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TMI Blog1988 (10) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... u General Sales Tax Act, 1959. The point of levy is "at the point of last purchase in the State". Presently, the rate of tax is 12 per cent. An additional sales tax is also levied in addition to the above, at 0.7 per cent on the taxable turnover under the Tamil Nadu Additional Sales Tax Act, 1970. 4.. The petitioners submit monthly returns in form A-2. This is in accordance with rule 18 of the Tamil Nadu General Sales Tax Rules, 1959. During the sugar season 1980-81, viz., 1st October, 1980 to 30th September, 1981, the petitioners submitted returns declaring as taxable turnover the cost of sugarcane purchased from the cane growers at Rs. 151.40 per metric tonne. This price of Rs. 151.40 is fixed by the Government of India under clause 3 of the Sugarcane (Control) Order, 1966. To that effect a notification was made under GSR 575-B (Ess. Com./Sugarcane) dated 8th October, 1980. For the sugar year 1981-82 the price of sugar was fixed by the Government of India at Rs. 152.90 by a notification dated 30th September, 1981. Accordingly the returns were filed on the basis of the notified price. They were accepted by the first respondent and taxes were remitted. 5.. While the matter stood ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring 1980-81 season", against probable additional cane price under clause 5-A of the Sugarcane (Control) Order, 1966 and paid under a separate voucher. This advance not being the price or consideration was not even credited to the individual accounts of the cane ryots but was kept and taken to "advance account" debiting the supplier for advance received. The grower consequently remained a debtor as per books of the petitioners. In the meanwhile on 2nd November, 1981 the petitioners were informed that their request for waiver could not be complied with. 7.. By proceedings dated 3rd September, 1981, the first respondent called upon the petitioners to furnish particulars of purchase tax due, whereupon, it was submitted by letter dated 8th September, 1981 that the State Government had no power to fix the price for sugarcane and that the petitioners were liable to pay purchase tax only on the basis of the price fixed by the Government of India under clause 3 of the Sugarcane (Control) Order, 1966. By letter dated 12th November, 1981 the first respondent, the assessing authority, called upon the petitioners to remit Rs. 11,00,800 as tax and Rs. 59,035 towards additional tax for the peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormula. There cannot be price determination under clause 5-A on any interim basis. It will require post-sugar season figures and cannot be fixed on ad hoc basis. The petitioners have paid the statutory minimum which is reported in the monthly returns. Further sums paid as advance cannot be treated as price, since they do not have the character of price. (ii) The petitioners are not legally bound by the directive of the third respondent to pay the recommended price over and above the statutory price fixed under clause 3 of the Sugarcane (Control) Order. Therefore, the demand is illegal. (iii) The written agreement between the assessee and the cane supplier provides only for payment of a price fixed by the Central Government. A cane supplier cannot legally or statutorily demand a price higher than the one notified by the Government of India under the provisions of the Sugarcane (Control) Order. Any payment by the petitioner as advance has neither nexus to the contract nor law and cannot be subjected to purchase tax. (iv) The payment of advance cannot be treated as turnover for the purpose of the Tamil Nadu General Sales Tax Act, 1959. The additional price fixed under clause 5-A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petitioners for the waiver of tax on the differential price was not complied with by the State, automatically the price fixed by the Director of Sugar became final. The State advised prices for 1980-81 and 1981-82 are statutory prices. Hence, the petitioner is obliged to pay purchase tax for these prices. (iv) The petitioner actually made payments to the sugarcane growers in accordance with the State directed cane price, but, they had shown the figures under two heads: (i) price fixed by the Central Government; and (ii) the difference amount as advance. If these two items are totalled, the total price will be the price fixed by the Director of Sugar. The so-called advance paid to the cane growers is nothing but the price difference. In view of the wording of the letter of the Director of Sugar dated 8th January, 1981, the petitioner is liable to pay the State directed cane price. (v) After accepting the order of the Director of Sugar, the petitioner made payments to the cane growers at the price fixed by the Director. Therefore, the