Calcutta High Court (Appellete Side)
Sethia Oil Industries Limited & Anr vs State Of West Bengal & Ors on 6 May, 2025
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
APPELLATE SIDE
Present:
The Hon'ble Justice Rai Chattopadhyay
W.P. No. 17846 (W) of 2012
&
W.P. No. 11513 (W) of 2019
Sethia Oil Industries Limited & Anr.
Vs.
State of West Bengal & Ors.
For the Petitioners : Mr. Jai Kr. Surana
: Mr. D. Surana
: Mr. Abhimonyu Roy
For the State : Mr. Amal Kr. Sen, ld. AGP
: Mr. Lal Mohan Basu
(...in WPA 17846 of 2012)
: Mr. Amal Kr. Sen, ld. AGP
: Mr. Suman Ghosh,
: Ms. Munmun Tewari,
(...in WPA 11513 of 2019)
For the respondent, RMC,
Purba Bardhaman : Mr. Supriyo Chattapadhyay
(...in WPA 17846 of 2012 &
WPA 11513 of 2019)
For the respondent no. 3 : Ms. Sutapa Sanyal
: Mr. Debrup Bhattacharjee
: Mr. Pradip Kr. Tulsiyan
Judgment on : 05/05/2025
Rai Chattopadhyay, J. :-
(1) Two writ petitions being W.P. No. 17846(w) of 2012 and W.P. No.
11513(w) of 2019 are taken up together for disposal by dint of this
common judgment, as the two are connected and deal with the
same subject matter, which is as follows;
Page 2 of 35
(2) The subject matter of challenge in W.P.No. 17846(w) of 2012 are
the two notifications being (i) No. 429-M.W&C/9M-9/2000 dated
January 29, 2002 (hereinafter referred to as No.429) and (ii) No.
2537-M.W.&C/1M-05/99(Pt.1) dated August 22, 2008 (hereinafter
referred to as No.2537).
(3) By way of amendment of the said writ petition, the petitioner has
further challenged the West Bengal Act XXVII of 2014 being the
West Bengal Agricultural Produce (Regulation) (Amendment) Act,
2014 (hereinafter referred to as the Amendment Act of 2014 or the
2014 Amendment Act) and the West Bengal Act XVI of 2017 being
the West Bengal Agricultural Produce (Regulation) (Amendment)
Act, 2017 (hereinafter referred to as the Amendment Act of 2017 or
the 2017 Amendment Act).
(4) The subject matter of challenge in W.P. No. 11513 (w) of 2019, is
the assessment order dated June 30, 2016, issued by the
Secretary, Purba Bardhaman Zila Regulated Marketing
Committee/respondent no. 6 therein and the impugned order
dated May 16, 2019, issued by the Director Agriculture
(Marketing) and Ex-officio Additional Director of Agricultural
(Marketing)/respondent No. 2. The writ petitioners have prayed
for quashing of both of the said impugned orders.
(5) The question involved in these writ petitions is that if the
amendments introduced to the West Bengal Agricultural Produce
Marketing (Regulation) Act 1972, bereft of any assent of the
President of India and with that of the Governor of the State, is
ultra vires the Constitution of India, or not. Also that, in that
event, whether the subsequent notifications issued under the
provisions of the said Amendment Acts should be termed as illegal
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and be set aside or not. The other question required to be
determined is in that event whether the concerned respondents
would be eligible to issue the impugned assessment orders as
mentioned above and if the same would be liable to be set aside or
not.
(6) Let the relevant facts of the case necessary for adjudication of the
writ petitions, be narrated in a nutshell. The petitioners are
engaged in the business of manufacture and sale of rice bran oil
namely “Rice Gold” and de-oiled rice bran as its by-product. They
do their business from the factory situated at district Burdwan, in
the state of West Bengal.
(7) So far as the West Bengal Agricultural Produce Marketing
(Regulation) Act 1972, is concerned, rice oil or rice bran oil has not
been a part of the same to come within its purview, before
introduction of the Notification No. 429, by the Department of
Agriculture, Government of West Bengal, on January 29, 2002.
Notification No. 429 says that in exercise of power conferred by
sub-section 1(a) of section 2 of the West Bengal Agricultural
Produce Marketing (Regulation) Act, 1972 (West Bengal Act XXXV
of 1972), the Governor includes the item “rice oil” in the schedule
of the said Act of 1972. It has been mentioned that the inclusion
as above was for the purpose of the market committees to raise
fees under section 1 of the said Act.
(8) By issuance of the notification No. 2537, on August 22, 2008, the
Governor in exercise of power conferred under section 3(3) of the
West Bengal Agricultural Produce Marketing (Regulation) Act 1972,
has enforced the provisions of the said Act of 1972, in the Sadar
and part of Durgapur sub-division, in the district Burdwan.
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(9) The following amendment has been carried out vide the
Amendment Act of 2014:
“2. In sub-section (1) of section 2 of the West
Bengal Agricultural Produce Marketing
(Regulation) Act, 1972 (hereinafter referred to as
the principal Act).-
(1) for clause (a), the following clause shall be
substituted:
*(a) “agricultural produce” means any produce,
whether processed or unprocessed of agriculture,
horticulture, apiculture, pisciculture, sericulture,
livestock and products of livestock, animal
husbandry. fleeces (raw wool) and skins of
animals, forest produce and any related and
secondary product or by-product and combination
of two or more than two of such produce as
specified in the Schedule
Provided that the State Government may, by
notification, include in, or exclude from, any item
of agricultural produce in the Schedule;”
(10) Thus, processed or unprocessed agricultural produce or by-
products thereof has been introduced within the definition of
agricultural produce, by dint of the said Amendment Act of 2014.
(11) 2017 Amendment Act introduces “All vegetable oils” in the
schedule of the said Act, along with other oils including “Rice oil”,
as against the category “Oils”, to be meant as the agricultural
produce, under section 2(1)(a) of the said Act.
(12) On this background, the respondents issue the said two orders
dated June 30, 2016 and May 16, 2019, against the petitioners,
holding the petitioner company to be liable to pay the fees under
the said Act (as amended) and assessing the fees payable by it.
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(13) As stated earlier, the writ petitioners have challenged the vires
of the said Amendment Acts of 2014 and 2017 and also of the
notifications No. 429 and 2537 and challenged the legality and
maintainability of the two orders dated June 30, 2016 and May
16, 2019, in these writ petitions.
