S. K. GANGELE, J.
(1.) This Judgment shall also govern the disposal of W. A. No. 610/07 and W. A. No. 541/07.
(2.) Both the aforesaid writ appeals have been filed against the common order passed by the learned Single Judge in W. P. No. 3798/2005. The original petitioner-M/s Agro Solvent Product (P) Ltd. company has been incorporated under the provisions of Companies Act, 1956. It carries on manufacturing of edible oil in factory situated at Datia. The factory is situated within the market area notified under section 7 of the M. P. Krishi Upaj Mandi Adhiniyam, 1972 (hereinafter referred to as the "Adhiniyam, 1972"). For the purpose of manufacture of oil named as sunflower oil, the company buys agricultural produce i.e. sunflower as raw material in its factory for extraction of oil from it. The company purchases the sunflower from the farmers of the State of Madhya Pradesh and outside of State of M. P. The Krishi Upaj Mandi Samiti, Datia levied the market fee on the petitioner-company in exercise of power under section 19 of the Adhiniyam, 1972. The company challenged the imposition of market fee by filing a writ petition before the Hon'ble High Court. It contended that the company is manufacturing oil from the agricultural produce i.e. sunflower and it is not in the process of 'Processing', hence, the Krishi Upaj Mandi Samiti has no power and authority to levy market fee. The learned Single Judge partly allowed the petition by holding that the company is in process of manufacturing of oil from sunflower, hence, market fee could not be levied on the company under the provisions of Adhiniyam, 1972 by the Krishi Upaj Mandi Samiti, however, the learned Single Judge refused to order refund of the market fee to the petitioner- company collected by the Mandi on the principle of doctrine of Unjust Enrichment. Against the finding recorded by the learned Single Judge that the company is not leviable of market fee by the Mandi Samiti, the Mandi Samiti has filed Writ Appeal No. 610/2007 and against (the order of not refunding of market fee to the company collected by the Mandii, the petitioner-company filed Writ Appeal No. 541/2007.
(3.) Learned counsel for the Krishi Upaj Mandi Samiti has contended that as per the provisions of section 19 and section 2(1)(mmm) of the Adhiniyam, 1972, the Mandi is empowered to levy market fee because the petitioner is in the process of processing the sunflower and the original petitioner-company is not in the business of manufacturing of oil. It simply extracting oil by processing the sunflower. Learned counsel further contended that the company is also not liable to refund the amount as held by the learned Single Judge on the principle of doctrine of Unjust Enrichment. In support of his contentions, learned counsel relied on the following judgments :-
i) 2001 (3) SCC 135, Park Leather Industry (P) Ltd. and anr. vs. State of U.P. and ors.; ii) 1984 (4) SCC 516, Krishi Utpadan Mandi Samiti and anr. vs. Ganga Dal Mill and Co. and ors.; iii) AIR 1992 SC 224, M/s Saraswati Sugar Mills vs. Haryana State Board and ors.; iv) 2006 (7) SCC 322, Sonebhadra Fuels vs. Commissioner, Trade Tax, U.P., Lucknow; v) 2003 (2) SCC 494, Kedia Agglomerated Marbles Ltd. vs. Collector of Central Excise vi) 1999(9) SCC 162, Indian Poultry and ors. vs. Sales Tax Officer, Rajnandgaon and ors. vii) 2007(4) SCC 155, Crane Betel Nut Powder Works vs. Commissioner of Customs and Central Excise, Tirupathi and anr. viii) 2000 (7) SCC 39, Indian Hotels Co. Ltd. and ors. vs. Income Tax Officer, Mumbai and ors. ix) AIR 1989 SC 627, The Collector of Central Excise, Coimbatore vs. M/s Protein Products of India Ltd.; and x) 2005 (3) SCC 738, Sahakari Khand Udyog Mandi Ltd. vs. Commissioner of Central Excise and Customs.
