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Petitioner: Messrs CRESCENT JUTE PRODUCTS LTD. through Director VS Respondent: GOVERNMENT OF JUDGMENT
Court Name: Lahore High Court Judge(s): Syed Jamshed Ali, Chaudhry Ijaz Ahmed, M. Javed Buttar Title:Messrs CRESCENT JUTE PRODUCTS LTD. through Director vs GOVERNMENT OF
JUDGMENT
Reported As: PLD 2004 Lahore 686 Result: Order accordingly Judgment JUDGMENT SYED JAMSHED ALI, J.---This judgment will dispose of the following writ petitions as in all these petitions the common, grievance of the petitioners is demand and levy of market fee under The Punjab Agricultural Produce Market Ordinance (No,XXIII) 1978, and the Punjab Agricultural Produce Market (General) Rules, 1979:-- (i) W.P. No,16590-1998, (ii) W.P. No,8137-1999, (iii) W:P. No,8138-1999, (iv) W.P. No,4866-2000, (v) W.P. No,4867- 2000, (vi) W.P. No,18549-1998. (vii) W.P. No,18550-1999,W.P. No,12582-2002, (ix) W.P. No,7247-2002, (x) W.P. No,20805-1999, (xi) W.P. No,20806-1999, (xii) W.P. No,17314-2002, (xiii) W.P. No,13676/1998, (xiv) W.P. No,19732-1998, (xv) W.P. No,1466-99, (xvi) W.P. No, 1580- 99 and (xvii) W.P. No,13677-98. 2. Petition No,(i) is by a manufacturer of Jute bags while petitions Nos.(ii), (iii), (iv), (v) and viii are by the manufactures of textile products. Petition No,(xvi) is by a manufacturer of bird feeds while all other petitions are by sugar mills. In these petitions, (except No,(xvi) jute, cotton and sugarcane is involved which are agricultural produce as defined in Clause (a) of Section 2 of Punjab Ordinance XXIII of 1978 and there is no dispute about it. 3. In the first three writ petitions, the petitioners claim that they had paid different amounts of market fee to the concerned market committees. Apart from challenging further demand and levy of market fee a direction has also been claimed for the refund of amount of market fee stated to have been illegally collected by the respective Market Committees. In W.P.No,4867/2000 (serial No, (v)), the petitioner claims to have paid market fee amounting to Rs,2,41,427 till December, 1999
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under protest. However, in these cases refund has not been claimed. In all other cases, the demand and levy of market fee under Ordinance XXIII of 1978 has been challenged on a number of grounds. 4. It may also be noted here that in W.P.No,16590-1998 (serial No,(i)), the contention raised before the learned Single Judge, was that the judgment rendered by the learned single Judge, of this Court (Multan Bench) in Solvex Pakistan Limited v. Market Committee Multan (1999 CLC 49), does not lay down the law correctly. In the case of Solve supra, the case of the petitioner was that it was producing vegetable ghee from the imported palm oil and soyabean or the palm and soyabean oils were purchased from outside the notified market area. The said writ petition was, however, dismissed. In view of the contention raised, the learned single Judge. Vide order dated 10.4.2002 referred the matter to a larger Bench and this is how this Full Bench is seized of these petitions.Vide order dated 6-11-2001 passed in W.P.No,16590-1998, notices in terms of Order XXVII-A of the Code of Civil Procedure were also directed to be issued to the learned Attorney General of Pakistan and learned Advocate-General, Punjab. 5. Although the questions being raised before us have by and large been resolved by various judgments of the superior Courts of the country, yet since we have heard these petitions at great length, we feel it appropriate to note the contentions of the learned counsel for the parties in necessary details. 6. Syed Mansoor 'Ali Shah, Advocate, appeared for the petitioners in the first three writ petitions. In the first writ petition, the petitioner mills imports jute from Bengla Desh while in the other two cases it is asserted that the petitioners purchase cotton from the Province of Sindh after paying the market committee fee to the concerned market committee. It is being maintained that under section 19 of the Punjab Ordinance No,XXIII of 1978, the market fee is leviable on the agricultural produce "bought or sold" by or through a dealer in the notified market area and in these three cases since sale or purchase does not take place' in the notified market area of any of the two market committees, no market fee is leviable. Further, the transaction liable to the levy of market fee, should take place in the market itself as distinguished from the notified market area and even on that score no market fee was leviable. It is next maintained that fee could only be levied for providing services, since the market committee was not providing any service to the petitioner mills, the fee could not be levied and the principle of quid promotion was attracted with full force. 