STATE OF BIHAR AND ORS.ETC.versusASHOK INDUSTRIES & ANR. ETC.

                  STATE OF BIHAR AND ORS.ETC.
A
                                      v.
                  ASHOK INDUSTRIES & ANR. ETC.

                           FEBRUARY 10, 1987

B          [0. CHINNAPPA REDDY AND V. KHALID, JJ.]

        Bihar Agricultural Produce Markets Act, 1960, S.2(P)(i) Expla-
  nation and s.27 Explanation-'Sale'-What is-Presumption that
  notified agricultural produce have been bought or sold in market area--
  Two Explanations, Whether can Co-Exist-Preference to charging sec-
C tion over definition section to be given-Provision to be construed
  harmoniously.
             \
          Statutory Interpretation-Fiscal Laws-Due importance to be
    given to phraseology used in charging section.                             \,

D       Section 2(P)(i) of th,e Bihar Agricultural Produce Markets Act,
   1960 defmes 'sale' to mear1 any transfer of property in goods for cash or
  deferred payment or other valuable consideration. The Explanation to
  Section 2(P)(i) inserted by the Bihar Agricultural Produce (Markets)
  Amendment Act, 1982 provides that notwithstanding anything con-
  tained in any law for the time being in force, 'sale' shall be deemed to
E have taken place for the purpose of this Act within a market area when
  the goods are transferred form the Principal to his selling agent or to ,
  the Arhatia within the market area or outside. The amending Act also
  added an Explanation to the charging section, section 27 providing that
  all notified agricultural produce leaving a market area shall, unless the
  c0ntrary is proved, be presllmed to have been bought or sold in such area.
F
         The respondents challenged before the High Court the vires of the
  Explanation to section 2(P)(i) on the ground that it encroached upon
  Entry 42 of List I Seventh Schedule to the Constitution. The High Court
  refrained from declaring the Explanation bad but read it down and held
  that it should be read in harmony with the Explanation to Section 27
G and directed the marketing committee concerned to make assessment of
  fees after giving the petitioners an opportunity as provided in the Expla-
  nation to Section 27.

          Dismissing the Appeal, this Court,

H         HELD: J. lb construing the two Explanations preference has to

                                     210
                     STATE OF BIHAR v. ASHOK INDUSTRIES                      211

     be given to the Explanation to the charging section over the Explanation A
     to the definition section consistent with the rules of interpretations of
     such provisions. l214G-H]

            2. l In fiscal laws due importance has to be given to the phraseo-
     logy used in the charging section. Section 27 gives to the market com-
     mittee the power to levy and collect market fees on the agricultural           B
     produce bought or sold in the market area at the rate given therein. The
     Explanation raises a presumption that all notified agricultural produce
     leaving a market area shall be presumed to have been bought or sold in
     such an area. But this presumption is rebuttable because the Explana-
     tion gives the affected party an opportunity to satisfy the assessing autho-
     rities that there was neither buying nor selling in a given case. l213F-H]
                                                                                    c
           2.2 In all transactions, the parties get an opportunity to satisfy
     the assessing authorities whether such transactions are sales or not. But
     the Explanation to Section 2{P)(i) introduces complications. This Expla-
     nation states by a deeming fiction that when goods are transferred from
     the principal to his selling agent or Arhatia within a market area or          D
     outside the market area, a sale takes place. This Explanation encompas-
     ses within its sweep, sales of all kinds within the market area or outside
     or within the State or outside. [214A-C]                        ·

            2.3 The Explanation to Section 2(P)(i) has not been well worded
     nor properly placed. The Explanation is in excess of the powers of the         E
     State Legislatnre since the dispute can be resloved better by allowing
     the two Explanations to co-exist by reading them harmoniously. In
     doing so, it is necessary to read down the Explanation to Section 2(P)(i)
     and give full effect to the Explanation to the charging section. The
-+   Explanation to Section 27 gives an opportunity to the affected persons
 \   to satisfy the assessing authorities that the transaction in question is not   F
     a sale. This Explanation should be deemed to take in all sales including
     those mentioned in the Explanation in Section 4(P)(i). In other words,
     even transactions coming within the ambit of Explanation to Section
     2(P)(i) have to be governed by the Explanations to Section 27. 1214E-G I

