M/S. Modi Enterprise And Anr. vs. The State Of Assam And 5 Ors.

Held

The Court held that the levy and collection of market cess by the Assam State Agricultural Marketing Board and its committees during the period from July 1, 2017, to June 12, 2020, was illegal and without authority. The Court found that the petitioners had not made any averments in their writ petitions to demonstrate that they had not passed on the burden of the cess to their customers. Citing the doctrine of unjust enrichment and Supreme Court judgments, the Court held that the petitioners were not entitled to a refund of the cess collected. However, the Court also considered the financial condition of the Respondent Board and decided against directing the Board to recover the amount from itself, deeming it not in the interest of justice and equity, and potentially hampering its functioning. The Court therefore did not direct restitution by the Respondent Board.

Facts

The petitioners, M/s. Bhatter Traders and Anr., M/s. Jai Bajrangbali Food Products and Anr., M/s. Sitaram Rameswarlal and Anr., M/s. Mahabir Oil Traders Industries and Anr., Lahkar Udyog Private Ltd., M/s. Modi Enterprise and Anr., Nezone Foods Private Ltd., M/s. Askaran Amit Kumar Princha and Anr., M/s. Rathi Traders and Anr., and Indraprasth Roller Flour Mills, filed writ petitions challenging the levy and collection of market cess by the Assam State Agricultural Marketing Board and various District Regulated Market Committees. The petitioners argued that the levy was illegal and without authority, particularly after the introduction of the Goods and Services Tax (GST) regime. The period in dispute is primarily from July 1, 2017, to June 12, 2020. The State of Assam and the Marketing Board were the respondents.

Key Issues

1. Whether the levy and collection of market cess by the Assam State Agricultural Marketing Board and its constituent committees on goods brought for resale, during the period from July 1, 2017, to June 12, 2020, was illegal and without authority, especially in light of the Goods and Services Tax (GST) regime? Petitioner's arguments: The petitioners contended that the levy of market cess was ultra vires the Assam Agricultural Produce Market Act, 1972, and that the same was rendered illegal and without jurisdiction with the introduction of GST. They argued that the State and its agencies could not levy taxes or imposts that were subsumed under GST. Revenue/State's arguments: The respondents argued that the Assam Agricultural Produce Market Act, 1972, and the rules framed thereunder continued to be valid and that the market cess was not a tax that was subsumed by GST. They also raised the issue of unjust enrichment, arguing that the petitioners had passed on the burden of the cess to their customers and therefore were not entitled to a refund.