Market Fee Under Punjab Agriculture Produce Markets Act Distinct From Fees Under Rural Development Act : Supreme Court

The Supreme Court recently held that the 'Market fees' collected under the Punjab Agricultural Produce Markets Act, 1961 and the 'Rural Development fees' collected under the Punjab Rural Development Act are distinct.

While dealing with a 2003 Policy of the State of Punjab regarding exemption from payment of market fees, the Court observed that even though there may be convergence of some interests under two different statutes, the same would not tantamount to benefits flowing from one to the other.

"It is not uncommon for different statutes, concerning similar area of law, to have convergence of interests to some degree. However, this would not imply that benefits extended to one statute will be presumed to flow to the other statute as well", the bench of Justices Vikram Nath and Prashant Kumar Mishra said, while allowing the appeals filed by State of Punjab.

On facts, it was held that Market Fees could not be equated with Rural Development Fees for the purposes of exemption under the 2003 Policy.

Factual Background

Respondent-M/s Punjab Spintex Ltd, having a spinning unit in Punjab, applied to the appellant-State for grant of exemption from paying Market fee and Rural Development fee in terms of the state's Industrial Policy, 2003. When the matter was before the High Court of Punjab and Haryana, counsel for State gave a statement that "Market Fee will also cover Rural Development Fee and further action as per above decision will be taken within one month". On this statement, the respondent withdrew the petition.

Subsequently, the State applied for modification of the High Court order, claiming that the statement given by the counsel was not factually and legally correct. It was argued that Market fee was collected under the provisions of Punjab Agricultural Produce Markets Act, 1961, whereas the Rural Development fee was collected under the Punjab Rural Development Act, 1987. Both the fees being separate, the state said, decision on exemption from Market fee did not automatically apply to Rural Development fee.

Relying on certain letters produced by the respondent, the High Court dismissed the state's application for modification. Aggrieved by the said order, the state approached the Supreme Court.

Issue

The issue before the Supreme Court was: Whether the exemption from payment of Market fee granted under Clause (i) of 11.4.2 of 2003 Policy of the Punjab Government could be said to include exemption from Rural Development fee?

Submissions of the parties

The appellant-state argued that the Market fees and Rural Development fees were two different “fees” levied under two different Acts having different objects and purpose. It further contended that the 2003 Policy did not specifically exempt Rural Development fees and therefore, such an assumption could not be made by the respondent.

Insofar as the letter relied upon by the respondent, based on which the High Court dismissed application for modification, it was urged that the letter was not issued by competent authority and was withdrawn.

The respondent, on the other hand, pled that there was convergence of interests under the two statutes. It further claimed that both the 1961 Act and the 1987 Act contemplated levy of fees in a notified market area, not in the sense of fees levied under the 1961 Act.

Court Observations

After perusing the record, the Supreme Court was of the view that the issue arising in the case was not adjudicated upon by the High Court on merits.

"the High Court failed to delve into the merits of the matter and rather instantly went on to rely on the letters dated 09.10.2001, 28.08.2001 and 10.09.2001 referred by the Respondent, thereby dismissing the application for modification...Neither the arguments were discussed and analysed nor the contents of three notes/letters were discussed."

It agreed with the state on the aspect that the objects of the two statutes were different and the respondent could not claim exemption from Rural Development Fees merely because there was convergence of some interests.

"The 2003 Policy does not specifically exempt Rural Development fees and therefore, such an argument by the Respondent is highly presumptive, far-fetched and a clear attempt at over-reaching the scope of the 2003 Policy. If such an assumption is allowed, it would considerably broaden the canvas of the incentives available under the 2003 Policy, which was never intended. In fact, such a loose interpretation of the State policies would lead to an ambiguity to the State's intent and render it opposite to the public policy".

The court also noted that the Department of Agriculture issued a Memo to clarify and reiterate that when exemption from Market fees is granted, as in the instant case, such exemption will not be automatically applicable on Rural Development fee.

Conclusion

After going through the statutory provisions and relevant policies, the court concluded that Market fees and Rural Development fees were distinct and, there being no exemption from Rural Development fees mentioned in the 2003 Policy, the same only encompassed exemption from Market fees.

"...it is apparent that no unit, other than those approved as Mega Project, has been allowed exemption from the payment of Rural Development fee, unless explicitly provided by the authorities. The Respondent herein, M/s Punjab Spintex Limited, has admittedly not been approved as a Mega Project and, therefore, not eligible for such exemption from Rural Development fee", it said.

Case Title: State of Punjab & Ors. v. M/s Punjab Spintex Ltd, Civil Appeal Nos.10970-10971 of 2014

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