# AGRICULTURAL PRODUCE MARKET COMMITTEE, NARELA, DELHI v. COMMISSIONER OF INCOME TAX & ANR

- **Citation:** [2008] 12 S.C.R. 387
- **Court:** Supreme Court of India
- **Decided:** 2008-08-21
- **Case number:** Civil Appeal No. 5180 of 2008
- **Bench:** S.H. Kapadia, 8. Sudershan Reddy
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/agricultural-produce-market-committee-narela-delhi-v-commissioner-of-income-tax-23710
- **Pages:** 32

## Headnote

~
Income Tax Act, 1961:
s. 10(20), Explanation - 'local authority' - Agricultural · C
Prduce Market Committee (AMC) claiming exemption from
income tax - HELD: Definition of 'local authority' given in
the Explanation to s. 10(20) is an exhaustive definition and
words "other authority" do not find place therein - Therefore,
AMC is not entitled to exemption uls 10(20) after insertion
D
of the Explanation by Finance Act 2002 - General Clauses
Act, 1897 - s. 3(31) - Constitution of India, 1950 - Articles
243(d) and 243-P(e) - Delhi Agricultural Produce Marketing
(Regulation) Act, 1998 - ss. 2(1) and 5.
The appellant in CA No. 5180 of 2008, an Agricultural E
Produce Market Committee (AMC), was availing
exemption benefit under s.10(20) of the Income Tax Act,
1961, prior to its amendment by Finance Act, 2002. By
the said amendment the Explanation was added to subsection (20) of s.10 of the 1961 Act, defining the term
F
'local authority'. The words 'other authority' as occurring
in s.3(31) of the General Clauses Act, 1897, did not find
place in the said Explanation. Accordingly, the Revenue
rejected appellant's claim for exemption from payment
of tax on incom~ earned by it, for the assessment year G
2003-04. The appellant having failed before the
Commissioner of Income Tax (Appeals), the Income Tax
Appellate .Tribunal and the High Court, filed the instant
appeal. The other appeals were filed on similar facts.
387
H
A
388
SUPREME COURT REPORTS
[2008] 12 S.C.R.
On the strength of the decision in R. C. Jain's 1 case,
it was contended for the appellants that the Parliament,
by way of Explanation to s.10(20), bodily lifted the
definition of 'local authority' u/s 3(31) of the General
Clauses Act, 1897 and, as such, the AMC continued to
B be a 'local authority' even after the said amendment;
that even otherwise, Item (iii) of the Explanation to
s.10(20) of the 1961 Act, referred to "Municipal
Committees" and "District Boards", and as no Municipal
Committees were in existence, nor the term "Municipal
c Committee" was defined and, as such, AMC, though not
a Municipal Committee, would still be a 'local authority'
of like nature and character to that of a 'Municipal
Cc:>mmittee' performing muni~ipal functions.
For the respondents it was contended, that after
D the insertion of the Explanation to s.10 (20) of the 1961
Act, the term 'local authority' stood exhaustively definedand since AMC was not mentioned in the said
Explanation, the appellant was no more enti~led to the
exemption benefit. It was submitted that the clarification
E issued by CBDT expressly stated that Agricultural
· Marketing Societies and Agricultural Marketing Boards
would stand excluded from the Explanation to s.10 (20)
of the 1961 Act.
- The question for consideration before the Court
F was: "whether Agricultural Marketing Committee
[AMC(s)] is 'a "local authority", so as to be entitled to the
benefit under Section 10 of the 1961 Act after insertion
of the Explanation in Section 10(20) vide Finance Act,
2002 w.e.f. 1.4.2003?"
G
D~smissing the appeals, the Court
HELD: 1.1 The Explanation to Section 10(20) of the
Income Tax Act, 1961 provides a definition to the word
"local authority". It is an exhaustive, and not an inclusive,
H definition. The words "other authority" do not find place
-
-f
•
--.{
AGRI. PRODUCE MARKET COMMT., NARELA,
DELHJ v. COMM!. OF INCOME TAX & ANR.
389
in the said Explanation. Even. according to the A
_appellants, Agricultural Produce Market Committee is
neither a Municipal Committee nor a District Board nor
a Municipality nor a Panchayat. Therefore, the functional
test and the test of incorporation as laid down in the
case of R. C. Jain* is no more applicable to the B
Explanation to Section 10(20) of the 1961 Act. Therefore,
the judgment in R. C. Jain followed by judgments of
various High Courts on the status and character of AMC
is no more applicable to the provisions of s.10(20) after
the insertion of the Explanation/definition clause to that c
sub-sec

## Text

_Characters 0–39,711 of 58,267. This is a partial read: ask again with offset=39711 for what follows._

[2008] 12 S.C.R. 387
AGRICULTURAL PRODUCE MARKET COMMITTEE,
NARELA, DELHI
v.
COMMISSIONER OF INCOME TAX & ANR.