differential amount paid by the petitioner is not an advance. It is only a portion of the price. The petitioner himself has submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the extra statutory orders issued by the State Government and the petitioners have not agreed either with the cane growers or with the State Government to accept the State directed price. The petitioners do not pay any sum under any agreement with the cane growers, except what is paid as price as fixed by the Government of India and as "adjustable advance" pending determination of the liability, if any, under clause 5-A of the Sugarcane (Control) Order, 1966. The cane growers having received the interim advances on specific terms from the petitioners are contractually/statutorily bound to restore the sums, if any, found in excess of the amount determined under clause 5-A of the Control Order. The failure to restore such sums will be a breach of contract on their part. The petitioners at that stage considered the recovery of the excess advance over and above the clause 5-A liability and such recoverable sum is ultimately waived and written off as cane development expenditure. This is a gratuitous act of the petitioners. It is independent of the contract for purchase of sugarcane. Therefore, this cannot form part of the turnover. The sums so waived would neither be "price" nor "t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sugar mill for the supply of cane in 1980-81 season over and above the statutory minimum cane price fixed by the Government of India shall be adjusted against the additional cane price payable under clause 5-A of the Sugarcane (Control) Order, 1966. All the sugar mills should show the arrears of cane price in their fortnightly cane price statements worked out at the above rates only." Concerning this, the petitioner sent a letter on 8th September, 1981 to the first respondent contending that he has no jurisdiction. Ignoring this protest the petitioner was directed to pay the arrears and on 11th December, 1981, notices for April and May were issued and the assessment order was passed on 26th December, 1981. It is the demand for the months of April and May, 1981. It is submitted that these demands are illegal. The minimum price payable to the cane grower is fixed under the Sugarcane (Control) Order. With regard to the additional price purchased after 1st October, 1974 the method of calculation is as set out in the Second Schedule to the said Order. That is in terms of clause 5-A of the order. It was on this basis a letter was sent on 18th February, 1982 addressed to all State Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the field of price fixation. Section 3(3)(c) deals with price fixation. Section 4 lays down the imposition of duties on State Governments. Section 5 deals with the delegation of powers. Section 16(1)(b) in no uncertain terms repeals any law in force in any State relating to control of production, supply and distribution of essential commodity. The sugarcane being an essential commodity any provision in this regard in the Tamil Nadu Sugar Factories Control Act will also stand repealed. Such being the position in law, the State has no power to fix any price. In other words, the price fixation has been completely taken over by the Essential Commodities Act and the orders issued thereunder. The State cannot even claim an executive power. In support of this submission, reliance is placed on the decisions reported in A.K. Jain v. Union of India AIR 1970 SC 267 and Ch. Tika Ramji v. State of Uttar Pradesh AIR 1956 SC 676. 19.. It cannot be contended that section 12 of the Tamil Nadu Act 20 of 1949 could be invoked, because- (i) that could be done only by notification (ii) in any event, it is not pursuant to a decision of an Advisory Committee, as contemplated under section 12 of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 72 and it was also held that the decision of the Madras case could not be accepted because section 72 of the Contract Act would take within it the mistake of law after the Privy Council ruling in Sri Shiba Prasad Singh v. Srish Chandra Nandi (1949) 76 IA 244. The question whether payment was made voluntarily or not is irrelevant. However, it is submitted that the payment is not voluntary for two reasons: (i) In fact, there was no voluntary payment as additional minimum cane price, but the payment was as advance; (ii) By agreement between the parties only the statutory price requires to be paid. 22.. The next submission of the learned counsel is that it is a clear case of payment made under compulsion. Therefore, the ratio of K.R. Shenoy v. Udipi Municipality AIR 1974 SC 2177 would apply. It cannot be contended as laid down in that ruling that an excess of statutory power cannot be validated by acquiescence. 