(14) The petitioners are represented by Mr.Dutta, learned senior
counsel, being assisted by Mr.Chakraborty, Mr. Surana and
Mr.Roy learned advocates. Firstly, the petitioners have challenged
the two Amendment Acts of 2014 and 2017 respectively, those
being allegedly ultra vires of the Constitution of India. It is stated
that the West Bengal Agricultural Produce Marketing (Regulation)
Act 1972 and the amendments thereof vide Amendment Acts of
1977 and 1981 respectively, were introduced with the previous
sanction of the President of India. In case of the Amendment Acts
of 2014 as well as that of 2017 respectively, the assent of the
President of India has not been obtained but the same have been
promulgated with consent of the Governor of the State. It is stated
that according to Article 301 of the Part-XIII of the Constitution of
India, trade, commerce and intercourse would be free through out
the country, excepting subject to the other provisions of Part-XIII
thereof. Article 302 empowers the Parliament to impose
restrictions on freedom of trade, commerce and intercourse
between States or within any part of the country as may be
required in public interest. Likewise, Article 304(b) has empowered
the State Legislatures to impose reasonable restrictions on the
freedom of trade, commerce and intercourse, within the State as
may be required in public interest. The Proviso to Article 304(b)
states that no bill or amendment shall be introduced or moved in
the State Legislature without the previous sanction of the
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President of India. On the basis of these provisions, it’s the
contention of the petitioners that sanction by the President of
India has been mandated by the Constitution, for the State
Legislature to impose reasonable restrictions on trade, commerce
and intercourse within the State. Thus, the State Legislature is
incompetent to bring in any amendment as to the provisions of the
Act of 1972, without the previous sanction of the President of
India. It has been emphasised that so far as the Amendment Acts
of 1977 and 1981 are concerned, there would not be any illegality
in the same, those having been introduced with the assent of the
President. The subsequent Amendment Acts of 2014 and 2017
having not been introduced through the similar process and with
the assent of the Governor of the State only, would be ultra vires
to the Proviso to Article 304(b) of the Constitution, which
mandates that n7o amendment should be introduced or moved in
the State Legislature without the previous sanction of the
President. Hence, therefore introduction of processed or
unprocessed agricultural produce or by-products thereof within
the purview of the definition of agricultural produce and
introduction of “Rice Oil” in the schedule of the said Act, has been
challenged, being ultra vires the Constitution. Consequently,
assessment of fees as per the provisions of the said Act (as
amended) against the petitioners has also been challenged.
(15) Secondly, the petitioners say that the West Bengal Agricultural
Produce Marketing (Regulation) Act 1972 has been promulgated
with the object to regulate buying and selling of the agricultural
produce by establishing markets for agricultural produce in the
State of West Bengal. The petitioners say that they are not in a
business of buying and selling of the agricultural produce in
market. That, the amendments to bring into the processed goods
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or the rice oil within the purview of the said Act, being ultra vires,
the petitioner cannot be considered to be within the purview of the
said Act and is liable for payment of any fees as prescribed
thereunder. That, for the said reason provisions of the said Act of
1972 (as amended) cannot be made applicable in their case. That
hence, the notices issued against the petitioner company,
demanding fees in terms of the said amended Act, are also illegal.
(16) The petitioners have argued further that ‘agricultural product’
would mean a product of cultivation or rural industry cultivation
of land. In this regard the petitioners have referred to a judgment
of Privy Council reported in 1948 AC 210 (at pg. 214). They say
that the rice bran oil, as produced by them is a factory produce
and cannot be construed to be an ‘agricultural produce’ as defined
in the said Act. They have elaborated the different stages through
which the rice bran oil is produced from its raw form, which is
paddy (and an ‘agricultural produce’, in terms of the said Act), are
summarised as below:
1. Paddy (agricultural produce) is a produce of
cultivation.
2. Paddy is reached to rice mill by farmers or traders.
3. Rice mill segregates paddy into husk, rice and bran.
4. Bran is sold to solvent extraction plant which extract
oil from bran and produces crude rice bran oil and
De-Oil Rice Bran (used as cattle feed).
5. Crude rice bran oil is sold to refineries like that of
the petitioner.
6. While refining crude bran oil several saleable
products are produced, namely (a) gums (b) spent
earth (c) wax (d) fatty acid (e) refined rice bran oil.
Refined rice bran oil do not retain the character of
agricultural produce.
Page 8 of 35
(17) The writ petitioners have mentioned section 17 of the said Act
of 1972, which has empowered the market committee, to levy fees
on any agricultural produce purchased or sold in the market area.
In this regard their first submission is that charging of any fees
has to be quid pro quo and levied in lieu of a special benefit or
privilege granted to and enjoyed by the assessee. The petitioners
mention that the services to be availed by the assessee, have been
provided in sections 12, 20, 36C, 36G of the Act of 1972 (as
amended). They say, that none of the services as mentioned
therein are being availed of or enjoyed by the petitioners. Thus,
they say that they cannot be subjected to levy of fees under the
said Act. In this regard the petitioners mention a judgment of this
Court reported in AIR 1991 Cal 371 [Bethuadahari Regulated
Market Committee vs Tapan Kumar Saha & Ors]. It is stated that
in the said case, while interpreting section 17(1) of the Act of 1972
the Court finds that the market committee can levy fees and in
turn the facilities as contemplated in section 20 thereof has to be
provided. The Court has held that the fee is not a tax and part of a
common burden but it has to be quid pro quo. In this regard the
petitioners have further contended that the Proviso to section
17(1) of the said Act prohibits multiple levy of fees in relation to
the same agricultural produce. They say that the raw material
paddy, which is an ‘agricultural produce’, finally becomes a
different product originated in the factory, that is the refined rice
bran oil, after being processed through various stages. The raw
material of the said final product, being an agricultural produce
itself and thereafter being processed to become a different
product, that is rice bran oil, cannot be twice levied with fees,
under the provisions of the said Act as that would amount to
multiple levy, which would not be sustainable in the eye of law.
Page 9 of 35
(18) Finally, the petitioners have submitted that the definition of
‘agricultural produce’ as enumerated in section 2(1)(a) of the said
Act, is a hard-and-fast definition to mean nothing excepting the
meaning assigned to the expressions therein. The Legislature has
used the word ‘means’ therein. In this regard the petitioners have
relied on a judgment of the Supreme Court reported in 1995 Supp
(2) SCC 348 [P. Kasilingam vs P.S.G. Collage of Technology & Ors].
It is submitted that hence, inclusion of any expression incoherent
with the illustrative expressions made in the said provision, would
render those as nugatory and redundant, as the definition cannot
be expanded beyond the scope of the words already promulgated
thereunder.
(19) For all these reasons the petitioners say that the Amendment
Acts and notifications as mentioned above may be declared ultra
vires the Constitution and the order of assessment as mentioned
above may be set aside being illegal.
(20) The respondent State is represented by Mr.Sen, learned AGP.
