# HEINZ INDIA PVT. LTD. & ANR v. STATE OF U.P. & ORS

- **Citation:** [2012] 3 S.C.R. 898
- **Court:** Supreme Court of India
- **Decided:** 2012-03-23
- **Case number:** Civil Appeal NO. 1476 of 2006
- **Bench:** T.S. Thakur, Dipak Misra
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/heinz-india-pvt-ltd-anr-v-state-of-u-p-ors-28354
- **Pages:** 49

## Headnote

The Uttar Pradesh Krishi Utpadan Mandi Adhiniyam,
1964:
ss. 2(h), 32 and 33 of the Act read with r.133-A of the
Rules framed under the Act - Market fee - Levy of -
Assessment and adjudicatory machinery - Held: Dealers
aggrieved of an order of assessment or an order declining
0
refund of the fee paid by them are entitled to question the
correctness of any such demand in terms of s.32 which is in
the nature of a revisional power vested in the Board - The
power vested in the Board including that u/s 32 of the Act
could be exercised by the Director as a delegate of the Board
E keeping in view the provisions of s. 33 of the Act which permits
such delegation - Rule 133-A of the Rules regulates the filing
and disposal of the revision petitions uls 32 and is, therefore,
a step in the direction of providing a machinery under the Act
for adjudication of disputes that may arise between dealers
on the one hand and the market committee on the other -
F That being so, the Act is not completely bereft of a machinery
nor can it be said that the observations made in Ram Chandra
Kai/ash Kumar's case have gone unheeded - However, in
order to make the Board's revisional power more effective and
its exercise more transparent and credible, the Board would
G do well to delegate the power of hearing and disposal of the
revision petitions to a senior and experienced officer who is
well-versed in dealing with legal issues concerning
assessment and/or determination of the liability under the Act.
H
898
HEINZ !NOIA PVT. LTD. & ANR. v. STATE OF U.P. & 899
ORS.
s. 2(h) -
'Director' - Held: It is manifest from a plain A
reading of s.2(h) that the expression 'Director' wherever used
in the Act including s. 33 thereof includes an officer authorised
by the Director to perform all or any of his functions under the
Act.
s.17(iii), Explanation - Presumption as regards sale of B
a product within the market area - Standard of proof to rebut
the presumption - Held: The presumption is rebuttable in
nature, for it holds good only till the contrary is not proved by
the· dealer -
The evidence intended to rebut the statutory
presumption u/s 17 of the Act ought to be clear and C
convincing, showing that what is presumed under the
provision is not the real fact - In the instant case, the Market
Committee and the Director have recorded concurrent
findings of fact to the effect that the dealers had failed to
establish that no sale of the stocks of Ghee had taken place D
within the Mandi limits - The statutory presumption that any
transfer of stocks from within the Mandi area was pursuant to
a sale was, thus, held to have remained unrebutted.
Judicial Review:
E
Mandi Samiti - Market fee - Levy of - Judicial review of
- Held: The court in exercise of power of judicial review does
not substitute its judgment for that of the legislature or
executive or their agents as to matters within the province of
the either - In the instant case, the Mandi Samiti appreciated
F
each piece of evidence and found the same to be insufficient
to hold that the sale transactions had, in fact, taken place
outside the Mandi area so that the presumption arising uls
17(iii) of the Act stood rebutted - The Director exercising
powers of the Mandi Parishad once again evaluated the
G
evidence and concurred with the view taken by the Mandi
Samiti - It is neither feasible for the Court to embark upon
. an exercise of re-appreciating the entire material nor to
substitute its own findings for those recorded by the Mandi
Samiti and the Director/Mandi Parishad - So long as the
H
900
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A finding recorded by the Mandi Samiti and the Mandi Parishad
are not irrational or perverse, and so long as the view taken
by them is a reasonably possible view, the Court would not
interfere.
The predecessor-in-interest of appellant no. 1 in C.A.
8 No. 1476 of 2006 manufactured certain products
generically called milkfoods/weaning foods and energy
beverages. The manufacturing process also prod

## Text

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A
B
c
[2012] 3 S.C.R. 898
HEINZ INDIA PVT. LTD. & ANR.
v.
STATE OF U.P. & ORS.
(Civil Appeal NO. 1476 of 2006)
MARCH 23, 2012
[T.S. THAKUR AND DIPAK MISRA, JJ.]
The Uttar Pradesh Krishi Utpadan Mandi Adhiniyam,
1964:
ss. 2(h), 32 and 33 of the Act read with r.133-A of the
Rules framed under the Act - Market fee - Levy of -
Assessment and adjudicatory machinery - Held: Dealers
aggrieved of an order of assessment or an order declining
0
refund of the fee paid by them are entitled to question the
correctness of any such demand in terms of s.32 which is in
the nature of a revisional power vested in the Board - The
power vested in the Board including that u/s 32 of the Act
could be exercised by the Director as a delegate of the Board
E keeping in view the provisions of s. 33 of the Act which permits
such delegation - Rule 133-A of the Rules regulates the filing
and disposal of the revision petitions uls 32 and is, therefore,
a step in the direction of providing a machinery under the Act
for adjudication of disputes that may arise between dealers
on the one hand and the market committee on the other -
F That being so, the Act is not completely bereft of a machinery
nor can it be said that the observations made in Ram Chandra
Kai/ash Kumar's case have gone unheeded - However, in
order to make the Board's revisional power more effective and
its exercise more transparent and credible, the Board would
G do well to delegate the power of hearing and disposal of the
revision petitions to a senior and experienced officer who is
well-versed in dealing with legal issues concerning
assessment and/or determination of the liability under the Act.