23.. Lastly it is submitted that the cane grower and the writ petitioner entered into a formal agreement, which requires the petitioner to pay only controlled or statutory price. Any excess paid over and above clause 5-A cannot be "price". The liability to pay as fixed un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resenting the additional price fixed under clause 5-A, which is to be adjusted from the advance, could also be treated as part of the price on which tax could be levied. The dispute centres around the excess paid over and above the clause 3 and clause 5-A prices. Once it is established that the amount paid in excess of clause 3 price by the petitioners was one which was to be retained by the cane growers and the said amount was to be paid towards the cane supplied at the fixed rate per metric tonne, it would be obvious that the said amount also formed part of consideration for the cane supplied. In support of this proposition the learned Advocate-General relies on Pandavapura Sahakara Sakkare Kharkhane (P.) Ltd. v. State of Mysore [1973] 32 STC 104 (Mys). In this connection it requires to be noted if the price had not been paid the growers would not have supplied the sugarcane. Relying on North Arcot District Co-operative Sugar Mills Ltd. v. State of Tamil Nadu [1977] 40 STC 430 (Mad.), it is urged that once it was agreed to be paid by the writ petitioner-company it certainly would mean towards the supply of cane. In India Sugars & Refineries Ltd. v. State of Karnataka [1984] 56 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over and above the statutory minimum price, which alone the petitioners are liable to pay, cannot by any stretch of imagination be contended to partake the character of "price". 30.. Now we will proceed to deal with the merits of the above submissions advanced on either side. But, before doing so, it will be useful to highlight the point for determination. 31.. The Essential Commodities Act, 1955 is an Act to provide, in the interests of the general public, for control of production, supply and distribution of, and trade and commerce in, certain commodities. The commodities which are essential have been specified in the Act. The object, therefore, is to ensure equitable distribution of essential commodities at fair price. This law had been enacted by the Parliament by virtue of the legislative power under entry 33, List III of the Seventh Schedule to the Constitution of India. Sugarcane is specifically provided under clause (b) of section 2, because it says: "'food crops' include crops of sugarcane". Section 2(v) defines foodstuffs. Sugarcane is undoubtedly a food-stuff within the meaning of the Essential Commodities Act. 32.. Under section 3(1) the powers to control productio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory at the gate of the factory or at a sugarcane purchasing centre; or (ii) to a khandsari unit." Clause 3 of the said Order speaks of fixation of minimum price. That reads: "3. Minimum Price of sugarcane Payable by producer of sugar.-(1) The Central Government may, after consultation with such authorities, bodies or associations as it may deem fit, by notification in the Official Gazette, from time to time, fix the minimum price of sugarcane to be paid by producers of sugar or their agents for the sugarcane purchased by them, having regard to- (a) the cost of production of sugarcane; (b) the return to the grower from alternative crops and the general trend of prices of agricultural commodities; (c) the availability of sugar to the consumer at a fair price; (d) the price at which sugar produced from sugarcane is sold by producer of sugar; and (e) the recovery of sugar from sugarcane: Provided that the Central Government or, with the approval of the Central Government, the State Government, may, in such circumstances and subject to such conditions as it may specify, allow a suitable rebate in the price so fixed. Explanation.-(1) Different prices may be fixed for differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of sugar or sugarcane grower, who is aggrieved by any decision of the person or authority, referred to in sub-clause (2) may, within thirty days from the date of communication of such decision under that sub-clause appeal to the Central Government or the State Government, as the case may be: Provided that the Central Government or the State Government, as the case may be, may if it is satisfied, that the appellant had sufficient cause for not preferring the appeal within the aforesaid period of thirty days, admit the appeal, if presented within a further period of fifteen days. (b) The Central Government or the State Government, as the case may be, may, after giving an opportunity to the appellant to represent his case and after making such further enquiry as may be necessary, pass such order as it thinks fit. (c) The decision of the person or authority referred to in sub-clause (2) where no appeal is filed and of the Central Government or