Shree Sita Agro Foods Pvt. Ltd. vs State of C.G.

Manindra Mohan Shrivastava, J.

Heard. By this petition under Article 226 of the Constitution of India, the petitioner-trader has assailed the correctness and validity of memo dated 6-4-2011, 28-7-2012 and 4-5-2012 by which respondents have rejected petitioner''s claim for refund of excess market fee paid by him. The petitioner has prayed for a direction to respondents to refund the excess payment of market fee calculated at Rs. 30,69,648 for the period 1-4-2009 to 31-3-2010 and Rs. 15,29,875/- for the period 1-4-2012 to 17-4-2012.

The factual matrix giving rise to this petition is in narrow encompass and is stated infra--

The petitioner is a trader engaged in sale and purchase of agricultural produce. It is the case of the petitioner that during the period from 1-4-2009 to 31-3-2010 and 1-4-2012 to 17-4-2012, the petitioner while purchasing agricultural produce in the market area of the Krishi Upaj Mandi Samiti/respondent No. 4, paid market fee at the rate of Rs. 2/- per hundred rupees. At the time when this market fee was paid by the petitioner, there was no exemption or relaxation in the rate at which market fee was payable. However, subsequent to each of these two periods of transaction, the State Government issued notification on 4-11-2010 and 13-7-2012 respectively by amending its notification dated 13-5-2004 thereby including the aforesaid periods also. The effect of these two notifications was that in respect of the period from 1-4-2009 to 31-3-2010 and period from 1-4-2012 to 13-7-2012, the liability to pay market fee was only on the relaxed rate of 50 paise per hundred rupees. Soon thereafter, the petitioner started raising claim for refund of the market fee paid by him on the statement that during the relevant period, he had actually paid market fee @ Rs. 2/- per hundred rupees, whereas, under the notification subsequently issued, the rate of market fee was retrospectively fixed as 50 paise per hundred rupees. During that period, claims were raised by the traders including the petitioner and the matter went up to the State Government and the State Government then came out with impugned order dated 6-4-2011 (Annexure P-1) that as the traders have already passed on their liability, no refund is payable to them. It is this refusal of the respondents, which is under challenge in this writ petition.

Learned Counsel for the petitioner submits that even though at the time of actual transaction of sale and purchase during the relevant period, there was no exemption or relaxation on rates of market fee, subsequent to those transactions, the State Government issued notification covering that period also with the effect that the market fee leviable was only @ 50 paise per hundred rupees whereas the petitioner actually paid Rs. 2/- per hundred rupees. Therefore, to the extent of excess payment made by the petitioner, he was entitled to refund. Learned Counsel for the petitioner submits that it is the claim of the petitioner that the petitioner actually did not pass on the liability to his prospective buyers. This claim was not examined but on the basis of general direction issued by the State Government, his claim has been illegally rejected, which is contrary to the principles with regard to refund as laid by the Supreme Court in the case of Mafatlal Industries Ltd. and Others Vs. Union of India (UOI) and Others, and Belapur Sugar and Allied Industries Ltd Vs. Collector of Central Excise, Aurangabad, .

Per contra, learned Counsel for the respective respondents raised common submission opposing the claim of the petitioner. In particular, learned Counsel for the State submitted that the petitioner claims unjust enrichment. Relying upon the judgment of the Supreme Court in the cases of Amar Nath Om Prakash and Others Vs. State of Punjab and Others, and State of Madhya Pradesh Vs. Vyankatlal and Another, , learned Counsel for the Mandi submitted that the claim of the petitioner was duly examined by the Mandi and was referred to the Mandi Board. The matter was ultimately referred to the State Government and the State Government finally decided that as the liability has already been passed on by the dealers to its buyers, no refund would be admissible under the law. He further submitted that the petitioner raised the claim of refund only on the basis that by subsequent notification, the rate of market fee, in respect of the previous transactions was reduced retrospectively. At the time when the transaction had taken place, there was no exemption or reduction and as the notifications of exemption issued at that point of time and in force, did not permit any exemption, the petitioner was liable for payment of the market fee at the rate of Rs. 2/- per hundred rupees.

Indisputable facts of the case are that the petitioner is a trader, who is engaged in the sale and purchase of the agricultural produce in the market area of respondent No. 4/Mandi. The facts as stated in the writ petition reveal that in respect of the period from 1-4-2009 to 31-3-2010 and period from 1-4-2012 to 13-7-2012, the petitioner purchased agricultural produce and paid market fee @ Rs. 2/- per hundred rupees. At that time, the notifications regarding exemption issued by the State Government in exercise of powers u/s 69 of the Mandi Act did not allow any exemption or reduction in the rate of market fee. The earlier notification issued on 5-4-2008 allowed reduced rate of fee only upto 2009, i.e., up to 31-3-2009. At the time when the transaction had taken place, there was no notification of the State Government in force, prescribing the market fee @ 50 paise per hundred rupees. A notification came to be issued on 9-6-2010 (Annexure P-6) by which the period from 1-4-2010 to 31-3-2012 was substituted. However, the period from 1-4-2009 to 31-3-2010 was not included. It was only upon issuance of notification dated 4-11-2010 that the period from 1-4-2009 to 31-3-2010 was included with the effect that the notification reduced and fixed the market fee @ 50 paise per hundred rupees, with retrospective effect.

Similarly, in respect of the period from 1-4-2012 to 13-7-2012, there was no notification prescribing market fee @ 50 paise per hundred rupees until issuance of notification dated 13-7-2012. These facts are not in dispute.

