STATE OF BIHAR AND ORS.ETC. versus ASHOK INDUSTRIES & ANR. ETC.

Citation: [1987] 2 S.C.R. 210 · Decided: 10-02-1987 · Supreme Court of India · Bench: O. CHINNAPPA REDDY · Disposal: Dismissed

Judgment (excerpt)

A 
STATE OF BIHAR AND ORS.ETC. 
v. 
ASHOK INDUSTRIES & ANR. ETC. 
FEBRUARY 10, 1987 
B 
[0. CHINNAPPA REDDY AND V. KHALID, JJ.] 
Bihar Agricultural Produce Markets Act, 1960, S.2(P)(i) Expla-
nation and s.27 Explanation-'Sale'-What is-Presumption that 
notified agricultural produce have been bought or sold in market area--
Two Explanations, Whether can Co-Exist-Preference to charging sec-
C tion over definition section to be given-Provision to be construed 
harmoniously. 
\ 
Statutory Interpretation-Fiscal Laws-Due importance to be 
given to phraseology used in charging section. 
\, 
D 
Section 2(P)(i) of th,e Bihar Agricultural Produce Markets Act, 
1960 defmes 'sale' to mear1 any transfer of property in goods for cash or 
deferred payment or other valuable consideration. The Explanation to 
Section 2(P)(i) inserted by the Bihar Agricultural Produce (Markets) 
Amendment Act, 1982 provides that notwithstanding anything con-
tained in any law for the time being in force, 'sale' shall be deemed to 
E 
have taken place for the purpose of this Act within a market area when 
the goods are transferred form the Principal to his selling agent or to , 
the Arhatia within the market area or outside. The amending Act also 
added an Explanation to the charging section, section 27 providing that 
all notified agricultural produce leaving a market area shall, unless the 
c0ntrary is proved, be presllmed to have been bought or sold in such area. 
F 
The respondents challenged before the High Court the vires of the 
Explanation to section 2(P)(i) on the ground that it encroached upon 
Entry 42 of List I Seventh Schedule to the Constitution. The High Court 
refrained from declaring the Explanation bad but read it down and held 
that it should be read in harmony with the Explanation to Section 27 
G and directed the marketing committee concerned to make assessment of 
fees after giving the petitioners an opportunity as provided in the Expla-
nation to Section 27. 
Dismissing the Appeal, this Court, 
H 
HELD: J. lb construing the two Explanations preference has to 
210 
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\ 
STATE OF BIHAR v. ASHOK INDUSTRIES 
211 
be given to the Explanation to the charging section over the Explanation A 
to the definition section consistent with the rules of interpretations of 
such provisions. l214G-H] 
2. l In fiscal laws due importance has to be given to the phraseo-
logy used in the charging section. Section 27 gives to the market com-
mittee the power to levy and collect market fees on the agricultural B 
produce bought or sold in the market area at the rate given therein. The 
Explanation raises a presumption that all notified agricultural produce 
leaving a market area shall be presumed to have been bought or sold in 
such an area. But this presumption is rebuttable because the Explana-
tion gives the affected party an opportunity to satisfy the assessing autho-
rities that there was neither buying nor selling in a given case. l213F-H] 
c 
2.2 In all transactions, the parties get an opportunity to satisfy 
the assessing authorities whether such transactions are sales or not. But 
the Explanation to Section 2{P)(i) introduces complications. This Expla-
nation states by a deeming fiction that when goods are transferred from 
the principal to his selling agent or Arhatia within a market area or D 
outside the market area, a sale takes place. This Explanation encompas-
ses within its sweep, sales of all kinds within the market area or outside 
or within the State or outside. [214A-C] 
· 
2.3 The Explanation to Section 2(P)(i) has not been well worded 
nor properly placed. The Explanation is in excess of the powers of the 
E 
State Legislatnre since the dispute can be resloved better by allowing 
the two Explanations to co-exist by reading them harmoniously. In 
doing so, it is necessary to read down the Explanation to Section 2(P)(i) 
and give full effect to the Explanation to the charging section. The 
Explanation to Section 27 gives an opportunity to the affected persons 
to satisfy the assessing authorities that the transaction in question is not 
F 
a sale. This Explanation should be deemed to take in all sales including 
those mentioned in the Explanation in Section 4(P)(i). In other words, 
even transactions coming within the ambit of Explanation to Section 
2(P)(i) have to be governed by the Explanations to Section 27. 1214E-G I 
3. If the Government wants a stricter control over the transac-
G 
lions in the market area it is for them to 

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