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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 ..... 05 STC 497(Mad)) which came to be affirmed by the Hon'ble Supreme Court in the case of E.I.D. Parry (I) Ltd. v. Assistant Commissioner of Commercial Taxes ((2000) 2 SCC 321) and later on followed by the Hon'ble Supreme Court in the case of Ponni Sugars (Erode) Ltd. v. Deputy Commercial Tax Officer ((2005) 13 SCC 102. 3. The relevant portions of the above decisions are quoted below for ready reference:- In the case of EID Parry (I) Limited ((2000) 2 SCC 321): "In support of this last submission not only the relevant provisions under the Act but the decision of this Court in Andhra Sugars Ltd. v. A.P. State, [1968] 1 SCR 705, was also relied upon. Apparently, the two agreements-one agreement in respect of planting subsidy and the other agreement for the sale of sugarcane 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 appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduled delivery of sugarcane. The sale of sugarcane became complete only thereafter. Those payments can be regarded either as payments made on behalf of the sugarcane growers or payments made in modification or variation of the earlier agreements entered into by the sugarcane growers for selling sugarcane. In either case they could legitimately be regarded as the components of the sale price as the sellers would have otherwise included those amounts in the sale price." In the case of Ponni Sugars ((2005) 13 SCC 102: "8. 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 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 v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rescribed form of agreement disclosed that sugarcane had to be delivered by the grower at the factory premises. 10. After considering earlier authorities, this Court upheld the view of the Full Bench of the Madras High Court and concluded: (SCC p.336 para 18) "18. 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not incorporated in that particular agreement for purchase of sugarcane. The principles would therefore be applicable a fortiori to the present case where the directive formed part of the agreement. The issue raised by the appellant before us has thus been answered in the negative by this Court in E.I.D. Parry((2000) 2 SCC 321) which view we respectfully adopt." 4. The learned Tribunal, in the order impugned before us, has taken a similar view with the following observation:- "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -appellant's own case argued that charges have been as per the terms of the agreement between the cane grower and the dealer-appellants and that the same cannot be included in the taxable turnover. Apart from this, the learned counsel had argued that the dealer- appellants had taken the sugarcane from the field of ryots and then only transported the sugarcane by arranging lorries on their own. We have gone through the order of the Hon'ble High Court 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sugarcane growers to arrange for the speedy transport of sugarcane to the mill. Above all, it is seen from the assessment records that after paying transport charges to third party lorry owners, the dealer-respondents had deducted such transport charges from the statutory price to be paid as per 5-A price of Sugar Control Order, 1966. Then, they had claimed exemption on such amount with 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 no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax even though they would well aware of the decision reported in 117 STC 457 in the case of E.I.D. Parry (I) Limited case, in which, the Hon'ble Supreme Court has confirmed the decision of the Hon'ble High Court of Madras reported in 105 STC 497 (Chengalvarayan Co-operative Sugar Mills Limited case). The dealer-appellants have contended that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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