As to the challenge of the petitioner regarding the said
Amendments Acts of 2014 as well as 2017 being ultra vires, as
discussed above, the State heavily relies on the interpretations
and findings of the Constitutional Bench judgment of Jindal
Stainless Limited & Another vs State of Haryana & Others
reported in (2017) 12 SCC 1. Mr. Sen has stated that pursuant to
the unamended as well as the amended provisions of the West
Bengal Agricultural Produce Marketing (Regulation) Act 1972, there
has been a non-discriminatory imposition made upon the targeted
group of persons. Therefore, according to the ratio decided by the
9 Judges Bench in Jindal Stainless Limited (supra), in which the
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Court has decided that only such taxes which are discriminatory
in nature are prohibited by Article 304(a) and taxes simpliciter are
not within the contemplation of Part-XIII of the Constitution, levy
of a non-discriminatory tax would not constitute an infraction of
Article 301. That, the West Bengal Agricultural Produce Marketing
(Regulation) Act 1972, having affected an imposition, non-
discriminatory in nature, does not come within the purview of
Article 301 and accordingly the ‘Proviso’ to Article 304(b) would
not be applicable to the said Act. Also that, according to the ratio
decided in the case of Jindal Stainless Limited (supra), both the
enactments being the West Bengal Act XXVII of 2014 and the West
Bengal Act XVI of 2017, whereby the amendments had been
carried out to the said Principal Act of 1972 (previously amended)
are valid pieces of legislation and thus intra vires to the
Constitution of India though the assent of the President of India
has not been obtained in either of the two Amendment Acts.
(21) He has said further that in view of the fact admitted by the
petitioner as mentioned above and the amended definition of
agricultural produce in Section 2(1)(a) of the 1972 Act (as
amended) read with Section 2(1)(mb) of the said Act, “Rice Bran
Oil” is an agricultural produce which is amenable to the charging
Section of the West Bengal Agriculture Produce Marketing
(Regulations) Act, 1972 (hereinafter referred to as Marketing
Regulations Act, 1972) for the purpose of imposition of fees under
the said Act subject to inclusion of the same by way of issuance of
a notification in terms of the proviso of Section 2(1) of the said
Marketing Regulations Act, 1972. In this regard he has relied on a
judgment of the Hon’ble Coordinate Bench of this Court in the
case of Amit Trade Centre Private Limited. vs. State of West Bengal
[in W.P. No. 17184 (w) of 2012, dated August 13, 2014]. He says
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that in the said judgment the issue as to whether the Rice Bran
Oil is an agricultural produce or not for the purpose of imposition
of fees under the said Marketing Regulations Act, 1972 is no more
res integra. The following portion of the judgment has been relied
on:-
“The only issue arises here for decision whether the
Rice Bran comes within the ambit of agricultural
produce as defined in Section 2(a) of the West Bengal
Agricultural Produce Marketing (Regulation) Act,
1972.
** ** **
Indisputedly, rice bran is an agricultural product and
in the light of the observation of the Hon’ble Apex
Court as above, the Rice bran oil, which is an
industrial product obtained by processing of Rice
Bran, of course come within the ambit of agricultural
produce as defined in Section 2(a) of the said Act.”
(22) In so far as the writ petitioner’s contention about double
taxation, that as per first Proviso to section 17 of the said West
Bengal Agricultural Produce Marketing (Regulation) Act, 1972,
double taxation is not permissible, the State submits that Rice
Bran and Rice Bran Oil are two distinct and different agricultural
produces. The respondents submit that first Proviso to Section 17
of the said Act contains a bar in respect of imposition of fees on
same agricultural produce in the same market area, which means
that the said Proviso does not stand in the way of imposition of
fees on “Rice Bran Oil” even if it appears that such fees under the
said Act has already been levied on “Rice Bran” in the same
market area. Hence, according to the said respondent, in case of
different market area, the said Proviso to Section 17 of the said
Act is not applicable, i.e. there is no bar of imposition of fees
under the said statute if the two products are different, and even
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on same product such fees can be imposed in different market
area.
(23) The following judgments have been referred to by Mr.Sen, in
support of the case of the respondent State.
(i) Municipal Council, Kota, Rajasthan vs. Delhi Cloth
& General Mills Co. Ltd., Delhi & Ors. reported in
(2001) 3 SCC 654;
(ii) Jain Bros. vs. Union of India reported in (1969) 3
SCC 311.
(24) The respondents have stated by referring to the judgment of
Municipal Council Kota (Supra) that once the legislature is found
to possess the required legislative competence to enact the law
imposing tax limits, that competence cannot be judged further by
the form or manner in which that power is exercised. The
following portion has been relied on:
“16. Whenever a challenge is made to the levy of tax, its
validity may have to be mainly determined with reference
to the legislative competence or power to levy the same
and in adjudging this issue the nature and character of
the tax has to be inevitably determined at the threshold.
It is equally axiomatic that once the legislature concerned
has been held to possess the power to levy the tax, the
motive with which the tax is imposed becomes immaterial
and irrelevant and the fact that a wrong reason for
exercising the power has also been given would not in any
manner derogate from the validity of the tax. In Jullunder
Rubber Goods Manufacturers’ Assn. v. Union of
India [(1969) 2 SCC 644 : AIR 1970 SC 1589] this Court
while dealing with a challenge to the levy of rubber cess
under Section 12(2) of the Rubber Act, 1947 as amended
in 1960 observed that the tax in the nature of excise duty
does not cease to be one such merely because the stage of
levy and collection has been as a matter of legislative
policy shifted by actually providing for its levy and
collection from the users of rubber, so long as the
Page 13 of 35character of the duty as excise duty is not lost and the
incidence of tax remained to be on the production or
manufacture of goods. Likewise, once the legislature is
found to possess the required legislative competence to
enact the law imposing the tax, the limits of that
competence cannot be judged further by the form or
manner in which that power is exercised. In (Morris)
Leventhal v. David Jones Ltd. [AIR 1930 PC 129] the
question arose as to the power of the legislature to impose
“bridge tax”, when the power to legislate was really in
respect of “tax on land”. It was held therein as follows:
“The appellants’ contention that though directly imposed
by the legislature, the bridge tax is not a land tax, was
supported by argument founded in particular on two
manifest facts. The bridge tax does not extend to land
generally throughout New South Wales, but to a limited
area comprising the City of Sydney and certain specified
shires, and the purpose of the tax is not that of providing
the public revenue for the common purposes of the State
but of providing funds for a particular scheme of
betterment. No authority was vouched for the proposition
that an impost laid by statute upon property within a
defined area, or upon specified classes of property, or
upon specified classes of persons, is not within the true
significance of the term a tax. Nor so far as appears has
it ever been successfully contended that revenue raised by
statutory imposts for specific purposes is not taxation.”
(emphasis supplied)
22. Though taxation of the same thing under different
names is nonetheless “double taxation” in popular sense,
the expertise exposition of the topic seems to also lean in
favour of the Revenue, in that the legislature has been
considered to possess the power to levy one or more tax or
rates of tax on the same taxable event and since in these
areas large latitude and wide discretion has always been
allowed to the State to choose its own method or kind of
tax or mode and purpose of levy and recovery, unless
there is any prohibition in the Constitution or the very
law enacted by the legislature itself prevents such a thing
happening no infirmity can be said to vitiate such a levy.
