within such time as may be specified in the

notice. Sub-section (5) thereof provides that the penalty payable

under the Act shall be without prejudice to the institution of any

proceedings for an offence under the Act.

19. The provision for penalty and prosecution is contained

in Section 23. To the extent it is relevant, it reads as under:-

"23. Penalties:- (I) Whoever contravenes the

provisions of Section 7 or fails to pay the fees

levied under sub-section (1) of Section 12 shall, on

conviction be punished with imprisonment for a

term, which shall not be less than six months but

which may extend to one year and with fine, which

may extend to five thousand rupees, and in the

case of a continuing contravention with further fine

which may extend to five hundred rupees for every

day during which the contravention is continued

after conviction thereof;

Provided that the Court may, for adequate and

special reasons to be mentioned in the judgment,

impose a sentence of imprisonment for a term of

less than six months.

2. xxx xxx xxx xxx xxx

3. xxx xxx xxx xxx xxx

4. xxx xxx xxx xxx xxx

5. xxx xxx xxx xxx xxx"

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20. Section 23 of the Act, thus, provides for penalty to be

imposed against a person who contravenes the provisions of

Section 7 or who fails to pay fees levied under sub-section (1) of

Section 12.

21. The fee is levied by the market committee on sale or

purchase of any notified agricultural produce or livestock or

products of livestock in the notified market area by virtue of

Section 12(1) of the Act. For a levy of fee, it is necessary that

amount of market fees payable by the trader is assessed by the

assessing authority. The procedure for assessment is provided

in Section 12-B. The assessment of market fees is done under

sub-section (1). Sub-section (5) of that Section, however,

provides that if, for any reason, the whole or any part of the

turnover of the trader has escaped assessment to market fees or

has been under assessed or assessed at a rate lower than the

correct rate, the assessing authority may, at any time within a

period of three years from the date on which the assessment order

was served on the trader, inter alia, assess the correct amount of

market fees payable on the turnover that has been under-

assessed after issuing notice to the trader and after making such

inquiry as it may consider necessary. The assessing authority,

under Section 12-B(5) may also direct the trader to pay penalty,

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equal to two times the market fees, in addition to the market fees

so assessed. As per the Scheme of the Act, it is the assessment

of market fee under Section 12-B(1) or re-assessment under

Section 12-B(5) which ultimately results in levy of fee under

Section 12(1). We find the reasoning of the High Court strange

when it says that further assessment of market fees made under

Section 12-B(5) is not covered under Section 12(1). The High

Court overlooked the explanation appended to Section 12-A

which clearly provides that for the purposes of Sections 12-A to

12-G, `market fees' shall mean fees levied under sub-section (1)

of Section 12. Section 12-B and the explanation appended to

Section 12-A taken together would leave no manner of doubt that

assessment of market fees - whether it is done under Section 12-

B(1) or 12-B(5) - is covered by the expression `levy fees' in

Section 12(1). In other words, whether assessment of market

fees payable by a trader is made under Section 12-B(1) or Section

12-B(5), the market fees so assessed means the fees levied under

sub-section (1) of Section 12. The provisions being clear, non

payment of the market fees assessed in the original proceedings

under Section 12-B(1) or in the proceedings for re-assessment

under Section 12-B(5) would mean default in payment of fee levied

under sub-section (1) of Section 12 of the Act.

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22. The learned Single Judge of the High Court relied

upon an earlier decision of that Court in the case of B. Youdhister

Vs. The Secretary, Agricultural Market Committee, Jogipet & Anr1.

wherein it was held that since there was no penal provision for the

violations of Sections 12-A, 12-B and 12-C, the violators cannot

be prosecuted. The view taken in the case of B. Youdhister1, in

our opinion, is not correct view and does not lay down the correct

law.

23. The High Court, thus, was clearly in error in quashing

the criminal proceedings against the respondents.

24. In the result, appeals are allowed and the judgment of

the High Court dated April 21, 2010 is set aside.

............................. J.

(R.M. Lodha)

............................J.

(Surinder Singh Nijjar)

NEW DELHI

APRIL 29, 2011

1 (1991) Cri.L.J. 277

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