(Civil Appeal No. 5180 of 2008)
AUGUST 21, 2008
A
B
-\'
[S.H. KAPADIA AND 8. SUDERSHAN REDDY, JJ]
~
Income Tax Act, 1961:
s. 10(20), Explanation - 'local authority' - Agricultural · C
Prduce Market Committee (AMC) claiming exemption from
income tax - HELD: Definition of 'local authority' given in
the Explanation to s. 10(20) is an exhaustive definition and
words "other authority" do not find place therein - Therefore,
AMC is not entitled to exemption uls 10(20) after insertion
D
of the Explanation by Finance Act 2002 - General Clauses
Act, 1897 - s. 3(31) - Constitution of India, 1950 - Articles
243(d) and 243-P(e) - Delhi Agricultural Produce Marketing
(Regulation) Act, 1998 - ss. 2(1) and 5.
The appellant in CA No. 5180 of 2008, an Agricultural E
Produce Market Committee (AMC), was availing
exemption benefit under s.10(20) of the Income Tax Act,
1961, prior to its amendment by Finance Act, 2002. By
the said amendment the Explanation was added to subsection (20) of s.10 of the 1961 Act, defining the term
F
'local authority'. The words 'other authority' as occurring
in s.3(31) of the General Clauses Act, 1897, did not find
place in the said Explanation. Accordingly, the Revenue
rejected appellant's claim for exemption from payment
of tax on incom~ earned by it, for the assessment year G
2003-04. The appellant having failed before the
Commissioner of Income Tax (Appeals), the Income Tax
Appellate .Tribunal and the High Court, filed the instant
appeal. The other appeals were filed on similar facts.
387
H
A
388
SUPREME COURT REPORTS
[2008] 12 S.C.R.
On the strength of the decision in R. C. Jain's 1 case,
it was contended for the appellants that the Parliament,
by way of Explanation to s.10(20), bodily lifted the
definition of 'local authority' u/s 3(31) of the General
Clauses Act, 1897 and, as such, the AMC continued to
B be a 'local authority' even after the said amendment;
that even otherwise, Item (iii) of the Explanation to
s.10(20) of the 1961 Act, referred to "Municipal
Committees" and "District Boards", and as no Municipal
Committees were in existence, nor the term "Municipal
c Committee" was defined and, as such, AMC, though not
a Municipal Committee, would still be a 'local authority'
of like nature and character to that of a 'Municipal
Cc:>mmittee' performing muni~ipal functions.
For the respondents it was contended, that after
D the insertion of the Explanation to s.10 (20) of the 1961
Act, the term 'local authority' stood exhaustively definedand since AMC was not mentioned in the said
Explanation, the appellant was no more enti~led to the
exemption benefit. It was submitted that the clarification
E issued by CBDT expressly stated that Agricultural
· Marketing Societies and Agricultural Marketing Boards
would stand excluded from the Explanation to s.10 (20)
of the 1961 Act.
- The question for consideration before the Court
F was: "whether Agricultural Marketing Committee
[AMC(s)] is 'a "local authority", so as to be entitled to the
benefit under Section 10 of the 1961 Act after insertion
of the Explanation in Section 10(20) vide Finance Act,
2002 w.e.f. 1.4.2003?"
G
D~smissing the appeals, the Court
HELD: 1.1 The Explanation to Section 10(20) of the
Income Tax Act, 1961 provides a definition to the word
"local authority". It is an exhaustive, and not an inclusive,
H definition. The words "other authority" do not find place
-
-f
•
--.{
AGRI. PRODUCE MARKET COMMT., NARELA,
DELHJ v. COMM!. OF INCOME TAX & ANR.
389
in the said Explanation. Even. according to the A
_appellants, Agricultural Produce Market Committee is
neither a Municipal Committee nor a District Board nor
a Municipality nor a Panchayat. Therefore, the functional
test and the test of incorporation as laid down in the
case of R. C. Jain* is no more applicable to the B
Explanation to Section 10(20) of the 1961 Act. Therefore,
the judgment in R. C. Jain followed by judgments of
various High Courts on the status and character of AMC
is no more applicable to the provisions of s.10(20) after
the insertion of the Explanation/definition clause to that c
sub-section by Finance Act, 2002. [para 29] [416,E-H]
*Union of India and others v. R. C. Jain and others -
1981 ( 2 ) SCR 854=1981 (2) SCC 308 - held inapplicable.
1.2 Under Section 3(31) of the General Clauses Act, 0
1897, "local authority" was defined to mean "a municipal
committee, district board, body of port commissioners
or other authority legally entitled to the control or
management of a· municipal or local fund. The words
"other authority" in Section 3(31) of the 1897 Act tias
been omitted by Parliament in the Explanation/definition
E
clause inserted in Section 10(20) of the 1961 Act by
Finance Act, 2002. iherefore, it would not be correct to
say that the entire definition of the word "local authority"
is bodily lifted from Section 3(31) of the 1897 Act and
incorporated, by Parliament, in the Explanation to Section
F
10(20) of the 1961 Act. This deliberate omission is
important. [para 27] [413,E-G]
1.3 As regards the use of the words "Municipal
Committee" and "District Board" in Item (iii) of the G
Explanation to s.10(20) of 1961 Act, Parliament has
defined "local authority" to mean -
a Panchayat as
referred to in clause (d) of Article 243 of the Constitution
of India, and a Municipality as referred to in clause (e) of
Article 243P of the Constitution of India. However, there H
390
SUPREME COURT REPORTS
[2008] 12 S.C.R.
