PETITIONER:
M/S. AMAR NATH OM PARKASH AND ORS. ETC
Vs.
RESPONDENT:
STATE OF PUNJAB AND ORS. ETC.
DATE OF JUDGMENT29/11/1984
BENCH:
REDDY, O. CHINNAPPA (J)
SEN, A.P. (J)
VENKATARAMIAH, E.S. (J)
CITATION:
1985 AIR 218 1985 SCR (2) 72
1985 SCC (1) 345 1984 SCALE (2)769
ACT
Punjab Agricultural Produce Markets Act Excess See collected from dealers by Market Committee u/s 23 declared invalid by Court-Sec. 23A enacted enabling market committees to retain excess collection in case of dealers who had passed on the burden of such fee to the next purchaser of such agricultural produce-Section-Whether within legislative competence-Whether State Legislature competent to validate levy declared by Court as bad in law.
HEADNOTE
After the decision of the Supreme Court in Kewal Krishan Puri v. State of Punjab AIR 1980 SC 1008 holding that the increase of the market fee from Rs. 2 to Rs. 3 perhundred leviable on the agricultural produce brought or sold by a licensee in the notified market area under section 23 of the Punjab Agricultural Produce Markets Act was not justified, some dealers wanted refund of the market fee in excess of Rs. 2/-per hundred already collected by various market committees. But, the Supreme Court held in Shiv Shankar Dal Mills v. State of Haryana AIR 1980 SC 1037 that dealers who had not passed on the liabilities to others and others who had contributed to or paid the excess one percent were entitled to make claim for such sums as were due to them from the Concerned market committees and directed the market committees to pay the same The Court further directed that the unclaimed amounts, if any, shall be permitted to be used by the respective market committee for the purposes falling within the statute as interpreted by this Court in C.A. 1083 of 1977. Thereafter more or less in tune with these directions given by the Court, the Punjab Agricultural Produce Markets Act was amended by the introduction of section 23-A It provided, inter alia, that not with standing anything contained in any judgment decree or order of any court, it shall be lawful for a committee to retain the fee levied and collected by it from a licensee in excess of that leviable under section 23 if the burden of such fee passed on by the licensee to the next purchaser of the agricultural produce in respect whereof such fee was levied and collected The appellants challenged before the High Court the constitutional validity of section 23-A and the same was upheld.
The appellant contended (1) that Section 23-A was a blatant attempt to validate a levy which had been declared invalid by the Supreme Court and this was not permissible (2) that while the legislature was competent to enact a law for the levy of fee and matters incidental and ancillary thereto, it was incompetent to legislate providing for the retention by any authority of fee illegally levied. 73
Dismissing the appeals by the appellants ,. ^
HELD: (1) The general scheme of the Punjab Agriculture Produce Markets Act and the Act, as amended and in force in Haryana, are broadly on the same lines as the Madras and the Andhra Pradesh Acts and similar enactments in other States. Sections 13, 26 and 28 of the Act covers a vast range of topics and are so wide as take in a multitude of direct and indirect ways of achieving the principal object of the Act, namely, the better regulation of the purchase, sale, storage and processing of agricultural produce and the establishment of markets for agricultural produce. Some of the purposes for which the funds may be expended may on a first impression appear to be municipal or governmental functions, but a closer scrutiny will reveal that they are clearly associated with providing better facilities for marketing of agricultural produce. [81H; 86C-D]
(2) The primary purpose of s. 23-A is to prevent the refund of licence fee by the market committee to dealers, who have already passed on the burden of such fee to the next purchaser of the agricultural produce and who want to unjustly enrich themselves by obtaining the refund from the market committee. S. 23-A, in truth recognises the consumer.public who have borne the ultimate burden as the persons who have really paid the amount and so entitled to refund of any excess fee collected and therefore direct the market committee representing their interests to retain the amount. It has to be in this form because it would, in practice, be a difficult and futile exercise to attempt to trace the individual purchasers and consumers who ultimately bore the burden. It is really a law returning to the public what it has taken from the public, by enabling the Committee to utilise the amount for the performance of services required of it under the Act. Instead of allowing middlemen to profiteer by illgotton gains, the legislature has devised a procedure to undo the wrong that has been done by the excessive levy by allowing the Committees to retain the amount to be utilised hereafter for the benefit of the very persons for whose benefit the marketing legislation was enacted. [97D-G]
(3) There is no substance in the argument that sec. 23- A is an attempt at validating an illegal levy. Section 23-A does not permit any recovery of fee at the rate of Rs 3 per hundred in respect of any sales of agricultural produce before or after the coming into force of that provision. There is no attempt at retrospective validation of excess collection nor any attempt at providing for future collection at the rate of Rs. 3 per hundred. All that section 23-A does is to prevent unjust enrichment by those dealers who have already passed on the burden of the fee to the next purchaser and so reimbursed themselves by also claiming a refund from the market committees. It gives to the public through the market committee what it has taken from the Public and is due to it. There is no justification for characterising a provision like section. 23.A as one aimed at validating an illegal levy. It is consistent with the spirit of Kewal Krishan case and the Letter of Shiv Shankar Dal Mills case. [98B D]
Walati Ram Mahabir Prasad v. State of Punjab, AIR 1983 P & 120 & R. S. Joshi v. Ajit Mills AIR 1977 SC 2279 approved. 74
Shiv Shankar Dal Mills v. State of Haryana AIR 1980 SC 1037 followed.
orient Paper Mills Limited v. State of Orissa [1962] SCR 549, R.S. Joshi v. Ajit Mills AIR 1977 SC 2279 relied upon.
Kewal Krishan Puri v. State of Punjab AIR 1980 SC 1008, Srinivasa General Traders State of Andhra Pradesh AIR 1983 S. C. 1246 Kutti Keya v. State of Madras AIR l954 Mad 621 Arunachala Nadar, State of Madras, AIR 1959 SC 30O, Immedisetti Ramkrishnaiah Sons v. State of Andhra Pradesh, AIR 1976 AP 193 Sreenivasa General Taaders v. State A. P. AIR 1983 SC 1246, Shirur Matt [1954] SCR 1005; Hingir-Rampur Coal Co. Ltd. v. State of Orissa, [1962] 2 SCR 537, Corporation of Calcutta v. Liberties Cinema [1965] 2 SCR 477, H. H. Sudhundra Thirtha Swamiar v. Commissioner, [1963] Supp. 2 SCR 302, H. H. Shri Swamiji v. Commisssioner, Hindu Religious and Charitable Fndowments Department [1980] I SCR 368, Municipal Corporation Delhi v. Mohd. Yasin [1983] 3 SCC 229, Craving Dock Co. Ltd. v. Horton, [1951] A. C. 737 at 761, Home office v. Dorset Yacht Co., [1970] 2 All E. R. 294, Herington v British Railways Board [1972] 2 W. L R. 537, & State OF Bombay v. United Motor. (India) Ltd., [1953] SCR 1069 referred to.