(4.) Contrary to this, learned counsel for the Company has contended that the company is in the business of manufacturing of sunflower from the raw material i.e. sunflower because after use of raw material a new product i.e. oil comes out, hence, the company is not in process of processing of sunflower. The learned Single Judge has rightly recorded the; finding in this regard. Learned counsel further submitted that the learned Single Judge has committed an error of law by holding that the company is not entitled to receive the refund of the Mandi fee collected from the petitioner on the principle of doctrine of Unjust Enrichment. In support of her contentions, learned counsel relied on the following judgments :-
i) (2000) 6 SCC 264, Edward Keventer Pvt. Ltd. vs. Bihar State Agricultural Marketing Board and others; ii) 2000 (I) JLJ 391. S. K. Goyal Mill (M/s) and another vs. Krishi Upaj Mandi Samiti and another; iii) (1998) 8 SCC 250, Bhadrachalam Paperboards Ltd. and another vs. Government of A.P. and others; and iv) AIR 1967 SC 1895, M/s Devi Das Gopal Krishnan, etc. vs. State of Punjab and others;
(5.) From the facts of the case, it is clear that company has been using sunflower as raw material for the purpose of production of sunflower oil. It is an admitted fact that the company has purchased the raw material sunflower from outside of the State on which the Mandi has levied market fee i.e. Uttar Pradesh, Bihar. In para 6.6(v) to the grourrds of the petition, the petitioner-company pleaded that sunflower oil is extracted out of sunflower seed by solvent extraction method and after such extraction a new commodity commercially known as sunflower cooking oil is obtained in liquid form having separate and distinct, identity, character and use, and sale of this new commodity; sunflower oil cannot be said to be sale of "Sunflower seeds" after processing.
(6.) Contrary to this, the respondent in W. A. No. 541/07, Krishi Upaj Mandi Samiti stated in the return that the company is processing sunflower in order to get sunflower oil after processing sunflower seeds in its factory.
(7.) The question for determination is as to whether the process carried out by the company in its premises for the purpose of extraction of sunflower oil from sunflower is a processing activity or is a manufacturing activity. Within the meaning of provisions of Adhiniyam, 1972, section 2(mmm) of the Adhiniyam, 1972 prescribes "processing" which is as under:- "(mmm) "Processing" means powdering, crushing, decorticating, husking, parboiling, polishing, ginning, pressing, curing or any other treatment to which an agricultural produce or its product is subjected to before final consumption," In Hindi definition has also been given of the word 'Processing" under head "Processing", which is as under :-
(8.) The learned Counsel for the Krishi Upaj Mandi Samiti stressed on the word . He submitted that if there is some ambiguity between the English version and Hindi version, the Hindi version would be applicable. For the aforesaid submission, learned counsel relied on the judgments of the Hon'ble Supreme Court in the case of Park Leather Industry (P) Ltd. and anr. vs. State of U.P. and ors., reported in 2001 (3) SCC 135 and Krishi Utpadan Mandi Samiti and anr. vs. Ganga Dal Mill and Co. and ors., reported in 1984 (4) SCC 516. The company in its petition has clearly stated that it has been using a solvent extraction method to extract oil from sunflower seeds and a different identity of sunflower oil comes out after extraction which is a commercial viable commodity. It is a fact that the sunflower oil is a different identity from sunflower seeds because even though the sunflower seeds crushed into a small pieces or powdered the sunflower oil would not come from it. The extraction of the sunflower oil from sunflower seeds depends upon various processing activities and the aforesaid activities have been carried out with the help of different machines in a manufacturing plant.