7. Elaborating his submissions, he contended that although buying and selling has not been defined in the Ordinance, yet it has been explained in Rule 36(8) of the Punjab Agricultural Produce Market (General) Rules 1979, (hereinafter referred to as the 1979 Rules) which is reproduced hereunder:-- "(a) if the agreement of sale or purchase thereof is entered into in the said area; or (b) in pursuance of the agreement of sale or purchase agricultural produce is weighed in the said area; or (c) if in pursuance of the agreement of a sale or purchase the agricultural produce is delivered in the said area to the purchaser or to some other person on behalf of purchaser." His contention based on the said provision is two fold. Firstly, that the scope of the expression "bought or sold" in section 19 of Ordinance No,XXIII of 1978 could not be enlarged by the Rules and thus clause (a)and (b) of rule 36(8) are ultra vires of section 19 of the Ordinance. Reliance was placed on Agricultural Market Committee vs. Shalimar Chemical Works Ltd. (AIR 1997 SC 2502) in which a bye-law, in parameteria, with Rule 36(8) was struck down by the Indian Supreme Court. He further submitted that irrespective of the vires of the aforesaid rule, in the case of three petitions, none of the three clauses of Rule 36(8) was attracted to levy of market fee. 8. He next maintained that under section 19, it is only a dealer who is liable to pay the market fee and the petitioners are not dealers of agricultural produce.
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9. He referred to the definition of dealer from Black's Law Dictionary 5th edition, Law Lexicon and Judicial Dictionary by Venkataramaiya's 10th Edition which are respectively reproduced hereunder for facility of reference:-- "Dealer. In the popular sense, one who buys to sell; not one who buys to keep, or makes to sell. One who purchases goods for resale to final customers." "Dealer. A "dealer" means trader or a person who buys goods and sells them without processing them." "DEALER" In the Shorter Oxford English Dictionary (3rd Ed.). "Dealer" has been defined to be " one who deals" and the special meaning given therein is " one who sells articles in the same condition in which he bought that". (Ratanlal Rastogi vs. Corporation of Calcutta, (1971-72) 76 Cal WN 288). 10. The definition of the word "delivery" from the Black's Law Dictionary and from the Law Lexicon was also referred to which are as follows:-- "Delivery" The act by which the res or substance thereof is placed within the actual or constructive possession or control of another." "Delivery.-According to the ordinary understanding of the English language as soon as an article is put into the hands of a party that is delivery to him." 11. On the basis of the above definitions, he submits that a person who buys the agricultural produce and does not sell it could not be a dealer and on the basis of the definition of "delivery", he maintains that purchase in the case of the petitioner in the first three petitions, will only mature in case of delivery of the agricultural produce. He submits that in the three cases, the contracts for supply for agricultural produce are made at the headquarter office outside the notified market area. Asfar as jute is concerned, delivery is taken in Bengladesh, as far as cotton is concerned, the delivery is taken in Sindh after paying the market fee to the concerned, Market Committee and transported by the petitioner to their mills. Therefore, even if clauses "a & b" of Rule 36(8) of 1979 General Rules were held to be intra vires, none of the three contingencies contemplated by Rule 36(8) happens within the notified market area to attract the levy of the market fee. 12. He then referred to section 6 of Ordinance No,XXIII which provides that any person who wishes to work as a dealer may apply for a licence. Section 9 of the Ordinance was also referred to which provides, that a Market Committee shall enforce the provisions of this Ordinance and the rules and the bye-laws made thereunder in the notified market area and if so directed by the Government shall establish a market therein providing such facilities for persons visiting it in connection with the purchase, sale, storage, weigthment pressing and processing of the agricultural produce, as the Government from time to time may direct. Rule 79 of the Generals Rule of 1979, according to which sale and purchase of agricultural produce shall be conducted within the market premises was also relied upon. He also referred to the Schedule-A of Agricultural Produce Market Rules, 1940, providing for a licence for establishing or continuing or allowing to continue any place for the purchase and sale of agricultural produce and for sale and purchase of