            3. If the Government wants a stricter control over the transac- G
     lions in the market area it is for them to suitably amend the Explanation
     in question by excluding its operation from the Explanation to Section
     27. [21SB]

           CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2245
     to 2249 of 1985.                                          H
    212                   SUPREME COURT REPORTS           [1987] 2 S.C.R.

A        From the Judgment and Order dated 8.11.1984 of the Patna High
    Court in C.W .J. Case No. 2812 of 1982.                                     ~


          V.M. Tarkunde and M.P. Jha for the Appellants.

          S.N. Kacker and L.R. Singh for the Respondents.
B
          Vi jay Hansaria for Respondent in C.A. No. 2248/85.

          The J udg,ment of the Court was delivered by
        KHALID, J. In these appeals, by special leave, the short ques-
  tion that falls for decision is as to how Explanation to Section 2(P)(i)
C inserted by the Bihar Agricultural Produce Markets (Amendment)
  Act, 1982, should be read with the Explanation to Section 27 also
  inserted by the same Act. Before the High Court, the vires of Explana-
  tion to Section 2(P)(i) was challenged on the ground that it encroached
  upon Entry 42 of list I of the Seventh Schedule. The Division Bench of
D the High Court after considering the various authorities dealing with
  the concept of sale, refrained from declaring the Explanation bad but
  read it down and held that it should be read in harmony with the
  Explanation to Section 27 and directed the marketing committee con-
  cerned to make assessment of fees after giving the petitioners an
  opportunity as provided in the Explanation to Section 27.
E         In this Judgment, we do not propose to go into the question
    whether sale as explained in the Explanation to Section 2(P)(i)) would
    include interstate trade etc. and on that reasoning strike down the
    Explanation. We propose to consider the scope of the two Explana-
    tions to see whether they can c-0-exist.
                                                                               ___. ..
F         The Original Act was called the Bihar Agricultural Produce
    Markets Act, 1960, (for short the Act). This Act was enacted to regu-
    late the buying and selling of crops by providing suitable and regulated
    markets, to eliminate middlemen and to help the cultivators and the
    buyers in the disposal of the commodities. The Act enabled the mar-
    keting committee to levy a fee for transactions taking .Place in the
G   market area. To get at persons who manage to escape the levy of
    market fee by ingenious transactions, the Act was amended by insert-
    ing a new definition Section 2(P)(i) along with an Explanation and also
    adding an Explanation to Section 27. What we have to decide in this
    case is as to how these two Explanations have to be construed. In other
    words whether cine Explanation excludes the other or whether one is
H   the compliment of the other.
               STATE OF BIHAR v. ASHOK INDUSTRIES [KHALID, J.]              213

             It is necessary first to quote the two provisions under considern-    A
       tion. Section 2(P)(i) along with the Explanation reads as follows:

                  "2(P)(i)- 'Sale' means any tmasfer of property in goods
                  for cash or deferred payment or other valuable considern-
                  tion and shall include transfer or acquisition of goods on hire
                  purchase or under any other system in which payment of B
                  valuable consideration is made by instalment notwithstand-
                  ing the fact that the seller retains title in goods as valuable
                  security of payment of consideration or for any other
                  person.

                        Explanation-Notwithstanding anything contained in          C
                  any law for the time being in force sale shall be deemed to
                  have taken place for the purpose of this Act within a
                  market area when the goods are transferred from the
                  Principal to his selling agent or to the Arhatia within the
                  market area or outside the market area."
                                                                                   D
       Section 27 is the charging section. It reads as follows along with the
       Explanation:

                  "Section 27-Power to levy fees-(!) The market commit-
                  tee shall levy and collect market fees on the agricultural
                  produce brought or sold in the market area, at the rate of       E
                  rupee one per Rs.100 worth of agricultural produce.