H
898
HEINZ !NOIA PVT. LTD. & ANR. v. STATE OF U.P. & 899
ORS.
s. 2(h) -
'Director' - Held: It is manifest from a plain A
reading of s.2(h) that the expression 'Director' wherever used
in the Act including s. 33 thereof includes an officer authorised
by the Director to perform all or any of his functions under the
Act.
s.17(iii), Explanation - Presumption as regards sale of B
a product within the market area - Standard of proof to rebut
the presumption - Held: The presumption is rebuttable in
nature, for it holds good only till the contrary is not proved by
the· dealer -
The evidence intended to rebut the statutory
presumption u/s 17 of the Act ought to be clear and C
convincing, showing that what is presumed under the
provision is not the real fact - In the instant case, the Market
Committee and the Director have recorded concurrent
findings of fact to the effect that the dealers had failed to
establish that no sale of the stocks of Ghee had taken place D
within the Mandi limits - The statutory presumption that any
transfer of stocks from within the Mandi area was pursuant to
a sale was, thus, held to have remained unrebutted.
Judicial Review:
E
Mandi Samiti - Market fee - Levy of - Judicial review of
- Held: The court in exercise of power of judicial review does
not substitute its judgment for that of the legislature or
executive or their agents as to matters within the province of
the either - In the instant case, the Mandi Samiti appreciated
F
each piece of evidence and found the same to be insufficient
to hold that the sale transactions had, in fact, taken place
outside the Mandi area so that the presumption arising uls
17(iii) of the Act stood rebutted - The Director exercising
powers of the Mandi Parishad once again evaluated the
G
evidence and concurred with the view taken by the Mandi
Samiti - It is neither feasible for the Court to embark upon
. an exercise of re-appreciating the entire material nor to
substitute its own findings for those recorded by the Mandi
Samiti and the Director/Mandi Parishad - So long as the
H
900
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A finding recorded by the Mandi Samiti and the Mandi Parishad
are not irrational or perverse, and so long as the view taken
by them is a reasonably possible view, the Court would not
interfere.
The predecessor-in-interest of appellant no. 1 in C.A.
8 No. 1476 of 2006 manufactured certain products
generically called milkfoods/weaning foods and energy
beverages. The manufacturing process also produced
'ghee' as a by-product of the said items. With effect from
1.10.1994, the unit was taken over by appellant no. 1 and
C it continued to manufacture the said items including·
'ghee'. After February 1995, the Mandi Samiti constituted
under the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam,
1964 (the Act), started issuing gate passes only on
payment of Mandi fee. However, the dealers could make
D a claim for refund of the amount paid by them on
furnishing proof of the fact that the goods had moved out
of the Mandi area without being subjected to a
transaction of sale. The appellants made claims for the
refund of the amount paid by them towards Mandi fee and
E furnished to the Mandi Samiti the material in support of
their claim. The Mandi Samiti rejected the claim holding
that the material produced by the appellants was not
sufficient to rebut the statutory presumption that the
removal of goods from the Mandi limits was pursuant to
F a sale effected within such limits. The revision petitions
filed by the dealers were dismissed by the Director, Mandi
Parishad; and the writ petitions challenging the orders of
the Director were dismissed by the High Court.
In the instant appeals filed by the dealers, the
G question for consideration before the Court were: (i)
"Whether the Krishi Utpadan Mandi Adhiniyam does not
contain the necessary machinery provisions for
assessment of the fees and for adjudication of disputes
in relation thereto? If so to what effect?" (ii) "What
H precisely is the correct legal standard/test for determining
HEINZ INDIA PVT. LTD. & ANR. v. STATE OF U.P. & 901
ORS.
whether or not the presumption arising under the A
Explanation to Section 17(iii) of the Act has been
rebutted"? and (iii) "Whether the orders passed by the
Mandi Samiti and those passed by the Director, as
delegate of the Mandi Parishad, suffer from any legal
infirmity to call for interference?"
B
Dismissing the appeals as also the writ petition, the
Court
HELD: 1.1. This Court in the case of Ram Chandra
Kai/ash Kumar & Co.* specifically rejected the contention C
that in the absence of any machinery under the Uttar
Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 and the
Rules no market fee could be levied or collected. [para
18-19) [922-E]
D
*Ram Chandra Kai/ash Kumar & Co. & Ors. v. State of
U.P. & Anr. 1980 SCR 104 =1980 (Supp) SCC 27;
Kunnathat Thathunni Moopil Nair etc., v. State of Kera/a and
Anr. 1961 SCR 77 =AIR 1961 SC 552; Rai Ramkrishna and
Ors. etc. v. State of Bihar 1964 SCR 897 =AIR 1963 SC
E
1667; Raja Jagannath Baksh Singh v. State of Uttar Pradesh
and Anr. 1963 SCR 220 =AIR 1962 SC 1563; The State of
Andhra Pradesh and Anr. v. Na/la Raja Reddy and Ors. 1967
SCR 28 =AIR 1967 SC 1458; Mis Vishnu Dayal Mahendra
Pal and Ors. v. State of Uttar Pradesh and Ors. 1975 (1) SCR
376 = (1974) 2 SCC 306, and D.G. Gose and Co. (Agents)
F
Pvt. Ltd. v. State of Kera/a and Anr. 1980 (1) SCR 804 =
(1980) 2 sec 410 - referred to.