A. V Nachane and Ors. v. Union of India, [1982] 1 SCC 2’6 and Abdul Quadar & Co. v. Sales tax officer, AIR 1964 SC 922; held inapplicable.
JUDGMENT
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 450O and 4501 of 1984.
Appeals by Special leave from the Judgment and order dated the 18th January and 18 January, 1984 of the Punjab and Haryana High Court in Civil Writ Nos. 33OO of 1981 aud 4757 of 1982.
H.K. Puri, M.P. Jha and Sanjeev Walia for the Appellants.
S.K Bagga for the Respondent.
L.N. Sinha, A.K Panda and Ashwani Kumar for the Respon. dent
The Judgment of the Court was delivered by
CINNABAR REDDY J. The appellants, who are traders engaged in the purchase and sale of agricultural produce, appear to be a determined lot. For over a decade, they or those similarly placed have been litigating and impeding the levy and collection of Market fee by the Market Committees constituted under the Punjab Agricultural Produce Markets Act. Sometimes they have been successful, sometimes they have not. One of the occasions when they appeared to be successful was when this Court in Kewal Krishan Puri v. State 75 Of Punjab(l) declared that the enhancement of the fee from 2% to 3 % was illegal. The court while striking down the enhancement of the fee laid down no new principles but made certain general observations which, we regret to say, have been so misunderstood and misinterpreted as to lead to some confusion and public mischief. The misunderstanding and confusion have also naturally led to more litigation. Fortunately, in Srinivsa General Trader. v. Slate of Andhra Pradesh(2) this Court has removed much of the misunderstanding, cleared many of the cobwebs and retrieved the situation.
Before we proceed to consider the question at issue in present case, it will be fair to recall the object and purpose of the Punjab Agricultural Produce Markets Act and similar enactments in force in other States Far back in 1953, Rajamannar, CJ and T.L. Venkatarama Aiyar, J, in Kutti Keya v. The State of Madras(3) considered the provisions of the Madras Commercial Crops Markets Act 1933, one of the fore-runner of the Punjab Agricultural Produce Markets Act and other similar enactments elsewhere. The general nature of the legislation was explained by Venkatarama Aiyar, J, as follows:
"...the Subject-matter of the impugned Act is
marketing and legislation on marketing is now a well-
recognised feature of all commercial countries The need
for such a legislation arises whenever societies pass-d
on from the stage of self-supporting economic unit,
producing only articles for its own consumption to that
of a commercial community producing articles for sale
in outside areas for profit. While in the former stage,
transactions would be generally settled directly
between the seller and the purchaser, the price being
paid and delivery of the commodity taken at the time of
the deal, the conditions would be different when
commercial crops are begun to be raised. The ultimate
purchasers of these commodities would generally be
persons outside the area of production, a merchant
residing in another State and even in a foreign
country.
"To bring about a deal between the local producers
and the outside purchasers, there emerged a class of
(1) AIR 1980 SC 1008.
(2) AIR 1983 S.C, 1246.
(3) AIR 1954 Mad. 621. 76
middlemen. Even in well-organised and economically
advanced countries like England, it was found that the
agrIculturist producer had not facilities for disposing
of the goods to his best advantage (vide the statement
of Dr. Addison, Minister for Agriculture, quoted at
page 80 of the Indian Central Banking Enquiry Committee
Report, Vol. r, Part II). It is these conditions that
have led up to the enactment of marketing laws in all
countries having a large volume of trade in commercial
crops The object of this legislation is to protect the
producers of commercial crops from being exploited by
middlemen and profiteers and to enable them to secure a
fair need for their produce.
The need for such legislation is even greater in
India as the producers are as a class illiterate and
economically dependent and unstable. This question had
engaged the attention of several committees which had
been constituted to report on various economic matters.
Indian Cotton was a commodity greatly in demand in
England and other countries and in the Central
Provinces and Berar open markets for cotton were
established through legislation. In 1919, the Indian
Cotton Committee observed in their report that the
marketing system afforded great protection to the
producers and that special legislation should be
undertaken to establish such markets in every cotton
growing area.
The Royal Commission on Agriculture in India
recorded a considerable body of evidence on the state
trade in food crops and it showed the need for
legislative action for safeguarding the interests of
the producers (vide report dated 1928). In 1931 the
Indian Central Banking Enquiry Committee considered in
Chapter VII of its report the conditions with reference
to marketing. It is therein pointed out that the
village producer was seldom able to get a proper price
because he was chronically indebted to the middlemen
who advanced loans on the security of the crops to be
grown and were thus in a position to dictate their own
terms and that the bargains were seldom fair to the
seller.
"It was also observed that for want of
facilities for ware-housing the produce, the grower was
not in a position to wait and sell the commodities for
proper price (vide 77
pages 78 and 79). In 1933 the Act now under
consideration A was passed with the object of providing
for "the better regulation of buying and selling of
commercial crops". It must be mentioned that at that
time the only products which had become commercial
crops having an international market were cotton,
groundnuts and tobacco; and the definition of
commercial crops as enacted originally cornprised
only these three crops."
.......................................................
...........
"Various suggestions were made for improving the
market conditions (vide pp 92 and 63). In the report of
the Planning Comission published in 1952, Chapter XVII,
Vol l, deals with agricultural marketing and after
referring to the working of the regulated markets in
Bombay, Madras, Hyderabad and Madhya Pradesh, it throws
out several suggestions for future improvements. It
must be added that there has been legislation on lines
similar to those of the Madras Act in several of the
States in India.
"It will be clear from the above survey of the
market ing legislation that its object is to enable
producers to get a fair price for their commodities and
that it has been generally adopted in all commercial
States Such laws have been held in America to be within
the Police Power of the State as tending to promote
general welfare (Vide-’Parker v. Brown [(1942) 87 Law
ED 315 (D).] Under the Indian Constitution, they must
be upheld under Art. 19 (6) as reasonable and enacted
in the interests of the general public."
The decision of the Madras High Court in Kutti Keva v. The State was affirmed by a Constitution Bench of The Supreme Court in Arunachala Nadar v. State of Madras.(l) Subba Rao, J. referring to the background of the Act, observed:
"There is a historical background for this Act.
