OUDH SUGAR MILLS LTD Vs. STATE OF BIHAR

JUDGEMENT

(1.) Originally, this writ application was filed by M/s New Swadeshi Sugar Mills Ltd., Sub-sequently, this was merged with Oudh Sugar Mills Ltd. and application to that effect was filed by the original petitioner, namely, New Swadeshi Sugar Mills Ltd., and this Court by order dated 9-8-1991 allowed the application for substitution of M/s Oudh Sugar Mills Ltd as petitioner in this case.

(2.) The petitioner has challenged the assessment order dated 20-5-1981 whereby a sum of Rs. 12,51,180.85 was assessed as market fee payable by the petitioner and also a sum of Rs. 50,000 was assessed as penalty payable by the petitioner. A copy of the said assessment order is Annexure-12 to the writ application. The petitioner has also challenged the notice dated 8-6-81 issued by the Secretary of the Market Committee demanding the aforementioned amounts from the petitioner. A copy of the said demand notice is Annexure-13 to the writ application.

(3.) The brief facts of the case as stated by the petitioner are as follows: The petitioner is a Company registered under the Companies Act having its head office at Calcutta and is engaged in the business of manufacturing sugar by vacuum pan process in its factory situated at Narkatiaganj in the district of West Champaran. It has also a Distillery just adjoining to the premises of the Sugar Factory. The distillery is engaged in the business of manufacturing industrial alcohol. The molasses which is the bye-product of the sugar factory is transferred from sugar factory to its own distillery for manufacture of industrial alcohol. It is alleged that no sale of molasses from the sugar- factory to the distillery. According to the petitioner the purchase of sugar cane which is used as raw materials for manufacture of sugar, the manufacture of sugar and distillation and sale of molasses are completely regulated by various statutes enacted either by Parliament or by the State Legislature by various Control Orders made under the Essential Commodities Act. The price of sugarcane, the sale price of levy sugar, molasses and the industrial alcohol are fixed by the Government authorities in exercise of powers conferred upon them under various statutes. The petitioner's further case was that in order to manufacture sugar and industrial alcohol, the petitioner Company purchases various materials like sulphur, lime, coal, fire-wood and many other articles. Most of the purchases of the raw materials excepting the sugarcane is purchased from outside the market area of Narkatiaganj Market Committee or even from the outside of the State of Bihar. With regard to the sugarcane, the petitioner has both reserved and free areas of sugarcane growing areas from which the petitioner is purchasing sugarcane for its consumption to manufacture sugar strictly in accordance with law. In order to manufacture sugar, industrial alcohol and also 'in order to purchase and crush sugarcane, the petitioner has to obtain licence under the different Statutes and also have to comply with the conditions of licence contained therein. The petitioner's further case was that the State of Bihar enacted Bihar Agricultural Produce Markets Act in the year 1960 and the items mentioned in the Schedule appended to the Act were declared to be agricultural produce. It levied a market fee at the rate of 25 paise per Rs. 100 in the transaction of agricultural produce within the market area. It is stated that the commodities like sugarcane, sugar and molasses were not included in the original schedule appended to the aforesaid Act. In the year 1974 the Act was amended and the market fee was raised to Re. 1 per Rs. 100 and also apart from others, sugarcane, sugar and molasses were added to the Schedule. The State of Bihar by notification dated 28-7-1974 constituted a Market Committee at Narkatiaganj which also included Sikarpore Police Station in which the petitioner's factory is situated. The petitioner's factory received the notice from the Market Committee stating that as a Market Committee has been constituted and as also the petitioner is engaged in the trade of sugarcane, sugar and molasses, it should obtain a licence and pay market fee on the sale or purchase of the aforesaid items at the prescribed rate. The petitioner protested the said notice on the ground that the act is not applicable to the sugar factory for various reasons stated therein. The question of applicability of the Act was also taken up by the Bihar Sugar Mills Association of which the petitioner factory is also a member. The Association started representing the matter before the various authorities of the State of Bihar and tried to pursuade the government to accept the contention that the Bihar Agricultural Produce Market Act, whereinafter referred to as the Market Act, is not applicable to the sugar factory. However it is stated by the petitioner that while the matter was pending before the Government for consideration, the Market Committee started taking coercive stops for realisation of market fee. In the meantime two other sugar factories, namely, Belsund Sugar Company Ltd., and Motihari Sugar Factory, moved this Court for declaration that the Market Act is not applicable to the sugar factories on various grounds. The petitioner also moved this court by filing separate writ application being CWJC No. 172 of 1976. The aforesaid two writ applications were heard together and were disposed of by a common judgment dated 20-4-1976 whereby this Court dismissed the writ application. The judgment is reported in AIR 1977 Patna 136, (Belsund Sugar Company Ltd. and Ors. v. State of Bihar). The petitioner further case was that in the aforesaid judgment this Court gave a finding that the market Committee of the respective sugar factory was not providing any service in lieu of the market fee realised, and liberty was given to the petitioners to those writ application to move the authorities in case they do not get any service in future by the Committee. Against the aforesaid judgment those writ petitioners moved the Supreme Court by filing civil Appeal Nos. 398 and 399 of 1977 which is said to be pending before the Supreme Court. The petitioners thereafter was permitted to withdraw the writ application being CWJC No. 172 of 1976 with certain direction to raise all the points before the Assessment Sub-Committee of the Market Committee. The petitioner further case was that the Market Committee by letter dated 3-11-1980 intimated its intention to declare the petitioner factory premises to be a Sub Market and for the purposes of the Market Act, which was opposed by the petitioner on various grounds. However according to the petitioner although there was specific order of the Government to stop realising market fee till the disposal of the appeals by the Supreme Court, the Market Committee continued assessing the liability of the market fee against the petitioner. Having no alternative the petitioner filed revised return and objections on the order passed by the Market Committee. In the year 1981 the petitioner was informed that the objections filed by the petitioner was disposed of and the petitioner was required to produce books of account for the entire period otherwise ex-pane assessment would proceed. Pursuant to the said notice the petitioner appeared through his lawyer and filed the detailed returns of purchase of sugarcane and the sale of sugar for the period commencing from 1974- 75 to 1979-80. However in default of the petitioner to appear before the Assessment Sub-Committee an ex-pane assessment order was passed by the impugned order fixing liability against the petitioner to the extent mentioned above and the demand notice was issued for realisation of the same. The order and the demand notice are included in the writ application. The petitioner has challenged the liability of payment of market fee on various grounds mentioned in the writ application and claimed that no market fee is payable by the petitioner. The petitioner has also challenged the legality and validity of the assessment order passed ex-pane.