The statute lists what counts as processing: crushing, husking, parboiling, curing. Solvent extraction is not on the list

A market committee billed an oil manufacturer ₹1.74 crore for producing rice bran oil. The Calcutta High Court strikes the product out of the Schedule and orders every rupee refunded with 12% interest in a fortnight.

An agricultural produce marketing law taxes the movement of farm goods into a regulated market. The question of what counts as a farm good sounds like a definitional quibble until you notice that almost everything on a supermarket shelf began life in a field. Sugar comes from cane, paper from wood, and rice bran oil from the outer layer of a grain of rice. If a chain of origin were enough, the Schedule to a marketing statute would have no bottom.

On 25 September 2026 a Division Bench of Justice Rajasekhar Mantha and Justice Ajay Kumar Gupta drew the line where the West Bengal legislature had drawn it — in the statutory definition of “processing” — and allowed the appeals of an oil manufacturer that had been paying market fees for over a decade.

Fourteen years of demands

Sethia Oil Industries manufactures and sells Rice Bran Oil under the name ‘Rice Gold’, and De-Oiled Rice Bran, in the district of Burdwan. It makes no sale there: the goods go to Kolkata, and the West Bengal Agricultural Produce Marketing (Regulation) Act, 1972 does not apply to Kolkata.

The sequence of demands began with a notification of 29 January 2002, which for the first time put Rice Bran Oil and Rice Oil into the Schedule to the 1972 Act — and did so without amending the definition of “agricultural produce” in Section 2(1)(a). In August 2008 a second notification extended the Act’s operation to Burdwan district, where the appellant’s plant is. On 3 June 2011 the Burdwan Regulatory Market Committee called on the company to take a licence under Section 13 within fifteen days for running its processing unit, and when it protested, threatened penalties under Section 34.

The company filed its first writ petition in 2012. While it was pending, the legislature amended the 1972 Act twice, in 2014 and 2017, changing the definition of “agricultural produce”; the 2017 amendment brought “all vegetable oils” expressly into the Schedule. A fresh executive notification of 24 July 2017 added De-Oiled Rice Bran and Rice Bran Oil to the Schedule. The company amended its pleadings to challenge the amendments and the notification.

Meanwhile the levy ran its course. The appellate forum under the Act, by an order of 16 May 2019, directed the company to pay ₹1,74,82,400.40 as market fees — partially modifying a first authority order that had demanded more. That was the subject of the second writ petition.

A Single Bench dismissed both on 6 May 2025, holding that Rice Bran Oil and De-Oiled Rice Bran fall within “agricultural produce” and within the “Rice Oils” bracket in the Schedule. These appeals followed. Mr. Jaydip Kar and Mr. Sakya Sen, Senior Advocates, appeared for the appellant.

Five questions

The Bench framed five issues: whether the 2014 and 2017 amendments restrict freedom of trade and, if so, whether the absence of prior Presidential assent renders them ultra vires; whether the definition of “sale” introduced in 2014 conflicts with the Sale of Goods Act, 1930; whether including Rice Bran Oil and Rice Oil in the Schedule travels beyond the definition of “agricultural produce”; whether market committees must render actual services to charge fees and whether levying fees alongside SGST is double taxation; and whether the inclusion conflicts with the Industries (Development and Regulation) Act, 1951.

Four of the five went against the appellant. The 1972 Act itself had been brought into force with the prior sanction of the President under Article 304, but the Bench held both Amendment Acts intra vires and requiring no fresh Presidential consent before introduction of the bill. It held the 2014 definition of “sale” not contrary to the Sale of Goods Act, flowing as it does from Entry 26 read with Entry 66 of the State List. And it held that the 1951 Act and the 1972 Act provide different regulatory mechanisms — the first regulating the manufacturing process in scheduled industries, the second the commercial sale of agricultural produce — so there is no conflict between them.

The third issue decided the case.

What the original definition excluded

The Bench began with the definition as it stood when the Act commenced. “Agricultural produce” meant any produce of agriculture, and any other produce specified in the Schedule, with a proviso enabling the State Government to include or exclude items from the Schedule by notification.

That definition, the Court held, clearly excluded any product of an industrial activity. Products produced by artificial techniques are outside it. The process by which a raw agricultural produce is converted into a completely new and distinct product is not within it. What the definition contemplates is goods produced mostly by natural and environment-friendly techniques.

The Attorney General for the State had argued that the process is immaterial — rice bran oil and de-oiled rice bran come from paddy, and whether they are processed or manufactured forms of it makes no difference. The trouble with that, on the Bench’s reading, is that it makes the phrase “any other produce specified in the Schedule” do unlimited work.