Market ing legislation is now a well-settled feature of
all commercial countries. The object of such
legislation is to protect the producers of commercial
crops from being exploited by the middlemen and
profiteers and to enable them to secure a fair return
for their produce. In Madras State, as in other
(l) AIR l959 SC 30O. 78
parts of the country, various Commissions and
Committees have been appointed to investigate the
problem, to suggest ways and means of providing a fair
deal to the growers of crops particularly commercial
crops, and find a market for selling their produce at
proper rates. Several Commit tees, in their reports,
considered this question and suggested that a
satisfactory system of agricultural marketing should be
introduced to achieve the object of helping the
agriculturists to secure a proper return for the
produce grown by them."
The learned Judge then referred to the report of
the Royal Commission on Agriculture in India, the
report of the Expert Committee appointed by the
Government of Madras, and proceeded to observe:
"With a view to provide satisfactory conditions
for the growers of commercial crops to sell their
produce on equal terms and at reasonable prices, the
Act was passed on 25th July, 1933. The preamble
introduces the Act with the recital that it is
expedient to provide for the better regulation of the
buying and selling of commercial crops in the
Presidency of Madras and for that purpose to establish
market and make rules for their proper administration.
The Act, therefore, was the result of a long
exploratory investigation by exports in the field,
conceived and enacted to regulate the buying and
selling of commercial crops by providing suitable and
regulated market by eliminating middlemen and bringing
face to face the produces and the buyer so that they
may meet on equal terms, thereby eradicating or at any
rate reducing the scope for exploitation in dealings.
Such a statute cannot be said to create unreasonable
restrictions on the citizens and right to do business
unless it is clearly established that the provisions
are too drastic, unnecessarily harsh and over-reach the
scope of the object to achieve which it is enacted."
........................................................
........................................................
" ..Shortly stated, the Act, Rules and the Bye-
laws framed thereunder have a long-term target of
providing a net work of markets where in facilities for
correct weighment are ensured, storage accommodation
is provided, and equal 79
powers of bargaining;, ensured, so that the growers may
t, bring their commercial crops to the market and sell
them at reasonable prices 1 11 such markets are.
established, the said provisions, by imposing licensing
restrictions, enable The buyers and sellers to meet in
licensed premises, ensure correct weighment, make
available to them reliable market information and
provide for them a simple machinery for settlement of
disputes. After the markets are built or opened by the
marketing committees, within a reasonable radius from
the market, as prescribed by the Rules, no licence is
issued; thereafter all growers will have to resort to
the market for vending their goods. The result of The
implementation of the Act would be to eliminate, as far
as possible, the middlemen and to give reasonable
facilities for the growers of commercial crops to
secure best prices for their commodities "
In Immedisetti Ramkrishnaiah Sons v. State of
Andhra Pradesh(l), the nature of the duties of a Market
Committee was explained:
"Another unfounded assumption of the learned
counsel was that the activities of the Market Committee
and the facilities provided by it were confined by the
Act to the market area only. The establishment,
maintenance and improvement of the market is one of the
purposes for which the Market Committee Fund might be
expended under Sec. I S of the Act. The other Services
such as the pro vision and maintenance of standard
weights and measures, the collection and dissemination
of information regarding all matters relating to crop
statistics and marketing in respect of noticed
agricultural produce, livestock and pro ducts of
livestock schemes for the extension or cultural
improvement of notified agricultural produce including
the grant of financial aid to scheme for such extension
on improvement within such area undertaken by other
bodies or individuals, propaganda for the improvement
of agriculture, livestock and products of livestock and
thrift, the promotion of grading services, measures for
the preservation of the foodgrains, etc. are not
services which are
(1) AIR 1976 AP 193. 80
confined to the market area only. They area services
which are required to be performed by the Market
Committe and which may be rendered throughout the
notified market area without being confined to the
market. Further, the facilities provided in the market
are available for the use of every grower of
agricultural produce and owner of live stock within the
notified market area. It is too much to expect the
Market Committee to provide the same facilities as are
available in the market area in every nook and corner
of the notified market area. It is up to the growers of
agricultural produce and owners of livestock to avail
themselves of the facilities afforded in the market.
None can complain against the levy of licence fees on
the ground that some may not avail themselves of the
facilities available in the market."
Immedisetti Ramakrishnayya Sons v. State of Andhra Pradesh (supra) was approved by this Court in Sreenivasa General Traders v. State of A.P.,(1) where it was observed:
"It is obviously in the interests of the
producers of agricultural produce that they can get the
best competitive prices in an open market and that they
have not to pay the middlemen. Sale or purchase of
agricultural produce in h such a market under the
supervision and control of the market committee is
likely to be in ready cash and there fore advantageous
to the producers and the use of standard weights must
eliminate the possibility of his being victimized by
malpractices. Supervision of the operations in the
notified market area can be more conveniently done if
business is carried on in a specified area or areas
intended for that purpose. The Act is an integrated one
and it regulates the buying and selling of notified
agricultural produce, livestock and products of
livestock from a centralized place. "
.......................................................
.......... ............................................................ ......
"The contention that there is no liability cast on
the petitioners to pay market fee on transactions of
sale and purchase of notified agricultural produce,
livestock and
(1) ATR.1983 S.C. 1246. 81
product of livestock proceeds on a wrongful assumption
that they can still carry on such trade from their
premises in the notified market area, but outside the
market in that area. In view of the express prohibition
contained in subsection (6) of Sec. 7, the petitioners
cannot carry on such trade by not resorting to the
market proper."
"There is a fallacy underlying the argument that
since the services are rendered by market committees
Within the market proper, there is no liability to pay
a market fee on purchase or sale taking place in the
notified market area but outside the market. The
contention does not take note of the fact that
establishment of a regulated market for the purchase or
sale of notified agricultural produce, livestock or
products of live stock is itself a service rendered to
persons engaged in the business of purchase or sale of
such commodities. The duty of a market committee
constituted under sub-section (1) of sec. 4 of the Act
does not end with establishing such number of markets
in the notified market area under the first part of
sub-section (3) but also extends to the providing of
such facilities in the market as the Government may
from time to time by general or special order specify
under the second part of sub-section (3). In exercise
of their powers under sec. 33 of the Act, the State
Government have framed the Andhra Pradesh (Agricultural
Produce and Livestock) Markets Rules, 1969. Chapter V
relates to ’Regulation of trading’. It would appear
that Rules 48 to 53 are the machinery provisions for
controlling the trade in notified agricultural produce,
livestock and products of livestock in a notified area
while Rules 54 to 73 impose restrictions on the
carrying on of all such trade in such area. It is clear
from the provisions of sec. 15 of the Act that the
services to be rendered by the market committee and
facilities to be provided are not confined to the
market proper but extend throughout the notified area."