1.2. Section 32 of the Act empowers the Board to call
for and examine the proceedings of the Committee for the G
purpose of satisfying itself as to the legality or propriety
of any decision or order passed by a Committee and to
pass such orders thereon as it may deem fit including an
order modifying, annulling or reversing any such decision
or order of the Committee. Dealers aggrieved of an order H
902
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A
of assessment or an order declining refund of the fee paid
by them are entitled to question the correctness of any
such demand in terms of the said provision which is in
the nature of a revisional power vested in the Board. It is
common ground that the dealers in the instant case had
B
invoked the said power of the Board u/s 32. It is also
common ground that the revisions so filed have been
entertained and dealt with on merits. It has not been
disputed that the power vested in the Board including that
u/s 32 of the Act could be exercised by the Director as a
c delegate of the Board keeping in view the provisions of
s.33 of the Act which permits such delegation.[para 21)
[923-H; 924-A-C]
1.3. It is manifest from a plain reading of s.2(h) that
the expression 'Director' wherever used in the Act
D including s. 33 thereof includes an officer authorised by
the Director to perform all or any of his functions under
the Act. Significantly enough, neither before the High
Court nor before this Court was it contended that the
officer who had handled and disposed of the revision
E
petitions filed by the dealers, was not duly authorised in
terms of s.2(h) or that the power of the Board u/s 32 of
the Act was not duly delegated to the Director. It is not,
therefore, a case of inherent lack of jurisdiction. [para 24)
[825-C-D]
F
1.4. It is true that the stakes involved are substantial
and those called upon to satisfy the demands raised
against them would like their cases to be heard by a
senior officer or a Committee of officers to be nominated
by the Board. But in the absence of any data as to the
G number of cases that arise for consideration involving a
challenge to the demands raised by the Market
Committee and the nature of the disputes that generally
fall for determination in such cases, it will not be possible
for this Court to step in and direct an alteration in the
H mechanism that is currently in place. The power to
HEINZ INDIA PVT. LTD. & ANR. v. STATE OF U.P. & 903
ORS.
decide the revisions vests with the Board, which also
A
enjoys the power to delegate that function to the Director.
So long as there is statutory sanction for the Director to
exercise the revisional power vested in the Board, it
cannot be said that such a delegation is either
impermissible or does not serve the purpose of providing
B
a suitable machinery for adjudication of the disputes.
[para 24] [925-E-H]
1.5. It is noteworthy that r.133-A of the Rules framed
under the Act regulates the filing and disposal of the
revision petitions u/s 32 thereof. This provision has been
C
inserted with effect from 11.5.2008 and empowers the
Board either to decide the revision petition itself or to
nominate an officer for doing so. It also provides for grant
of an opportunity of being heard to the person
concerned and a time bound disposal of the revision.
D
Rule 133-A is, therefore, a step in the direction of
providing a machinery under the Act for adjudication of
disputes that may arise between dealers on the one hand
and the market committee on the other. That being so, the
Act is not completely bereft of a machinery nor can it be
E
said that the observations made by this Court in Ram
Chandra Kai/ash Kumar's case have gone unheeded. [para
24] [926-A-C]
1.6. However, in order to make the Board's revisional
power more effective and its exercise more transparent
and credible, the Board would do well to delegate the
power of hearing and disposal of the revision petitions
F
to a senior and experienced officer who is well-versed in
dealing with legal issues concerning assessment and/or
determination of the liability under the Act. [para 24] [926G
D-E]
2.1. Explanation to s.17(iii) of the Act raises a
presumption to the effect that any specified agricultural
produce taken out of or proposed to be taken out of a
H
904
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A market area by or on behalf of a licensed trader has been
sold within such area; the price of the produce so
presumed to be sold is then determinable in the manner
prescribed. It is fairly evident that the presumption is
rebuttable in nature; for it holds good only till the contrary
s is not proved by the dealer. [para 25-26) [926-F-G; 937-8)
Sodhi Transport Co. & Ors. v. State of UP. & Ors. 1986
(1) SCR 939 = (1986) 2 SCC 486; lzhar Ahmad Khan v.
Union of India and Ors. 1962 Suppl. SCR 235 =AIR 1962 SC
1052; Harbhajan Singh v. State of Punjab & Anr.
C 1965 SCR 235 =AIR 1966 SC 97 - referred to.
Miller v. Minister of Pensions [1947].2 All ER 372; Bater
v. Bater [1950] 2 All ER 458; Homa/ v. Neuberger Products
Ltd. [1957] 1 Q.8. 247; Addington v. Texas, 441 U.S. 418,
D 423 (1979); R. v. Clark (1921 61 SCR 608); Sodeman v. R
[1936) 2 All ER 1138 - referred to.
