Fees Collected by Agricultural Market Committee for its Services is not Tax: Andhra Pradesh HC dismisses Petition [Read Order]
The court noted that as per plain reading of the provision, the market fee is leviable on purchase or sale of rice by a trader to a trader because there is service rendered by a market committee at each of the stages. Traders were using the premises within the notified area of the agricultural market committee
Agricultural market committee fees – Agricultural Tax – Service Tax – TAXSCAN
Agricultural market committee fees – Agricultural Tax – Service Tax – TAXSCAN
The Andhra Pradesh High Court in a recent case observed that fees collected by the agricultural market committee for its services are not tax and dismissed the writ petition alleging double taxation on sale of 'Basmati rice'.
One of the petitioners who is a trader of Basmati rice, claimed that it sources the rice from Punjab where it already pays agricultural market committee tax and thus contended that if the State of Andhra Pradesh imposes tax on the very same stock, it amounts to double taxation.
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The Market Committee on the other hand argued they are not collecting any tax from the petitioners and they are only collecting fee under Section 12 of the AP (Agricultural Produce and Live Stock) Markets Act 1966, for providing services to the petitioners.
The Petitioners contended that Basmati Rice has not been notified as commodity under Schedule-II of the Act whereas market fee can only be collected on commodities notified thereunder.Further argued that “Basmati rice does not come under raw and boiled rice” and hence sought to set aside the impugned order.
The respondent filed the notified Schedule of the Agricultural Produce Market Act, for the State of Punjab and Haryana stating that there is no difference of Basmati Rice, raw rice or boiled rice and neither is their any exemption, and hence the market fee levied is reasonable.
The Court viewed that “Rice‟ means every variety of dehusked polished, raw and parboiled rice and includes rice equivalent of paddy held in stock. Basmati rice can be anything either raw or boiled rice. Unless the basmati rice is specifically exempted, it shall be construed as either raw or boiled rice.”
The court noted that as per plain reading of the provision, the market fee is leviable on purchase or sale of rice by a trader to a trader because there is service rendered by a market committee at each of the stages. Traders were using the premises within the notified area of the agricultural market committee.
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While dismissing the petition the single bench of Justice Tarlada Rajasekhar Rao held that levy of tax is for the purposes of general revenue which when collected forms part of the public revenue of the State, that a fee is generally defined to be a charge for a special service rendered to individuals by some Governmental agency.
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