The general scheme of the Punjab Agricultural Produce. Markets Act and the Act, as amended and in force in Haryana, 82
are broadly on the same lines as the Madras and the
Andhra Pradesh Acts and similar enactments in other
States. Though we do not consider it necessary to refer
to all the provisions of the Punjab and Haryana Acts,
we think it may be appropriate to mention here those provisions of the Act which enumerate some of the duties and powers of the Market Committees constituted under the Acts and the purposes for which the Marketing Development Fund and the Market Committee Fund may be expended. We may mention that while there is to be a State Agricultural Marketing Board for the entire State for performing the functions and duties assigned to the Board by the Act, the State Government may declare specified, notified areas as market areas for each of which there shall be a market committee. The Board is vested with powers of superintendence and control over the committees. Section 13 prescribes the duties and powers of market committees and is in the following terms:
"13-Duties and powers of Committee-(1) It shall
be the duty of a Committee-
(a) to enforce the provisions of this Act and the
rules and bye-laws made thereunder in the notified
market area and, when so required by the Board , to
establish a market therein providing such facilities
for persons visiting it in connection with the
purchase, sale, storage, weighment and processing of
agricultural produce concerned as the Board may from
time to time direct;
(b) to control and regulate the admission to the
market, to determine the conditions for the use of the
market and to prosecute or confiscate the agricultural
produce belonging to person trading without a valid
licence;
(c) to bring, prosecute or defend or aid in
bringing, prosecuting or defending any suit, action,
proceeding, application or arbitration, on behalf of
the Committee or otherwise when directed by the Boards.
(2) Every person licensed under sec. 10 or sec.
13 and every person exempted under sec. 6 from taking
out licence, shall on demand by the Committee or any
person 83
authorised by it in this behalf furnish such
information and returns, as may be necessary for proper
enforcement A of Act or the rules and bye-laws made
thereunder.
(3) Subject to such rules as the State Government
may make in this behalf, it shall be the duty of a
Committee to issue licences to brokers, weighmen,
measurers, surveyors, godown keepers and other
functionaries for carrying on their occupation in the
notified market area in respect of . agricultural
produce and to renew, suspend or cancel such licences.
(4) No broker, weighman, measurer, surveyor,
godown keeper or other functionary shall, unless duly
authorised by licence, carry on his occupation in a
notified market area in respect of agricultural
produce:
Provided that nothing in sub-sections (3) and (4)
shall apply to a person carrying on the business of
warehouseman who is licensed under the Punjab
Warehouses Act, l957 (Punjab Act No.2 of 1958)". Section 25 provides for the creation of a Marketing Development Fund out of which the Board has to defray its expenditure. Sections 27 provides for the creation of Market Committee Fund out of which the Committee has to defray its expenditure. The purpose for which the Marketing Development Fund may be expended are specified in sec. 26 as follows:
"26-The Marketing Development Fund shall be
utilised out of following purposes:-
(i) Better marketing of agricultural produce;
(ii) Marketing of Agricultural produce on co-
operative lines;
(iii) collection and dissemination of market rates
and news;
(iv) grading and standardisation of agricultural
produce:
(v) general improvements in the markets or their
respective notified;
(vi) maintenance of the office of the Board and
construction and repair or its office buildings, rest-
house and staff quarters; 84
(vii) giving aid to financially weak Committees in
the shape of loans and grants,
(viii) payment of salary, leave allowance, gratuity,
corn passionate allowance, compensation for injuries or
death resulting from accidents while on duty, medical
aid, pension or provident fund to the persons employed
by the Board and leave and pension contribution to
Government servants on deputation;
(ix) travelling and other allowances to the employees
of the Board, its members and members of Advisory
Committees;
(x) propaganda, demonstration and publicity in favour
of agricultural improvements;
(xi) production and betterment of agricultural produce;
(xii) meeting any legal expenses incurred by the
Board;
(xiii) imparting education in marketing or
agriculture;
(xiv) construction of godowns;
(xv) loans and advances to the employees;
(xvi) expenses incurred in auditing the accounts of
the Board;
(xvii) with the previous section of the State
Government, any other purpose which is calculated to
promote the general interests of the Board and the
Committees (or the national or public interests);
Provided that if the Board decides to give aid of
more than five thousand rupees to a financially weak
Committee under clause (vii), the prior approval of the
State Government to such payment shall be obtained. The purposes for which the Market Committees Fund may be expended are specified in sec. 28 as follows:-
"28-Purposes for which the Market Committee Funds may
be expended. Subject to the provisions of section 27
the Market Committee Funds shall be expended for the
following purposes:- (1) AIR 1983 SC 1246 85
(i) acquisition of sites for the market; A
(ii) maintenance and improvement of the market;
(iii) construction and repair of buildings which
are necessary for the purposes of the market and for
the health, convenience and safety of the persons using
it;
(iv) provision and maintenance of the standard weights
and measures:
(v) pay, leave, allowances, gratuities, compassionate
allowances and contributions towards leave allowances,
compensation for injuries and death resulting from
accidents while on duty, medical aid, pension or
provident fund of the persons employed by the
Committee;
(vi) payment of interest on loans that may be raised
for purposes of the market and the provisions of a
sinking fund in respect of such loans;
(vii) collection and dissemination of information
regarding all matters relating to crop statistics and
marketing in respect of the agricultural produce
concerned;
(viii) providing comforts and facilities, such as
the shelter, shade, parking accommodation and water for
the per sons, draught cattle vehicles and pack animals
link roads I coming or being brought to the market or
on construction and repair of approach roads, culverts,
bridges and other such purposes:
(ix) expenses incurred in the maintenance of the
offices and in auditing the accounts of the Committees,
(x) propaganda in favour of agricultural improvements
and thrift:
(xi) production and betterment of agricultural produce;
(xii) meeting any legal expenses incurred by the
Committee,
(xiii) imparting education in marketing or
agriculture;
(xiv) payments of travelling and other allowances
to the members and employees of the committee, as
prescribed; 86
(xv) loans and advances to the employees;
(xvi) expenses of and incidental to elections, and
(xvii) with the previous sanction of the Board, any
other purpose which is calculated to promote the
general interest of the Committee or the notified
market area (supra) (or with the previous sanction of
the State Government, any purpose calculated to promote
the national or public interest)".