Black's Law Dictionary 5th Edition, 1979; and 32A
Corpus Juris Secundum Evidence§ 1624 - referred to.
E
2.2. It is well-settled that a decision is an authority for
the point it decides. It is equally well-settled that the text
of the decision cannot be read as if it were a statute. That
apart, the expression used by this Court in Sodhi
Transport Co. is "evidence fairly and reasonably tending
F to show", which signifies that it is not just any evidence,
howsoever shaky and nebulous that would satisfy the
test of preponderance of probability to rebut the statutory
presumption, but evidence that can by proper and judicial
appl!cation of mind be said to be fairly and reasonably
showing that the real fact is not as presumed. The
G evidence required to rebut a statutory presumption ought
to be clear and convincing, no matter the degree of proof
may not be as high as pro~ing the fact to the contrary
beyond a reasonable doubt. [para 39) [935-A-C]
H
2.3. The heightened standard of proof required to
HEINZ INDIA PVT. LTD. & ANR. v. STATE OF U.P. & 905
ORS.
rebut a presumption raised under the statute at hand is A
applicable for two distinct reasons: The first and foremost
is that the presumption is raised in relation to a fiscal
statute. While the amount payable is not a tax it is
nevertheless a statutory levy which is attracted the
moment the transaction of sale takes place within the
B
market area. Goods, admittedly produced within the
market area and not consumed within such area are
presumed to be leaving pursuant to a transaction of sale
unless the contrary is proved. That the goods are
produced within the market area is not in dispute in the c
instant case. That they left the market area is also
admitted. In the ordinary course, therefore, the
presumption would be that the goods left pursuant to a
sale unless the appellants are in a position to prove the
contrary. The second reason is that the nature of 0
transaction pursuant to which the goods are removed
from the market area is within the exclusive knowledge
of the appellants or the persons to whom such goods are
being dispatched. The circumstances in which the
transactions, which the statute presumes to be sales, but E
which the appellants claim are simple transfer of stocks
are within the exclusive knowledge of the appellants. The
entire evidence relevant to the transactions, being
available only with the appellants and the true nature of
the transactions being within their special knowledge,
there is no reason why the rebuttal evidence should not F
satisfy the higher standard of proof and clearly and
convincingly establish that the fact presumed is not the
actual fact. The evidence intended to rebut the statutory
presumption u/s 17 of the Act ought to be clear and
convincing evidence showing that what is presumed G
under the provision is not the real fact. [para 39-40] [935D-H; 936-A-C]
2.4. The Market Committee and the Director have
recorded concurrent findings of fact to the effect that the H
906
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A
dealers had failed to establish that no sale of the stocks
of Ghee had taken place within the Mandi limits. The
statutory presumption that any transfer of stocks from
within the Mandi area, was pursuant to a sale was thus
held to have remained unrebutted. [para 41] [936-D-E]
B
3.1. The power of judicial review is neither unqualified
nor unlimited. It has its own limitations. That the court
dealing with the exercise of power of judicial review does
not substitute its judgment for that of the legislature or
C executive or their agents as to matters within the province
of either, and that the court does not supplant 'the feel
of the expert' by its own review, is also fairly well-settled
by the decisions of this Court. In all such cases judicial
examination is confined to finding out whether the
findings of fact have a reasonable basis on evidence and
D whether such findings are consistent with the laws of the
land. [para 42 and 46] [936-F; 939-H; 940-A-B]
Council of Civil Service Unions (CCSU) v. Minister for
the Civil Service [1984] 3 All ER 935; Tata Cellular v. Union
E of India 1994 ( 2 ) Suppl. SCR 122 = (1994) 6 SCC 651;
State of Punjab v. Gurdial Singh 1980 (1) SCR 1071 = (1980)
2 SCC 471; Union of India v. S.8. Vohra, 2004 (1) SCR 36 =
(2004) 2 SCC 150, Shri Sitaram Sugar Co. Ltd. v. Union of
India, 1990 (1) SCR 909 = (1990) 3 sec 223, and
F
Thansingh Nathmal and Ors. v. Supdt. of Taxes and Ors.,
Dhubri, 1964 SCR 654 =AIR 1964 SC 1419; Dharangadhra
Chemical Works Ltd. v. State of Saurashtra and Ors., 1957
SCR 152 = AIR 1957 SC 264 - relied on
Chief Constable of North Wales Police v. Evans [1982]
G 3 All ER 141; Trop v. Dulles 356 U.S. 86 (1958); and Reid
v. Secretary of State for Scotland [1999] 1 All ER 481 -
referred to.
