KRISHI UPAJ MANDI SAMITI AND ORS. versus ORIENT PAPER AND INDUSTRIES LTD.

Citation: [1994] SUPP. 5 S.C.R. 392 · Decided: 09-11-1994 · Supreme Court of India · Bench: P.B. SAWANT, S.C. AGRAWAL

cites 4 · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
c 
D 
E 
F 
G 
KRISHI UPAJ MANDI SAMIT! AND ORS. 
v. 
ORIENT PAPER AND INDUSTRIES LTD. 
NOVEMBER 9, 1994 
[P.B. SA WANT AND S.C. AGRAWAL, JJ.] 
MP. Krishi Upaj Mandi Adhiniyam, 1973. 
Section 19-Levy of market fee on sale and purchase of bamboos-
Existence of nexus between fees levied and services rendered-No direct 
benefit to buyers-No bar to levy-Transaction between traders-Liability 
on the buyer not seller-Distinction between tax and fee-Explained 
The respondent-Mills purchased bamboos as raw material under a 
contract with the State Government. The bamboos were supplied to the 
respondent-Mills by the Forest Department of the State Government at 
various forest depots established for the purpose. After taking delivery from 
the forest depots, the respondent transported the same to its factory. The 
forest depots from which the respondent purchased the bamboos and its 
factory fell withm the market area of the appellant-Committees. 
The appellants levied market fees on the sale and purchase of 
bamboos under Section 19 of the M.P. Krishi Upaj Mandi Adhiniyam, 
1973. The respondent challenged the said levy by way of a writ petition 
before the·High Court which upheld its contention that the levy was not 
justified because there is no direct or indirect benefit conferred by the 
appellants either on the purchasers or traders of bamboos as a class. 
The High Court further held that, while selling the bamboos, the 
forest department would be a trader and hence the sale of bamboos 
would be a sale by a trader to a trader. In such a case the market fee 
shall be collected and paid by the seller, i.e.; the Forest Department and 
not by the respondent. Aggrieved by the High Court's judgment, the 
appellants preferred the present appeal. 
Allowing the appeal, this Court 
HELD : 1.1. Though levying of fee is only a particular form of the 
exercise of the taxing power of the State, the Constitution has placed 
H 
fee under a separate category for purposes of legislation. (399-G) 
392 
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KRISHI UPAJ MANDI SAMITI v. ORIENT PAPER 
393 
1.2. Tax is a compulsory exaction of money by public authority for A 
public purposes enforceable by law and is not payment for services 
rendered. Fee is a charge for a special service rendered to individuals 
or a class by some governmental agency. The element of compulsion or 
coerciveness is present in all kinds of impositions though in different 
degrees and it is not totally absent in fees. Hence it cannot be the sole or 
even a material criterion for distinguishing a tax from fee. The B 
distinction between a tax and fee lies primarily in the fact that a tax is 
levied as a part of the common burden while a fee is a payment for a 
special benefit or privilege. (400-A, C, E, F) 
1.3. There is really no generic difference between tax and fee and 
the taxing power of the State may manifest itself in three different C 
forms, viz.; special assessments, fees and taxes. In determining whether 
the levy is a fee, the true test must be whether the primary and essential 
purpose is to render specific services to a specific area or classes. I~ is 
not a postulate of a fee that it must have relation to the actual service 
rendered. However, the rendering of service has to be established. The D 
service, further, cannot be remote. Absence of uniformity is not a 
criterion on which alone it can be said that the levy is of the nature of a 
tax. Also it is not necessary that the amount of fees collected by the 
Government should be kept separately. (401-D, 402-E, 403-A) 
Commissioner, 
Hindu 
Religious Endowments, 
Madras 
v. 
Sri E 
Lakshmindra Thirtha Swamiar of Shirur Mutt, [1954) SCR 1005, Sri 
Jagannath Ramuni Das and Anr. v. The State of Orissa and Anr., [1954) 
SCR 1046, Ratilal Panchanand Gandhi v. The State of Bombay and Ors., 
[1954) SCR 1055, The Corporation of Calcutta and Anr. v. Liberty Cinema 
[1965) 2 SCR 477, Keva/ Krishna Puri and Anr. v. State of Punjab and 
Ors., [1979) 3 SCR 1217; Southern Pharmaceuticals and Chemicals, F 
Trichur and Ors. v. State of Kera/a and Ors., (1982] 1 SCR 519 and Om 
Prakash Agarwal v. Giri Raj Kishori and Ors., (1986] 1 SCR 149, relied 
on. 
Mathews v. Chicory Marketing Board, (60) CLR 263, referred to. 
G 
2. In the instant case, the services that are rendered by the market 
committees, among others, are covered auction platform and open 
auction platform, godowns, shops-cum-godowns, office building, 
provision of all categories of staff and their

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