9911796707
TMI Blog1971 (4) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... sale therein. The liability to pay cess is on the assessee. This appears from rule 11 of the Madras Sugar Factories Control Rules, 1949. Under this rule within a fortnight of the close of each month, the occupier of a factory should pay into the treasury the amount due as cess on the quantity of sugarcane which had entered the factory during the previous month. The Joint Commercial Tax Officer, Esplanade Division I, considered the cess so paid by the assessee as part of the purchase turnover chargeable to tax. The price of sugarcane is, as empowered by section 12 of the Sugar Factories Control Act, fixed by the Government from time to time. The price per tonne of sugarcane at the start of the year in question stood at Rs. 85, but in the course of the year with effect from a specified date, it was reduced to Rs. 80. The assessee having paid at the rate of Rs. 85 made debit entries against the relative producers-sellers as to the deficit. The Joint Commercial Tax Officer declined to allow deduction from the chargeable turnover the difference on account of the reduction in the purchase price. The assessees contend that the cess paid, by no means, formed part of the purchase price and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement with the grower for the purchase of all sugarcane offered by him in accordance with the terms of section 10(1). As indicated earlier, in exercise of the powers under section 12(1), the Government after consulting the Advisory Committee fixes by notification the price which the occupier of a factory shall be bound to pay for any sugarcane purchased by him during the season and the prescription by the Government would include also the method of calculation of such price. Under section 14(1) the Government may, after consulting the Advisory Committee, by notification, levy a cess not exceeding the specified rate per standard maund on sugarcane brought into any local area specified in such notification for consumption, use or sale therein. The Government is empowered under that section to make rules again after consulting the Advisory Committee which may specify the authorities by which, the persons from whom, and the manner in which, the cess levied by the Government shall be collected. Rule 11 of the Rules framed requires the occupier of every factory to maintain in the form given in Appendix II of the Rules a current daily account of the sugarcane entering the factory for con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the seller, normally it would be impossible to suggest that the excise duty paid by the buyer in discharge of his own statutory liability involved any benefit to the seller, unless the duty was paid on behalf of the seller." With respect, we agree with this observation. In the case before us, as we have already pointed out, the cess was paid by the assessees in compliance with the statutory liability which was on them. In fixing the price for the sugarcane, cess was not taken into account. There was also no stipulation between the assessees and the growers-sellers that the duty should, as between them, be borne by the seller and that when the buyer, on whom the liability was, paid the cess, it should be on behalf of the seller. The cess paid by the assessees in discharge of their own statutory liability and on their own account cannot therefore form part of the purchase price and therefore of the purchase turnover chargeable to tax. The inclusion of the cess in the chargeable purchase turnover was, therefore, illegal. We are also of the view that the department as well as the Tribunal were not right in disallowing deduction of the difference in price arising out of reduction of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Local Board, Ratnagiri v. ShantaramA.I.R. 1961 S.C. 652. : "...........an octroi and customs duty though a tax, are limited in scope to a levy or duty on the import of goods or animals into some town, place or country or a levy or duty on the goods or animals.........There are obvious difficulties in imposing personal liability for such a duty, since it is the animals or goods in relation to location which causes the duty to arise and not property in relation to ownership. The 'octroi' is of French origin, and literally means 'to authorise'." But the nature of the tax in entry 52 of List II as an octroi appears to be qualified, for it is not entry of goods for any purpose whatever that will attract tax, but only if the import or export is for purposes specified in the entry itself. The Supreme Court in Diamond Sugar Mills v. State of Uttar PradeshA.I.R. 1961 S.C. 652. elaborately went into the history of entry 52 in fixing its scope and it is hardly necessary for us to cover the same ground. The majority in that case concluded that a local area in the entry was equivalent to an area administered by a local body like a Municipality, a District Board, a Local Board, a Union Board, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e entering into the local area was left free of charge, that would not impinge on the validity of the levy of tax on the sugarcane which entered into the local area and the premises of the factory for its use. It is nobody's case that any sugarcane grown in the local area itself has been subjected to levy of cess on its entry into the factory situate within that area. All that is held by the Supreme Court is that a local area in entry 52 is equal to an area like the Panchayat, District Board and the like and if that local area is notified and the entry of the goods into that area is subject to levy of cess, its validity cannot be assailed merely because the entry of sugarcane into the factory was actually the point at which the cess was collected. The challenge on the validity of the levy of cess fails. The tax case and all the writ petitions except W.P. Nos. 765, 939 and 940 of 1971 are allowed in so far as they relate to the inclusion of cess in the chargeable purchase turnover and the refusal of deduction we have dealt with. W.P. Nos. 765, 939 and 940 of 1971 are dismissed. We make it clear that though the assessees have raised other points they are not covered by this judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
