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TMI Blog2020 (1) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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, 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 materiall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ane appear to be independent but on a close scrutiny it can be noticed that they constitute one single transaction. In their petitions filed before the High Court the appellants have stated that the planting or varietal subsidy is by way of incentive to the cane grower. It is given to motivate the cane grower to grow sugarcane and subsequently sell the same to the sugar factory. Thus the reason why the appellants had given planting subsidy was to see that the cane grower plant the desired and improved variety of sugarcane and that too in the months suggested by the appellants so as to ensure stagger supply of sugarcane as per the crushing schedule. The object of the planting subsidy was to obtain the desired variety and quality of sugarcane at the time required by the appellants. It is also significant to note that as a matter of fact the planting subsidy was given by the appellants 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale. This is also clear from the conduct of the parties. The appellant has admittedly included the transport charges up to 40 km. 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 upto the 40 km 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 12.9.1985 which was payable on delivery at the factory gate would also support the view that the transport charges were otherwise bearable by the cane growers. 9. The Full Bench of the Madras High Court was called upon to resolve a dispute between conflicting decisions of the High Court inter alia as to whether transport subsidies were includible in the purchase turnover of the sugar mills which were purchasing sugarcane 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) 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 dehors 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 them in the price at which he would sell his goods. But if the sale price is fixed statutorily then the only obligation of the purchaser under the agreement would be to pay that price only and no other amount can be included in the purchase price even if the same is paid by the purchaser to the seller. (Emphasis supplied) 11. The appellant has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion:- The dealer-appellants are sugar mills and manufacturers of sugar. They are governed by the Madras Sugar Factories Control Act, 1949 and the Rules framed thereunder and the Sugar Cane (Control) Order, 1966. Under the Madras Sugar Factories Control Act, 1949, an area was declared to be an area reserved for a sugar factory for a specified crushing season and before every planting season the sugarcane grower in the reserved area was to offer to the sugar mills a specified quantity of sugarcane grown by him, at inspection and weighment at the factory . On such offer being made the sugar factory was to enter into an agreement with the sugarcane grower in the prescribed form for purchase of all the sugarcane offered by the grower . The Sugarcane (Control) Order, 1966 fixed the price for sugarcane delivered to factory at the gate of the factory. The sugar mill used to provide incentive to sugarcane growers as subsidy for earlier planting of particular variety of seed. It is called planting subsidy. The dealer-appellants had also paid planting subsidy to their ryots as incentive and they did not include these amounts in their Returns. The grower of sugarcane had to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of Madras produced by the learned counsel. A careful reading of the same revealed the fact that the disputed assessment years involved in the above cases are 1975-76 and 1976-77. In that order, the High Court of Madras had approved the order of this Tribunal passed in CTA Nos.82 and 84/79 dated 26.4.1980. In the above said order, this Tribunal, by following the case law reported in 38 STC 238 had deleted the freight charges paid to third party lorry owners. In the above said case (The State of Tamil Nadu vs. The Maduranthakam Co-operative Sugar Mills), the Hon'ble High Court of Madras on 17.2.1976 held that the transport charges paid by the sugar mill to third party lorry owners for transporting the sugarcane to the factory site was not to be included in the taxable turnover of the sugar mill. ... ... ... 11. In the light of the above catena of judicial decisions, we have considered the contention of the learned counsel that the Hon'ble High Court of Madras itself approved the findings of this Tribunal that the transport charges paid to third party lorry owners is not includible in purchase turnover of sugarcane in Tax Case Nos.1742, 173 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim that such payments are not includible in the purchase price of sugar. Thus, it is clear that the transport charges paid to third party owners were deducted from statutory cane price and therefore the claim of dealerappellants that transport charges paid to third party lorry owners are not to be included to the purchase price is not acceptable. Hence, the reliance of learned Counsel on the Tax Case Nos.1742, 1739 and 1740 of 2008 dated 19.8.2010 is not acceptable since the same was delivered by the Hon'ble High Court by approving the order of this Tribunal, which was actually rendered by relying on the earlier case law reported in 38 STC 238. Subsequently, the decision of the Hon'ble High Court of Madras reported in 38 STC 238 was reversed. Further, the dealer-appellants had not raised any objection regarding transport and planting subsidy. In view of the above facts and circumstances of the case and case laws relied on, we are of the considered view that the planting subsidy, transport subsidy and transport charges paid to third party lorry owners are to be included to the purchase price of sugarcane and therefore we are not inclined to interfere with the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat they had acted bonafide and their conduct was not contumacious of guilt that they still in bonafide belief that the facts are distinguishable from the case decided by the Hon'ble Supreme Court of India. 15. We have considered the order of the learned Appellate Joint Commissioner and the contention of the dealer-appellants. As far as the case on hand is concerned, it is an admitted fact that every turnover is found in the accounts. It is submitted by them that they have not paid the tax due with the bonafide belief that the above charges are not includible to the purchase price of the sugarcane. We find that dealer-appellants were in bonafide belief from the fact that the dealer- appellants disputed the levy of tax on the above payments continuously. Further there is no suppression of any turnover out of accounts and there is only claim of exemption which was later denied and disallowed by the Assessing Authority. In of the above, we are of the considered view that no penalty can be levied for the difference of tax due arisen for non-payment of tax on which exemption claimed. However, the Assessing Authority is at liberty to levy interest u/s. 24(3) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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