Lahkar Udyog Private LTD. vs. The State Of Assam And 3 Ors.

Held

The Court held that the petitioners had not made any averments in their writ petitions to demonstrate that the burden of the cess collected was not passed on to their customers. Citing the Supreme Court judgments in Mafatlal Industries Limited & Others vs. Union of India and Swanstone Multiplex Cinema Private Limited, the Court stated that a claim for refund can only succeed if it is alleged and proved that the person from whom the tax was illegally collected had not passed on the burden to another person. As this was not established, the question of refunding the amount collected as cess to the petitioners did not arise. Furthermore, the Court considered the financial condition of the Respondent Board, noting its penurious state and reliance on grant-in-aid. Directing the Board to recover the amount from itself was deemed not to be in the interest of justice, equity, and good conscience, as it would seriously hamper its functioning. Therefore, the Court was not inclined to pass any directions for restitution by the respondent Board of the cess collected. 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. Askaram Amit Kumar Princha and Anr., Indrapraprasth Roller Flour Mills, and M/s. Rathi Traders and Anr., filed writ petitions challenging the levy and collection of market fees/cess by the Assam State Agricultural Marketing Board and various District Regulated Market Committees. The period in dispute appears to be from July 1, 2017, to June 12, 2020. The petitioners argued that the levy was illegal and contrary to law, particularly in light of the Goods and Services Tax (GST) regime. The State and the Marketing Board contended that the levy was valid under the Assam Agricultural Produce Market Act, 1972.

Key Issues

1. Whether the levy and collection of market fees/cess by the Assam State Agricultural Marketing Board and the District Regulated Market Committees from the petitioners during the period from July 1, 2017, to June 12, 2020, was illegal and without authority, particularly in light of the introduction of the Goods and Services Tax (GST) regime? (Question of law) Petitioner's Arguments: The petitioners contended that the levy of market fees/cess was illegal and ultra vires the Assam Agricultural Produce Market Act, 1972, and the Constitution of India, especially after the implementation of GST. They argued that the State and its agencies were not empowered to levy such fees when GST was already applicable. They sought a refund of the amounts collected. Revenue/State's Arguments: The respondents argued that the levy was authorized under the Assam Agricultural Produce Market Act, 1972, and that the introduction of GST did not negate their power to collect these fees. They also raised the issue of unjust enrichment, arguing that the petitioners had likely passed on the burden of these fees to their customers and therefore were not entitled to a refund.