2001 (10) TMI 1116 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Determination of the minimum price for sugarcane.
2. Payment of additional price under Clause 5-A of the Sugarcane (Control) Order, 1966.
3. Liability to pay purchase tax on advances paid to sugarcane growers.
4. Levy of interest under Section 24 of the Tamil Nadu General Sales Tax Act, 1959.

Detailed Analysis:

1. Determination of the Minimum Price for Sugarcane:
The petitioner, a sugar manufacturer, purchased sugarcane from farmers at the minimum price fixed by the Sugarcane (Control) Order, 1966, under the Essential Commodities Act, 1955. Clause 3 of the Order mandates the Central Government to notify the minimum price considering various factors. The petitioner claimed that it did not contract to pay any higher price than the fixed minimum price.

2. Payment of Additional Price under Clause 5-A of the Sugarcane (Control) Order, 1966:
Clause 5-A requires producers to pay an additional price for sugarcane purchased after October 1, 1974. This additional price is calculated using a formula provided in the Second Schedule, with most inputs available to producers except the rate of return recommended by an authority specified by the Central Government. The additional price is determined at the end of the sugar year and not at the time of sugarcane supply.

3. Liability to Pay Purchase Tax on Advances Paid to Sugarcane Growers:
The State Government advised sugar producers to pay a higher price, termed as "State Advised Price," which was higher than the price fixed under Clause 3. The petitioner labeled these payments as advances and did not include them in the returns filed under Section 13(2) of the Tamil Nadu General Sales Tax Act, 1959. The assessing authorities held that these advances were part payments of the price for sugarcane and liable to purchase tax. The Tribunal upheld this view, and the petitioner challenged it.

4. Levy of Interest under Section 24 of the Tamil Nadu General Sales Tax Act, 1959:
The petitioner argued that the advances paid to growers were not part of the price and hence not subject to purchase tax. However, the court held that these payments, up to the additional price notified under Clause 5-A, were part payments of the price and attracted purchase tax. The court also upheld the levy of interest under Section 24 for the delay in payment of purchase tax, stating that the revised returns filed by the petitioner admitted higher turnover and tax liability. The interest was levied for the period between the filing of the incorrect original return and the revised return.

Conclusion:
The court dismissed the writ petitions, upholding the orders of the assessing authorities and the Tribunal. The payments made by the petitioner to growers, labeled as advances, were considered part payments of the price for sugarcane and subject to purchase tax. The levy of interest for delayed payment of purchase tax was also upheld.