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TMI Blog2019 (12) TMI 885X X X X Extracts X X X X X X X X Extracts X X X X ..... ormed part of the consideration for the purchase of the sugarcane by the appellant from the sugarcane growers. There are no reason to take a different view as there is no distinction on facts in the present case and the purchase of sugar cane by the Assessee Sugar Mill during the period in question also happened in a similar way and therefore, the mere bifurcation of prices in the invoices to the extent of transport charges or plantation subsidy will not materially affect the aforesaid prevailing legal position. The Tribunal is justified in imposing the purchase tax on the Assessee Sugar Mill on the entire purchase price including the components of price for the sugar cane, plantation subsidy and transportation charges paid by the Assessee for transportation of sugar cane from the sugarcane fields to the factory premises of the Petitioner. The Tax Cases filed by Assessee fail and they are devoid of merits and they are liable to be dismissed - Appeal dismissed. - Dr. Justice Vineet Kothari And Mr. Justice R. Suresh Kumar For the Appellant : Mr.M.P.Senthilkumar For the Respondent : Mr.Mohammed Shaffiq Special Government Pleader COMMON JUDGMENT DR.VINEET KOTHARI, J. These Tax Cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants to the cane growers at the time of delivery of sugarcane by them. Though the appellants had described the payments by way of planting subsidy as deferred payments that cannot conceal the real nature of the transaction between the appellants and the cane growers. The planting subsidy was given by the appellants to the cane growers not by way of agrarian reform or a social welfare measure. The appellants had given planting subsidy as purchasers of sugarcane and as a part of the consideration for which the sugarcane was ultimately purchased by them. As rightly pointed out by the Madras High Court in State of Tamil Nadu v. National Co-operative Sugar Mills Ltd., (1992) 86 STC 22 giving of planting subsidy earlier and supply of sugarcane later were closely linked. The planting subsidy was relatable to the supply of sugarcane. If die whole deal between the appellants and the cane growers is examined they really constitute one contract of sale. Therefore, the sums paid by the appellant as planting subsidy to the cane grower were rightly treated as a part of the sale price and included in the taxable turnover of the appellants for the purpose of assessing the purchase tax liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugarcane under the Tamil Nadu General Sales tax Act, 1959 (referred to hereafter as the Act) in Chengalvarayan Co-operative Sugar Mills Ltd. V. State of Tamil Nadu, ((1997) 105 STC 497 (Mad)). The Court while affirming the view expressed in Kallakurichi Co operative Sugar Mills Ltd. vs. State of Tamil Nadu ((1985) 60 STC 113 (Mad.)) and overruling the decision in State of Tamil Nadu v. Madurantakam Cooperative Sugar Mills ((1976) 38 STC 73 (Mad.)) said: (STC p.560, para 58) (I) if subsidy -- whatever name or nomenclature, it may assume and whether paid or payable prior to or subsequent to the entering into contract of sale -- is linked to the supply of sugarcane, such subsidy and expenses incurred for the transportation of the sugarcane to the factory site -- whether incurred by the grower initially and paid by the sugar mills subsequently or incurred by the sugar mills and shown separately in the invoices -- by adopting whatever procedure reflecting those amounts in the accounts -- shall form part of the price includible in the purchase turnover as such transportation alone makes the passing of property in the sugarcane sold by the grower to the assessee Mills complete . This view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eller. (Emphasis supplied) 11. The appellant has relied on the last line of the quoted paragraph to contend that it showed that the statutory price fixed would be the only price includible in the taxable turnover of the purchasing sugar mill. This is not what the Court meant . In the preceding sentence it has been made clear that the total amount of consideration not only included the price but also other amounts which represent the expenses required for competing the sale. This is clear from the paragraph 21 of the judgment where this Court said: (SCC p 338) For the same reasons we hold that the transport subsidy was a part of the consideration for which sugarcane was sold by the sugarcane-growers to the appellants. Though the agreements between the parties provided for delivery by the sugarcanegrowers at the factory gate and though the transport charges paid by the appellants were not to the sugarcane-growers but to third-party lorry-owners, they were made for securing regular supply of sugarcane as per the requirements . Though payments were made at the instance of the Government of Tamil Nadu they also became a part of the implied agreement between the