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TMI Blog2005 (11) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... f the agreement, the appellant arranges transport of the sugarcane from the fields to the appellant's mill. The question is whether the transport charges are excludible from the taxable turnover of the appellant for the purpose of purchase tax under the Tamil Nadu General Sales Tax Act, 1959. 2.. The assessment years in question are 1987-88 and 1988-89. During this period, the agreement for sale and purchase of sugar which was entered into between the appellant and the cane growers (where the appellant is referred as "the first party" and the cane growers as "the second party") provided inter alia: "(1) Both the parties agree to act according to the provisions of Madras Sugar Factory Control Rules, 1949, Sugarcane (Control) Order, 1996 and the orders of Tamil Nadu Government Agricultural (Cane) Department and the Director of Sugar/Cane Commissioner of Tamil Nadu (2) The second party agrees to sell the entire cane planted/to be planted in the land specified in the schedule to this agreement to the first party for the control price fixed by the Government from time to time. (3) ............... (4) .............. (5) .............. (6) The second party agrees to sell a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the registered cane would be borne by the cane growers themselves and for the distance beyond 40 kms., the transport charges for the cane would be met by the purchasing sugar mills. Therefore, it is submitted that there was no question of including the transport charges for the transportation of the sugarcane from beyond 40 kms. to the appellant's mill paid by the appellant under this directive, in the purchase price. The appellant has also relied upon the orders in assessment proceedings in respect of earlier years whereby the transport charges had been excluded from the taxable turnover of the appellant on a construction of the agreement between the appellants and the cane growers. Reliance has also been placed on the Tribunal's decision dated March 24, 1995, rejecting the respondent's claim to enhance the purchase price by adding transportation charges. It was pointed out that the Tribunal had referred to a Circular issued by the Board of Revenue on July 31, 1982, by which the Board of Revenue excluded the transport subsidies paid by the appellants to the lorry owners for transporting sugarcane from areas beyond 40 kms. It is submitted that the Circulars are binding on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which were required to be granted by the sugar mills, the purchasers of sugarcane were required to give a transport subsidy. The Circular was expressly included in the agreement entered into between the appellant and the cane growers. Therefore the transport subsidy formed part of the agreement for the sale of the cane to the appellant. 9.. Clause (6) of the agreement did not say that the sale was to take place in the field as contended by the appellant. It merely provided for the method of sale. This is also clear from the conduct of the parties. The appellant has admittedly included the transport charges up to 40 kms. from the mill within the purchase price and has admittedly paid tax thereon. If the sale took place at the field and transportation charges did not have any connection with the cane growers, there was no need either to include the transport charges from the field up to the 40 kms. mark in the purchase price or to expressly provide that the transportation charges would be payable by the vendor. Besides the very use of the word "subsidy" in the directive dated September 12, 1985 which was payable on delivery at the factory gate would also support the view that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Full Bench of the Madras High Court and concluded: "What transpires from the above case law is that the amounts paid by way of consideration by the purchaser to the seller of goods in pursuance of the contract of sale can legitimately be regarded as purchase price while calculating the turnover for the purposes of sales tax legislation. What can legitimately be brought to sales tax or purchase tax is the aggregation of the consideration for the transfer of property. All the payments should have been made pursuant to the contract of sale and not de hors it. Any amount paid as ex gratia payment or as an advance cannot be the component of the purchase price and therefore cannot legitimately be included in the turnover of the purchasing dealer. Whether one of the components of the purchase price goes to the coffers of the seller or not will not cease to be so if it is necessary for completing the same. Thus the total amount of consideration for the purchase of goods would include the price strictly so called and also other amounts which are payable by the purchaser or which represent the expenses required for completing the sale as, the seller would ordinarily include all of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant before us has thus been answered in the negative by this Court in E.I.D. Parry See [2000] 117 STC 457 (SC). which view we respectfully adopt. 15.. The decision relied upon by the appellants, namely, Commissioner of Sales Tax, U.P. v. Rai Bharat Das Bros. See [1988] 71 STC 277 (SC). (1989) 1 SCC 143 does not support the appellant. In fact the court found in that case that the costs of freight or delivery were included in the sale price. 16.. The assessment orders of the department in respect of the earlier years also relied on by the appellants were based on the earlier decision of the High Court in State of Tamil Nadu v. Madhurantakam Co-operative Sugar Mills [1976] 38 STC 238 (Mad.) which was specifically overruled by the Full Bench in Chengalvarayan's case [1997] 105 STC 497 (Mad.). 17.. The findings of the Tribunal sought to be relied upon by the appellant related to a previous stage of proceedings. The order of the Special Taxation Tribunal which was passed on an enhancement petition filed by the respondents and which was the subject- matter of the writ petition before the High Court, had held against the assessee following the decision of the Full Bench of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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