HARINAGAR SUGAR MILLS LTD. versus STATE OF BIHAR AND ORS.

Citation: [2003] SUPP. 5 S.C.R. 794 · Decided: 19-11-2003 · Supreme Court of India · Bench: BRIJESH KUMAR · Disposal: Dismissed

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Judgment (excerpt)

A 
B 
HARINAGAR SUGAR MILLS LTD. 
v. 
STATE OF BIHAR AND ORS. 
NOVEMBER 19, 2003 
[BRIJESH KUMAR AND ARUN KUMAR, JJ.] 
Bihar Agricultural Produce Markets Act, 1960-Section 27-B-Inter 
alia provided that no appeal by the assessee against the order of assessment 
C for payment of market fee would be entertained unless one third of the fee 
assessed as due and ten percent of the levy of penalty due against the 
assessee is paid-Assessee challenging the payment of market fee on purchase 
of sugarcane and sale of sugar and molasses by way of a suit-But lost the 
case due to him in limini dismissal of the Special Leave Petitiorr-Fresh 
assessment made-Assessee paying one third of market fee and one tenth of 
D penalty and preferring an appeal-Both appeal and subsequent revision 
dismissed-Challenged the same in a writ petitiorr--During the pendency of 
writ petition, in another matter a Constitution Bench of the Supreme Court 
held that market fee was not leviable on purchase of sugarcane an"'d on sale 
of sugar and molasses-However, direction issued under Article 142 of the 
Constitution that the judgment was prospective but the amount of market fee 
E which had already been paid till the date of the order was not to be refunded 
and the balance which remained unpaid was also not to be recovered--
Claim for refund of fee and penalty paid-Held, only penalty is liable to 
be refunded and not the fee-Constitution of India-Article 142. 
F 
For the purposes of manufacture of sugar, the Appellant had been 
purchasing sugarcane and the sugar produced was being sold as per provisions 
of law. The Appellant also sold molasses being one of the by products. By means 
of a Notification dated 21.07.1976 issued under Bihar Agricultural Produce 
Act, 1960, Ram Nagar Agricultural Produce Marketing Area was constituted. 
It issued a licence under the provisions of the Act to the Appellant as a result 
G of which the transactions of purchase of sugarcane and sale of sugar and 
molasses were subjected to market fee. 
The Appellant filed a suit in the Court of Subordinate Judge challenging 
the levy of market fee. By an interim injunction, the market committee was 
restrained from realizing the market fee from the Appellant. The suit was 
H 
794 
HARINAGAR SUGAR MILLS LTD. v. STATE 
795 
ultimately decreed in favour of the Appellant. The 2nd Additional District A 
Judge allowed the appeal against the decree filed by the market Committee. 
The second appeal filed by the Appellant was admitted and the matter was 
remanded to the First Appellate Court for consideration of points, which 
remained undisposed of. The Appellant thereafter filed Special Leave Petition 
in which leave was granted. However, the Second Appeal filed by the AppeUant 
before the High Court was dismissed against which also a Special Leave B 
Petition was filed. During the pendency of the above SLPs, the Market 
committee issued notices to the Appellant for assessment for the years 1977-
78 to 1995-96. The Appellant was called upon to produce the relevant records 
before the Assessment Sub Committee. The Special Leave Petition filed 
against the dismissal of the Second Appeal was dismissed in limini. Market C 
fee was assessed on the basis of best judgment and penalty was also imposed 
on the Appellant. After making adjustment of the payments made, the 
Respondent issued demand notices for depositing the market fee and the 
penalty. 
The Appellant filed appeals before the Regional Director, Bihar D 
Agricultural Produce Marketing Board under Section 27-8 of the Act against 
the orders of assessment. The appeals filed by the Appellant before the 
Appellate Authority were dismissed confirming the market fee and penalty. 
The Revision Petitions filed before the Managing Director were also 
dismissed. The Appellant filed writ petitions before the High Court for E 
quashing the assessment orders. 
In the meantime, Civil Appeal No. 398of1977 filed by another Sugar 
Mill was allowed by a constitution Bench of this Court holding that the 
provisions of the Act do not apply to the transactions of purchase of sugarcane 
and sale of sugar and molasses by the sugar mills situated in the market F 
area of the Market Committee. However, the judgment, which was pronounced 
on 10.08.1999, was made prospective in effect and the market fee paid prior 
to the judgment in respect of the past transactions was not liable to he refunded 
to the sugar mills. At the same time where the market fee w

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