appellants and the sugarc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be and the sugar mill under administrative instructions of the Government paid the excess transport charges for the distance beyond 40 km/30 km. This is called transport subsidy . The dealer-appellants had also paid such transport subsidy to their ryots and the dealer appellants did not include these amounts in the purchase turnover in their Returns . Apart from the above, the dealer-appellants had also claimed exemption on the transport charges paid to the third party lorry owners for the transport of sugarcane from the field of ryots to the factory premises. The dealer-appellants deducted such transport charges from the statutory 5-A price and claimed exemption of tax from purchase turnover. Sugarcane is taxable at the point of purchase. On check of accounts, the Assessing Authority made levy of tax on the planting subsidy, transport subsidy and also on the transport charges paid to third party lorry owners. Aggrieved of the orders of the Assessing Authority, the dealer/Appellants had preferred first appeal before the first appellate authority, who after hearing the case and perusal of records confirmed the levies after detailed discussion and by following the decision of the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... involved are 1975- 76 and 1976-77. Actually, this Tribunal had passed the above order on 26.41980 by following the case law reported in 38 STC 238 (Madurantakam Co-operative Sugar Mills case) which was rendered by the Hon'ble High Court of Madras on 17.2.1976. Subsequently the same Hon'ble Madras High Court on 4.1.1984 in the Kallakurichi Co-operative Sugar Mills Limited case reported in 60 STC 113, held that the contractual obligation of the sugarcane growers for delivering the sugarcane at the mill or factory premises was not departed from or varied even in practice. Further, the Hon'ble High Court has held that transport charges paid by the sugar mills to third party lorry owners initially and subsequent deduction of same could not be treated as post-purchase expenses. In subsequent case laws also, the Hon'ble Madras High Court has taken the same view and the Hon'ble Supreme Court of India has also affirmed the same as discussed above. 12. With the above observation and understanding, we have gone into the details of the case on hand. As far as the transport charges paid to third party lorry owners, the dealerappellant sugar factory claimed deduction from tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of assessment year 1988-89 (CTA No.140/02), the learned first appellate authority had directed the Assessing Authority to assess the turnover of ₹ 1,01,82,689.46 and ₹ 87,156.46 on which exemption claimed under heading transport charge paid to third party lorry owners. In pursuance of the order of the learned Appellate Deputy Commissioner, the Assessing Authority issued a notice to the dealer-appellants proposing levy of tax on the turnover of ₹ 1,02,69,845/- which is filed at page Nos.685 to 689 of assessment file. But it is not known whether the Assessing Authority made levy of tax on the above turnover. Since, we confirm the levy of tax on the above three charges paid as prepurchase expenses of sugarcane, we direct the Assessing Authority to consider the above notice also and to pass appropriate orders. 14. The next issue involved is levy of penalty made by the Assessing Authority for the assessment year 1993-94 u/s. 12(3)(b) of the Act to the tune of ₹ 63,34,292/- and sustained by the learned Appellate Joint Commissioner. The Assessing Authority had actually levied 50% of the balance of the tax assessed and tax paid as per the assessment order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the result, the appeals in CTA Nos.138/02, 140/02, 141/02, 194/02, 195/02, 315/02 316/02 and 332/02 stand DISMISSED and the APPEAL in cta 58/09 stands MODIFIED with a direction to the Assessing Authority to impose interest u/s.24(3) of the Act from the due date for belated payment of tax due on the turnovers of ₹ 59,11,518/-, ₹ 1,86,97,256/- and ₹ 3,25,88,998/- . 5. Since the view of the learned Sales Tax Appellate Tribunal is in consonance with the decision of the Full Bench of this Court and that of the Hon'ble Supreme Court, we have no reason to take a different view as there is no distinction on facts in the present case and the purchase of sugar cane by the Assessee Sugar Mill during the period in question also happened in a similar way and therefore, the mere bifurcation of prices in the invoices to the extent of transport charges or plantation subsidy will not materially affect the aforesaid prevailing legal position. Therefore, the Tribunal is justified in imposing the purchase tax on the Assessee Sugar Mill on the entire purchase price including the components of price for the sugar cane, plantation subsidy and transportation charges paid by the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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