LexI.T.C. LTD. ETC. versus STATE OF KARNATAKA & ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
I.T.C. LTD. ETC.
v.
STATE OF KARNATAKA & ORS.
May 3, 1985
[S. MURTAZA FAZAL ALI, A. VARADARAJAN AND
S-\BYASACHI MuKHARJJ, JJ.}
145
Constitution of India, Seventh Schedule. Entry 52 of List 1, and Entries 22
and 66 of List 11-''lndustties"-Tobacco Board Act 1975 (Central Act) passed
for the development of tobacco industry-State Act subsequently included tobacco
in its Schedule and levied market fee on tobacco or its prodr1cts-Whether the
proPisions of the State Act repugnant to the Central Act on this point.
Karnataka Agricultural Produce Marketing (Regu/lltion) (Amendment) Act
1966, Section 65 Enhancement and collection of market fee- Whether it should
have direct nexus between services randered and the amount collected-Levy of
market fee found to be had in law-Fee collected- Whether it should be
refunded- Whether the Slate legislature competant to validate levy declartd by
Court as bad in law.
On 19th May, 1915, the State Government amended s. 65 of the
Karnataka Agricultural Produce Marketing (ReKu1ation) Act, 1966 by the
Karnataka Agricultural Produce Marketing (Regulation) (Amendment) Act 24
of 1975, Sub-Section (1) of S, 65 as it stood after the amendment provided
that the Market Committee shall levy and collect market fee from every seller
in respect of agricultural produce sold by such seller in the market area at the
rate of one rupee per hundred rupees of the price of such produce sold. Sub-
Section (2) laid down that the market Committee shall levy and collect market
fee from every buyer in respect of agricultural produce bought by such buyer
in the market area at such rate as may be specified in the bye-laws. Sub·Section
(3) stated that every market committee shall credit to the Kamataka Motor
Vehicles Taxation Act, !957, the market fee collected under sub-section (I) for
being spent for the purpose of construction, repair, improvement and main·
tenance of rural roads in the State. On 2 th September, 1978, the High Court
struck down the amended section 65(1) and (3) of the Act and upheld the levy
on buyers at the rate of one rupee per one hundred rupees under s. 65(2) of the
Act in Raja1ekhariah's case (lLR (1978) Karnataka 1939). Thereafter, the
Karnataka Ordinance 2 of 1979 was promulgated amending ss. 63 and 65 of the
Act. Section 63 was amended with retrospective effect from 19.5.1975 by
substituting in clause (ii) of sub-section (1) of S. 63 the words "transport and
marketing'' for the word ''marketing''. The amended S. 65(a) validated market
fee levied and collected under sub-section (1) of S. 65 for the period 19.5.1975
to 28.9.1978; (b) omitted the amended sub-section (1) of S. 65 with effect from
28.9.1978; (c) enh<\nce<1 the maximum vermissible limit of market fee levied and
A
B
c
D
E
F
G
H
A
B
c
D
E
F
G
H
146
SUPREME COURT REPORTS
(1985) SUPPL. S.C.R.
and collected from buyers of specified agricultural produce under sub-section
(2) of S. 65 from one per cent to two per cent; and (d) omitted sob-section (3)
of S. 65 as if it never existed in the Statute. The Ordinance was later replaced
by the Karnataka Agricultural Produce Marketing (Regulation) (Amendment)
Act 17 of 1980 which also numerated for the first time cardamom and tobacco
as an agricultural produce for the purpose of the Act. The Tobacco Board Act
1975 (Act No. 4 of 1975) which had been passed for the development of the
tobacco industry under the control of the Union was already in existence before
tobacco was included in the Schedule to the Act, Section 42 of that Amend·
ment Act validated the levy and collection of market fee during the period
19.5.1975 to 28.9.1978. Pursuant to the amendment made to sub-section 2 of
S. 65 of the Act, all the Market Committees in the State of Karnataka except
the Mangalore Markt:t Committee amended the bye-law by enhancing the levy
under S. 65(2) of the Act from one per cent to two per cent on the directions of
the Chief Marketing Officer and without following the procedure laid down in
S. 148 of the Act.
The appellants{traders filed writ petitions in the High Court challenging
the enhancement of the levy from one per cent to two per cent as well as the
collection of market fee from sellers during the period 19.5.1975 to 28.9.1978.
The High Court directed the Chief Marketing Officer to furnish in respect of
each market committee a comprehensive statemeBt in a tabulated form setting
out certain factors which may be relevaExcerpt shown. Read the full judgment & AI analysis in Lexace.