SUPREME COURT CLARIFIES THAT THE MARKET FEE AND RURAL DEVELOPMENT FEE, MENTIONED UNDER TWO DIFFERENT STATUES ARE DISTINCT.

Introduction

A two-judge Bench of the Hon’ble Supreme Court, comprising of Justice Vikram Nath and Justice Prashant Kumar Mishra, passed a Judgement dated 15.07.2024 in STATE OF PUNJAB & ORS. vs. M/S PUNJAB SPINTEX LTD. CIVIL APPEAL NOS. 10970-10971 OF 2014, wherein the Supreme Court clarified and held that the Market Fee and Rural Development Fee, mentioned under two different statues (Punjab Agricultural Produce Markets Act, 1961 (hereinafter referred to as PAPMA 1961) and Punjab Rural Development Act, 1987 (hereinafter referred to as PRDA 1987) respectively), are distinct and the 2003 Policy only encompasses exemption from Market Fee in its ambit.

Facts

On 26.12.2006, the Respondent company was incorporated and it set up a spinning unit at Bathinda for cotton yarn manufacturing. That under the Industrial Policy, 2003 (hereinafter referred to as Policy) the Respondent applied for grant of exemption from payment of Market Fee and Rural Development Fee.

That the Respondent company filed a Civil W.P. (14847 of 2009) before the Hon’ble High Court of Punjab & Haryana for the abovementioned exemption citing, that the Policy impliedly mentions exemption from both the fees. Here, it is pertinent to note that Market fee was collected under the provisions of PMPMA 1961 and Rural Development fee was collected under the PRDA 1987

With the Order dated 27.01.2010, the Hon’ble High Court dismissed the Writ Petition (CWP 14847 of 2009) and adjudged that the Market Fee will also cover Rural Development Fee. Aggrieved by this, the Appellant-State filed C.M. No. 3144 for seeking modification of the Order dated 27.01.2010 contending that “Market Fee will also cover Rural Development Fee” is legally and factually incorrect.

During the hearing for the modification of above-mentioned Order, the counsel for Appellant contended that PAPMA 1961 and PRDA 1987 are separate and exemption from Market fee did not apply to Rural Development fee. However, the Respondent whipped out and replied upon, the letters by Agriculture Department of Government of Punjab dated 09.10.2001, 28.08.2001 and 10.09.2001 which allegedly stated that exemption from Market Fee automatically covers Rural Development Fee.

The Hon’ble High Court, by Order dated 24.09.2010, observed that the abovementioned letters support the earlier stance taken and that no modifications are required to the Order dated 27.01.2010. In response to this the aggrieved State reached the Hon’ble Apex Court.

Issue

Whether the exemption from payment of Market Fee granted under Clause (i) of 11.4.2 of Policy of the Punjab Government can be said to include exemption from Rural Development Fee as well or not.

Analysis by the Supreme Court

The Apex Court after reviewing the impugned statutes and Policy observed that, Market Fees under PAPMA 1961 and PRDA 1987 being two different fees is true. It was further observed that the Policy did not specifically exempt Rural Development fees and therefore, such an assumption cannot be made by the Respondent. Such an argument was highly presumptive and far-fetched.

That Respondent emphatically relied on letters by Agriculture Department of Government of Punjab dated 09.10.2001, 28.08.2001 and 10.09.2001. Meanwhile the State furnished letters dated 02.11.2010 and 21.02.2011 which clarified and withdrew the letters dated 28.08.2001, 09.10.2001 and 10.09.2001.

The Hon’ble Supreme Court held that in the instant matter, Hon’ble High Court failed to delve into the merits of the matter and rather instantly went on to rely on the letters dated 09.10.2001, 28.08.2001 and 10.09.2001, thereby dismissing the application for modification. The Highest Court found it apparent that by the letter dated 02.11.2010, the Department of Agriculture had duly withdrawn the notices dated 09.10.2001, 28.08.2001 and 10.09.2001

After an in-depth analysis of the statutes and Policy, Hon’ble Supreme Court held that the Respondent herein, M/s Punjab Spintex Limited, is not eligible for exemption from Rural Development Fee.

Conclusion

The Apex Court concluded by stating that Market Fees and Rural Development Fees are separate and distinct. The 2003 Policy does not provide any exemption for Rural Development fees, only for Market fees. Therefore, these two fees, governed by different statutory frameworks, cannot be considered equivalent by the Respondent. Therefore the assumption that an exemption for Market Fees also includes Rural Development Fees is unacceptable and incorrect.

 

SURAJ

4^th YEAR

INSTITUTE OF LAW, KURUKSHETRA UNIVERSITY, HARYANA

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