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TMI Blog1959 (9) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... ory, the authorities notify an area as reserved area for that factory for the crushing season. Under section 10 of the Act, before each planting season, any grower of sugar-cane in the reserved area may offer such quantity as he may specify of the sugar-cane grown by him to the factory in the crushing season immediately following it. The factory then enters into an agreement with the registered grower for purchasing the sugar-cane offered by him. Section 11 of the Act prohibits the sale of sugarcane grown in the reserved area to a person other than the factory specified, unless the factory has refused to buy the sugar-cane. No one is permitted to export any sugar-cane out of the reserved area except where the sale of the sugar-cane to a person other than the factory is permitted. The factory generally enters into an agreement with a registered grower, allotting a particular acreage of land to him and undertaking to purchase the sugar-cane grown on the lands so specified. The petitioners were all registered suppliers to the factory at Nellikuppam. It was common ground that the books of the factory showed the correct amount for which the sugar-cane was sold in the year in question by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, though the owners themselves raised the sugar-cane on those lands. It was the owners that raised the sugar-cane that supplied sugar-cane to the factory, but the supply was in the names of the petitioners as registered growers. It was those owners, however, that obtained the sale price for the sale of that sugar-cane. This was evidently done with a view to obtain the comparatively high price which the factory paid to the registered growers of sugar-cane. Whether such benami sales were in contravention of the provisions of the Madras Sugar Factories Control Act is not really germane to the present proceedings, where the question for determination is whether the proceeds of such sales of sugar-cane were liable to be included in the assessable turnover, if any, of the petitioners. There was no difficulty at any time about the sales of the sugarcane grown on the lands included in the first of the three categories mentioned above, that is, sugar-cane grown on lands owned by the petitioners. The departmental authorities held that such sales came within the scope of the exemption, for which the proviso to section 2(i) provided. The Deputy Commercial Tax Officer, however, did not accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year of assessment itself or within two years next succeeding that to which the tax related. In effect, the rule prescribed the latter period as the limit within which the assessing authority should take proceedings for assessing the escaped turnover. The former time limit was mentioned apparently only to emphasis the power of the assessing authority to take re-assessment proceedings even during the year of assessment itself, when that authority came to know of the escape of assessment after an assessment had been completed under section 9. In the present case notice under rule 17 was issued within two years following the year of assessment. The proceedings were validly initiated and completed. The question we have to determine now is, whether the sales of sugar-cane to the factory fell within the scope of the definition of "turnover" and whether each of the petitioners was liable to be assessed to sales tax on that turnover. That question is really limited to the sales of sugar-cane grown on lands in which, the Tribunal held, the petitioner had no interest, that is, a portion of the lands in category (2) and the lands in category (3) of the three categories mentioned above. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioners can claim the benefit of that exemption. In deciding this question, it should be obvious that the two categories of lands stand practically on the same footing, that is, lands which the petitioners failed to prove had been leased to them, and lands which admittedly were never in the possession of the petitioners, the produce of which, however, was sold benami by the owners in the name of the petitioners. In neither case could the petitioners claim to have been in possession of the lands, though the produce of these lands was sold in the name of the petitioners because they had been registered as the growers of sugar-cane on those lands. Having regard to the provisions of section 11 of the Madras Sugar Factories Control Act (XX of 1949) it would be difficult to assume that the owners of those lands, who were the persons entitled to possession of those lands, and who actually grew the sugar-cane would have sold the sugar-cane to the petitioners. But such a possibility cannot be excluded. The sugar-cane grown on such lands might have been delivered by the respective growers to the factory, utilising the names of the registered growers, that is the petitioners, or it might ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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