It will be seen that sections 26 and 28 cover a vast range of topics and are so wide as to take in a multitude of direct and indirect ways of achieving the principal object of the Act, namely, the better regulation of the purchase, sale, storage and processing of agricultural produce and the establishment of markets for agricultural produce. Some of the purposes for which the funds maybe expended may on a first impression appear to be municipal or govemental functions, but a closer scrutiny will reveal that they are clearly associated with providing better facilities for marketing of agricultural produce. In fact, some of them may be municipal or governmental functions, but may yet be purpose for which the funds of the marketing board and marketing committees may be usefully, lawfully and perhaps necessarily expended. For example, it is of fundamental importance that there should be a network of roadways if effective aid is to be given to farmers to transport and market their produce. Section 23 of the Act enables the Committee, subject to such rules as may be made by the State Government in that behalf, to levy on ad volorem basis, fee on the agricultural produce bought or sold by a licensee in the notified market area at a rate not exceeding the rate mentioned in sec. 23 from time to time for every one hundred rupees. The fee which was originally 50 paise per 100 was raised to Re. l per 100 in 1969, thereafter to Rs. 1.50 in 1973 and to Rs. 2.25 in 1974. Later the fee was raised to Rs. 3 per 100. It was this enhancement of fee to Rs. 3 per 100 that was challenged by several dealers from Punjab and Haryana in Kewal Krishan v. State of Punjab (Supra). A Constitution Bench of this Court, after referring to the principles laid down in the leading cases of Shirur Malt,(1) Hingir-Rampur Coal Co. Ltd. v. State of Orissa,(2) Corporation of Calcutta v. Liberties Cinema etc. thought that in all the (1) [1954] SCR 10O5 (2) 119621 2 SCR 537 87 circumstances of the case, an increase of the license fee beyond Rs 2 A per 100 was not justified. The court noticed that each of the market Committees had huge surpluses and had made large donations to educational institutions and expended funds for other purposes wholly unconnected with the purpose stipulated by the Act. It appeared that the increase from Rs. Z to Rs. 3 in the year 1978 was made largely to compensate the market committees for having contributed the huge sum of Rs. One crore to the Medical College, Faridkot. Having regard to the huge surpluses and unanthorised items of expenditures, the court came to the conclusion, on the facts of the case, that the increase of fee above Rs. 2 per 100 was not justified. In the course of the discussion, Untwalia, J. who spoke for the Court made certain observations which when turn out of context appear to give rise to some misunderstanding. For example, at page 1016 of AIR, he said:
.’But generally and broadly speaking, it must be
shown with some amount of certainty, reasonableness or
preponderance of probability that quite a substantial
portion of the amount of the fee realised is spent for
the special benefit of its payers".
This sentence should not be read in isolation. It must be read in the context of the facts of the case. In fact, in the very sentence, preceding the one quoted, it was said:
"It may be so intimately connected or interwoven
with the services rendered to others that it may not be
possible to do a complete dichotomy and analysis as to
what amount of special service was rendered to the
payers of the fee and what proportion went to others".
That was why Sen J. in Sreenivasa General Traders v. State of Andhra Pradesh (Supra) took immense pains to explain the observations of Untwalia J. and place them in their proper setting. He observed, very rightly indeed, G
"In the ultimate analysis, the Court held in
Kewal Krishan Puri’s case, supra that so long as the
concept of fee remains distinct and limited in contrast
to tax, such expenditure of the amounts recovered by
the levy of a market fee cannot be countenanced in law.
A case is an authority H 88
only for what it actually decides and not for what may
logically follow from it. Every judgment must be read
as applicable to the particular facts proved, or
assumed to be proved, since the generality of the
expressions which may be founded there are not intended
to be expositions of the whole law but governed or
qualified by the particular facts of the case in which
such expressions are to be found. It would appear that
there are certain observations to be found in the
judgment in Kewat Krishan Puri’s case, supra. which
were really not necessary for purposes of the decision
and go beyond the occasion and therefore they have no
binding authority though they may have merely
persuasive value. The observation made therein seeking
to quantify the extent of correlation between the
amount of fee collected and the cost of rendition of
service, namely:
"At least a good and substantial portion of the
amount collected on account of fees, may be in the
neighborhood of two-thirds or three-fourths must be
shown with reason able certainty as being spent for
rendering services in the market to the payer of fee".
appears to be an obiter".
obviously Untwalia, J. did not purport to lay down any new principles and could not have intended to depart from the series of earlier case of this Court. For instance, in H. H. Sudhundra Thirtha Swamiar v. Commissioner(l) the Court had said,
".... nor is it a postulate of a fee that it must
have direct relation to the actual services rendered by
the authority to individual who obtains the benefit of
the service. If with a view to provide a specific
service, levy is imposed by law and expenses for
maintaining the service are met out of the amounts
collected there being a reasonable relation between the
levy and the expenses incurred for rendering the
service, the levy would be in the nature of a fee and
not in the nature of a tax.. but a levy will not be
regarded as a tax merely because of the absence of
uniformity in its incidence, or because of compulsion
in the collection thereof, or because some of the
contributories do not obtain the same degree of service
as others may". (1) [1963] Supp 2 SCR 302. 89
In Hingir-Rampur Coal Co. Ltd. v. State of orissa (Supra) the A Court had said,:
"If specific services are rendered to a specific
area or to a specific class of persons or trade or
business in any local area, and as a condition
precedent for the said services or in return for them
cess is levied against the said area or the said class
of persons or trade or business, the cess is
distinguishable from a tax and is described as a fee".
................................................
"It is true that when the Legislature levies a
fee for rendering specific services to a specified area
or to a specified class of persons or trade or
business, in the last analysis such services may
indirectly form part of services to the public in
general. If the special service rendered is distinctly
and primarily meant for the benefit of a specified
class or area the fact that in benefiting the specified
class or area the State as a while may ultimately and
indirectly be benefited would not detract from the
character of the levy as a fee. Where, however, the
specific service is indistinguishable from public
service, and in essence is directly a part of it,
different considerations may arise. In such a case, it
is necessary to enquire what is the primary object of
the levy and the essential purpose which it is intended
to achieve. Its primary object and the essential
purpose must be distinguished from its ultimate or
incidental results or consequences. That is the true
test in determining the character of the levy,
Again in H.H. Shri Swamiji v. Commissioner, Hindu Religious and Charitable Endowments Department (1) Chandracud C.J. said:
"For the purpose of finding whether there is a
correlationship between the services rendered to the
fee payers and the fees charged to them, it is
necessary to Know the cost incurred for orgainsing and
rendering the services. But matters involving
consideration of such a correlation ship are not
required to be proved by a mathematical formula. What
has to be seen is whether there is a fair
correspondence between the fee charged and the cost of (1) [1980] 1 S.C.R. 368. 90 services rendered to the fee payers as a class. The further and better particulars asked for by the appellants under order 6, Rule S of the Civil Procedure Code, would have driven the Court, had the particulars been supplied, to a laborious and fruitless inquiry into minute details of the Commissioner’s departmental budget. A vivisection of the amounts spent by the Commissioner’s establishment at different places and for various purposes and the ad hoc allocation by the Court of different amounts to different heads would at best have been speculative. It would have been no more possible for the High Court if the information were before us than it would be possible for us if the information were before us, to find out what part of the expenses incurred by the Commissioners establishment at various places and what part of the salary of his staff at those places should be allocated to the functions discharged by the establishment in collection with the services rendered to the appellants. We do not therefore think that any substantial prejudice has been caused to the appellants by reasons of the non-supply of the information sought by them."