agricultural produce and referred to section 4(4) of Punjab Ordinance XXIII of 1978 which provides that "no person shall within the market, store, purchase, sell or in any manner deals in any commodity which is not declared as agricultural produce." According to him the requirements of the licence is, therefore, relatable to sale and purchase of agricultural produce in the market. According to him, the definition of the dealer contemplates a person who sets up, establishes, uses or allows to be used any place he the sale and purchase of an agricultural produce, "the place" as he sees is a place contemplated within the market if read with section 9 and Rule 79. Rule 15 which prescribes the duties and powers of the Market Committee was also referred to particularly clause `m' which provides for regulation of traffic in a market or sub-markets. Rule 23 was also relied upon, according to which the Market Committee shall exercise such control over the Market and the sale and purchase of agricultural
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produce therein as may be required for the due observance or provisions of the Ordinance and the rules and shall manage the affairs of the Market in the best interest of the trade. 13. Section 21 of the Ordinance was also relied upon which specifies the purposes for which the Fund, created under section 20 the Ordinance, could be spent. According to him, the services thereprovided by a Market Committee have clearly been identified: in section 21 of the Ordinance No,XXIII and a plain reading thereof showsthat the funds cannot be spent on any other purpose. The services according to him, are provided in the market premises and not in the notified market area or to the growers and not to the petitioners. He thus maintains that a combined reading of sections 9 and 21, Rules 23 and Rule 79 leaves no manner of doubt that the sale and purchase liable to the market fee must take place in the market itself. He relied on Administrator Market Committee Kasur and 3 others v. Muhammad Sharif (1994 SCMR 1048), to contend that the rules framed under the Ordinance have been upheld as intra vires of the Ordinance. Although, he maintains, that even indirect or remote service was not being provided to the petitioners Mills to ensure to their benefit which was necessary to satisfy the principle of quid pro quo. Reliance was placed on Kewal Krishan Pera v. State of Punjab (AIR 1980 SC 1008), in which the conditions for satisfying the test for valid levy of market fee on an agricultural produce bought or sold by a licensee in a market area, have been identified. He referred to the following judgments to contend that for charging fee, there must be service in return:-- Nishat Tek Limited, Lahore' v. The Federation of Pakistan through- Secretary, Education, Islamabad and 3 others PLD 1994 Lahore 347. Messrs Saif Textile Mills Limited v. Pakistan through Secretary, Finance (Finance Division), Islamabad and 3 other PLD 1998 Peshawar 15. Sheikh Muhammad Ismail & Co. Ltd., Lahore v. The Chief Cotton Inspector, Multan Division, Multan and others PLD 1966 SC 388. Sohail Jute Mills Ltd. And others v. Federation of Pakistan through Secretary, Ministry of Finance and others PLD 1991 SC 329. Ravi Textile Mills Ltd. v. Federal Government of Pakistan through its Secretary, Ministry of Education, Islamabad and 2 others 1995 MLD 243. Sind Glass Industries Limited v. Chief Controller of Import and Export, Islamabad and 2 others 1990 CLC 638. Messrs Nishat Mills. v. Federation of Pakistan and others 1997 MLD.3194. Shahtaj Sugar Mills Limited v. Province of Punjab through Secretary, Food, Civil Secretariat, Lahore and 3 others 1998 CLC 1912. Biafo Industries v. Federation of Pakistan 2000 CLC 170. Collector of Customs, and others v. Sheikh Spinning Mills 1999 SCMR 1402. Government of North-West Frontier Province through Secretary Agriculture and others v. Rahimullah and others 1992 SCMR 750. Messrs Fatima Enterprises Ltd. v. The Federation of Pakistan through Secretary, Education, Ministry of Education, Islamabad and others 1999 MID 2889, and Matiari Sugar Mills v. Government of Sindh PLD 1999 Karachi 424. 14. He further submitted that the judgments rendered under The Punjab Agricultural Produce Market Act (No,V of 1939) will not be applicable because, not only the definition of the "dealer" given in section 1 (aa) of 1939 Act but also section 19 of the said Act were not exactly, the same as these are in Punjab Ordinance (XXIII of 1978). He, however, to be fair to him brought to our notice the following cases:- Hyesons Sugar Mills Ltd., Karachi v. Market Committee, Khanpur and another PLD 1976 Lahore 1334. Messrs Kohinoor Sugar Mills Ltd., Lahore v. Market Committee, Jauharabad, District Sargodha and another PLD 1974 Lahore 1284.