State Government, as the case may be, where an appeal is filed, shall be final. (4) The additional price determined under sub-clause (2) shall be paid by the producer of sugar to the sugarcane grower at such time and in such manner as the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enters into an agreement with a producer of sugar to supply sugarcane. (2) 'Sugar year' means the year commencing on the 1st day of October and ending with the 30th day of September in the year next following." By a reading of this clause it is clear that it refers to the Second Schedule to this Order. The Second Schedule is as follows: "Second Schedule The amount to be paid on account of additional price (per quintal of sugarcane) under clause 5-A by a producer of sugar shall be computed in accordance with the following formula namely: R -- L + 2A + B X = --------------------- C Explanation.-In this formula- 1.. 'X' is the additional price in rupees per quintal of sugarcane payable by the producer of sugar to the sugarcane grower. 2.. 'R' is the amount in rupees of sugar produced during the sugar year excluding the excise duty paid or payable to the factory by the purchaser. 3.. 'L' is the value in rupees of sugar produced during the sugar year, as calculated on the basis of the unit cost per quintal ex-factory, exclusive of excise duty, determined with reference to the minimum sugarcane price fixed under clause 3, the final working results of the year and the Cost Sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so far as such law controls or authorises the control of the production, supply and distribution of, and trade and commerce in, any essential commodity. ....................." (The rest of the section is omitted as unnecessary). Therefore, section 12 of the Tamil Nadu Act 20 of 1949, viz., Tamil Nadu Sugar Factories Control Act, will stand repealed. That section lays down as follows: "The Government may at any time before the commencement of a crushing season, after consulting the Advisory Committee, by notification, specify either generally or in respect of any factory, either the price which the occupier of a factory shall be bound to pay for any sugarcane purchased by him during the season or the method of calculating such price: Provided that the Government may specify different prices or different methods of calculating the prices of different varieties of sugarcane. (2) The Government may at any time, after consulting the Advisory Committee, by notification, vary any price or method of calculation specified under sub-section (1): Provided that no such notification shall apply to any sugarcane purchased by the occupier of a factory before the publication of such notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, it is clear that the Parliament intended to bring under control the cultivation and sale of food crops. In view of these provisions it is idle to contend that sugarcane does not come within the ambit of the Act. The question whether the cultivation and sale of sugarcane can be regulated under section 3 of the Act came up for the consideration of this court in Ch. Tika Ramji v. State of U.P. [1956] SCR 393; AIR 1956 SC 676. At pages 432 and 433 (of SCR) (at page 703 of AIR) of the report it is observed: "Act 10 of 1955 included within the definition of 'essential commodity' food-stuffs which we have seen above would include sugar as well as sugarcane. This Act was enacted by Parliament in exercise of the concurrent legislative power under entry 33 of List III as amended by the Constitution (Third Amendment) Act, 1954. Food crops were there defined as including crops of sugarcane and section 3(1), gave the Central Government powers to control the production, supply and distribution of essential commodities and trade and commerce therein for maintaining or increasing the supplies thereof or for securing their equitable distribution and availability at fair prices. Section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall vest in the Central Government on and from such date as may be specified in such notification." Therefore, the non-payment will entail this penalty. With this background the facts may now be analysed. 36.. On 8th October, 1980 the basic minimum cane price, for the season 1980-81 was fixed by the Ministry of Agriculture, Department of *Here italicised. Food, Government of India, New Delhi, under Notification No. G.S.R. 575-B (Ess. Com./Sugarcane), at Rs. 13 per quintal linked to a recovery of 8.5 per cent or below with a premium of Rs. 15.2941 paise per quintal for every 0.1 per cent increase in recovery above 8.5 per cent. For Tamil Nadu it was fixed at Rs. 15.14 as far as the petitioner was concerned. Then G.O. Ms. No. 2218, Agriculture (S)/Department, Government of Tamil Nadu, dated 15th November, 1980 was passed to the following effect: "The Government of India have notified the statutory minimum cane price at Rs. 130 per tonne linked to the sugar recovery of 8.5 per cent for the 1980-81 sugar season. 