On a consideration of these cases Sen J. concluded as follows in Sreenivasa General Traders v. State of Andhra Pradesh (Supra):
"The traditional view that there must be actual
quid pro quo for a fee has undergone a sea change in
the subsequent decisions. The distinction between a tax
and a fee lies primarily in the fact that a tax is
levied as part of a common burden, while a fee is for
payment of a specific benefit or privilege although the
special advantage is secondary to the primary motive of
regulation in public interest
In determining whether a levy is a fee,the true test
must be whether its primary and essential purpose is to
render specific services to a specified area or class;
it may be of no consequence that the State may
ultimately and indirectly be benefited by it. The power
of any legislature to levy a fee is conditioned by the
fact that it must be "by and large" 91
a quid pro quo for the services rendered. However,
correlationship between the levy and the services
rendered A expected is one of general character and not
of mathematical exactitude. All that is necessary is
that there should be a "reasonable relationship"
between the levy of the fee and the services rendered."
Referring to the catena of these cases it was observed by this Court in Municipal Corporation Delhi v. Mohd. Yasin (1):
"What do we learn from these precedents ? We
learn that there is no generic difference between a tax
and a fee, though broadly a tax is a compulsory
exaction as part of a common burden, without promise of
any special advantages to classes of taxpayers whereas
a fee is a payment for services rendered, benefit
provided or privilege conferred. Compulsion is not the
hallmark of the distinction between a tax and a fee.
That the money collected does not go into a separate
fund but goes into the consolidated fund does not also
necessarily make a levy a tax. Though a fee must have
relation to the services rendered, or the advantages
conferred, such relation need not be direct, a mere
causal relation may be enough. Further, neither the
incidence of the fee nor the service rendered need be
uniform. That others besides those paying the fees are
also benefited does not detract from the character of
the fee. In fact the special benefit or advantage to
the payers of the fees may even be secondary as
compared with primary motive of regulation in the
public interest. Nor is the court to assume the role of
a cost accountant. It is neither necessary nor
expedient to weigh too, meticulously the cost of his
service reinduced etc. not against the amount of fees
collected so as to evenly balance the two. A broad
correlationship is all that is necessary. Quid pro quo
the strict sense is not the one and only true index of
a fee; nor is it necessarily absent in tax."
Earlier on a question of interpretation it was pointed
out:
" A word on interpretation. Vicissitudes of time
and necessitudes of history contribute to changes of
philosophical attitudes, concepts, ideas and ideals
and, with them, the meanings of words and phrases and
the language itself. The philosophy and the language of
the law are no excep-
(1) [1983] 3 S.C.C. 229. H 92
tions. Words and phrases take colour and character from
the context and the times and speak differently in
different contexts and times. And, it is worthwhile
remembering that words and phrases have not only a
meaning but also a content, a living content which
breathes, and so, expands and contracts. This is
particularly so where the words and phrases properly
belong to other disciplines. ’Tax’ and ’fee’ are such
words. ’they properly belong to the world of Public
Finance but since the Constitution and the laws are
also concerned with Public Finance, these words have
often been adjudicated upon in an effort to discover
content."
In Sreenivasa General Traders v. State of Andhra Pradesh (supra), Sen, J. had also pointed out that there was no generic difference between a tax and a fee, that both were compulsory exactions of money by public authorities and that a levy in the nature of a fee did not cease to be of that character merely because there was an element of compulsion or coerciveness present in it nor was it a postulate of a fee that it must have direct relation to the actual service rendered by the authority to each individual, who obtains the benefit of the service. He also drew attention to the increasing realization that the element of quid pro quo in the strict sense was not always sine quo non for fee. Nor was the element of quid pro quo necessarily absent in every tax. He further pointed out that an insistence upon a good and substantial portion of an amount collected on account of fee, say in the neighbourhood of two-thirds or three-forths, being shown with reasonable certainty as having been spent for rendering services in the market to the payer of fee, could not be a rule of universal application, and that it was a rule which had necessarily to be confined to the special facts of Kewal Krishan Puri’s case. Otherwise, it would affect the validity of marketing legislations undertaken throughout the country during the past half a century. We agree with the view of Sen, J. that the observations extracted by him from Kewol Krishan Puri’s case were not really necessary for that case and we also agree with the clarification of the observation made by Sen, J.
There is one other significant sentence in Sreenivasa General Traders v. State of A.P. (Supra) with which we must 93 express our agreement. It was said, . with utmost respect, these observations of the learned judge are not to be read as Euclid’s A theorems, nor as provisions of the statute. These observations must be read in the context in which they appear." We consider it proper to say, as we have already said in other cases, that judgments of courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. In London Graving Dock Co. Ltd. v. Horton (1) Lord Mac Doormat observed,
"The matter cannot, of course, resettled merely
by treating the ip sesame verba of Willes, J., as
though they were part of an Act of Parliament and
applying the rules of interpretation appropriate
thereto. This is not to detract from the great weight
to be given to the language actually used by that most
distinguished judge." D
In Home office v. Dorset Yacht Co.(2) Lord Reid said, "Lord Atkin’s speech.. is not to be treated as if it was a statutory definition. It will require qualification in new circumstances." Megarry, J. in 1971(1) W.L.R. 1062 observed, "one must not, of course, construe even a reserved judgment of even Russell L. J. as if it were an Act of Parliament. And, in Herington v. British Railways Board."(2) Lord Morris said:
"There is always peril in treating the words of a
speech or judgment as though they are words in a
legislative P enactment, and it is to be remembered
that judicial utterances are made in the setting of the
facts of a particular case.