The Court therefore read “any” in context, citing the Supreme Court’s treatment in Vivek Narayan Sharma v. Union of India, (2023) 3 SCC 1 — the demonetisation case — where it was held that “any” is of wide amplitude and may mean “all” or “every” as well as “some” or “one”, the meaning to be given depending on the context, scheme and object of the legislation.

Read purposively, the Bench held, all and any final product originating from an agricultural raw material does not and cannot fall within “agricultural produce”. The inclusion of “any other produce specified in the Schedule” broadens the category, but a product must still be produced through one or more of the techniques the definition expressly specifies. A final product not derived from those statutorily specified techniques cannot be classified as agricultural produce under the Act.

The list that decides it

Those techniques appear in Section 2(mb), which defines “processing” as one or more of a series of treatments relating to powdering, crushing, decorticating, de-husking, parboiling, polishing, ginning, pressing or curing, or any other manual, mechanical, chemical or physical treatment to which raw agricultural produce or its product is subjected.

The named techniques, the Court observed, do not involve any manufacturing or industrial activity. The definition of “processing”, read with the inclusion of “processed products” in the definition of agricultural produce, therefore establishes that manufacturing and industrial activity have been consciously set aside from the purview of the Act. And the residual phrase — “manual, mechanical, chemical, or physical treatment” — clearly excludes complicated industrial and manufacturing activity applied to raw agricultural produce.

The Bench explained why the legislature drafted it this way. A raw agricultural product may not initially be a marketable commodity; specific processing techniques may be needed to make it saleable, which is why “processed products” was included. But the inclusion reaffirms that the Act does not seek to levy a product that has lost the characteristics of agricultural produce, because a processed agricultural product is a mere variation of the raw produce. Husked rice is still rice. Rice bran oil, extracted by solvent, is not bran.

The State had relied on Park Leather Industry (P) Ltd. v. State of U.P., (2001) 3 SCC 135, where it was held that it makes no difference that the item is a different commodity from the one in the Schedule, since a different commodity may come into existence through admixture or processing and would still be agricultural produce. The Bench dealt with that authority in the context of the West Bengal statute’s own definition of processing, which is what distinguishes it — the question is not whether a new commodity emerges, but whether it emerged through the techniques the Act names.

What was struck down, and what survives

The findings are set out with unusual precision, and the distinctions matter to anyone else in the sector.

De-Oiled Rice Bran and Rice Bran Oil are not agricultural produce. Their inclusion under the expression “Oils” in the Schedule is illegal and was quashed and struck out, as was Rice Oil produced from rice bran. The executive notification of 29 January 2002 that first added Rice Oil and Rice Bran Oil to the Schedule was quashed. So was the notification of 24 July 2017 issued under the 2014 and 2017 amendments adding De-Oiled Rice Bran and Rice Bran Oil, and all market fees levied by the State on those products were declared illegal.

The 2008 notification survived. It had merely extended the Act’s operation to Burdwan district, and the Court did not interfere with it — clarifying only that it does not empower the State or the Burdwan market committee to levy market fee on the manufacture and trade of De-Oiled Rice Bran and Rice Bran Oil in that market area.

The demand raised and recovered from the appellant was declared illegal, and the orders of 30 June 2016 and 16 May 2019 were quashed.

The refund, and its limit

All market fee paid by the appellant to the Burdwan Market Committee for manufacturing de-oiled rice bran and rice bran oil is to be refunded with 12% simple interest within fourteen days of the judgment. Any sums deposited with the Registry in aid of the proceedings are to be refunded with accrued interest on a written request.

The Bench attached a condition that deserves attention: the direction will not create any rights in favour of any third party who has not challenged and approached the Court against the inclusion of Rice Bran Oil and De-Oiled Rice Bran under the Act. Manufacturers who paid the same fee under the same quashed notifications and did not litigate do not get an automatic refund out of this judgment.

Both appeals were allowed and the impugned judgment set aside, with no order as to costs.

The reasoning travels well beyond rice bran. Every State has a marketing statute with a Schedule, and every Schedule grows by executive notification. What the Bench holds is that the notification power runs only as far as the definition it serves: a State may add items of agricultural produce to a Schedule, but it cannot, by adding an item, make an industrial product into agricultural produce. Where the statute has troubled to list the processes it means — crushing, husking, parboiling, curing — that list is the boundary, and solvent extraction is on the other side of it.