2.. The Government have been receiving representations to the effect that the minimum cane price should be fixed at Rs. 200 and more. Taking into consideration, the incre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment towards cane supply during 1980-81. Certified: L.T.I. of Jayalakshmi. Sd ...... Witness: 1. Sundaram, Vadakattalai (Sd.) Administrative Manager." The petitioner made the payment in the following manner: "Thiru Arooran Sugars Ltd., Vadapathimangalam. Sugarcane suppliers' account position slip for the season 19 -- 19 Name of ryot: S. Jayalakshmi. Ryot No. A. 5932. Date Extent: 0.50 Village: Vadakattalai Zone: 1980-1981 Estimated supply: 15 Total cane supplied: from 13-3-81 to 20-3-81 Value of the supply at the ex-factory: L. Folio: J7 M.T. 16-4-70. Rs. 2,493.55. Gate delivery price of Rs. 151.40 per M.T. Deduction: 1.. Company loan: Rs. 10.50 2. Interest: 3. Crop loan (SBI) with interest: Rs. 695.95 4.. Transport charges: Rs. 130.14 5.. Cane harvest charges: - 6.. Cash advance paid: Rs. 1,315.00 7.. Borewell: - 8.. Tractor: 9. Tyre cart: - 10.. Other debits: - Rs. 2,158.59 --------- Balance due: Rs. 334.96 Passed for Rs. 334.96 (Sd.)....... Accountant." The payment voucher is to the following effect: "Thiru Arooran Sugars Ltd., Vadapathimangalam. Payment voucher (cane payment) Voucher No. 87. Date: 3-4-81. Name of payee: Thiru S. Jayalakshmi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry, 1981, at Rs. 203.80, till the final determination of the payment under clause 5-A has been made. This is an important fact which will have a great bearing. 38.. The agreement between the petitioners and the cane growers contains the following terms: "The ryot hereby agrees to supply the entire sugarcane raised by him in the undermentioned lands to the factory belonging to the company for 1980-81 crushing season subject to the following terms and conditions: The surety also assures the same. Surety also accepts all the undermentioned conditions. The company hereby agrees to purchase the said sugarcane supply subject to the undermentioned conditions. The ryot agrees to receive the price fixed by the Central Government of the Price for sugarcane supplied." (Emphasis* supplied) ... ... ... "11. The ryot shall receive from the company as price for the sugarcane supplied by them to the factory as per the terms of this agreement as per the rate fixed by the Central Government. The ryot further agrees that from out of the abovesaid amount the company shall be entitled to appropriate all amounts due to the company, and to pay the entire loan amount of principal and interest due to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 980 and G.O. Ms. No. 5 dated 2nd January, 1981. 40.. Under these circumstances the only question that arises for our determination is whether this excess would form part of the price so as to be included as turnover within the meaning of section 2(r) of the Tamil Nadu General Sales Tax Act. At this stage, we record the statement of Mr. Nariman, that he does not deny the liability of the petitioners to pay the final price fixed under clause 5-A. 41.. The position may be reflected in the form of the following statement: THIRU AROORAN SUGARS LTD., MADRAS --------------------------------------------------------------------------------------------------------------------------------------------------Sugar Minimum Date of State Date of letter Amount actually Additional Date of Amount Whether State season price fixed notificadirected from Director paid price under order paid in directed excess under tion price of Sugar work--------------clause 5-A under excess of is shown as clause 3 ing out State As price As advance clause 5-A minimum part of taxfor the directed price adjustable passed price and able turnover factory against proby State additional in the monthly bable clause 5-A Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... test followed on 18th November, 1981 and also on 24th November, 1981. But, a notice of assessment was sent for April, 1981 on 11th December, 1981 unmindful of the protests. Equally another assessment of even date was sent on 11th December, 1981, for May, 1981. On 25th December, 1981 the petitioner protested. On 26th December, 1981 the assessment proceeding of the Deputy Commercial Tax Officer, Mannargudi, was made, which is impugned in these writ petitions. The petitioner's objections were overruled on the following reasons: "The dealers have made payments to the cane growers at the rates fixed by the State Government in the previous years. They had not also challenged the authority of the State Government to fix the additional cane price previously. (ii) As provided under clause 5-A(2) of the Sugarcane (Control) Order, 1966, the additional price was fixed as Rs. 203.80 in