The pivotal issue, which arises for consideration is whether the petitioner is entitled to refund against excess market fee actually paid by him in respect of the relevant period, referred to above, in view of subsequent notifications dated 4-11-2010 and 13-7-2012.

From the representations filed by the petitioner, cumulatively filed as Annexure P-11, it is borne out that the petitioner claimed refund only on the basis that due to subsequent notification, market fee has been reduced retrospectively covering relevant period of earlier transactions. In his representation, on facts, there was no assertion that the petitioner was entitled to refund because he did not pass on his liability to his buyers after such purchases made by him. A bare claim for refund, only because the rate was retrospectively reduced, was raised by the petitioner. The matter was taken up to the State Government and the State Government keeping in view the law laid down by the Supreme Court in the case of Vyankatlal (supra), directed that where liability had already been passed on to the buyers, no refund would be payable.

There was no occasion either for the Mandi or for the Board or even for the State Government to examine, on facts, the claim of the petitioner for refund on the assertion of the petitioner having not passed on his liability to his buyers.

The law with regard to refund, by applying principles of unjust enrichment, has been well-settled by the Supreme Court in catena of decisions. In the case of Vyankatlal (supra), the Supreme Court after survey of earlier decisions held thus:--

"The principles laid down in the aforesaid cases were, based on the specific provisions in those Acts but the same principles can safely be applied to the facts of the present case, inasmuch as in the present case also the respondents had not to pay the amount from their coffers. The burden of paying the amount in question was transferred by the respondents to the purchasers and, therefore, they were not entitled to get a refund. Only the persons on whom lay the ultimate burden to pay the amount would be entitled to get a refund of the same. The amount deposited towards the Fund was to be utilised for the development of sugarcane. If it is not possible to identify the persons on whom had the burden been placed for payment towards the Fund, the amount of the Fund can be utilised by the Government for the purpose for which the Fund was created namely, development of sugarcane. There is no question of refunding the amount to the respondents, who had not eventually paid the amount towards the Fund. Doing so, would virtually amount to allow the respondents unjust enrichment."

In a subsequent Constitution Bench judgment in the case of Mafatlal Industries (supra), the Supreme Court taking into consideration its earlier judgment including judgment in the case of Vyankatlal (supra), held that though refund of fee so collected may be legally due to the traders, traders may be repaid amounts only to the extent, they have not passed on the burden to their customers. To the extent they have passed on, it was held that they were not entitled, applying principles of unjust enrichment deducible from the concept of distributary justice underlying Articles 38 and 39 of the Constitution of India as also from the discretionary nature of the power under Article 226 of the Constitution of India. In the case of Belapur Sugar & Allied Industries Ltd. (supra), relied upon by learned Counsel for the petitioner, what has been held is that even if duty is paid under ignorance of law or otherwise, if by subsequent legislation or valid notifications, the obligation to pay the duty is withdrawn, exemption cannot be refused since the assessee has already paid the duty. It has also been held that if the duty paid is shown to be not leviable or entitled to rebate, the revenue has to refund, adjust, credit such amount to the assessee, as the case may be.

The aforesaid decision is not an authority for the proposition that if in a case, where the trader has actually passed on his liability to his buyers, he will be entitled to refund of excess tax or fee paid by him.

In the case of M/s. Amar Nath Om Prakash (supra), the Supreme Court examined the validity of Section 23-A of the Punjab Agricultural Produce Markets Act, which enabled the Market Committees to "retain the fee levied and collected by it from a licensee in excess of that leviable u/s 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".

The Supreme Court negated the challenge holding that the primary purpose of the said Section was to prevent the refund of license fee to dealers, who have already passed on burden of such fee to the purchaser and who want to unjustly enrich themselves by obtaining the refund from the Market Committee. The said provision, as was held, recognises that the consumer public, who have borne the ultimate burden are the persons really entitled to refund and since the Market Committee represents their interests, is entitled to retain the amount. It was pointed out that the provisions for retention by Market Committee had to be made because of the practical impossibility of tracing the individual purchaser and consumers, who have ultimately borne the burden. It was held:--

"53........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 ill-gotten 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 hereafter for the benefit of the very persons for whose benefit the marketing legislation was enacted."

As an upshot of above discussion, I am of the view that petitioner''s claim for refund only on the basis of subsequent reduction in the rate of market fee on the basis of notification subsequent to actual transaction is not tenable under the law in the absence of assertion much less proof of fact before the authorities that he actually did not pass on his excess liability to his buyers.

Learned Counsel for the petitioner submits that though specifically this assertion of fact was not made in the representation made by the petitioner before the authorities, in this writ petition, the petitioner has come out with specific averments that he has not actually passed on his excess liability to his buyers. I, however, find that there is no material to prima facie substantiate this pleading of the petitioner. Whatever documents have been placed on record only go to prove that the petitioner while purchasing agricultural produce had paid market fee @ Rs. 2/- per hundred rupees. That the petitioner did not pass on the liability, is not borne out from the documents placed before this Court. Unless that is done, it will be presumed that the liability was passed on to the buyers.

Learned Counsel for the petitioner at the last submitted that he may be allowed to establish this fact before the Mandi Samiti that he actually did not pass on the liability to the buyers. Upon due consideration of this submission, I am of the view that in respect of old transaction, it would not be proper for this Court to direct reopening of the matter. Therefore, in the discretion of this Court, the matter is required to be set at rest and no further enquiry is necessary in this regard. In the result, this petition is dismissed.