A is no reference to Article 243 after the words "Municipal
Committee" and "District Board". The Municipal
Committee and District Board in the said Explanation
are used out of abundant caution. In 1897 when General
Clauses Act was enacted there existed in India, Municipal
B Committees. and District Boards. They continued even
thereafter. Besides, Article 243N and Article 243ZF
indicate that there could be enactments· which still retain
the entities like Municipal Committees and District
Boards and if they exist, Parliament intends to give
C' exemption to their income under Section 10(20) of the
1961 Act. [para 30] [417,A-C; 418,B]
1.4 Agricultural Produce Market Committee (AMC) is,
therefore, not entitled to exemption under Section 10(20)
of the 1961 Act after insertion of the said Explanation by
D Finance Act, 2002 w.e.f. 1.4.03. [para 33] [418,F-G]
Case Law Reference:
1981 ( 2 ) SCR 854 held inapplicable para 12
Union of India and others v. R. C. Jain and others -
E 1981 ( 2 ) SCR 854=1981 (2) sec 308
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
5180 bf 2008
From the final Judgment and Order dated 2.06.2006 of
F the High Court of Delhi at New Delhi in ITA No. 819 of 2006
:.Ir
WITH
C.A. Nos. 5181 & 5182 of 2008
G
M.L. Verma, Avnish Ahlawat, Pawan Chaudhary, Rani
Chhabra, Lalita Chaudhary, Simran Singh and Satya Mitra for
the Appellant.
Pa rag Tripathi, ASG., P. Vishwanatha Shetty, Amey
Nargolkar, Shweta Garg, Rahur Kausnik and B.V. Ba!aram
H Das for the Respondents.
,
'
...
...
AGRI. PRODUCE MARKET COMMT., NARELA,
391
DELHI v. COMM!. OF INCOME TAX & ANR. [S.H. KAPADIA, J.]
The Judgment of the Court was delivered by
S.H. KAPADIA, J. 1. Leave granted.
A
2. In this batch of civil appeals a short question which
arises for determination is : whether Agricultural Market
Committee ("AMC", for short) is a "local authority" under the B
Explanation to Section 10(20) of the Income-tax Act, 1961
("1961 Act", for short).
3. For the sake of convenience we refer to the facts
mentioned in Civil Appeal No. 5180 of 2008 (arising out of
S.L.P. (C) No.6757 of 2007) filed by AMC, Narela, Delhi.
C
4. Appellant-Committee is established under the Delhi
Agricultural Produce Marketing (Regulation) Act, 1998 ("1998
Act", for short). The provisions of the said 1998 Act enjoin
upon the appellant to provide the facilities for marketing of D
agricultural produce in Narela ... Delhi. This is apart from
performing other functions
and
duties
such
as
superintendence, direction and control of markets for regulating
the marketing of agricultural produce.
5. For the assessment year 2003-04, the appellantE
Committee claimed exemption from payment of tax under
income earned by it on the ground that it was a "local authority"
within the meaning of Section 10(20) of the said 1961 Act. It
relied upon the definition of "local authority" in Section 2(1) of
the said 1998 Act. The A.O. rejected the appellant's claim for
F
exemption relying upon Circular No.8/2002 dated 27.8.02
issued by CBDT. The view taken was that the amended
provisions of Section 10(20) of the 1961 Act were not attracted
to "Agricultural Produce Marketing Societies" or "Agricultural
Market Boards" even when they may be local authorities under G
Central or State Legislations.
6. Aggrieved by the said order, appellant filed an appeal
before CIT(A) who upheld the view taken by the A.O. and
declined the exemption claimed by the appellant.
H
392
SUPREME COURT REPORTS
[2008] 12 S.C.R.
A
7. A further appeal by the appellant, before the Tribunal,
also failed.
8. Aggrieved by the decision of the Tribunal, the appellant
moved the High Court by way of Income Tax Appeal No:819/
2006 under Section 260A of the 1961 Act. By impugned
B. decision dated 2.6.06, Delhi High Court following its earlier
judgment in the· case of Agricultural Produce Market
Committee, Azadpur v. Commissioner of Income-tax - (/.TA.
No. 7 4912006) dismissed the appellant's appeal. Hence this
c
civil appeal.
9. At the outset, it may be stated that all AMCs at different
places were enjoying exemption . from income tax under
Section 10(20) of the 1961 Act prior to its amendment by
Finance.Act, 2002 w.e.f. 1.4.03.
·
D
10. Prior to the amendment by Finance Act, 2002,
E
F
G
H
Section 10(20) of the Income-tax Act, 1961 provided as under:
"CHAPTER Ill
INCOME WHICH DO NOT FORM PART
OF TOTAL INCOME
Incomes not included in total income.
10. In computing the total income of a previous year of any
person, any income falling within any of the following
clauses shall. not be included -
·
(20) the income of a local authority which is chargeable
under the head "income from house property", "Capital
gains" or·"lncome from other sources" or from a trade or
business carried on by it which accrues or arises from the
supply of a commodity or service (not being water or
electricity) within its own jurisdictional area er from the
supply of water or electricity within or outside its own
jurisdictional area."
~
.
11. Through the aforemenl\oned amendment (Finance
l
. • I
~'
~-
AGRI. PRODUCE MARKET COMMT., NARELA,
393
DELHI v. COMMI. OF INCOME TAX & ANR. [S.H. KAPADIA, J.]