(9.) The Constitution Bench of the Hon'ble Supreme Court in the case of M/s Devi Das Gopal Krishnan vs. State of Punjab and others, reported in AIR 1967 SC 1895 has held as under with regard to manufacture of refined oil from seeds under the provisions of Punjab General Sales Tax Act:-
"30. The last argument is that the said definition only takes in the purchase of goods for use in the manufacture of goods but tax is imposed on the purchase of goods for producing oil. To state it differently, oil is not manufactured out of oilseeds but only produced. Reliance is placed upon the user of two words in the Act, viz., manufacturing or processing in the proviso to sub-section (2) of section 4 and sub-section (5) thereof and the expression "edible oils produced" in entry of Schedule B to the Act and a contention is raised that the Act itself makes a distinction between manufacturing and processing and manufacture and production and, therefore, oil is not manufactured but only produced from oil seeds. Support is sought to be derived for this argument from the decision of this Court in Union of India vs. Delhi Cloth and General Mills, 1963 Supp (1) SCR 586 = (AIR 1963 SC 791). But a perusal of the judgment shows that this Court only held that refined oil produced out of seeds was only an intermediate stage in the manufacture and was, therefore, not liable to excise duty. On the other hand, the dictionary meaning of "manufacture" is "transform or fashion raw materials into a changed form for use." When oil is produced out of the seeds the process certainly transforms raw material into different article for use. We cannot, therefore, accept this contention."
From the aforesaid judgment of the; Hon'ble Supreme Court, it is clear that the Hon'ble constitution Bench has clearly held that when oil is produced out of the seeds the process certainly transforms the raw material into different article for use and when a different article is used as comes out the process is to be termed as manufacturing.
(10.) The Hon'ble Supreme Court in the case of Orient Paper and Industries Ltd. vs. State of M. P., reported in AIE 2006 SCW 6017, after considering the various facts has held as under with regard to manufacturing :-
"11. Undisputedly, the notified agriculture produce in the instant case is "Bamboo". During the pendency of the appeal, it was brought to the notice of this Court that in the judgment impugned in the appeal certain directions were given more particularly para 18 thereof. Directions read as follows : 18. Submission of Mr. Gupta is that the bamboos are brought into the market area and used in manufacturing as one of the raw material and, therefore, concept of processing as has been defined under the statute would not attracted. Learned counsel submitted that if the agricultural produce is brought inside the market area and is not used for processing, market fee cannot be levied. The aforesaid submission of the learned counsel for the petitioner has substantial force. We are inclined to hold that if section 19(1)(ii) is read in proper perspective it becomes plain as noon day that the market fee is leviable on the notified agricultural produce it is brought into the market area and used for processing,. If the goods are brought only into the market area and are not used for processing certainly it cannot be liable to the levy of market fee. Both the aspects are to be read in a composite manner. To put it differently it has to be given the cumulative effect of bringing in and used for processing would give create the factum of liability. In absence of the produce being used for processing the liability cannot be saddled or fastened. While we are accepting the submission of Mr. Gupta are not inclined to adjudicate the fact whether the petitioner is engaged in processing or not as in our considered view that lies in the realm of factual aspect and would be adjudicated by the competent authority. Needless to emphasize it would be open to the competent authority to delve upon the fact whether the produce which is brought inside the market area is used for processing and is brought for some other purpose, and take a decision. If the Petitioner seeks a personal hearing the same shall be afforded to it. Mr.Saxena, learned Senior Counsel, has no objection to the aforesaid hearing given to the petitioner. 12. Pursuant to the directions, the Additional Director, Madhya Pradesh State Agriculture Marketing Board, Bhopal considered the matter. By order dated 7.2.2006 he held that the appellant is liable to pay market fee as process of agricultural produce. 13. The distinction between 'manufacturing' and 'processing' has been examined by this Court in several cases. 14. According to Oxford Dictionary one of the meanings of the word 'process' is "a continuous and regular action or succession of actions taking place or carried on in a definite manner and leading to the accomplishment of some result". The activity contemplated by the definition is perfectly general requiring only the continuous or quick succession. It is not one of the requisites that the activity should involve some operation on some material in order to effect its conversion to some particular stage. There is nothing in the natural meaning of the word 'process' to exclude its application to handling. There may be a process, which consists only in handling and there may be a process, which involves no handling or not merely handling but use or also use. It may be a process involving the handling of the material and it need not be a process involving the use of material. The activity may be subordinate but one in relation to the further process of manufacture. Any activity or operation, which is the essential requirement and is so related to the further operations for the end result, would also be a process in or in relation to manufacture. (See : C.C.E. vs. Rajasthan State Chemical Works (1991) 4 SCC 473). 15. In Black's Law Dictionary, (5th Edition), the word 'manufacture' has been defined as, "The process or operation of making goods or any material produced by hand, by machinery or by other agency; by the hand, by machinery, or by art. The production of articles for use from raw or prepared materials by giving such materials new forms, qualities, properties or combinations, whether by hand labour or machine".