respect of the factory by the State Government. Accepting this fixation the factory had made payments. But to avoid taxation they have followed the procedure by splitting the total figures into two, i.e., the price fixed by the Central Government, and (ii) the difference amount between the State fixed price and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een completely taken over by the Central Government under the Essential Commodities Act read with clause 3 and clause 5-A of the Sugarcane (Control) Order, 1966. The State Government have no legal authority whatever to direct the payment of price. We have already referred to this argument in this regard on the citations made in this behalf. We do not think that we need go into this matter because, the learned Advocate-General had fairly conceded that there is no statutory authority for the State Government and they have no binding force. However, in passing we may note the stand taken in the counter-affidavit. It is otherwise. In paragraph 3 it is stated to be statutory. The same contention is repeated in paragraph 4 as well. On this aspect of the matter we will in the later part of the judgment deal with the question whether the payment made pursuant to the direction of the Director of Sugar could be claimed back by the petitioners. 45. The learned Advocate-General in his submission and in the counter-affidavit takes the stand that it is not the contention of the petitioners that the amount was paid under threat. The counter-affidavit in more than one place would have it as fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the tabulated statement, which we have already extracted. The clause 5-A price comes to be fixed long after the sugarcane season is over. Where, therefore, after payment of the minimum cane price under clause 3, which the petitioner is statutorily and contractually bound to pay, if he pays over and above the said price in anticipation of the price fixed under clause 5-A calling it as "advance payment" how could it ever partake the character of price? 47.. Price is the money consideration for the sale of goods. The consideration for the sale can be by consensus between the parties. But, in matters of this kind which are governed by the Essential Commodities Act, such a consensus can be brought about by fixing a price under the Control Order. In Andhra Sugars Ltd. v. State of Andhra Pradesh [1968] 21 STC 212 at 218 (SC) it is held: "Under section 4(1) of the Indian Sale of Goods Act, 1930, a contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. By section 3 of this Act, the provisions of the Indian Contract Act, 1872, apply to contract of sale of goods save in so far as they are inconsistent wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." Again in Salar Jung Sugar Mills Ltd. v. State of Mysore [1972] 29 STC 246 (SC) the same principle was reiterated at page 257, thus: "In the case of Andhra Sugars Ltd. [1968] 21 STC 212 (SC) this court referred to the whittling down of the laissez faire concept in a social welfare State by emphasising public interest to control unfair competition and combination. It was said: 'The cane growers scattered in the villages had no real bargaining power. The factory owners or their combines enjoined a near monopoly of buying and could dictate their own terms. In this unequal contest between the cane growers and the factory owners, the law stepped in and compelled the factory to enter into contracts of purchase of cane offered by the cane growers on prescribed terms and conditions." Therefore, rightly, as we have already noted, Mr. Nariman does not urge that the petitioners are not liable to pay the statutory price fixed with reference to clause 5-A. But his contention is, the petitioners were compelled to pay by reason of the directive issued by the Director of Sugar. We are in entire agreement with this submission. Certainly, but for the directive issued by the Director of Sugar, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be fixed under clause 5-A. In our considered view, the fact of payment alone, on which the learned Advocate-General lays stress, will be of no assistance. This is not to say that we are determining this question merely on the nomenclature of payment by the petitioner, viz., as "advance payment". But, what we regard is only the substance of the matter. 49.. In P.S.S. Kharkhane (P.) Ltd. v. State of Mysore [1973] 32 STC 104 (Mys) the headnote reads as follows: "The assessee manufacturing sugar in its factory entered into agreements with the sugarcane growers for the purchase of sugarcane at the minimum purchase price fixed by the Central Government by its order issued under the Sugarcane (Control) Order, 1956. Under the agreements the growers agreed to deliver the sugarcane f.o.r. the factory premises. Subsequently, as an inducement to the growers to supply more sugarcane, the assessee promised to pay, in addition to the minimum price agreed upon, the harvesting and transportation charges at the rate of four paise per quintal. The assessee contended that the additional payments made by the assessee by way of harvesting and transportation charges to the growers were merely ex grati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no such novation. This case also related to the assessment year 1967-68 and 1968-69. 