Act, 2002) the following Explanation stood added to Section A
10(20) of the Income-tax Act, 1961 which reads as follows:
"Explanation.- For the purposes of this clause, the
expression "local authority" means -
(i)
Panchayat as referred to in clause (d) of article 243
B
of the Constitution; or
(ii)
Municipality as referred to in clause (e) of article
243P of the Constitution; or
(iii) Municipal Committee and District Board, legally c
entitled to, or entrusted by the Government with, the
control or management of a Municipal or local fund; or
(iv)
Cantonment Board as defined in section 3 of the
Cantonments Act; 1924 (2 of 1924);"
12. Mr. M.L. Verma, learned senior counsel appearing
on behalf of the appellants, submitted that AMC(s) has been
held to be a "local authority" under Section 10(20) of the 1961
D
Act falling outside the taxing net. in this connection, learned
counsel placed reliance on the judgment of the Delhi High
E
Court in the case of Commissioner of Income-tax v.
Agricultural Marketing Produce Committee - [2001] 250 !TR
369 and the reasoning given by this Court in the case of
Union of India and others v. R.C. Jain and others - 1981 (2)
SCC 308. According to learned counsel, even after the
amendment to Section 10(20) of the 1961 Act, by inserting
F
the Explanation thereto, the AMC(s) continues to be covered
by Item (iii) in the said Explanation as it is a "local authority"
performing the municipal functions and is legally entitled to
the control of local fund, namely, Market Fund under the said
1998 Act. In this connection, learned counsel urged that vide G
Finance Act, 2002, Parliament has bodily lifted the definition
of the "local authority" under Section 3 (31) of the General
Clauses Act, 1897 ("1897 Act", for short) and has incorporated
the said definition vide Explanation inserted in Section 10(20)
and consequently AMC(s) is a "local authority" and continues
H
394
SUPREME COURT REPORTS
[2008] 12 S.C.R.
A
to be a local authority even after the· said amendment to Section
10(20) of the 1961 Act. According to learned counsel, since
Section ;3(31) of the 1897 Act is bodily incorporated into
;
Section 10(20) of the 1961 Act, it follows that the judgments
of various High Courts earlier delivered prior to Finance Act,
;
B 2002 holding AMC(s) to be a "local authority", would continue
1to apply and the tests laid down in those judgments would
continue to apply even after the said amendment to Section
10(20) of the 1961 Act. Therefore, according· to. learned
counsel, the said Explanation does not adversely affect the
c appellant(s) as the appellant(s) is covered by Item (iii) in the
Explanation, which according to the appellant(s), is identical
to Section 3(31) of the 1897 Act on the basis of which AMC(s)
.is a "local authority".
13. Learned counsel next contended that even after the
D amendment to Section 10(20), the appellant(s) is covered by
Item (iii) of the said Explanation as it is a "local authority"
•
performing municipal functions and as it is legally entitled to
)r-·
the control of local fund, namely, Market Fund. In this
co~nection, learned counsel pointed out that the appellant(s)
E has the power and authority to levy and collect fees called
"Market Fees" and in fact it levies and collects "Market Fees"
and the fact that the Government exercises control, does not
. take away the statutory power of the appellant(s) under Section
62 of the 1998 Act.
F
14. Learned counsel next contended that it is true that
the words ''other authority" appearing in Section 3(31) of the
1897 Act do not find place in the Explanation to Section 10(20)
of the 1961 Act, however, that would not change the basis of
decision of this Court in the case of R. C. Jain (supra). Learned
G counsel urged that the judgment of this Court in the case of
R. C. Jain (supra) is squarely applicable to the facts of the
•+-.A
present case and applying the tests laid down in the said
judgment the position which emerges is that AMC(s) is a "local
authority" of "like nature and character" as a Municipal
H Committee performing municipal functions and legally entitled
AGRI. PRODUCE MARKET COMMT., NARELA,
395
*
DELHI v. COMMI. OF INCOME TAX & ANR. [S.H. KAPADIA, J.]
to the control of the local fund, namely, the Market Fund. One A
more aspect needs to be mentioned. An Explanatory Note (at
pages 114 to 116 of the paper book of S.L.P.(C) No.6757 of
2007) states that "Agricultural Produce Marketing Boards" and
"Agricultural Marketing Societies" are not entitled to exemption
1
after insertion of the said Explanation in Section 10(20) of the
B
1961 Act. According to learned counsel AMC(s) is neither
"Agricultural Produce Marketing Board" nor "Agricultural
Marketing Society". Therefore, according to learned counsel
even the Explanatory Note indicates that AMC(s) is covered
by the Explanation and, therefore, AMC(s) is entitled to the
continuance of the benefit of exemption even after Finance c
Act, 2002. Further, in the Explanation to Section 10(20) there
are three items - Item (i) refers to "Panchayat", Item (ii) refers
to "Municipalities" whereas Item (iii) refers to "Municipal
Committees" and "District. Boards". According to learned D
counsel, there is no independent definition of "Municipal
'.