Thus by manufacture something is produced and brought into existence which is different from that out of which it is made in the sense that the thing produced is by itself a commercial commodity capable of being sold or supplied. The material from which the thing or product is manufactured may necessarily lose its identity or may become transformed into the basic or essential properties. (See Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam vs. M/s Coco Fibres (1992 Supp.(1)SCC 290).
16. Manufacture implies a change but every change is not manufacture, yet every change of an article is the result of treatment, labour and manipulation. Naturally, manufacture is the end result of one or more processes through which the original commodities are made to pass. The nature and extent of processing may vary from one class to another. There may be several stages of processing, a different kind of processing at each stage. With each process suffered the original commodity experiences a change. Whenever a commodity undergoes a change as a result of some operation performed on it or in regard to it, such operation would amount to processing of the commodity; but it is only when the change or a series of changes takes the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognized as a new and distinct article that a manufacture can be said to take place. Process in manufacture or in relation to manufacture implies not only the production but also various stages through which the raw material is subjected to change by different operations. It is the cumulative effect of the various processes to which the raw material is subjected to that the manufactured product emerges. Therefore, each step towards such production would be a process in relation to the manufacture. Where any particular process is so integrally connected with the ultimate production of goods that but for that process processing of goods would be impossible or commercially inexpedient, that process is one in relation to the manufacture. (See Collector of Central Excise, Jaipur vs. Rajasthan State Chemical Works, Deedwana, Rajasthan (1991 (4) SCC 473). 17. 'Manufacture' is a transformation of an article, which is commercially different from the one, which is converted. The essence of manufacture is the change of one object to another for the purpose of making it marketable. The essential point thus is that in manufacture something is brought into existence, which is different from that, which originally existed in the sense that the thing produced is by itself a commercially different commodity whereas in the case of processing it is not necessary to produce a commercially different article. (See M/s Saraswati Sugar Mills and others vs. Haryana State Board and others (1992 (1) SCC 418). 18. The prevalent and generally accepted test to ascertain that there is 'manufacture' is whether the change or the series of changes brought about by the application of processes take the commodity to the point where, commercially, it can no longer be regarded as the original commodity but is, instead, recognized as a distinct and new article that has emerged as a result of the process. There might be borderline cases where either conclusion with equal justification can be reached. Insistence on any sharp or intrinsic distinction between 'processing and manufacture', results in an oversimplification of both and tends to blur their interdependence. (See Ujagar Prints vs. Union of India, (1989 (3) SCC 488). 19. To put differently, the test to determine whether a particular activity amounts to 'manufacture' or not is: Does new and different goods emerge having distinctive name, use and character. The moment there is transformation into a new commodity commercially known as a distinct and separate commodity 'having its own character, use and name, whether be it the result of one process or several processes 'manufacture' takes place and liability to duty is attracted. Etymologically the word 'manufacture' properly construed would doubtless cover the transformation. It is the transformation of a matter into something else and that something else is a question of degree, whether that something else is a different commercial commodity having its distinct character, use and name and commercially known as such from that point of view is a question depending upon the facts and circumstances of the case. (See Empire Industries Ltd. vs. Union of India (1985 (3) SCC 314). 20. These aspects were highlighted in (Kores India Ltd., Chennai vs. Commissioner of Central Excise, Chennai (200 2005 (1) SCC 385). 21. The stand of learned counsel for the respondents that the levy is under two circumstances i.e. (i) on the buying and selling of notified agricultural produce when brought within the State into the market area (ii) on the notified agriculture produce when brought from within the State or from outside the State into the market areas. The case at hand, it is submitted, relates to the second category. 22. Had it been only that the goods notified are brought into the market area to be covered by the second category then the stand of the respondents would have been acceptable. But the further condition it must be "used for processing" shows that the emphasis is on end-user. In this case that makes the difference. Therefore, the appellant is correct in its stand that levy on the notified agriculture produce being brought within market area where end-user is manufacture does not attract levy of market fee."