Wherever the taxes are imposed by different legislatures
Page 14 of 35
or authorities or where one of the two alone is a tax or
where it is for altogether different purposes or when it is
indirect rather than direct, there is no scope even for
making any grievance of double taxation, at all. In the
absence of any impediment specifically created in the
Constitution of a country or the legislative enactment
itself, the desirability or need otherwise to avoid such
levies has been held to pertain to areas of political
wisdom of policy making and adjusting of public finances
of the State, and not for the law courts, though courts
would unless there is clear and specific mandate of law in
favour of such multiple levies more than once, in
construing general statutory provisions lean in favour of
an interpretation to avoid double taxation. So much are
the principles or statements of law governing a challenge
to any levy on the ground of double taxation.”
(25) The Constitution Bench judgment of the Apex Court in the case
of Jain Bros. (Supra) has been referred to on the following aspect :-
“19. There is no warrant or justification in law
for the High Court proceeding on an assumption
that permitting the levy even as “octroi” twice
over would suffer the vice of double taxation and
therefore bad in law, unmindful of the well-
settled position of law in this regard, also. A
Constitution Bench of this Court in the decision
reported in Jain Bros. v. Union of India [(1969) 3
SCC 311 : AIR 1970 SC 778] in unmistakable
terms declared the position to be as hereunder:
(SCC pp. 315-16, para 6)
“6. It is not disputed that there can be double
taxation if the legislature has distinctly enacted
it. It is only when there are general words of
taxation and they have to be interpreted they
cannot be so interpreted as to tax the subject
twice over to the same tax (vide Channell, J.,
in Stevens v. Durban-Roddepoort Gold Mining Co.
Ltd. [(1909) 5 TC 402 : 100 LT 481] ). The
Constitution does not contain any prohibition
against double taxation even if it be assumed
that such a taxation is involved in the case of a
firm and its partners after the amendment of
Section 23(5) by the Act of 1956. Nor is there any
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other enactment which interdicts such taxation.
It is true that Section 3 is the general charging
section. Even if Section 23(5) provides for the
machinery for collection and recovery of the tax,
once the legislature has, in clear terms, indicated
that the income of the firm can be taxed in
accordance with the Finance Act of 1956 as also
the income in the hands of the partners, the
distinction between a charging and a machinery
section is of no consequence. Both the sections
have to be read together and construed
harmoniously. It is significant that similar
provisions have also been enacted in the Act of
1961. Sections 182 and 183 correspond
substantially to Section 23(5) except that the old
section did not have a provision similar to sub-
section (4) of Section 182. After 1956, therefore,
so far as registered firms are concerned the tax
payable by the firm itself has to be assessed and
the share of each partner in the income of the
firm has to be included in his total income and
assessed to tax accordingly. If any double
taxation is involved the legislature itself has, in
express words, sanctioned it. It is not open to
anyone thereafter to involve the general
principles that the subject cannot be taxed twice
over.”
(26) Thus, the State respondent has argued that the Amendment
Acts of 2014 and 2017 are well maintainable on the anvil of
Constitutional validity thereof. Also, that the products of the
petitioner company should be considered within the purview of the
definitions as provided in the said Amendment Acts and that the
plea of double taxation as emphasised by the writ petitioners,
should also not be maintainable. Hence, it has sought for
dismissal of the writ petitions and immediate compliance with the
statutory provisions by the petitioners.
Page 16 of 35
(27) Part XIII of the Constitution of India deals with the trade,
commerce and intercourse within the territory of the country.
Article 301 of the Constitution has provided for freedom of trade,
commerce and intercourse within the country, subject to
restrictions imposed in the following portion of the said Part-XIII,
thereof. The Parliament has been empowered to impose by law,
such restrictions, which should not generally be discriminatory
unless it is necessary to do so for the purpose of dealing with a
situation arising from scarcity of goods in any part or territory of
the country [as per Articles 302, 303(1) and (2)].
(28) Power has been vested upon the Legislature of a State, to
impose reasonable restrictions by promulgating law, under Article
304 of the Constitution to eradicate discrimination between goods
imported from other States and the goods manufactured or
produced within the said law making State or as may be required
in the public interest [as per Article 304 (a) and (b)].
(29) In the instant writ petitions, the petitioners have challenged the
vires of the State Amendment Acts 2014 and 2017, on the ground
that those are violative of the Constitutional provision enshrined
in the Proviso to Article 304(b) in so far as those amendments have
been introduced in the principal legislation, that is the West
Bengal Agricultural Produce Marketing (Regulation) Act, 1972,
with previous sanction of the Governor of the State and not the
President of India, as mandated under the said Proviso to Article
304(b) of the Constitution.
(30) Since at the outset the petitioners have challenged the vires of
the said Amendment Acts of 2014 and 2017 and termed those to
be ultra vires, being introduced allegedly in contravention of the
Page 17 of 35
Proviso to section 304(b) of the Constitution of India, it is
necessary that the Court examines the veracity of such challenge
to the vires of those enactments at the first instance. The main
issue looms large therefore in these writ petitions is as to the
constitutionality of the Amendment Act 2014 and the Amendment
Act 2017 respectively, as to whether these are Constitutionally
valid being the Acts of the State Legislature imposing levy of fees
on the petitioners, who are the producers and marketers of the
refined rice bran oil, produced from the raw material ‘paddy’,
though enacted without previous sanction of the President of
India, where as in case of legislations to impose restrictions on
trade, commerce and intercourse by a State Legislature, as per
Proviso to Article 304(b), previous sanction of the President of
India has been laid down as mandatory. If the answer is to be that
the said Amendment Acts as above cannot be validated on the
anvil of the Proviso to Article 304(b) and hence are ultra vires the
Constitution, it would become unnecessary to advert to the other
aspects of the submissions made on either side.
(31) Legislative competence refers to the authority or power of a
legislative body (like the Parliament or the State legislature) to
make laws on specific subjects or areas. It essentially defines what
a legislature is authorised to legislate on. This authority is often
determined by the Constitution, which outlines which subjects fall
under the jurisdiction of each legislative body.
(32) According to sub Article (3) of Article 246 of the Constitution of
India, the legislature of any State has exclusive power to make
laws for such State or any part thereof with respect to any of the
matters enumerated in List II in the Seventh Schedule of the
Constitution [State list]. Entry 46 of the State List, is regarding
Page 18 of 35
“Taxes on agricultural income”. Entry 60 thereof is with regard to
“Taxes on professions, trade, callings and employments”.
According to Article 246 (2) of the Constitution, the Legislature of
any State also have the power to make laws with respect to any of
the matters enumerated in List III in the Seventh Schedule, that is
the Concurrent list. Entry 33(6) of the Concurrent list has
provided for Trade and commerce in, and the production, supply
and distribution of foodstuffs, including edible oil seeds and oils.
