Punjab Industrial Policy: Supreme Court rules Market Fee exemption does not automatically include Rural Development Fee
Justices Vikram Nath & PK Mishra [15-07-2024]

Read Order: STATE OF PUNJAB & ORS v. M/S PUNJAB SPINTEX LTD [SC- CIVIL APPEAL NOS.10970-10971 OF 2014]

LE Correspondent

New Delhi, July 17, 2024: In a significant ruling, the Supreme Court has held that exemption from Market Fee under the Punjab Industrial Policy, 2003 does not automatically include an exemption from Rural Development Fee.

The top court set aside the orders of the Punjab & Haryana High Court which had earlier ruled in favor of M/s Punjab Spintex Ltd., a cotton yarn manufacturing company. The dispute arose when M/s Punjab Spintex Ltd. sought exemption from both Market Fee and Rural Development Fee under the 2003 Industrial Policy, claiming to be similarly situated to another company that was granted such an exemption.

The High Court initially dismissed the company's writ petition based on the state counsel's statement that Market Fee exemption would also cover Rural Development Fee. However, the state later sought modification of this order, arguing that the two fees are separate and collected under different acts.

The Supreme Court, after examining the relevant statutory provisions and the 2003 policy, concluded that Market Fee under the Punjab Agricultural Produce Markets Act, 1961 and Rural Development Fee under the Punjab Rural Development Act, 1987 are distinct levies with different objects and purposes.

The top court noted that the 2003 policy specifically mentions exemption only from Market Fee and does not extend it to Rural Development Fee. The court also rejected the company's reliance on certain letters issued by the state agriculture department in 2001, stating that these were unauthorized communications and had been subsequently withdrawn. It was observed that no unit, other than those approved as Mega Projects, has been allowed exemption from Rural Development Fee unless explicitly provided by the authorities.

Setting aside the High Court orders, the Supreme Court dismissed the writ petition filed by M/s Punjab Spintex Ltd., holding that the company cannot assume exemption from Rural Development Fee based on the exemption granted from Market Fee under the 2003 Industrial Policy. The court emphasized that a loose interpretation of state policies would lead to ambiguity and render it contrary to public policy.