3.2. The Mandi Samiti has upon examination of the
H evidence adduced before it recorded a finding that the
HEINZ INDIA PVT. LTD. & ANR. v. STATE OF U.P. & 907
ORS.
same did not inspire confidence for a variety of reasons. A
The Samiti has found that the appellants had failed to
produce any evidence as to when and where any
transaction regarding sale and purchase of ghee
manufactured within Mandi area was finalised. No
evidence was adduced by the appellants to show as to B
who had been instrumental in finalising such sale
transactions out of its officers and employees. The Samiti
was of the view that although the appellant had claimed
that there were separate C&F agreements with various
agents appointed by it at several destinations outside the c
mandi area the appellant had produced only two of such
agreements in support of its case that such C&F agents
existed at all such destinations. The Samiti found
information furnished by the appellant incomplete and
discrepant in regard to the sales. The Samiti took the view 0
that the so called C&F agents were the actual purchasers
of ghee from the company and the C&F agreements, two
of which were placed on record, were only meant to avoid
payment of market fee. Suffice it to say that the Mandi
Samiti appreciated each piece of evidence and found the
E
same to be insufficient to hold that the sale transactions
had, in fact, taken place outside the mandi area so that
the presumption arising u/s 17(iii) of the Act stood
rebutted. The Director exercising powers of the Mandi
Parishad has in its order dated 25.9.2004 once again
evaluated the evidence and concurred with the view F
taken by the Mandi Samiti. The orders passed by the
Mandi Samiti and the Director clearly show that there was
no clear and convincing evidence to establish that the
presumption arising u/s 17(iii) of the Act stood rebutted
and that the actual was not, what was presumed under G
the said provision. [para 50-52, 55 and 56) [941-E-H; 942A-E; 943-E; 944-F-G]
3.4. In the light of the legal position, it is neither
feasible for this Court to embark upon an exercise of reH
908
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A appreciating the entire material nor to substitute its own
findings for those recorded by the Mandi Samiti and the
Director/Mandi Parishad. So long as the findings
recorded by the Mandi Samiti and the Mandi Parishad are
not irrational or perverse, and so long as the view taken
B by them is a reasonably possible view, this Court would
not interfere. [para 57] [944-H; 945-A]
4. No remand ought to be made only to enable a
party to produce additional material. A remand is neither
mechanical nor a routine affair. If there is nothing wrong
C in the orders under challenge, there is no question of
interference with the same. [para 61) [946-D]
D
E
F
G
H
Krishi Utpadan Mandi Samiti & Ors. v. Shree Mahalaxmi
Sugar Works & Ors. (1995) Supp (3) SCC 433 - cited.
Case law Reference:
(1995) Supp (3) sec 433
cited
para 3
1961 SCR 77
referred to
para 12
1964 SCR 897
referred to
para 13
1963 SCR 220
referred to
para 14
1967 SCR 28
referred to
para 15
1975 (1) SCR 376
referred to
para 17
1980 (1) SCR 804
referred to
para 17
1980 SCR 104
referred to
para 18
1986 (1) SCR 939
referred to
para 27
[1947) 2 All ER 372
referred to
para 31
[1950) 2 All ER 458
referred to
para 32
[1957) 1 Q.B. 247
referred to
para 33
441 U.S. 418, 423 (1979)
referred to
Para 34
HEINZ INDIA PVT. LTD. & ANR. v. STATE OF U.P. & 909
ORS.
1962 Suppl. SCR 235
1965 SCR 235
referred to
referred to
referred to
referred to
referred to
para 35
A
para 37
para 37
(1921 61 SCR 608)
[1936] 2 All ER 1138
[1984] 3 All ER 935
para 37
8
.
1994 ( 2 ) Suppl. SCR 122 referred to
1980 (1 ) SCR 1071
referred to
[1982] 3 All ER 141
referred to
para 42
para 43
para 44
para 45
para 45
para 46
para 46
para 46
para 47
c
D
356 U.S. 86 (1958)
2004 (1) SCR 36
1990 (1) SCR 909
1964 SCR 654
1957 SCR 152
[1999] 1 All ER 481
referred to
referred to
referred to
referred to
referred to
referred to
para 48
E
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
1476 of 2009.
From the Judgment & Order dated 20.08.2004 of the High
Court of Judicature at Allahabad, Lucknow Bench, Lucknow in
F
Civil Misc. Writ Petition No. 2323 (MIS), 2321 (M/S), 2322
(M/S), 2324 (M/S), 2325 (M/S), 2326 (MIS), 2474 (M/S), 2475
(M/S), 2476 (MIS), 2477 (M/S}, 2478 (M/S) of 1997.
WITH
W.P. (C) No. 144 of 2005, C.A. Nos. 1477 & 1478 of 2006.
Sudhir Chandra, Rakesh Dwivedi, Gaurav Goel, Abhinav
Agarwal, Mahesh Agarwal, E.C. Agrawala, U.A. Rana, Mrinal
Mazumdar, Awigin M. George (for Gagrat & Co.), Daleep Kr.
G
H
910
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A Dhyani, Suraj Singh, Pradeep Misra, Kamlendra Mishra, Manoj
Swarup, Ashok Anand, Anil Kapur, Ajay Kumar for the
appearing parties.