(33) Therefore, Entry 60 of the State list, being read with Entry 33
(6) of the Concurrent list helps to understand that trade,
commerce, production, supply and distribution of foodstuffs
including edible oil seeds and oil are/may be subject matter of
levy by the State legislature.
(34) Entries in the legislative lists are to be construed by applying
and in accordance with the doctrine of pith and substance. Briefly
stated the doctrine means that when the question arises of
determining whether a particular law relates to a particular
subject mentioned in one list or another, the Court looks to the
substance of the matter. When the substance of the matter is
found to fall within one list, than the incidental encroachment by
the law on the other list does not make it invalid. The doctrine is
sometimes expressed in terms of ascertaining the true character of
legislation and even the name given by the legislature in the short
title to the legislation has been held to be immaterial. The classical
example is the Privy Council judgment in Prafulla Kumar
Mukherjee Vs. The Bank of Commerce Limited, Khulna, reported in
AIR 1947 PC 60 holding that a State law dealing with money
lending (which is a State subject) is not invalid merely because it
incidentally affects promissory notes (Union list, Entry 46).
Page 19 of 35
(35) It is well-settled that the various entries in the three lists of the
Indian Constitution are not powers but fields of legislation. The
power to legislate is given by Article 246 and other Articles of the
Constitution. The three lists of the Seventh Schedule to the
Constitution are legislative heads or fields of legislation. These
demarcate the area over which the appropriate legislatures can
operate. From the scheme of entries in the three lists it is clear
that taxing entries have been specifically enacted conferring power
of taxation whereas the other entries pertain to the authority of
the legislature to enact laws for the purpose of regulation.
(36) In this connection, it would be profitable to mention a Supreme
Court judgment of Southern Pharmaceuticals and Chemicals
Trichur and Others Vs. State of Kerala and Others reported in
1981 4 SCC 391. In the same, the Court was considering the
aspect of legislative competence under Articles 245 and 246 of the
Constitution of India and has held that in determining whether an
enactment is a legislation “with respect to” a given power, what is
relevant is not a consequence of the enactment on the subject
matter or whether it affects it, but whether in its pith and
substance, it is a law upon the subject matter in question. Once it
is found that in pith and substance the impugned Act is a law on
a permitted field, any incidental encroachment on a forbidden field
does not affect the competence of the legislature to enact the law.
(37) Another is the case of Premchand Jain and Another Vs. R.K.
Chhabra reported in 1984 2 SCC 302. In the same, the subject
“education including universities” though was earlier a State
subject, by dint of 42nd amendment of the Constitution in 1976,
the entry was omitted from the State list and included in the
Page 20 of 35
Concurrent list. University Grants Commission Act, 1956 was
held to be covered under Entry 66 of the Union list that while
legislating for a purpose germane to the subject covered by that
Entry and establishing a University Grants Commission,
Parliament considered it necessary, as a regulatory measure to
prohibit unauthorized conferment of degrees and diplomas as also
use of the word ‘university’ by institution which had not been
either establish or incorporated by the subject legislation. The
Court has held further that in doing so, the Parliament has not
entrenched upon legislative power reserved for the State
legislature. The Court has reiterated as per Harak Jain Vs. Union
of India reported in 1969 2 SCC 166, the settled legal position that
the entries incorporated in the lists covered by Schedule VII are
not powers of legislation but ‘fields of legislation’ by referring to
State of Bihar Vs. Kameswar reported in AIR 1952 SC 252 the
Court has held there that such entries are mere legislative heads
and are of an enabling character. Also that the language of the
entries should be given the widest scope or amplitude.
(38) In the said judgment [Premchand Jain (supra)], the Court has
held further with reference to earlier decision of the Supreme
Court in Naveen Chandra Vs. CIT reported in AIR 1955 SC 58 that
each general word in the Schedule as above has been asked to be
extended to all ancillary or subsidiary matter which can fairly and
reasonably be comprehended. It says with reference to Check Post
Officer Vs. K.P. Abdullah Brothers reported in 1970 3 SCC 355 that
an entry confers power upon the legislature to legislate for matters
ancillary or incidental including provision for avoiding the law. It
has been held further that as long as the legislation is within the
permissible field in pith and substance, objection would not be
entertained merely on the ground that while enacting legislation,
Page 21 of 35
provision has been made for a matter which though germane for
the purpose for which competent legislation is made, it covers an
aspect beyond it. The Court has held further that if an enactment
substantially falls within the powers expressly conferred by the
Constitution upon the legislature enacting it, it cannot held to be
invalid merely because it incidentally encroaches on matters
assigned to another legislature.
(39) In this context and keeping in mind the framework of the
Constitution as discussed above, the scope of Chapter XIII of the
Constitution may be found out. According to Article 301 of the
Constitution, trade, commerce and intercourse throughout the
territory of India shall be free. But this freedom is not an absolute
one and every imposition of duty does not tantamount to
infringement of Article 301. The impugned provision when
amounts to a restriction directly and immediately on the
movement of trade or commerce, only comes within the bounds to
be prohibited thereunder. Article 301 refers to non maintainability
of laws which burdens, restricts or prevents the trade movements
between and within states. Article 304, in its two sub-Articles (a)
and (b) gives Constitutional sanction for reasonable restrictions on
freedom of trade, commerce within a particular state, by way of
legislation by the Sate Legislature. Article 304(a) when deals with
legality and justifiability of such restriction on the basis of its
nature being not discriminating, whereas provision under Article
304(b) allows imposition of reasonable restrictions by way of the
law introduced by the State Legislature as may be required in
public interest. Article 304 is an exception to Article 301 of the
Constitution and need of taking resort to the exception will arise
only if the ‘reasonable restriction’ is hit by Article 301 thereof.
Only the levy which directly and immediately prohibits, restricts or
Page 22 of 35
interferes with free trade, commerce and intercourse, would
amount to be hit by Article 301 of the Constitution and not
otherwise. There should be a reasonable difference between
prohibitory and regulatory measures by way of imposing
reasonable restriction, when in case of the earlier such restriction
may be held to be hit by Article 301 of the Constitution, whereas
in the later case, any restriction would only be reasonable and
thus permitted under Article 304(b) as well as Article 301 of the
Constitution.
(40) It would be also beneficial to mention the other judgment of the
Hon’ble Supreme Court in Video Electronics Private Limited Vs.