(11.) Section 19 of the Adhiniyam, 1972 gives power to the Mandi Committee to levy market fee which is as under :-
"19. Power to levy market fee. - (1) Every Market Committee shall levy market fee - (i) on the sale of notified agricultural produce whether brought from within the State or from outside the State into the market area; and (ii) on the notified agricultural produce whether brought from within the State or from outside the State into the market areas and used for processing; at such rates as may be fixed by the State Government from time to time subject to a minimum rate of fifty paise and a maximum of two rupees for every one hundred rupees of the price in the manner prescribed : Provided that no Market Committee other than the one in whose market area the notified agricultural produce is brought for sale or processing by an agriculturist or trader, as the case may be, for the first time shall levy such market fees."
From the aforesaid provision, it is clear that the Market Committee has power to levy market fee only if the notified agricultural produce is brought into the market area and used for processing. In the present case sunflower is a notified agricultural produce, however, as held earlier in this order, the notified agricultural produce has not been used for processing purpose by the company, in such circumstances, in our opinion, the learned Single Judge has rightly held that the Krishi Upaj Mandi Samiti has no power and authority to levy market fee.
(12.) With regard to the next point of Unjust Enrichment, it is an admitted fact that the petitioner-company has used sunflower seeds as raw material. It has not purchased the finished products and sold out the finished products. The Hon'ble Supreme Court in the case of Bhadrachalam Paperboards Ltd. and another vs. Government of A. P. and others, reported in (1998) 6 SCC 250, has held that if the goods are used for manufacturing purpose as raw material, therefore, the question of passing on the tax liability to the consumer would not arise. The relevant findings of the Hon'ble Supreme Court are as under :-
"7. Mr. K. Ram Kumar, learned counsel appearing for the respondents, placing reliance on the judgment of this court in Mafatlal Industries Ltd. vs. Union of India submitted that unless the appellants moved the appropriate forum to set aside the assessments already made for collecting the sales tax, the question of refund will not arise. In any case, learned counsel submitted that the refund cannot be ordered for more than three years preceding the filing of the writ petition. 8. We have seen that the appellants sought a declaration that the tax demanded and collected on the transactions in question for the period from 1978-79 onwards was illegal, null and void. The High Court in the light of the decision of this Court in Titaghur Paper Mills Co Ltd, held that the transactions in question were not exigible to tax. The refund was, however, denied on the ground that the appellants must be deemed to have passed on the liability to the consumer. 9. We find that the High Court was not right in so presuming in the light of the case put forward by the Government Pleader as extracted above. The appellants have reimbursed a tax liability which was on the forest Department and the appellants have consumed the goods for manufacturing paperboards, etc. Therefore, the question of the appellants passing on the tax liability to the consumer, on the facts of this case, would not arise. Consequently, the appellants are entitled to refund of the tax collected from them, not for the entire period but for the period commencing three years prior to the date of filing of the writ petition."
In the present case also the sunflower seeds have been used by the company for manufacturing sunflower oil, hence, passing on the tax liability to the consumer in the present facts of the case, would not arise.