Committee". According to learned counsel, the Department is
~
also not able to answer whether any Municipal Committee still
exists so as to constitute a separate category or whether they
would be covered under Item (ii) in the said Explanation which
E
refers to "Municipality". Therefore, according to learned
counsel, AMC(s) is a "local authority" of like nature and
character as a Municipal Committee performing municipal
functions legally entitled to control the local fund.
15. Lastly, learned counsel urged that in any event it is
F
well-settled rule of construction of taxing statutes that if two
views are possible then the view that is favourable to assessee
should be executed and in case of doubt it should be resolved
in favour of that assessee.
16. Mr. Parag P. Tripathi, learned Additional Solicitor G
' -4.·
General of India, submitted that before the insertion of the
Explanation, under Section 10(20) of the 1961 Act, by Finance
Act, 2002, various High Courts were of the view that since
"local authority" has not been defined under 1961 Act; the
definition may be borrowed from Section 3(31) of the 1897 H
396
SUPREME COURT REPORTS
[2008] 12 S.C.R.
+
A
Act. However, according to learned counsel, after the insertion
of the Explanation, vide Finance Act, 2002 whereby "local
authority" stood defined exhaustively, it was not necessary to
invoke Section 3(31) of the 1897 Act. He further contended
that the Notes on Clauses in the Finance Bill 2002 shows that
B
Parliament intended to restrict the exemption to Panchayat
-1--
'
and Municipality, as referred to in Article 243(d) and Article
I
.....
243P(e) of the Constitution of India, Municipal Committees ·
and District Boards, legally entitled to or entrusted by the
Government with the control or management of a local fund as
c well as Cantonment Boards as defined under Section 3 of the
Cantonment Act, 1924. In this connection, learned counsel
urged that AMC(s) is not mentioned in the Explanation.
Therefore, according to learned counsel, it would not be proper
to read AMC(s) into the Explanation particularly when Section
D
10(20) of the 1961 Act is an exemption provision.
17. It was next contended that Section 3(31) of the 1897
.,
Act was riot bodily incorporated in the Explanation to Section
10(20) of the 1961 Act as it sought to be contended on behalf
~
of the appellant(s). Learned counsel submitted that Parliament
E
in its wisdom has excluded the expression "other authority", .
found under Section 3(31) of the 1897 Act, from the
Explanation to Section 10(20) of the 1961 Act. According to
learned counsel, this conspicuous absence has to be
understood in the context, namely, that in the case of R. C.
F
Jain (supra), the focus of this Court was on the said expression
-~
"other authority" under Section 3(31) of the 1897 Act and,
therefore, reliance placed by the appellants herein on the
judgment of this Court in the case of R. C. Jain (supra) was
misplaced.
G
18. Learned counsel further submitted that the
explanation/definition clause inserted by Finance Act, 2002 is
·+-"
exhaustive as it uses the expression "means" as contradistinct
from the expression "includes". Learned counsel submitted
that borrowing definition frorn other statutes is not a safe guide,
H particularly, when the explanation is a definition section,
AGRI. PRODUCE MARKET COMMT., NARELA,
397
DELHI v. COMMI. OF INCOME TAX & ANR. [S.H. KAPADIA, J.]
~
specifically designed for grant of the exemption under Section
A
10(20) of the 1961 Act.
19. Learned counsel next con~ended that in the hierarchy,
mentioned in 1998 Act, the Delhi Agricultural Marketing Board,
as defined under Section 5, is in complete control of the
B
finances of AMC(s) and, therefore, according to learned
_,...,
counsel, the clarification, issued by CBDT, expressly states
~
that Agricultural Marketing Societies and Agricultural Marketing
Boards shall stand excluded from the said Explanation.
According to learned counsel, since the said Board is the c
highest authority under the 1998 Act, the CBDT Circular
clarifies that the exemption shall not be admissible to such
Agricultural Marketing Boards and when such an exemption
is not admissible to Agricultural Marketing Boards it would not
be admissible to a subordinate body under the 1998 Act,
namely, AMC(s).
D
20. Mr. P. Vishwanatha Shetty, learned senior counsel
,,
appearing for the Department, has adopted the arguments of
._.,.
the learned Addi. Solicitor General. Learned counsel submitted
that earlier in 1897 when General Clauses Act stood enacted
E
there were District Boards and Municipal Committees in
certain areas. Those District Boards, according to learned
counsel, were different from the Municipalities. Learned counsel
urged that if one looks at the said Explanation in its entirety, it
would be clear that Parliament intended to grant exemption to
Panchayat, Municipality, Municipal Committee and District F
Boards legally entitled to the control or management of a local
fund. Learned counsel contended that an AMC(s) is not a
Municipal Committee. He contended that the constitution of
Panchayat and Municipality indicated them to be a
representative body which is not there in the case of AMC(s).
G
'-_I
Learned counsel submitted that even in the case of a Municipal
,<
~·
Committee the body consists of representatives of the people
whereas in the AMC(s) that is not the case. In the circumstances,
learned counsel submitted that AMC(s) cannot be equated to
the Municipal Committee under the said Explanation.
H
398
SUPREME COURT REPORTS
[2008] 12 S.C.R.
A
11. Learned counsel lastly urged that the entire finances
of AMC(s) are under the control of Agricultural Marketing Board
as defined under Section 5 of the 1998 Act and, therefore, it
cannot be said that AMC(s) is legally entitled to the control or
management of a local fund. In this connection, learned counsel
B submitted that even in the matter of prescription of fees the
upper and lower limits regarding the fees to be charged by
AMC(s) are fixed by the Government. Therefore, according to
learned counsel there is no merit in these civil appeals.