State of Punjab reported in 1990 3 SCC 87 in which the Court has
held that where the State law does not offend against Article 301
or Article 303, it need not be examined whether the conditions
imposed by Article 304 are satisfied. The relevant portion thereof
may be quoted for reliance as hereinbelow:-
“20. The question as we see is, how to harmonise
the construction of the several provisions of the
Constitution. It is true that if a particular provision being
taxing provision or otherwise impedes directly or
immediately the free flow of trade within the Union of
India then it will be violative of Article 301 of the
Constitution. It has further to be borne in mind that
Article 301 enjoins that trade, commerce and intercourse
throughout the territory of India shall be free. The first
question, therefore, which one has to examine in this case
is, whether the sales tax provisions (exemption etc.) in
these cases directly and immediately restrict the free flow
of trade and commerce within the meaning of Article 301
of the Constitution. We have examined the scheme of
Article 301 of the Constitution read with Article 304 and
the observations of this Court in Atiabari case [(1961) 1
SCR 809 : AIR 1961 SC 232] , as also the observations
made by this Court in Automobile Transport, Rajasthan
case [(1963) 1 SCR 491 : AIR 1962 SC 1406] . In our
opinion, Part XIII of the Constitution cannot be read in
Page 23 of 35isolation. It is part and parcel of a single constitutional
instrument envisaging a federal scheme and containing
general scheme conferring legislative powers in respect of
the matters relating to List II of the Seventh Schedule on
the States. It also confers plenary powers on States to
raise revenue for its purposes and does not require that
every legislation of the State must obtain assent of the
President. Constitution of India is an organic document. It
must be so construed that it lives and adapts itself to the
exigencies of the situation, in a growing and evolving
society, economically, politically and socially. The
meaning of the expressions used there must, therefore, be
so interpreted that it attempts to solve the present
problem of distribution of power and rights of the
different States in the Union of India, and anticipate the
future contingencies that might arise in a developing
organism. Constitution must be able to comprehend the
present at the relevant time and anticipate the future
which is natural and necessary corollary for a growing
and living organism. That must be part of the
constitutional adjudication. Hence, the economic
development of States to bring these into equality with all
other States and thereby develop the economic unity of
India is one of the major commitments or goals of the
constitutional aspirations of this land. For working of an
orderly society economic equality of all the States is as
much vital as economic unity.”
(41) The Court relies on the other decision of the Hon’ble Supreme
Court in Subhodaya Cheat Fund Private Limited Vs. Director of
Cheats, Madras reported in 1991 supplementary to SCC 131 in
which the Supreme Court has been pleased to held that where the
original Act received the President’s sanction under Article 304 (b)
of the Constitution, no fresh sanction is required where the
Amending Act, without imposing any additional restriction merely
varied the form of restriction.
(42) The only conditions upon exercise of power under Article 304
(b) of the Constitution are that the restriction must be ‘required in
Page 24 of 35
the public interest’ and the restrictions so imposed are reasonable.
Restrictions can be imposed on the freedom of trade, commerce
and intercourse in the public interest the Supreme Court in the
case of Khairabari Tea Company Limited Vs. State of Assam
reported in AIR 1964 SC 925 as held while dealing with a
challenge to the validity of statute that the Court has to consider
whether the restrictions imposed by it are reasonable and are
required in the public interest.
(43) Since it has been laid down by the Supreme Court that
‘regulatory measures’ are outside the purview of Article 301, so far
apart from the power to impose restrictions conferred by Articles
302 and 304 (b), the Union or State legislature has the power to
exercise legitimate control over the freedom of trade and
commerce by means of regulatory measures, not amounting to
restrictions. A distinction between a ‘regulation’ and a ‘restriction’
has been determined by the Supreme Court in the case of
Automobile Transport Vs. State of Rajasthan reported in AIR 1962
SC 1406, to include ‘Licensing provisions with compensatory fees’.
The term ‘reasonable’ means commensurate with the purpose for
which the restriction that laid down and to the extent as is
necessary for that purpose. It is a settled law that any restriction
which does not impede the movement of goods but only facilitates
their passage cannot be held to be unreasonable merely because
they cause some inconvenience. What may be a restriction from
the point of view of an individual may not be a restriction on inter-
state or intra-state commerce viewed from the angle of the trade
as a whole.
(44) Also, in the case of State of Karnataka Vs. Hansa Corporation
reported in 1980 Volume 4 SCC 697, the Supreme Court has held
Page 25 of 35
that though Article 304 (b) requires prior Presidential assent
before the Bill is introduced in the State Legislature yet due to
Article 255 of the Constitution, if prior consent is not obtained,
the infirmity can be cured by subsequent assent of the President
after the Bill has been passed by the legislature. Hence, absence of
Presidential assent has been held to be not an incurable defect, so
far as the imposition in substance is found to be reasonable.
Reasonableness of the restriction would have to be judged in the
light of the purpose for which the restriction is imposed, that is,
‘as may be required in public interest’.
(45) Therefore, the petitioners must show that the restrictions are
unreasonable and they are unduly hampered from carrying on
their trade or business. To adjudicate if the challenge as to the
Constitutional validity of the legislation would be maintainable,
the substantial purpose of the legislation and if the same carries
reasonableness in imposing invasion to the right of freedom of
trade of the petitioner in public interest, by way of legislation to
impose levy, are the concerns of the Court. In that case, only the
reason that the legislation is bereft of Presidential assent, as per
Proviso of Article 304(b), particularly when the original legislation
has been published in due compliance with the said provision and
with the assent of the President of India, should not come into way
for the said legislation to be valid and intra vires the Constitution.
(46) In the case of Automobile Transport (supra), according to the
majority opinion, the regulatory measures are excluded from the
scope of Article 301, therefore, measures like the licensing of trade
or business or its instrumentalities, would altogether come out of
the purview of Article 304 (b) and the reasonableness of such
regulatory measures could not be challenged under that provision.
Page 26 of 35
In this case as in all Constitutional adjudications, the substance
of the matter has to be looked into to find out whether there is any
restriction imposed by way of the Amendments brought out in the
Act of 1972 as an unreasonable restriction, in violation of the
Constitutional mandate.
(47) The West Bengal Agricultural Produce Marketing (Regulation)
Act, 1972, is a statute to provide for regulation for marketing
agricultural produce in West Bengal. The object of the Act is to
regulate buying and selling of agricultural produce, by
establishing markets for agricultural produce in the State. Section
17 thereof has empowered the market committee for levy of fees,
in the following words:
“17. (1) Notwithstanding anything contained in the
Bengal Finance (Sales Tax) Act, 1941 or any other
law relating to taxation of agricultural produce in
force, the market committee shall levy fees on any
agricultural produce in force, the market
committee shall levy fees on any agricultural
produce sold in the market area, at a rate which
shall not be more than two rupees per one hundred
rupees of the amount for which the agricultural
produce is sold, whether for cash or for deferred
payment or for other valuable consideration,
irrespective of the fact that the buyer of the
produce is the Central Government or the State
Government or an agent [or undertaking] of either
of them or a corporation constituted under any
law for the time being in force:
Provided that no fee shall be levied in the same
market area, more than once, in relation to the
same agricultural produce irrespective of the
number of transactions.