(13.) The Hon'ble Supreme Court in the case of Salonah Tea Co. Ltd. and others vs. Superintendent of Taxes, Nowgong and others, reported in (1988) 1 SCC 401, further held as under with regard to principle of refund of tax or money collected illegally :-
"Per Mukharji, J. The High Court was in, error in the approach it took. Normally in a case where tax or money has been realised without the authority of law, there is a concomitant duty to refund the realisation as a corollary of the constitutional inhibition that should be respected unless it causes injustice or loss in any specific case or violates any specific provision of law. In the present case the assessment was made without jurisdiction and tax collected without authority of law in view of Loong Soong Tea Estate decision. Therefore, the respondents had no authority to retain the money collected without the authority of law and as such they were liable to refund the same."
(14.) The Hon'ble Supreme Court further in the case of UP. Pollution Control Board and ors. vs. Kanoria Industrial Ltd. and anr., reported in (2001) 2 SCC 549, has held as under with regard to facts which have to be considered by the Court in ordering refund :-
"It is one thing to say that the High Court has no power under Article 226 of the Constitution to issue a writ of mandamus for making refund of the money illegally collected. It is yet another thing to say that such power can be exercised sparingly depending on facts and circumstances of each case. For instance, in the cases on hand where facts are not in dispute, collection of money as cess was itself without the authority of law; no case of undue enrichment was made out and the amount of cess was paid under protest; the writ petitions were filed within reasonable time from the date of the declaration that the law under which tax/cess was collected was unconstitutional. There is no good reason to deny a relief of fund to the citizens in such cases on the principles of public interest and equity."
(15.) The Hon'ble Supreme Court further in the case of Tata Engineering and Locomotive Company Limited and another vs. Municipal Corporation of the City of Thane and ors, reported in 1993 Supp.(1) SCC 361, held as under with regard to refund :-
"Having regard to the nature and incidence of octroi unless the octroiable goods are consumed or used or
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are meant to reach an ultimate user or consumer in the octroi area no octroi is leviable. The taxable event is the entry of goods which are meant to reach an ultimate user or consumer in the area. Mere physical entry into the octroi limits would not attract levy of octroi. The words 'sale therein' in the words of "consumption, use or sale therein" in the definition of octroi means sale of octroiable goods to a person for the purpose of consumption or use by such person in the octroi area. If sale was intended for consumption or use in the octroi area whether the purchaser act ually consumed inside or outside octroi area is irrelevant. In view of constitutional bar, octroi is not leviable if the goods are not brought into the octroi area for purposes of consumption or use in the area but for export and in fact, exported by the importer himself or the sale by him occasions the export. When the goods are brought in not for consumption within the area but: for temporary detention and eventual export, octroi is not leviable. But in order to ensure, in such circumstances, that the goods are exported and to prevent evasion of octroi on goods consumed inside the octroi limit, rules provide for deposit of a certain sum of money or the actual octroi duty payable subject to a right to get a refund of the same when the goods are exported. When the goods in respect of which octroi was paid are exported, the octroi became refundable and that is the very scheme of the levy of octroi. The octroiable even in such a case shall be deemed not to have happened. Right to refund arises because the goods are not consumed inside the area but exported and the tax becomes not leviable. The amount collected which is equivalent to the octroi duty payable on the goods, on entry into the octroi limits while in detention in the warehouse is only as a deposit pending export of the goods. Once octroi is not leviable the deposit made by the importer pending export is in the nature of a trust and refundable in the event of the export of the goods." As per the above principle of law laid down by the Hon'ble Supreme Court, in our opinion, the learned Single: Judge has committed an error of law by holding that on the principle of doctrine of Unjust Enrichment, the company is not entitled to refund of the Mandi fee collected by Mandi. (16.) Consequently, W. A. No. 610/2007 filed by the Krishi Upaj Mandi Samiti and another is hereby dismissed and the W. A. No. 541/2007 filed by the company-M/s Agro Solvent Products (P) Ltd. is allowed. The finding of the learned Single Judge that the company is not entitled the refund of fee on the principle of Unjust Enrichment is hereby set aside. The Krishi Upaj Mandi Samiti is hereby directed to refund the fee collected by it from the petitioner- company. (17.) Looking to facts of the case, parties are directed to bear their own cost. Order accordingly.