22. Before analyzing the submissions made, we quote
C hereinbelow the relevant sections of the Delhi Agricultural
Produce Marketing (Regulation) Act, 1998 which read as
under:
D
E
F
G
H
"CHAPTER I
PRELIMINARY
2. Definitions -(1) In this Act, unless the context otherwise
requires,
(c) "Board" means the Delhi Agricultural Marketing Board
constituted under section 5;
(I) "local a1,.Jthority" means, in relation to an area within the
local limits of:-
(i)
The Municipal Corporation of Delhi, that Corporation;
(ii) the New Delhi Municipal Council, that Council; and
(iii) the Delhi Cantonment Board, that Board;
Explanation- It is hereby clarified that, for the purpose of
this Act, the Delhi Development Authority constituted under
the Delhi Development Act, 1957 and the Board and a
marketing committee established under this Act, shall be
deemed to be local authority;
·l
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AGRI. PRODUCE MARKET COMMT., NARELA,
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DELHI v. COMMI. OF INCOME TAX & ANR. [S.H. KAPADIA, J.]
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CHAPTER 111
A
CONSTITUTION AND POWERS OF DELHI
AGRICULTURAL MARKETING BOARD
17. Powers and functions of the Board - (1) The Board
shall exercise superintendence and control over the
B
marketing. committees.
(2)
The Government or the Chairman or the ViceChairman of the Board or any other official of the
Board authorized in this behalf by the Board may call
for from any marketing committee or any trader, c
godown-keeper or any other functionary operating
within the market area any inforrnation or return
relating to agricultural produce .and shall have the
power to inspect the records and accounts of such
marketing committee, trader, godown-keeper or D
other functionary and shall also have power to seize
or take into possession against proper receipt the
€
records accounts books stocks of notified agricultural
-t
produce alongwith its containers and carriers.
(3)
It may authorise officer/officers of the Board and/or
E
marketing committees to inspect works undertaken
by the marketing committees and Board and to take
corrective measures.
(4)
Subject to the provisions of this Act and the rules and
F
regulations made thereunder, the Board may employ
+
such persons for the performance of its functions as it
may consider necessary and the method of recruitment,
the scale of pay and other conditions of service of such
persons shall be such as may be provided in the G
regulations made by the Board in this behalf.
', ~·
(5)
The Board shall, subject to the provisions of this Act,
perform the following functions and shall :Jiave the
power to do such things as may be necessary or
expedient for carrying out these functions, namely:-
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(i)
Coordination of the working of the marketing
committees and other affairs thereof including ·
programmes undertaken by such marketing
committees for the maintenance of markets,
sub-markets, check posts and other sites in
the market areas;
(ii)
undertake the planning and development of
markets for agricultural produce;
(iii) administer the Market Development Fund;
(iv)
issue direction to Marketing Committees in
general or to one or more Marketing
Committees in particular with a view to ensuring
improvement thereof;
(v)
any other function specially entrusted to it by
this Act;
(vi)
such other functions of like nature as may be
entrusted to the Board by the Government.
(6)
Without prejudice to the generality of the foregoing
provision, such functions of the Board shall include :-
(a)
to consider proposals for sele~tion of new site(s)
for establishment of the markets ·and to make
recommendations to the Director for establishing
principal market and sub-markets as per
provisions of sub-section (2) of section 22;
(b)
to approve proposal for providing infrastructural
facilities in the market and market area;
(c)
to construct a market or to approve plans,
designs and estimates for constructing markets;
(d)
to sanction, supervise and guide a Marketing
Committee in the preparation of plans and
estimates for maintenance and improvement
works undertaken by the Marketing Committee;
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AGRI. PRODUCE MARKET COMMT., NARELA,
401
DELHI v. COMMI. OF INCOME TAX & ANR. [S.H. KAPADIA, J.]
(e)
to execute all works chargeable to the Market A
Development Fund;
(f)
to encourage marketing of the .agricultural
produce on cooperative basis;
(g)
to maintain accounts in such forms as may be
B
prescribed and get the same audited in such
manner as may be prescribed;
(h)
to publish annually at the close of the financial
year, its progress report, balance sheet and
statement of assets and liabilities and send C
copies thereof to all the members of the Board
and a copy to the Government;
(i)
to make necessary arrangements for
dissemination of information on matters relating
D
to regulated marketing of notified agricultural
produce;
(j)
to provide facilities for the training of officers
and members of the staff of the Board as also
the Marketing Committees;
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(k)
to prepare and adopt its budget for the ensuring
year;
(I)
to sanction the budget of the Marketing
Committees;
F
(m) to grant subventions of loans to the Marketing
Committees for the purposes of this Act on such
terms and conditions as the Board may
determine;
(n)
to arrange or organize seminars or workshops
or exhibitions, etc. on subjects related to
agricultural marketing;
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(o)
to perform such other functions as may be of
general interest to the Marketing Committees
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[2008] 12 S.C.R.
or considered necessary for efficient functioning
of the Board or the Marketing Committees.