Explanation I.-For the purpose of this sub-section
all agricultural produce taken out, or proposed to
be taken out, of a market area shall, unless the
Page 27 of 35contrary is proved. be presumed to have been sold
within such area.
Explanation II.-In the determination of the amount
of the fees payable [under this sub-section], any
fraction of ten paise less than five paise shall be
disregarded and any fraction of ten paise equal to
or exceeding five paise shall be regarded as ten
paise.
Explanation III.-For the purpose of this sub-section
all agricultural produce stored in the cold
storages within the market area shall, unIess the
contrary is proved, be presumed to have been
stored for the purpose of sale.
(2) The fees referred to in sub-section (1) shall be
paid by the purchaser or the agricultural produce
concerned in the following manner, namely:-
(i) when a licensed trader is the buyer of any
agricultural produce, he shall pay the fees to the
market committee in the prescribed manner within
a week from the day of the transaction
(ii) when a Iicensed trader is the seller of any
agricultural produce and the buyer is not licensed,
the trader shall recover the fees from the buyer
and deposit the same in the prescribed manner
with the market committee within a week from the
day of the transaction,
(iii) the market committee may authorise its
officers or staff or any other person to realise the
fees directly from the buyer.”
(48) The said Act of 1972 was promulgated on October 31, 1972,
with the sanction of the President of India and later on, has been
subjected to amendments on various occasions, vide the
Amendment Acts XXXIV of 1975, XII of 1977, XXVII of 1978, XXI
of 1981 and recently vide the Amendments Act of 2014 and that of
2017 respectively.
Page 28 of 35
(49) Vide the Amendment Act of 2014, amendment of section 2(1)(a)
of the West Bengal Agricultural Produce Marketing (Regulation)
Act, 1972 has been brought in. the amended provision has been
extracted above. Let the old provision be quoted as herein bellow:
” 2. Definitions:-
(1) In this Act, unless the context otherwise requires,-
(a) “agricultural produce” means any produce of
agriculture, horticulture, pisciculture, sericulture, forestry or
animal husbandry or and includes any related product specified
in the Schedule to this Act;
Provided that the State Government may, by
notification include any item of agricultural produce in the
Schedule or exclude any such item from it;”
(50) Initially in the Schedule of the said Act, the de-oiled rice bran
and the refined rice bran oil were not included as the agricultural
produce, within the realm of its definition in the Act.
Subsequently, by dint of the impugned notification No.425, said
to have been published by the Governor of the State in exercise of
the power conferred by section 2(1)(a) of the Act of 1972, an
amendment was brought in to the Schedule of the Act, to include
rice bran and rice oil within the purview of the said Act to be
applied to all regulated market committee in the State for
collection of fees in market areas under section 17(1) of the said
Act. The writ petitioners have challenged the said notification too,
in these writ petitions.
(51) Vide the West Bengal Act XVI of 2017, amendment was brought
into section 2(1)(t) of the Act of 1972, in order to substitute the
Page 29 of 35
words therein “the business of purchasing and selling the
agricultural produce”, with the words, “the business of purchasing
and selling the agricultural produce in such manner as may be
prescribed”. The Schedule to the principal Act was also
substituted by the Schedule incorporated in the said Amendment
Act, 2017.
(52) Reasonability of the action of the State Legislature to bring in
changes by way of amendment may first be traced in the proviso
to section 2(1)(a) of the Act of 1972 (as amended) which empowers
the State, validates and justifies its action to include or exclude
any item of agricultural produce in the Schedule of the Act. Even
after omission of the words “in the Official Gazette” as were
appearing therein, vide the West Bengal Agricultural Produce
Marketing (Regulation) (Amendment) Act 1978, such inclusion or
exclusion by notification of an item from the Schedule of the Act
by the State Government shall not be required to be published in
the Official Gazette, to be valid. Inclusion of Rice Oil in the
Schedule of the Act is coherent with the definition(amended) of
‘agricultural produce’ as appears in section 2(1)(a) of the Act,
which has provided that the processed product and the related/
secondary product/ by product, is ‘agricultural produce’, as per
the Act. The amendment of the Act as above is under challenge as
ultra vires, being allegedly in violation of the Proviso to Article
304(b) of the Constitution, though such challenge is found not
maintainable for the reason as enumerated by the Court in the
case of Subhodaya Cheat Fund (supra), that once the Act has
been promulgated with the Presidential sanction, no fresh
sanction for amendment thereof may be necessary, particularly
when no addition in restrictions is imposed, than the previous. In
the instant case the provision of charging of the market fees has
Page 30 of 35
been there in the original Act of 1972 (section 17 thereof) and the
same has remained unaltered, with the power granted to the State
Government to add or exclude items in the Schedule thereof.
These provisions are not challenged in this case but only the
Amendment Acts of 2014 and 2017, which changes the definition
of the ‘agricultural produce’ and adds an additional item in the
Schedule. There appears no conflict between the provision of law
as above and the amendments brought in by the Amendment Acts
of 2014 and 2017. Hence such amendment brought in to the
original Act, cannot be termed as unreasonable, so mush so to
restrict the free flow of trade of the writ petitioner company. It may
be a restriction or burden from the point of view of the petitioner
itself but cannot be termed so on inter-state or intra-state
commerce, viewed from the angle of the trade as a whole. These
may be considered as the regulatory measures which may not be
challenged under the law.
(53) Rice bran oil is the edible vegetable oil extracted from the hard
outer layer of rice called bran. The vegetable oil has been a part of
the Schedule of the Act. Hence, there is no apparent incoherence
due to inclusion of the said item in the Schedule, with the other
portions of the Statute. It is an agricultural produce derived from
the bran of rice, a by product of the milling process. Its production
and processing is no different from the other vegetable oils. Oil
obtained from the oil-bearing product, which is an ‘agricultural
produce’ according to the definition clause of the statute, by
process of extraction by a solvent is the processed by-product and
not the different product altogether. Due to the processing, it does
not undertake a character of any synthetic product by losing its
original, natural and organic character. The Rice Bran Oil being
Page 31 of 35
considered as an agricultural produce and a natural derivative
from the rice crop or paddy, is also guided under the framework of
the Food Safety and Standards Authority of India (FSSAI). This
Court in the case of Amit Trade Centre (supra) has held in a
similar way, as discussed above.