B
The Judgment of the Court was delivered by
T.S. THAKUR, J. 1. These appeals by special leave arise
out of an order dated 20th August, 2004, passed by the High
Court of Judicature at Allahabad whereby a batch of writ
petitions challenging an order passed by the Director, Rajya
Krishi Utpadan Mandi Parishad, Lucknow, dated 3rd July,
C 1997, under Section 32 of the Uttar Pradesh Krishi Utpadan
Mandi Adhiniyam, 1964 (hereinafter called 'the Act'), have been
dismissed. The order passed by the Director, Rajya Krishi
Utpadan Mandi Parishad pertained to 19 revision petitions of
which 8 petitions were filed by Glaxo India Ltd. relevant to the
D period 1st November, 1990 to 30th September, 1994 while the
remaining 11 petitions pertained to Heinz India Pvt. Ltd.
relevant to the period between 1st October, 1994 and 31st May,
1996. During the pendency of the Special Leave Petitions, Writ
Petition (C) No.144/2005 was filed under Article 32 of the
E Constitution of India, inter alia, praying for a writ of certiorari,
quashing order dated 25th September, 2004 passed by the
Deputy Director (Administration) Krishi Utpadan Mandi
Parish ad, Gomti Nagar, Lucknow in another batch of revision
petitions (pertaining to the period between 3rd June, 1996 and
F 30th April, 2004) and an assessment order dated 7th July,
1998 passed by the Krishi Utpadan Mandi Samiti, Aligarh. A
declaration to the effect that the goods removed from the
petitioner's unit at Aligarh to places outside the State of Uttar
Pradesh were by way of stock transfer and no Mandi Fee was
G payable on such transfers has also been prayed for. The facts
giving rise to the appeals and the writ petition may be
summarised as under:
2. Glaxo India Ltd., set up an industrial unit at Aligarh for
the manufacture of what is sold in the market under the brand
H names Glacto, Complan, Farex, Glucon D and other products
HEINZ INDIA PVT. LTD. & ANR. v. STATE OF U.P. & 911
ORS. [T.S. THAKUR , J.]
generically called milk foods/weaning foods and energy A
beverages. It is not in dispute that the manufacturing process
undertaken in the said unit produced ghee as a by-product of
the said items. It is also not in dispute that with effect from 1st
October, 1994, the Family Products Division of Glaxo India Ltd.
was taken over by Heinz India Pvt. Ltd. who continued B
manufacturing the products mentioned above including ghee
as a by-product of its manufacturing activity.
3. In terms of Section 17(iii) of the Act, sale of specified
agricultural produce within the Mandi limits attracts levy of what C
is described as Mandi Fee from the person effecting the sale.
The Mandi Samiti accordingly started demanding the said fee
from Glaxo India Ltd., upto the year 1994 and from Heinz India
Ltd., from 1994 onwards qua sales effected by the said two
companies of its products including ghee. These demands
were resisted by both the companies primarily on the ground D
that bulk of the ghee produced in their unit at Aligarh, if not the
entire quantity, was sent out of the Mandi limits on stock transfer
basis and that there was no sale involved in such transfers so
as to attract the levy of the Mandi Fee on the s~me. Even so,
the companies appear to have continued removing their goods E
from the Mandi limits in accordance with the procedure in vogue
at the relevant time. In Krishi Utpadan Mandi Samiti & Ors. v.
Shree Mahalaxmi Sugar Works & Ors. (1995) Supp (3) SCC
433, decided on 2nd February, 1995, this Court noticed the
Explanation to Section 17(iii) of the Act and observed that there
F
was a presumption against the dealers. This Court held that in
view of the said presumption it is open to the Mandi Samiti to
raise demands against the dealers before the issue of passes.
If there is a valid rebuttal to the presumption and it is shown
that no sale took place within the notified market area the G
dealers will be entitled to the passes, otherwise not. This Court
further held that even if the dealers are compelled to pay the
market fee as demanded it shall be open to them to challenge
the same in the manner provided under the Act. This implied
that if the claim of the dealers that the goods were not being
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912
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(2012] 3 S.C.R.
A
removed pursuant to any sale transaction was rejected and a
demand for payment of Mandi Fee raised, the aggrieved dealer
could question that demand in appropriate proceedings.
4. It is evident from a reading of the order passed by the
8
Mandi Parishad that the earlier procedure of issuing free gate
passes remained in vogue upto February, 1995, whereafter the
Mandi Samiti started issuing gate passes only on payment of
the Mandi Fee demanded by it. This change came about as a
result of the aforementioned decision of this Court in Shree
Mahalaxmi Sugar Works (supra). Subsequently, in Krishi
C
Utpadan Mandi Samiti v. Mis Saraswati Cane Crusher & Ors.
(Civil Appeal Nos. 1769-1773of1998), decided on 25th March,
1998 this Court prescribed the procedure to be followed in the
matter of issue of gate passes, making of provisional
assessment and the time frame for making a final assessment.
D
E
F
G
H
"We are satisfied that the orders of this Court aforereferred to would need some repair work. We treat the said
order to be conceiving of a provisional assessment where
after doors are opened for a final assessment. We
conceive that when demands are raised by the Krishi
Utpadan Mandi Samiti against a trader before he could
ask for transit of goods outside the market area, the trader
would be entitled to tender a valid rebuttal to say that no
sale had taken place within the notified area and that if the
explanation is accepted there and then by the Mandi
Samiti, no question of payment would arise as also of
withholding the gate passes. If prima facie evidence led
by the trader is not accepted by the Mandi Samiti, the
trader or the dealer can be compelled to pay the market
fee as demanded before issuance of gate pass. If the
trader makes the payment without demur, the matter ends
and the assessment finalized. But in case he does so and
raises protest, then the assessment shall be taken to be
provisional in nature making it obligatory on the trader to
pay the fee before obtaining the requisite gate pass. After
I
HEINZ INDIA PVT. LTD. & ANR. v. STATE OF U.P. & 913
ORS. [T.S. THAKUR , J.]