There are a few other observations in Rewal Krishan Puri’s case to which apply with the same force all that we have said above. It is needless to repeat the of quoted truism of Lord Halsbury that (1) [1951] A.C. 737 at 761 (2) [1970] 2 All. E.R. 294 (3) [19721 2 W.L.R. 537 H 94 a case is only an authority for what it actually decides and not for what may seem to follow logically from it. We have said so much about Kewal Krishan Puri’s case because the learned counsel placed implicit reliance upon it though as we shall presently show, we do not see how a mere declaration that the levy and collection of fee in excess of Rs.2 per hundred automatically vest in the dealer the right to get at the excess amount when in fact he did not bear the burden of it and when the moral and equitable owner of it was the consumer-public to whom the burden had been passed on.
Soon after judgment was pronounced in Kewal Krishan’s case, the question arose as to what was to be done with the fee in excess of Rs.2 per 100 collected by various market committees. Were the Market Committees to be permitted to retain the excess amounts ? Were the excess amounts to be refunded to the traders from whom the amounts had been collected notwithstanding the fact that the traders themselves had already passed on the burden to the next purchasers and consumers ? In other words, were the traders to be allowed to get a refund from the market committees and unjustly enrich themselves ? Were they to be allowed to profiteer by ill-gotten gains ? or were the next purchasers or consumers to be traced and the amounts refunded to them, which of course, would well-nigh be an impossible task in practice? If it was not possible to trace the individual consumers who had borne the burden, was it not right that the public authority who levied and collected it should be allowed to hold and retain the amount as if it were in trust for their benefit to be used for the purposes for which the statute . desired the levy of the fee ? Some dealers, however, wanted the monies to be refuned to them and moved this Court. Instead, in the circumstances, the court in Shiv Shankar Dal Mil1s v. State of Haryana.’’(l) gave the following directions:
"I. Subject to the directions given below, all
the sums collected by the various market committees who
are respondents in these various writ petitions or
appeals shall be liable to be paid into the High Court
of Punjab and Haryana within one week of intimation by
the Registrar of the amount so liable to be paid into
the court.
"II. A statement of the amounts collected in
excess
(1) AIR 1980 SC 1037 95 (1%) shall be put into this Court by the dealers with copies A to the various market committees aforesaid and furnished to the writ petitioners and appellant with 1O days from today, and if there is any difference between the parties it shall be brought to the notice of this Court in the shape of miscellaneous petitions. On final orders, if any passed thereon by this Court, those amounts, so as determined, shall be treated as final.
llI. The Registrar of the High Court shall issue public notice and otherwise give due publicity to the fact that dealers who have not passed on the liabilities to others and others who have contributed to or paid the excess one percent covered by these writ petitions and appeals may make claims for such sums as are due to them from him Within one month or such other period as he may fix. The Registrar shall scrutinise such claims and ascertain the sums so proved. He will thereupon demand of all the market committees concerned payment into the Registry of such sums in regard to which proof of claims have been made. On such intimation, the market committees shall pay into the Registry the amounts so demanded by the Registrar within one week of such intimation. The amount shall be paid together with interest at 10 per cent per annum from today up to the date of deposit with the Registrar.
IV. It shall be open to the Registrar to make such periodical claims on appropriate proof by claimants on the line stated above.
V. He will devise the mechanics of processing the claims as best as he may and, in the event of dispute, may refer to the High Court for its decision of such disputes, if he thinks it necessary. Otherwise, he may dispose of the objections finally. G
VI. If any further directions regarding the mechanics of the claim of refund or otherwise are found necessary from this Court, the High Court will report about such matter to this Court and orders made thereon will bind the parties. N 96
VII. If parties eligible for repayment of amounts
do not claim within one year from today the Registrar
will not entertain any further claims. It will be open
to such parties to pursue their remedies for recovery
for any sums that may be due to therm.
VIII. Each State Marketing Board will deposit
within 1O days from today a sum of Rs. 5.000/- before
the Registrar for the preliminary expenses of publicity
and other incidentals for the implementation of the
directions given above. Any unexpended amount, at the
end of one year, will be repaid to the respective State
Marketing Board.
IX. We further direct that the unclaimed amount,
if any, shall be permitted to be used by the respective
Marketing Committees for the purpose falling within the
statute as interpreted by this Court in the C. A. No.
1083/77".
Thereafter, more or less in tune with the directions given by the Court in ShivShankar Dal Mills case, the Punjab Agricultural Produce MarKets Act was amended by the introduction of sec. 23-A providing as follows:
"In the Principle Act, after Section 23, the
following section p shall be inserted namely:- ’23-A(1) Notwithstanding anything contained in any judgment decree or order of any Court, it shall be lawful for a Committee to retain the fee levied and collected by it from a licensee in excess of that levied under Section 23, if the burden of such fee was passed on by the licensee to the next purchaser of the Agricultural Produce in respect whereof such fee was levied and collected.
(2) No suit or other proceedings shall be instituted,
main trained or continued in any court for the refund
of whole or any part of the fee retained by a Committee
under sub-section (1) and no court shall enforce any
decree or order directing the refund of whole or any
Part of such fee.
(3) If any dispute arises as to the refund of any fee
retained by a Committee by virtue of sub-section (1)
and 97
the question is whether the burden of SUCH fee was
passed on by the licensee to the next purchaser of the
concerned agricultural produce, it shall be presumed
unless proved otherwise that such burden was so passed
on by the licensee.
(4). If any amount of tee retainable by a Committee
under sub-section (1) has been refunded to any
licensee, the same shall be recoverable by the
Committee in the manner indicated in sub-section (2) of
Section 41.
(5). The provisions of this section shall not effect
the operation of Section 6 of the Punjab Agricultural
Produce Markets (Amendment and Validation) Act, 1976".
The primary purpose of sec. 23-A is seen on the face of it; it prevents the refund of license fee by the market committee to dealers, who have already passed on the burden of such fee to the next purchaser of the agricultural produce and who went to unjustly enrich themselves by obtaining the refund from the market committee. S. 23-A, in truth, recognises the Consumer public who have borne the ultimate burden as the persons who have really paid the amount and so entitled to refund of any excess fee collected and therefore directs the market committee representing their interests to retain the amount. It has to be in this form because it would, in practice, be a difficult and futile exercise to attempt to trace the individual purchasers and consumers who ultimately bore the burden. It is really a law returning to the public what it has taken from the public, by enabling the Committee to utilise the amount for the performance of services required of it under the Act. Instead of allowing middlemen to profiteer by illgotten gains, the legislature has devised a procedure to undo the wrong item that has been done by the excessive levy by allowing the Committees to retain the amount to be utilised here after for the benefit of the very persons for whose benefit the Marketing legislation was enacted. The constitutional validity of sec. 23A was questioned before the High Court of Punjab and Haryana, but was upheld in Walati Ram Mahabir Prasad v. State of Punjab(l). The correctness of this decision is questioned before us in these two civil appeals.