54) For the reasons as afore stated, the other challenge raised
against the said Amendment Acts, that by dint of those the
petitioners have been subjected to double taxation, does not
appear to be a substantive and cogent one. The concept of double
taxation has been deprecated by the Supreme Court in the case of
Avinder Singh Vs. State of Punjab reported in 1979 1 SCC 137
in the following words:
“A feeble plea that the tax is bad because of the
vice of double taxation and is unreasonable
because there are heavy prior levies was also
voiced. Some of these contentions hardly merit
consideration, but have been mentioned out of
courtesy to counsel. The last one, for instance,
deserves the least attention. There is nothing in
Article 265 of the Constitution from which one can
spin out the constitutional vice called double
taxation. (Bad economics may be good law and vice
versa). Dealing with a somewhat similar argument,
the Bombay High Court gave short shrift to it
in Western India Theatres [Cantonment Board
Poona v. Western India Theatres Ltd., AIR 1954
Bom 261] . Some undeserving contentions die hard,
rather survive after death. The only epitaph we
may inscribe is : Rest in peace and don’t be re-born
! If on the same subject-matter the legislature
chooses to levy tax twice over there is no inherent
invalidity in the fiscal adventure save where other
prohibitions exist.”
Page 32 of 35
The other point raised in this case by the writ petitioners
is that the market fees levied against it has to be quid pro quo,
which is allegedly not in this case and hence cannot be maintained
against the petitioners. Quid pro quo is a Latin term, meaning
“something for something”. It describes a situation when two
parties mutually agree to exchange goods or services reciprocally,
when one party’s actions are conditional on another’s. In the
context of fees payable, quid pro quo refers to a principle where a
fee is justified by the clear exchange of value between the payer
and the recipient for a specific service rendered. It essentially
means that a fee is a payment for a service received. The test of
quid pro quo is not to be satisfied with close or proximate
relationship in all cases. It is the settled law that the test would be
satisfied if the fees, so levied and collected are shown to have been
expended for the purpose for which it has been levied. Fees
charged for licence is a regulatory fee, unlike fees for services
rendered which is compensatory in nature. In terms of Article
110(b) and Article 199(2) of the Constitution, which are quoted
bellow, fees for licences and the fees for services are expressions
used indicating thereby that they are not the same;
‘110. Definition of “Money Bill”.–
** ** ** ** (2)
A Bill shall not be deemed to be a Money Bill by reason
only that it provides for the imposition of fines or
other pecuniary penalties, or for the demand or
payment of fees for licences or fees for services
rendered, or by reason that it provides for the
imposition, abolition, remission, alteration or
regulation of any tax by any local authority or body
for local purposes.’
‘199. Definition of “Money Bill”.–
** ** ** ** (2)
A Bill shall not be deemed to be a Money Bill by reason
only that it provides for the imposition of fines or
Page 33 of 35
other pecuniary penalties, or for the demand or
payment of fees for licences or fees for services
rendered, or by reason that it provides for the
imposition, abolition, remission, alteration or
regulation of any tax by any local authority or body
for local purposes.’
(54) The purpose of the Act of 1972 is to regulate the marketing of
agricultural produce and the market-place users are liable to pay
the licence fees, as per the said statute. Hence, it is clear that the
impugned licence fee is regulatory in character. Therefore, stricto
sensu the element of quid pro quo does not apply in the case. The
question to be considered is if there is a reasonable correlation
between the levy of the licence fee and the purpose for which the
provisions of the Act and the Rules have been enacted/framed. In
the particular facts of this case the answer of the said question
has to be in affirmative. Also, that the Court has no hesitation to
concur with the submission of the respondent that the levy as
impugned is not discriminatory in nature. Hence, levy of
regulatory fees in this case should not be considered as vitiable
being in contravention of the principle of quid pro quo. Similar
proposition has been upheld by the Supreme Court in the
judgment of A.P. Paper Mills Ltd. Etc. Etc vs Government Of A.P.
And Anr [2000 (8) SCC 167].
(55) In the case of State of Tripura v. Sudhir Ranjan Nath [ (1997) 3
SCC 665] the Supreme Court has held that the distinction
between compensatory fee and regulatory fee is well established by
several decisions of this Court. Reference may be made to the
decision of the Constitution Bench in Corpn. of Calcutta v. Liberty
Cinema 1965 AIR(SC) 1107 : 1965 (2) SCR 477). It has been held
in the said decision that the expression ‘licence fee’ does not
Page 34 of 35
necessarily mean a fee in lieu of services and that in the case of
regulatory fees, no quid pro quo need be established. The following
observations may usefully be quoted : ‘This contention is not
really open to the respondent for Section 548 does not use the
word “fee”, it uses the words “licence fee” and those words do not
necessarily mean a fee in return for services. In fact in our
Constitution fee for licence and fee for services rendered are
contemplated as different kinds of levy. The former is not intended
to be a fee for services rendered’.
(56) The other case of the same Court may also be referred to that
is Vam Organic Chemicals Ltd. v. State of U.P. [1997 (2) SCC 715],
wherein the Court has held that there is a distinction between fees
charged for licence i.e. regulatory fees and the fees for services
rendered as compensatory fees. In the case of regulatory fee like
the licence fee, existence of quid pro quo is not necessary although
the fee imposed must not be, in the circumstances of the case,
excessive.
(57) The Privy Council in George Walkem Shannon v. Lower
Mainland Dairy Products Board [1939 AIR(PC) 36(PC)] has observed
:
“If licences are granted, it appears to be no objection
that fees should be charged in order either to defray
the costs of administering the local regulation or to
increase the general funds of the Province or for both
purposes …. It cannot, as their Lordships think, be an
objection to a licence plus a fee that it is directed both
to the regulation of trade and to the provision of
revenue. It would, therefore, appear that a provision
for the imposition of a licence fee does not necessarily
lead to the conclusion that the fee must be only for
services rendered.”
Page 35 of 35
(58) For all the reasons as discussed above, the Court finds
that challenge as to the vires of the West Bengal Agricultural
Produce (Regulation) (Amendment) Act, 2014 and West Bengal
Agricultural Produce (Regulation) (Amendment) Act, 2017 and
also to the notifications No. 429-M.W&C/9M-9/2000 dated
January 29, 2002 and No. 2537-M.W.&C/1M-05/99(Pt.1) dated
August 22, 2008, that those are ultra vires the Constitution, is
not sustainable. The reasonableness of the impugned legislation
challenged principally on the grounds of non-compliance with
the Proviso to Article 304(b) of the Constitution or imposing
double taxation upon the petitioners or that the levy being not
in compliance with the principal of quid pro quo have not been
substantiated in the instant case by the petitioners. The legality
and propriety of the same as challenged in the instant writ
petitions are found not to be maintainable. On the other hand it
is found that the fees imposed is in the nature of regulatory
levy, not challenged to be excessive in nature. Hence, being
devoid of any merit the writ petitions No. W.P. 17846(w) of 2012
and W.P. 11513(w) of 2019 are dismissed. The petitioner
company is held to be liable to duly pay the amount of market
fees as per demand.
(59) Urgent certified website copy of this judgment, if applied for, be
supplied to the parties upon compliance with all requisite
formalities. Digitally signed by RAI
RAI CHATTOPADHYAY
CHATTOPADHYAY Date: 2025.05.06 13:24:36
+05’30’
(Rai Chattopadhyay, J.)