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TMI Blog1994 (11) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... eld to be just and reasonable and which should cover cost of production of the concerned coffee and reasonable percentage of profit thereon. - C.A. Nos. 1841, 1842 of 1991, W.P. (Civil) No. 899 of 1990, & 66 of 1991 - - - Dated:- 22-11-1994 - JEEVAN REDDY B.P., SINGH N.P. AND MAJMUDAR S.B. JJ. -------------------------------------------------- The judgment of the Court was delivered by N.P. SINGH, J.- The appellants are growers of coffee. They filed writ petitions for injuncting the Coffee Board, respondent No. 1 (hereinafter referred to as the Board ) from making any payment under the head purchase tax out of the pool fund maintained under section 30 of the Coffee Act, 1942. According to the appellants, the Board cannot discharge its liability in respect of payment of purchase tax to the State Government, under the provisions of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as the Act ) out of the pool fund. The High Court held See Consolidated Coffee Ltd. v. Coffee Board [1989] 74 STC 272 (Kar)., that growers/producers were not liable under section 5(3)(a) of the Act to pay the tax in respect of the sale of coffee by them to the Coffee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or purchase in the course of inter-State trade or commerce, shall be liable to pay tax on the purchase price of such goods at the same rate at which it would have been leviable on the sale price of such goods under section 5. There was a controversy as to whether the Board shall be liable to pay the purchase tax under section 6 of the said Act. However, that was settled by this Court in the case of Coffee Board v. Commissioner of Commercial Taxes [1988] 70 STC 162; AIR 1988 SC 1487; [1988] 3 SCC 263. It was held by this Court that section 6 was applicable to the transactions entered into between the Board and the growers of the coffee and the Board was liable to pay the purchase tax . The controversy, with which, we are concerned is as to whether the Board was entitled to make payment of the purchase tax out of the pool fund required to be maintained under section 30 of the Coffee Act. The relevant part of section 25 is as under: 25. (1) All coffee produced by a registered estate in excess of the amount specified in the internal sale quota allotted to the estate or when no internal sale quotas have been allotted to estates, all coffee produced by the estate shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount specified in the internal sale quota allotted to that estate shall be delivered to the Board for inclusion in the surplus pool by the owner of the estate. After the coffee is delivered, it is to remain under the control of the Board, which shall be responsible for storages, curing where necessary and marketing of the coffee. In view of sub-section (6) of section 25, when the coffee has been delivered for inclusion in the surplus pool, the registered owner shall retain no rights in respect of such coffee except his right to receive the payments referred to in section 34. Section 26 enjoins the Board to take all practical measures to market the coffee included in the surplus pool and all sales thereafter shall be conducted by or through the Board. Section 30 says: The Board shall maintain two separate funds, a general fund and a pool fund. Section 31 is as follows: 31. (1) To the general fund shall be credited- (a) all amounts paid to the Board by the Central Government under sub- section (1) of section 13; and (b) any sums transferred to the general fund under the proviso to sub- section (2) of section 32; and (c) all fees levied and collected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , was not justified in holding that any such payment of purchase tax shall be part and parcel of marketing by the Board and as such covered by section 32(2)(b) of the Act. Reading section 32(2)(b), in its proper context, it obviously means marketing of coffee, which has been deposited in, after curing. Reference was also made to sub-section (3) of section 25 where also it has been said in clear and unambiguous words that coffee delivered for inclusion in the surplus pool shall be delivered to the Board and shall remain under the control of the Board, which shall be responsible for storages, curing where necessary and marketing of the coffee. In other words, according to the appellants, the expression marketing used in sub-section (3) of section 25 or in section 32(1)(b) refers to the process of marketing after the coffee has been delivered by the growers for inclusion in the surplus pool and is stored and cured by the Board; the expression marketing shall not include the process of purchase from the growers which precedes the delivery of coffee to the Board for inclusion in the surplus pool. On behalf of the Board, it was pointed out that the contention of the appellants t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rplus pool bears to the value of all coffee delivered to the surplus pool out of that year's crop: Provided that in calculating the sum of all payments made under sub- section (1) and the value of coffee delivered to the surplus pool out of the year's crop, respectively, any payment accepted by a registered owner as final payment in immediate settlement for coffee delivered by him for inclusion in the surplus pool and the value of any such coffee shall be excluded. In view of section 34, the Board has to make payment to the registered owners who have delivered coffee for inclusion in the surplus pool. The expression as it may think proper obviously means that the payment is made on reasonable basis to the growers in respect of coffee delivered by them for inclusion in the surplus pool. We are informed that a procedure has been prescribed to determine the rate of payment to the registered owners who have delivered coffee for inclusion in the surplus pool. The appellants have not questioned that procedure. On behalf of the Board, our attention was drawn to the stand taken on behalf of the Board, in paragraph 47 of the counter-affidavit, filed on behalf of the Board ..... X X X X Extracts X X X X X X X X Extracts X X X X
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