                  Explanation: All notified agricultural produce leaving a
                  market area, shall unless the contrary is proved be pre-
                  sumed to have been bought or sold in such area."
                                                                                   F
             In fiscal laws due importance has to be given to the phraseology
       used in the charging section. Section 27 gives to the market committee
       the power to levy and collect market fees on the agricultural produce
       bought or sold in the market area at the rate given therein. The Expla-
       nation raises a presumption and that is that all notified agricultural
       produce leaving a market area shall be presumed to have been bought G
...I   or sold in such an area. But this presumption is rebuttable because the
       Explanation gives the affected party an opportunity to satisfy the as-
       sessing authorities that there was neither buying nor selling in a given
       case.

             This Section with its Explanation thus creates no difficulty. It is   H
        214                    SUPREME COURT REPORTS            [1987] 2 S.C.R.

        when we come to the definition section, extracted above, that the
    A   difficulty arises. 'Sale' is defined in Section 2(P)(i). If the definition
        had stopped there, there would have been no difficulty in construing
        Section 27 and its Explanation. In all transactions the parties get an
        opportunity to satisfy the assessing authorities whether such trans-
        actions are sales or not. But the Explanation to Section 2(P)(i) intr-0-
    B   duces complications. This Explanation states by a deeming fiction,
        that when goods are transferred from the principal to his selling agent
        or Arhatia within a market area or outside the market area a sale takes
        place. This Explanation encompasses within its sweep, sales of all
        kinds within the market area or outside or within the State or outside.
        That is the reason why its validity was challenged by the respondents
    C   before the High Court.

            The learned counsc:I for the appellants contended that the Expla-
      nation to Section 2(P)(i) could stand independent of the Explanation
      to Section 27 since they have different fields of operation. According
      to him, if this Explanation is made subject to the Explanation to Sec-
    D tion 27, this Explanation would be rendered redundant and futile. The
      learned counsel for the respondents, on the other hand pleaded that
      since both the Explanations were brought on the Statute Book by the
      same amendment, they must be read harmoniously and the Explana-
      tion to the difinition section should be read subject to the Explanation
      to the charging section.
    E
              We have considered the rival contentions carefully. We feel that
        the Explanation to Section 2(P)(i) has not been well worded nor pr-0-
        perly placed. We are steering clear of the contention that the Explana-
        tion is in excess of the powers of the State Legislature since we feel
        that the dispute can be resolved better by allowing the two Explana-
    F   tions to co-exist by rnading them harmoniously. In doing ~o, it is
        necessary to read down the Explanation to Section 2(P)(i) and give full
        effect to the Explanation to the charging section. The Explanation to
        Section 27 gives an opportunity to the affected persons to satisfy the
        assessing authorities that the transaction in question is not a sale. This
        Explanation should be deemed to take in all sales including those
    G   mentioned in the Explanation to Section 2(P)(i). In other words, even
I
        transactions coming within the ambit of Explanation to Section 2(P)(i)       )
        have to be governed by the Explanation to Section 27. In construing
        the two Explanations we have give preference to the Explanation to
        the charging section over the Explanations to the definition section
        consistent with the rules of interpretation of such provisions. If that be
    H   so, the Judgment of the High Court has to be upheld and these
                   STATE OF BIHAR v. ASHOK INDUSTRIES [KHALID, J.]         215

        appeals have to be dismissed. We do so. As directed by the High Court A
 -y     the marketing committee concerned can make assessment of fees only
  '
        after giving the respondents an opportunity to show cause as laid down
        in the Explanation to Section 27. If the Government wants a stricter
        control over the transactions in the market area it is for them to suit-
        ably amend the Explanation in question by excluding its operation B
        from the Explanation to Section 27.

                 In the circumstances of the case, there will be no order as to
        costs.

        M.L.A.                                               Appeal dismissed.




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