SH. BHAGWAN DAS SOOD versus STATE OF HIMACHAL PRADESH AND ORS.

Citation: [1996] SUPP. 7 S.C.R. 788 · Decided: 25-10-1996 · Supreme Court of India · Bench: G.N. RAY · Disposal: Dismissed

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Judgment (excerpt)

A 
SH. BHAGWAN DAS SOOD 
v. 
STATE OF HIMACHAL PRADESH AND ORS. 
OCTOBER 25, 1996 
B 
[G.N.RAY AND G.B. PATTANAIK, JJ.) 
Himachill Pradesh Agricultural Produce Marketing Act, 1949 -
Himachal Pradesh Agricultural Produce Marketing Rules-Sections 2( 1 ), 4(3) 
and 21/Rule 91---Retailers dealing in Scheduled Area-Whether liable to ob-
C tain licence-Held : Obligation not confined to wholesalers or intennediate 
dealers-Small retailer operating within a notified market a1ea is also under 
an obligation to obtain licence-Payment of single point levy-Held, does not 
entitle a dealer of agricultural produce to refuse to take licence under Section 
4(3) of the Marketing Act-Onus on Appellant to establish that he has no 
D liability to pay Market Levy . 
. Constitution of India, 1950 : Imposition of Market Levy-Constitution-
al. Validity of-Held, existence of quid pro quo essential-Service rendered 
must be real and not illusory-Not necessary that infrastructure of Principal 
E. and sub-market yards had been complete-It would be sufficient if effective 
steps had been taken in reality to identify market and sub-market yards. 
The appellants challenged before the High Court the requirement to 
obtain licence under Section 4(3) of the Himachal Pradesh Agricultural 
Produce Marketing Act, and to pay market fee. High Court held that levy 
F of market fee Was quite justified and the provisions of Sec. 4(3) and 21 of ·. 
the Marketing Act, were intra vires and valid. Aggrieved by the judgment 
of the High Court the appellant preferred the present appeal. On behalf 
of the appellant it was contended that they did not carry on their business 
within the ·principal market or market yards/sub-market yards. The 
G market fee had direct relationship with the service rendered and since no 
service was rendered in respect of the area in which appellant was carrying 
on their business, realisation of market fee was illegal and unconstitution-
al. It was further contended that appellants are petty retailers who pur· 
chased. articles fr3m other dealers which had already been subjected to 
market fee, and that the appellant was not liable to pay any fee as the 
H products were subject to single point levy. 
788 
B.D. SOOD v. STATE [G.N. RAY, J.] 
789 
On behalf of the respondent it was contended that appellant has been A 
carrying on business in agricultural produce in Kasauli within a notified 
market area and was a dealer within the meaning of Section 2(1) of the 
Marketing Act, that appellant was bound to obtain licence under Section 
4(3) of the Marketing Act. It was also contended by the respondent that it 
was not necessary to establish that trades of a particular area within the 
notification area have in fact received the benefit of service and amenities 
envisaged by the marketing Act and Rules framed thereunder. 
Dismissing the appeal, this Court 
B 
HELD: 1. Under the Himachal Pradesh Produce Marketing Act, 1949 C 
any trader or dealer dealing in Scheduled Agricultural Produce within a 
notified market area is under an obligation to obtain a licence under section 
4(3) thereof. Such obligation is not confined to whole salers of agricultural 
produce or intermediate dealers indulging in whole sale and retail business 
and also to retain traders like the appellant. License is required to be taken 
by a small retailer operating within a market area. (802-F-G] 
D 
2. Requirement for obtaining a licence is mandatory under Section 
4(3) of the Act. Validity of imposition of levy on certain items of agricul-
tural produce on the score of exemption on account of single point levy is 
entirely a different exercise and it does not entitle a dealer of agricultural E 
produce to refuse to take licence under section 4(3) of the Act. It is for the 
appellant to establish that he has no liability to pay market levy in view of 
single point levy. (803-B, 806-C] 
3.1. Levy of market fee is essentially a fee and not a tax and its 
imposition necessarily inheres the essence of quid pro quo between the fees F 
levied and services returned to the payer of such fees. (804-B] 
3.2. Existence of quid pro quo is essential for retaining the character 
of fee but such quid pro quo is not to be reckoned with any mathematical 
precision with reference to quantum of fees realised and percentages of G 
fees spent for providing various amenities under the Act. (804-D-E] 
3.3. The service rendered to the payers of market fee must by real and 
not illusory. In deci

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