A two-judge bench of the Rajasthan High Court has held that the levy under section 17 of the Rajasthan Agriculture Produce Marketing Act, 1961 is a ‘ Fee ’ and not a cess and therefore, the same is not abolished after the rollout of Goods and Services Tax ( GST ).
The Imarti Lakdi Vyapari Sansthan has approached the High Court the State Government has no power to charge tax/cess payable under the provisions of Rajasthan Agriculture Produce Marketing Act, 1961 from its members.
It was contended that the cess on the purchase and sale of timber from the members of the petitioner society is illegal, as the same is not an agricultural produce. It was also contended that after the introduction of Goods and Service Tax, the impugned cess cannot continue. In support of their argument, the petitioners relied on a booklet published by the State Government, which contain an information that after imposition of GST, all cesses and surcharges levied by the State Government and Central Government shall be done away with.
The bench comprising Justices sangeet Lodha and Dinesh Mehta observed that the levy under Section 17 of the Act of 1961 is a ‘fee’.
“It is a settled proposition of law that the State can levy the market fee under the relevant provisions of a statute, enacted in the exercise of powers available to it under Entry 66 of the second list of the VIIth Schedule. It has also been settled by Hon’ble the Supreme Court in the case of Sreenivasa General Traders & Ors. vs. State of Andhra Pradesh & Ors., reported in AIR 1983 SC 1246 that irrespective of the fact, whether a dealer carries on business or trade in the market yard or not, the agriculture produce brought by such dealer in the notified area is exigible to market fee, leviable under the Act,” the bench said.
The ebnch also held that the argument that after promulgation of Goods and Service Tax, the levy of cess under the Act of 1961 cannot continue, is misconceived.
“The constitution (One Hundred and First Amendment) Act, 2016 was enacted by the Parliament with the intent to consolidate number of indirect taxes which were levied by the Union and States with the intention to reduce the Goods and Services Tax (GST) by giving concurring taxing power to Union and States for levying GST on every transaction of supply of goods or services both. There was a clear objective of the aforesaid constitutional amendment that with the introduction of Goods and Services Tax, not only the indirect taxes but the cesses and surcharges levied on goods and services shall also be subsumed in it,” the bench said.
“By a combined effect of Section 174 of CGST Act and RGST Act, the levy governed by only those enactments have been abolished, which have been enlisted in said sections. The market fee leviable under the Act of 1961 neither finds mention in any of the repeals and saving provisions, nor can it be so done, as the market fee is leviable under a separate enactment under the State’s power to legislate under Entry 66 of the List-II of the VIIth Schedule,” the bench added.
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