The submission of the learned counsel was that sec. 23- A was
(1). AIR 1984 P&H 120 98 a blatant attempt to validate a levy which had been declared invalid by this court and this, according to the learned counsel, was not permissible. We entirely disagree with the submission that sec. 23-A is an attempt at validating on illegal levy. Section 23-A does not permit any recovery of fee @Rs. 3 per 100 in respect of any sales of agricultural produce before or after the coming into force of that provision. There is no attempt at retrospective validation of excess collection nor any attempt at providing for future collection at the rate of Rs. 3 per 100. All that sec. 23-A does is to prevent unjust enrichment by those dealers who have already passed on the burden of the fee to the next purchaser and so reimbursed themselves by also claiming a refund from the Market Committees. We have already explained the true purpose of S 23-A. It gives to the public through the market committee what it has taken from the public and is due to it. It renders into Caesar what is Caesar’s. We do not see any justification for characterising a provision like Sec. 23-A as one aimed at validating an illegal levy. The decision of this Court in A. V. Nachane and ors. v. Union of lndia(1) on which the counsel placed reliance has no application whatsoever. Section 23-A in our view, is consistent with the spirit of Kewal Krishan and the letter of Shiva Shankar Dal Mills.
Another submission of the learned counsel was that while the legislature was competent to enact a law for the levy of a fee and matters incidental and ancillary thereto it was incompetent to legislate providing for the retention by any authority of fee illegally levied. For this purpose, reliance was placed by the learned counsel on the decision of this Court in Abdul Quadar & Co. v. Sales tax officer(a). We are afraid that this decision also is of no avail to the appellants.
In orient Paper Mills Limited v. State of Orissa(3), a dealer had been assessed to tax and had paid the tax. Later he applied for re fund of tax which was held to be not exigible by this Court in State of Bombay v. United Motors (India) Ltd(’) . When the appeals were pending in this Court, the orissa Legislature intervened in the matter and introduced sec. 14-A in the Principal Act providing that (1) [1982] I SCC 206. (2) AIR 1964 SC 922. (3) [19621 1 SCR 549 (4) [19531 SCR 1069. 99 refund could be claimed only by a person from whom the dealer has A actually realised the amount as tax. The vires of the provision was challenged in this Court, but it was upheld on the ground that it came within the incidental power arising out of Entry 54 of List II. The matter was considered to be a question of refund and it was held that it could not be doubted that refund of the tax collected was always a matter covered by incidental and ancillary powers relating to the levy and collection of tax. The Constitution Bench held,
"By item 54 of List Il of Schedule 7 to the
Constitution, the State Legislature was indisputably
competent to legislate with respect to taxes on sale or
purchase of papersand paper-boards. The power to
legislate with respect to a tax comprehends the power
to impose the tax, to prescribe machinery for
collecting the tax, to designate the offers by whom the
liability may be enforced and to prescribe the
authority, obligations and indemnity of those officers.
The diverse heads of legislation in the Schedule to the
Constitution demarcate the periphery of legislative
competence and include all matters which are ancillary
or subsidiary to the primary head. The Legislature of
the orissa State was therefore competent to exercise
power in respect of the subsidiary or ancillary matter
of granting refund of tax improperly or illegally
collected, and the competence of the legislature in
this behalf is not canvassed by counsel for the
assesses. If competence to legislate for granting
refund of sales-tax improperly collected be granted, is
there any reason to exclude the power to declare that
refund shall be claimable only by the person from whom
the dealer has actually realised the amounts by way of
sales-tax or otherwise ? We see none. The question is
one of legislative competence and there is no
restriction either express or implied imposed upon the
power of the Legislature in that behalf."
The present case is a case akin to orient Paper Mills case (supra). Section 23-A, as we have seen, disables a dealer from getting a refund of fee paid by him, the burden of which he has already passed on to the next purchaser. As we said all that sec. 23-A does is to prevent unjust enrichment by means 100 of a refund to which the person claiming it has no moral or equitable entitlement.
Abdul Quader & Co. v. Sales Tax officer (supra) on which considerable reliance was placed by the learned counsel for the appellants was an entirely different case. The dealer in that case had collected sales tax from the purchasers in connection with the sales made by him on the basis that the incidence of the tax lay on the sellers and assured the purchaser that after paying the tax to the appellant, there would be no further liability on them. After realizing the tax, however, the appellant did not pay the amount realized to the Government, but kept it in a suspense account. When the Sales Tax Department discovered this and called upon the appellant to pay the amount realized, he refused to do so. On behalf of the Government, reliance was placed upon sec. 11 (2) of the Hyderabad General Sales Tax Act which laid down that any amount collected by way of tax otherwise than in accordance with the provisions of the Act shall be paid over to the Government and in default of such payment, the said amount shall be recovered from such person as if it were arrears of land revenue. The Court held that it was clear that the words "otherwise than in accordance with the provisions of this Act", included amounts which may have been collected by way of tax though not exigible as tax under the Act. The Court then held that the State Legislature was income tent to enact a provision like sec. 11(2) as it enabled the Government to recover an illegal levy and it could not possibly be said to be an incidental or ancillary power capable of exercise in aid of the main topic of legislation, which was, a tax on the sale or purchase of goods. The decision in orient Paper Mills case was distinguished on the ground that it dealt with a case of refund and not the collection of tax, not really due as a tax under the law. In their precise words, they said:
"The matter (In orient Paper Mills case) dealt
with a question of refund and it cannot be doubted that
refund of the tax collected is always a matter covered
by incidental and ancillary powers relating to the levy
and collection of tax. We are not dealing with a case
of refund in the present case. What sec. 11(2) provides
is that some thing collected by way of tax, though it
is not really due as a tax under the law enacted under
Entry 54 of List II must be paid to the Government.
This situation in our 101
Opinion is entirely different from the situation in orient ,
A Paper Mills case."
The decision in orient Paper Mills case was expressly affirmed by a Bench of Seven Judges of this Court in R.S. Joshi v. Ajit Mills(l) and observations to the contrary Ashoka Marketing Company case(2) were expressly dissented from. We are, therefore. satisfied that sec. 23-A of the Punjab Agricultural Produce Markets Act was within the competence of the Punjab Legislature and that it was not also otherwise invalid in any manner. The appeals are, therefore, dismissed with costs. M .L.A. Appeals dismissed. (1) AIR 1977 SC 2279. (2) AIR 1971 SC 946. 102