Market fees not applicable on seed producing firms

The Supreme Court has declared that seeds are not agricultural produce and therefore, seed producing companies should not be charged market fees as if they are selling foodgrain.

This brings to an end nearly a decade of sparring between the seed producers and the market committees in Uttar Pradesh.

A Bench headed by Chief Justice VN Khare ruled that the authorities had no power to levy market fee on the sale and purchase of wheat by seed processing units.

"Wheat seed converted into certified seed is unfit for human consumption and, therefore, levy of market fee is impermissible," the judgment written by Justice AR Lakshmanan said.

In another but concurring judgment, Justice SB Sinha said the seed companies couldn't be said to be traders of agricultural produce as in the ordinary course of business.

Since they were not traders in agricultural produce, no market fee could be demanded from them. The market committees couldn't interfere in the business of certified seeds, either before or after the required process, he added.

According to seed companies, their business is to purchase "breeder seeds" from agricultural institutes to produce "certified seeds". The breeder seeds are distributed to the scheduled farmers.

The breeder seeds are sown and germinated under strict supervision of the statutory seeds certification agency, set up under the Seeds Act.

The harvest is collected carefully under the supervision of the agency. The standardised seeds thus obtained are called "foundation seeds".

The farmers again sow the seeds under the supervision of the agency. After the entire process, the bags containing the seeds are marked poison and then marketed. Despite these submissions, the authorities insisted on levying market fee on the seed bags.

Authorities argued that what was purchased by the companies was nothing but wheat and the entire transaction was within the market area.

Therefore, the seed companies were liable to pay the market fee. Rejecting the argument of the state authorities, the Supreme Court held that seed was a separate commodity from grain. The processing of wheat resulted in the loss of its basic characteristic of being a cereal.

The court said seed was an essential commodity within the meaning of the provisions of the Essential Commodities Act.