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Shah Muhammad and 4 others v. Kasur Market Committee, Kasur and 12 others PLD 1973 Note 142 at p.215. Province of West Pakistan v. Muhammad Hayat and 31 others PLD 1980 B1.23. Ch. Muhammad Ismail v. D.C. District Collector, Muzaffargarh and another 2000 CLC 1296, and Noon Sugar Mills v. Market Committee and others PLD 1989 SC 449. 15. He next contended that the respondent Market Committeehas been illegally collecting market fee from the petitioners in the three cases and, therefore, it was liable to refund the amount illegally collected from the petitioners. Reliance was placed on Messrs Pfizer Laboratories v. Federation of Pakistan PLD 1998 SC 64. 16. Another submission made by him was that the Market Committee had no material whatsoever before it to determine that the aforesaid three petitioners had purchased any agricultural produce withinthe notified market area to attract the market fee contemplated by section 19 even on the touch stone of rule 36 (8) of the 1979 Rules. 17. Mr.Shahid Karim, Advocate represents, the petitioners in the petitions at Sr.Nos.(iv) to (viii). Since the major issues raised in these petitions, have been decided in the case of Noon Sugar Mills (supra), and Pakistan Flour Mills Association vs. Government of Sindh 2003 SCMR 1062, his first contention was based on the role of a precedent. Both the aforesaid cases arose out of a the Punjab Act V of 1939. His precise contention was that Section 19 of the Punjab Ordinance No,XXIII was not as such interpreted. It may be mentioned at the outset that under section 19 of Punjab Act V of 1939, it is "licensee" who is liable to pay market fee while section 19 of Punjab Ordinance XXIII of 1978, it is a "dealer" who is to pay market fee. He submits that the role of a precedent is limited in its application to a question of law which is actually decided and not what may necessarily follow from the said decision. Reliance was placed on para. 17 of the Trustees of the Port of Karachi vs. Muhammad Saleem 1994 SCMR 2213. Which is reproduced hereunder:-- "It is well-settled that 'every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. Quinn v. Leather (1901) AC 495, 506. As far as the case of Pakistan Flour Mills supra is concerned, he submitted that the Honourable Supreme Court of Pakistan had declined to grant leave and, therefore, it was not a binding precedent. Reliance was placed on Kh.Ahmed Tariq Rahim v. The Federation of Pakistan Ministry of Law and Parliamentary Affairs and another PLD 1992 SC 646; and Khawaja Mohammad Yousuf v. Federal Government 1999 SCMR 1516. With this prelude, he contends that Ordinance XXIII of 1978 is ultra vires of Article 142 of the Constitution read with Items Nos.49 and 54 of the Federal Legislative List which are reproduced hereunder for facility of reference:-- ItemNo,49.--"Taxes on the sale and purchase of goods imported exported produced manufactured or consumed" ItemNo,54.--"Fee in respect of any of the matter in this part but not including fees taken in any" Definition of "Goods" given in Article 260 was also referred toaccording to which "goods include all materials commodities and articles". According to him, it was only when an item was not covered by the Federal Legislative List, that the Provincial Legislature had the authority to legislate. The next limb of his submission was that the petitioner mills are limited companies and even tax on corporations falls udder Item No,48 of the Federal Legislative List. The field of legislation being occupied by the aforesaid entries, it did not fall within the scope of a residuary subject within the competence of the Provincial Legislature. In support of pith and substance theory he referred to the following judgments:-- The Province of East Pakistan and others v. Siraj-ul-Haq Patwari and others PLD 1966 SC 854;
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Pir Rashid-ud-Doola v. The Chief Administrator Auqaf West, Pakistan PLD 1971 SC 401; ' Hari Krishna v. Union of India AIR 1966 SC 619; Federation of Hotel and Resturant v. Union of India AIR 1990 SC 1637; Messrs Rashid Bhais (Pvt) Ltd. Company v. Secretary Government of Punjab E.,T.O. And others PLD 2000 Lah. 20; Messrs Pakistan Telecommunication Company Ltd. Through General Manager (South) v. Government of the Punjab through Secretary, Excise and Taxation Lahore and another 2002 CLD 1010. 18. Mr.Ijaz Ahmed Awan, Advocate, represents the petitioners in all other writ petitions. Petition at Sr.No,(xvi) is a manufacture of poultry feeds while all the other petitions are by the Sugar Mills. As far as the Sugar Mills are concerned, his contention is that sugarcane does not go to the market, and no dealer or broker is involved. It is directly bought by the petitioners, from the growers of sugarcane. He further contends that the activities of the sugar mills are regulated by the West Pakistan sugar Factories Control Act (XXII of 1950). Section 16 of the said Act empowers the Provincial Government to fix minimum price and Rule 13 of the Sugarcane Factories Control Rules, 1950 places a restriction on purchase of sugarcane below the minimum price fixed under the Act. Section 17 of Punjab Act (XXII. Of 1950) was also referred to which provides that no person or class of persons