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The explanation to sub-section (2) of Section 65 of the Act, makes it clear that even the processed items from the agricultural products imported from outside the State of Karnataka, attract market fees on sales within the market area of the Market committee. Thus, it is the obligation of the importer to realize the market fee from the purchaser and pay the same to the Market Committee. Such an observation was made by the Hon’ble Supreme Court before Hon’ble Justice R. SUBHASH REDDY & Hon’ble Justice SANJIV KHANNA in the matter of APMC Yashwanthapura vs M/s. Selva Foods [CIVIL APPEAL NO. 7706 OF 2021].

The facts of the case were that M/S Selva Food was engaged in the business of selling cleaned and processed spices within the market area of the appellant. They buy spices like turmeric, chili, coriander, methi, and mustard seeds, etc., from the market areas of various Agricultural Market Committees within the State of Karnataka and they also import such spices from outside the State. After importing such agricultural produce, they undertake cleaning and processing of the spices and sell the processed items within the market area of the appellant. During the year 2008, authorities of the Market Committee have inspected the records of the respondent and found that the respondent had purchased methi and mustard seeds from outside the State of Karnataka, and after importing they sold the processed goods within the market area of the appellant and has not paid the market fee. Subsequently, the licence of the respondent was cancelled. Aggrieved the respondents preferred a writ petition before the High Court and the same was allowed on the ground that the respondent was not given proper opportunity and remitted the matter back for fresh consideration. Subsequently, after giving opportunity, an order dated 24.03.2009 was passed confirming the earlier demand and directed the payment of Rs.85,266/- which was payable out of the total demand of Rs.1,13,688/-. Aggrieved the respondent again approached the High Court via a writ petition which is allowed by the learned Single Judge of the High court. Aggrieved the appellate preferred an inter-court appeal which was dismissed. Thus, the instant appeal is preferred by the appellate.

The Hon’ble Supreme Court observed that the respondent is a buyer as defined under sub-section (2) of Section 65 of the Act and we cannot ignore the second proviso and Explanation to Section 65(2) of the Act. It is not a case where the respondent is denying the sale of the imported agricultural produce within the market area of the appellant after processing. In that view of the matter, it is not entitled to exemption from payment of market fees.

Additionally, the Hon’ble Supreme Court also observed that “if one merely imports notified agricultural produce from outside the State for the purpose of cleaning and processing without selling the processed produce within the market area is not liable to pay a market fee. As much as in this case without disputing the factum of sale within the market area post the import, the respondent has defended the proceedings only on the ground that once the agricultural produce is processed it will not attract a market fee as such the same cannot be accepted. It is the sale within the market area that attracts levy of market fee, and not the first purchase that was outside the market area.”

Finally, Hon’ble Supreme Court allowed the instant appeal and set aside the impugned order.

Click Here to Read The Judgment

Judgment Reviewed by: Rohan Kumar Thakur