(p)
to transfer or to provide marketing technology
and market assistance to the Marketing
Committees as and when required.
CHAPTER V
MARKET OF NATIONAL IMPORTANCE
26. Establishment of market of national importance and
Marketing Committee thereof -
(1) Notwithstanding
anything contained in this Act, where the Government is
satisfied that on account of the national importance of
marketing of any commodity, in any area, it is expedient
to ensure the efficient regulation of the marketing of such
commodity in such area, it may establish ....:.
(a)
in such area, special market, known as "Markets of
National Importance" for such commodities; and
(b)
independent Marketing Committees known as
"Marketing Committees of Market of National
Importance" in relation to such markets,
notwithstanding that such area falls within the local
limits of the jurisdiction of any other Marketing
Committee or Committees already functioning in that
area.
(2) The Government may, after consideration of· such
aspects as, the turnover, upstream catchment area, dow·nsteam servicing (number of consumers served), and price
leadership (whether the market influences the price at the
national level), declare an area as a special market area
known as "Market area of the market of National Importance".
+
Provided that no such market shall be established:-
·~- ~
(a)
if it handles less than one lakh tones of produce per
year;
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AGRI. PRODUCE MARKET COMMT., NARELA,
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DELHI v. COMMI. OF INCOME TAX & ANR. [S.H. KAPADIA, J.]
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(b)
if, out of the total produce handled by it, less than
A
thirty percent thereof is received from two or more
State or Union Territories; and
(c)
if the market does not influence the price of the
commodity referred to in sub-section (1) at the
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national level.
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CHAPTER VII
J
MARKETING COMMITTEES -
POWERS AND
DUTIES
c
55. Powers and duties of the Marketing Committees- (1)
Subject to the provisions of this Act, it shall be the duty of
a Marketing Committee:
(i)
to implement the provisions of this Act, and rules,
regulations and bye-laws made there under for the D
market area;
(ii)
to provide such facilities for marketing of notified
+
agricultural produce therein as the Board may, from
time to time, direct;
E
(iii) to perform other functions as may be required in
relation to the superintendence, direction and control
of markets, or for regulating and control of markets,
or for regulating the market area and for p1,,1rposes
connected with the matters aforesaid, and, for this
F
purpose, may exercise such powers and perform
such duties and discharge such functions as may be
provided by or under this Act.
(2) Without prejudice to the generality of the foregoing
provisions, a Marketing Committee may -
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(a)
regulate the entry of the persons and of vehicular
traffic into the market;
(b)
supervise the conduct of those who enter the market
for transacting business;
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(c)
grant, renew, refuse suspend or cancel licences;
(d)
provide for settling disputes arising out of any kind of
transaction connected with the marketing o notified
agricultural produce and all matters ancillary thereto;
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(e)
prosecute persons for vi.elating the provisions of this
Act and to the rules regulations and bye-laws made
-fthereunder;
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(f)
maintain and merge the market, including the
regulation of admissions to, and conditions for use
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of, the market;
(g)
regulate the marketing of notified agricultural produce
in the market area and the market, and weighment,
delivery of and payment for, such agricultural produce;
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Explanation - For the purposes of clause (g) the
word 'regulate' shall include -
(i)
making, carrying out, enforcing or cancelling of
nay contract of sale of a notified agricultural
+
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produce;
(ii)
conducting or supervising of a transaction of
sale or purchase of a notified agricultural
produce in accordance with the procedure laid
down under this Act, or rules, regulations and
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bye-laws made thereunder;
(iii) specifying any place or spot where a notified
4agricultural produce shall be stored or displayed
for purpose of sale by open auction;
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(iv)
fixing the time for holding auction; and
(v)
cancelling an auction if it is not held in the
presence of the employees of the marketing
.....
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committee.
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(h)
arrange for the collection -
AGRI. PRODUCE MARKET COMMT., NARELA,
405
DELHI v. COMMI. OF INCOME TAX & ANR. [S.H. KAPADIA, J.]
~
(i)
of such notified agricultural produce in the A
....
market in which all trade therein is to be carried
on exclusively by the Government by or under
any law for the time being in force for that
purpose, or
(ii)
of such other notified agricultural produce in
B
)
the market as the Government may, from time
to time notify in the official Gazette.
(i)
acquire, hold and dispose of any movable or immovable
property (including any equipment) necessary for the c
purpose of efficiently carrying out its duties;
G)
collect, maintain, disseminate and supply information
in respect of production, sale storage, processing,
. prices and movement of notified agricultural produce
(including information relating to crop-statistics and
D
market intelligence) as m~y be required by the
'
Director or the Board;
i
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(k)
take all such steps to prevent adulteration and to
promote grading and standardization of such E
agricultural produce, as may be prescribed;
(I)
enforce the provisions of this Act and of the rules,
regulations and bye-laws made thereunder including
the conditions of the licences granted, under this Act;
(m) perform such other duties as may be prescribed;
F
(n)
arrange to obtain fitness certificate of health from a
veterinary doctor in respect of animals, cattle or birds
brought for sale or sold in the market/sub-market;
(o)
disseminate information about the benefits of G
..,,.. -l·
regulation, the system of transaction, facilities
provided in the market yard, etc. through such means
as posters, pamphlets, hoarding, cinema slides, film
shows, group meetings, etc., or through nay other
means considered by it more effective or necessary; H
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(p)
ensure payment in respect of a transaction which
'
takes place in a market to be made on the same day
~
to the seller, and in default thereof to seize the
agricultural produce in question alongwith othet
property of the commission agent or purchaser if no
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commission agent is involved in the transaction;
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(q)
make arrangement for weighmen palledars for
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weighing and transporting of goods in respect of
transactions held in the market yard/sub-yard;
1--
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(r)
recover the charges in respect of .weighmen and
palledars and distribute the same to weighmen and
palledars if not paid by the purchaser or seller, as the
case may be.