shall be employed by an occupier of a factory or by a purchasing agent to do any work or class of work in connection with any transaction for the purchase of sugarcane without a licence. According to him, since the business of the sugar mills was regulated by Act XXII of 1950, which was a special law, the provisions of Punjab Ordinance No,XXIII stood excluded. As far as Poultry Feed is concerned, his contention was that the petitioner purchases the ingredients of the feed from the local market and after processing it produces the poultry feed. Therefore, no fee was leviable. His another grievance was that not only market fee is charged on the sugarcane but also on the sugar. He further submits that levy of fee under section 19 was subject to the rules and since no rules had been framed under the said section, it did not become operative. Apart from the provisions of the Sugar Factories Control Act (XXII) of 1950, he also referred to the Sugarcane Act (No,XVI of 1934). Reliance was placed on sections 3-D and section 3-F of the said Act. While the former contemplates restrictions on the purchase of cane, the latter provides for tax on sale of sugarcane. 19. He also contended that the petitioners are manufacturing units and are, therefore, not "dealers" within the scope of section 2 (b) of Punjab Ordinance (XXIII of 1978). He maintains that the Sugar Mills are already paying the sugar cess to be utilized for the purpose of construction of roads and since no services are directly being provided to the petitioner mills, the market fee could not be charged. He also referred to section 4(3) of Ordinance XXIII and section 6 in support of the contention that the petitioners were neither dealers nor they wished to work as dealers in the notified market area. 20. As to the services being rendered in the notified market area, he invited our attention to reply to ground (e) in W.P.No,18459-1998 in which the position taken by the Market Committee is that it was not bound to provide facilities to the factory owners, it was, however, providing necessary facilities to the growers. 21. Syed Shabbar Raza Rizvi, Advocate General, Punjab, defended not only the Punjab Ordinance (No,XXIII of 1978) but also the levy of the market fee under section 19 thereof. He took us to the history of legislation. The first statute covering the field was the Agricultural Produce Market Act (No,V of 1939) and section 19 thereof provided levy of fee on the agricultural produce bought or sold by a licensee in the notified market area . The said Act was repealed by section 233(4) of the Punjab Local Government Act (No,XXXIV" of 1975) and thereafter Punjab Ordinance (XXIII of 1978) was promulgated. According to section 39(2) of Punjab Ordinance (No,XXIII of 1978), sections 156 to
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163 of the Punjab Local Government Act (No,XXXIV of 1975) providing for establishment of markets were repealed. However, sections 39(2) of Punjab Ordinance No,XXIII saves not only the actions taken under the repealed provisions but also the rules, bye-laws made, an order or notification issued under the repealed provisions unless in consistent with the provisions of the Ordinance No,XXIII. He referred to section 4(3) of the said Ordinance, according to which no person can set up, establish or use any places for the purchase or sale of agricultural produce or purchase, sell, store, process such agricultural produce except in accordance with the terms and conditions of a licence granted under the provisions of the said Ordinance. He maintains that the restriction contemplated by section 4(3) is two fold. Firstly, against setting up or establishing a place for sale and purchase and secondly, against purchase, sale, storage or processing an agricultural produce. Under section 5, Market Committee is authorized to issue a licence to a dealer and its renewal and section 6 provides for application of a person who wishes to work as a dealer in a notified market area. The licences under the Ordinance are contemplated by section 6 and section 9(2). According to him, the scheme of the Ordinance contemplates licence fee and fee on purchase or sale of agricultural produce. He maintained that a dealer and a licensee for the sale and purchase of agricultural produce are inter-changeable and according to section 19, the fee is leviable on agricultural produce bought or sold by or through a dealer in the notified market area .He invited our attention to the definition of the "market" in section 2 Clause (i), and "notified market" area in section 2(k) which are respectively are as follows:-- "(I) 'Market' means a building, block of building, enclosure or other area which may be so notified in accordance with the rules framed under this Ordinance." "(k) "notified market area" means any area notified under section 4 of this Ordinance. ' According to him, the fee is leviable on sale and purchase in the notified market area and not in the market itself as being convassed. 22. He also referred to the preamble of Ordinance No,XXIII which unfolds the object of the legislation i,e, "for the better regulation of purchase and sale of agricultural produce for establishment of markets and for making rules for their proper…
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