1976 (1) TMI 163 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the amount paid over and above the minimum price fixed by the Government of India for sugarcane supplied should be included in the taxable turnover.
2. Whether the agreement to pay a higher price per tonne for sugarcane constitutes novation in the price payable.

Analysis:
Issue 1:
The Tax (Revision) Cases were filed by a cooperative sugar mill regarding the assessment years 1967-68 and 1968-69. The turnover in question related to the amount paid to cane-growers for the supply of sugarcane. The cane-growers demanded a price higher than the minimum price fixed by the Government of India, leading to an agreement to pay Rs. 110 per tonne instead of the minimum price of Rs. 73.70. The assessee argued that the amount paid above the minimum price was a subsidy and should not be included in the turnover. However, the assessing authorities and the Tribunal rejected this argument, stating that the agreed price of Rs. 110 per tonne constituted part of the taxable turnover.

Issue 2:
The contention of the assessee that the agreement to pay Rs. 110 per tonne did not constitute novation in the price payable was also dismissed. The Court held that the agreement to pay a higher price arose due to a dispute between the parties regarding the price fixed by the Government of India. The Court found that the agreement to pay Rs. 110 per tonne represented the price payable for the sugarcane and not a subsidy. The Court emphasized that the agreement to pay a higher price constituted novation in the price payable, even though the original contract had been performed by the delivery and acceptance of the sugarcane.

In conclusion, the Court dismissed the tax revision cases, stating that the entire sum of Rs. 110 per tonne paid to the cane-growers constituted the price payable for the sugarcane and should be included in the turnover. The Court also ordered the cases to be dismissed with costs.