62. Power to levy and collect market fee-Every
D
Marketing Committee shall levy and collect such fee
(hereinafter referred to as the 'market fee") not being in
excess of, or less than, the amount determined by the
Government by notification published in the official
~-
Gazette from every purchaser of notified agricultural
E
produce sold in a market area.
Provided that the amount to be determined by the Government
shall not be less than one rupee per one hundred rupees of
the sale price of the notified agricultural produce.
F
66. Assessment market fee payable by commission
+
agent and payment thereof-(1) If no teturn is furnished
in respect of any period by the specified date, or if ·the
Marketing Committee is not satisfied that the return
furnished by commission agent is correct or complete, an
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officer of the Marketing Committee specifically authorized
by it in this behalf (hereinafter referred to as the assessing
I
~
officer) shall proceed in such manner. as may be prescribed
..t~-
in the bye-laws to assess, to the best of his judgment, the
amount of market fee due from such commission agent.
H
Provided that before finalizing any such assessment, the
AGRI. PRODUCE MARKET COMMT., NARELA,
407
~
DELHI v. COMMI. OF INCOME TAX & ANR. [S.H. KAPADIA, J.]
commission agent concerned will be given a reasonable
A
opportunity of showing cause as to why the assessment
should not be finalized.
(2) The amount of the market fee assessed under subsection (1 ), less than sum, if any, already paid, shall be
B
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paid by the commission agent within fifteen days from the
,..
date of the receipt of the assessment order by him.
(3) If any commission agent fails to pay the amount of
market fee as required by sub-section (2), he shall, in
addition to market fee due, be liable to pay simple interest c
on the amount so due at two per cent per month from the
date immediately following the last date for submission of
return under clause (b) of section 65, upto the date of
assessment under sub-section (1) and at the rate of three
percent per month thereafter till realization.
D
CHAPTER X
-+
MARKET DEVELOPMENT FUND AND MARKET
FUND AND AUDIT THEREOF
84. Constitution of Market Development Fund-(1) All
E
moneys received by the Board shall be credited into a
fund to be called the Market Development Fund.
(2) No expenditure from the Market Development Fund
shall be defrayed unless it is sanctioned by the competent
F
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authority. The Market Development Fund shall be operated
in the manner as may be prescribed in the rules.
Explanation-For the purpose of this sub-section
'competent authority' shall mean the Board, or ViceChairman or any other officer of the Board to whom the G
\
powers of the Board to incur expenditure have been
---
......
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delegated, as tl;1e case may be.
(3) The amount standing to the credit of the Market
Development Fund shall be kept or invested in such
manner as may be prescribed.
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89. Application of Market Fund-(1) Subject to the
provisions of section 88, the Market Fund may be
expended for the following purposes only, namely:-
(i)
the acquisition of a site or sites for the market yard;
B
(ii)
the establishment, maintenance and improvement
of the market yards;
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(iii) the construction and repair of buildings necessary
for the purposes of the market and for convenience
or safety of the persons using the market yard;
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(iv)
the maintenance of standard weights and measures;
(v)
the meeting of establishment charges including
payment and contribution of provident fund, pension,
gratuity, leave encashment on retirement or yearly
D
basis, actual reimbursement of hospitalization
expenses in the authorized hospitals or other items
as may be laid down in the regulations/rules;
(vi)
loans and advances to the employees of the
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committee;
(vii) the payment of interest on the loans that may be
raised for the purpose of the market and provisions
of sinking fund in respect of such loans;
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(viii) the collection and dissemination or information
relating to crop statistics and marketing of agricultural
+
produce;
(ix)
expenses incurred in auditing the accounts of the
marketing committee;
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(x)
payment of honorarium to Chairman travelling
allowances of Chairman, Vice-Chairman and other
........
~
members of the Marketing Committee and sitting
fees payable to number for attending the meeting;
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(xi)
contribution to the Board as prescribed and
j.
AGRI. PRODUCE MARKET COMMT., NARELA,
409
DELHI v. COMM!. OF INCOME TAX & ANR. [S.H. KAPADIA, J.]
Consolidated fund of the National Capital Territory of A
Delhi to the extent required for salary of the
· employees of the Government as provided in clause
(b) of sub-section (2) and sub-section (3) of this
section;
(xii) contribution to any scheme for development of ' .B
agricultural marketing including transport an9
scientific storage;
(xiii) to provide facilities like grading services and
communication to agriculturists in the market area; c
(xiv) to provide for development of agricultural produce in
the market area;
(xv) payment of expenses on elections under this Act;
(xvi) incurring of all expenses for research, extension and
D
training in marketing of agricultural produce;
(xvii) prevention.