protest has been lodged and the provisional assessment A
has been made, a time frame would be needed to devise
making the final assessment. We, therefore, conceive that
it innately be read in the order of this Court that a final
assessment has to be made within a period of two months
after provisional assessment so that the entire transaction
B
in that respect is over enabling the aggrieved party, if any,
to challenge the final assessment in the manner provided
under the afore Act or under the general law of the land in
appropriate fora. Having added this concept in this manner
in the two Judge Bench decision of this Court, we declare c
that what repair has been done instantly would add to the
order of the High Court and the instant corrective decision
shall be the governing rule. The Civil Appeals would thus
stand disposed of.
Since the assessment thus far made against the D
traders, who are involved in the instant appeals, would have
to be treated as provisional awaiting final assessment, we
permit the concerned traders to move the respective Mandi
Samiti within two months from today to hear their objections
and proceedings onwards be regulated in accordance with
E
procedure devised hereinbefore. Nonetheless we add that
should the basis of provisional assessment be knocked off,
the Samiti would refund the market fee to the traders/
dealers within two months thereafter."
5. Suffice it to say that according to the above decision
the dealers could make a claim for the refund of the amount
paid by them on furnishing of proof of the fact that the goods
had moved out of the mandi area without being subjected to a
transaction of sale.
6. What is important for the present is that Heinz made
claims for the refund of the amount paid by it towards market
F
G
fee and furnished to the Mandi Samiti material to support that
claim. The material so produced was then evaluated by the
Mandi Samiti who came to the conclusion that the same was
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SUPREME COURT REPORTS
[2012] 3 S.C.R.
A
not sufficient to rebut the statutory presumption that the removal
of goods from the Mandi limits was pursuant to a sale effected
with.in such limits. The claim for refund of the amount paid by
the appellant-Heinz was accordingly rejected by the Mandi
Samiti in terms of the orders referred to earlier.
B
7. Aggrieved by the order passed by the Mandi Samiti
both Glaxo India Ltd. and Heinz India Pvt. Ltd. filed revision
petitions before the Director, Mandi Parishad, invoking his
jurisdiction under Section 32 read with Section 33 of the Act
as a delegate of the Mandi Parishad. By his order dated 24th
C
October, 1996, the Director dismissed the revision petitions,
aggrieved whereof the companies filed Writ Petitions before
the High Court of Allahabad. These Writ Petitions were
eventually allowed by the High Court in terms of an order dated
3rd April, 1997, and the matter remitted back to the Director
D for a fresh consideration and disposal in accordance with law.
8. The Director accordingly heard the revision petition
afresh, re-appraised the material relied upon by the companies
in support of their claim for refund and came to the conclusion
E
that the claim of the companies for refund remained
unsubstantiated and the presumption arising under the
Explanation to Section 17(iii) un-rebutted. The Director
observed:
F
"17 .....
(3) Neither the evidences produced by Revisionist
company with the details of information of sale has been
given to C & F Agent with dates on the basis of which C
& F Agent would deliver the goods to the buyer after
G
receipt of payment nor any instance has been produced
for giving required instructions to C & F Agent regarding
the sale of goods and nor even any evidence has been
produced. In this way, the evidence produced regarding
the actual mode of sale at the place of destination as to
H
how and by whom it is being done, are contradictory or
HEINZ !NOIA PVT. LTD. & ANR. v. STATE OF U.P. & 915
ORS. [T.S. THAKUR , J.]
are missing. Mandi Samiti gave time to revisionist for A
clarifying and proving this sale process but, the revisionist
has not been able to produce clear case and desired
evidence on this subject till date.
(4) When the chain related to the sale at the place of 8
destination in accordance with aforesaid through stock
transfer breaks then while keeping in view the declaration
given under Excise Rule 52(A)/173C, two possibilities
appear. First is that the sale agreement for deal at the
place of destination and according to marketing system
given in letter dated 4.1.95 it may be, that the Revisionist C
company by itself or through its marketing staff who might
be visiting the place of destination give the delivery of
goods to C & F Agent by fixing before the arrival of goods
at the place of destination after receiving amount of money
in the form of bank draft and pay order which resulted in D
the sale having taken place from the factory at Aligarh
office because the direct contact of buyer with revisionist
took place at Aligarh or it took place through the
employees/officers of revisionist's marketing department
at Aligarh and they were given the delivery on that basis
E
only.
xxxxxxxxx
xxxxxxxxx
F
19. In this way by the analysis and close consideration
of said paras 16, 17 and 18 it is concluded that under
the arrangement given by Hon'ble Supreme Court in
1995 (Supp. 3) S. C. C. 433 the sale taking place in the
matter of Mis Mahalaxmi Sugar Works, Revisionist's G
disputed transmitted and its sale taking place at the place
of destination by taking stock outside the mandi area in
the form of stock transfer and the concept of taking out
the sale under explanation of 17(3)(8), it has failed to
prove by producing counter valid rebuttal of concept H
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SUPREME COURT REPORTS
[2012] 3 S.C.R.
