M/S. Askaran Amit Kumar Princha 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 the District Regulated Market Committees from July 1, 2017, to June 12, 2020, was without authority of law. The Court found that the petitioners had not pleaded or proved 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 a claim for refund of illegally collected tax or cess can only succeed if it is proven that the burden was not passed on. Since the petitioners failed to make such averments, the Court was not inclined to direct the refund of the cess collected. Furthermore, considering the financial condition of the Respondent Board and the potential impact on its functioning, the Court also declined to direct the Respondent Board to divest itself of the benefit of the illegally collected cess and pay it to a charitable organization, as was done in similar cases. The writ petitions were disposed of with these observations.

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. Asakaran Amit Kumar Princha and Anr., Indrapraasth Roller Flour Mills, and M/s. Rathi Traders and Anr., 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 of market cess was illegal and without authority of law, particularly after the introduction of the Goods and Services Tax (GST) regime. The period in dispute is 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 the District Regulated Market Committees is illegal and without authority of law, especially in light of the Goods and Services Tax (GST) regime, thereby violating Article 265 of the Constitution of India? The petitioners contended that the Assam Agricultural Produce Market Act, 1972, under which the cess was levied, stood superseded or rendered inoperative by the introduction of GST, which is a comprehensive indirect tax regime. They argued that no tax or cess can be levied except by authority of law, and the continued levy of market cess post-GST was without such authority. The respondents, the State of Assam and the Assam State Agricultural Marketing Board, argued that the market cess is a fee for services rendered by the Market Committees and is not a tax. They maintained that the Assam Agricultural Produce Market Act, 1972, and the levy of cess thereunder remain valid and are not superseded by the GST regime, as the cess is collected for specific regulatory and developmental activities within the agricultural markets.