A
because according to the case went for revision on stock
transfer and place of destination it has failed to tell the
presence by producing the best chain of evidence for
proving .... "
B
9. Writ Petition Nos. 2320(MIS), 2516(MiS), 2517(M/S),
2518(MIS), 2519(M/S), 250(M/S), 226(M/S) and 2527(M/S) of
1997 filed by Glaxo India Ltd., before the High Court of
Allahabad challenged the correctness of the above order. Heinz
India Pvt. Ltd. also filed Writ Petition Nos. 2323(M/S), 2321(M/
C
S), 2322(M/S), 2324(M/S), 2325(M/S), 2326(M/S), 2474(M/S),
2475(M/S), 2476(M/S), 2477(M/S) and 2478(M/S) of 1997
before the High Court challenging the same order. The High
Court, however, concurred with the view taken by the Mandi
Samiti and the Director of the Parishad and dismissed the writ
petitions by its order dated 20th August, 2004. The High Court
D
held that the material produced by the companies did not make
out a case for refund for it did not rebut the presumption that
ghee produced in the company's unit at Aligarh was not sold
from Aligarh or that the stocks of ghee had been transferred
outside the Mandi limit on consignment basis. The High Court
E
gave several reasons for holding that the material produced by
the companies in support of their claim that the so called sales
were in fact stock transfer was either not reliable or was
deficient. High Court also held that the companies had withheld
the best evidence available to them without offering any
F
explanation for doing so. The High Court said:
G
H
'The long and short of the discussions made above is that
the petitioners have miserably failed to rebut the
presumption of sale in the market area at Aligarh and
therefore, the Director and the assessing authorities rightly
levie.d the Mandi fee on the consignments of Ghee
transported by Glaxo and its successor Heinz India Private
Limited to other States. The judgments passed by the
Revisional Authority are not perverse so as to be interfered
with by this Court; rather all the questioned judgments are
HEINZ INDIA PVT. LTD. & ANR. v. STATE OF U.P. & 917
ORS. [T.S. THAKUR , J.]
well discussed and reasoned. In the result, the petitioners
A
are not entitled to claim any relief."
10. The present appeals assail the above order as already
mentioned.
11. We have heard the learned counsels of the parties at
8
considerable length. Three questions fall for our determination.
These are:
1.
Whether the Krishi Utpadan Mandi Adhiniyam does
not contain the necessary machinery provisions for c
assessment of the fees and for adjudication of
disputes in relation thereto? If so to what effect?
2.
What precisely is the correct legal standard/test for
determining whether or not the presumption arising
0
under the Explanation to Section 17 (iii) of the Act
has been rebutted?
And
3. Whether the orders passed by the Mandi Utpadan
Samiti and that passed by the Director, as
delegate of the Mandi Parishad, suffer from any
legal infirmity to call for interference?
Re: Question No.1
12. This Court has in a long line of decisions rendered from
time to time, emphasised the importance of machinery
provisions for assessment of taxes and fees recoverable under
E
F
a taxing statute. In one of the earlier decisions on the subject a
Constitution Bench of this Court in Kunnathat Thathunni
G
Moopil Nair etc., v. State of Kera/a and Anr. (AIR 1961 SC
552) examined the constitutional validity of the TravancoreCochin Land Tax Act (15 of 1955). While recognising what is
now well-settled principle of law that taxing statute is not wholly
immune from attack on the ground that it infringes the equality
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SUPREME COURT REPORTS
[2012] 3 S.C.R.
A clause in Article 14, this Court found that the enactment in
question was violative of Article 14 of the Constitution for
inequality was writ large on the Act and inherent in the very
provisions under the taxing section thereof. Having said so, this
Court also noticed that the Act was silent as to the machinery
B and the procedure to be followed in making the assessment. It
was left to the Executive to evolve the requisite machinery and
procedure thereby making the whole thing from beginning to
end purely administrative in character completely ignoring the
legal position that the assessment of a tax on person or property
c is a quasi-judicial exercise. Speaking for the majority Sinha,
C.J. said:
D
E
F
G
H
"Ordinarily, a taxing statute lays down a regular
machinery for making assessment of the tax proposed
to be imposed by the statute. It lays down detailed
procedure as to notice to the proposed assessee to
make a return in respect of property proposed to be taxed,
prescribes the authority and the procedure for hearing
any objections to the liability for taxation or as to the
extent of the tax proposed to be levied, and finally, as to
the right to challenge the regularity of assessment made,
by recourse to proceedings in a higher Civil Court. The
Act merely declares the competence of the Government
to make a provisional assessment, and by virtue of s. 3
of the Madras Revenue Recovery Act, 1864, the landholders may be liable to pay the tax. The Act being silent
as to the machinery and procedure to be followed in
making the assessment leaves it to the Executive to
evolve the requisite machinery and procedure. The whole
thing, from beginning to end, is treated as of a purely
administrative character, completely ignoring the legal
position that the assessment of a tax on person or
property is at least of a quasi-judicial character."
(emphasis supplied)
HEINZ INDIA PVT. LTD. & ANR. v. STATE OF U.P. & 919
ORS. [T.S. THAKUR , J.]
13. In Rai Ramkrishna and Ors. etc. v.