51.. In India Sugars and Refineries Ltd. v. State of Karnataka [1984] 56 STC 145 (Kar) the headnote may be extracted: "The assessee was a company engaged in the manufacture of sugar. For the years 1969-70 and 1971-72, the assessee entered into agreements with the sugarcane growers for the purchase of sugarcane at the minimum price fixed by the Central Government under the Sugarcane (Control) Order. Subsequently, there was some dispute between the assessee and the sugarcane growers as to the price payable for sugarcane. The dispute relating to the year 1969-70 was referred to an arbitrator who made the award directing that the company must pay a certain sum per metric tonne as bonus. The award was accepted by the company and payment was accordingly made to the respective sugarcane growers. For the year 1971-72 the company itself agreed to pay a certain sum per metric tonne as freight or lorry charges to the sugarcane growers and payment was made accordingly. On the question whether the extra payment made formed part of the purchase turnover liable to be taxed: Held, that the real quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation No. 402(E) dated 25th September, 1974. 53.. The last of the case relied on by the learned Advocate-General is Central Wines v. Special Commercial Tax Officer [1987] 65 STC 48 (SC). We will extract the headnote: "Sales tax charged by a dealer as 'tax' in his bill to the purchaser but shown separately is part of the 'turnover' within the meaning of the definition of 'turnover' in section 2(s) of the A.P. General Sales Tax Act, 1957. The sales tax component of the sale price charged by the dealer to the purchaser is not collected by him as an agent of the State. Even if, therefore, the bill or the voucher issued to the purchaser indicates the amount of sales tax separately what is collected by the dealer from the purchaser is not tax but is merely a part of the sale price charged by the dealer to the purchaser. So far as the statute is concerned it does not cast any obligation on the purchaser of the goods to pay any tax and therefore what is collected by the dealer from the purchaser by way of consideration for passing the property in the goods to the purchaser is the price charged by him and not tax collected by him from the purchaser. The amount of money which goes from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration relating to such sale shall be excluded from his turnover when such produce is sold in the form in which it was produced, without being subjected to any physical, chemical or other process for being made fit for consumption save mere cleaning, grading or sorting;........" The learned Advocate-General would urge on the basis of the rulings that the ultimate question is what is the amount which is paid from one pocket to another towards the sale or purchase. We are afraid the sentence cannot be torn out of context and pressed into service. It is true the nomenclature is not decisive. But, what is relevant is, as we observed above, the character, the mode and the manner of payment. With this view we go on to ascertain the meaning of "advance". 54.. In Md. Abdul Kadir Rowther v. Muthiah Chettiar (1960) 2 MLJ 13 at page 15, a Division Bench of this Court held: 'Advance' means literally a payment beforehand; in certain cases it may be a loan but it cannot be said that a sum paid by way of advance is necessarily a loan. In London Financial Association v. Kelk LR (1884) 26 Ch D 107, it was observed, that the words 'advancing' and 'lending' might each have a different signifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prayed for the waiver of tax that cannot in any way militate against the plea for questioning the validity of demand in law, nor would the representation mean, the petitioners agreed to pay as "price". 58.. We are of the firm view that merely because the petitioner has not claimed back the excess from the cane growers, the character of payment will not in any manner stand altered. What is to be stated is the right of the petitioner to recover the excess under law. That alone is important in our view. On the same reasoning it would follow that the excess payment has been treated as cane development charges will not belittle the character of payment. Thus, we conclude that the payment was never as part of price and it was not voluntary. As to when the payment could be considered voluntary can be gathered from Halsbury's Laws of England, Fourth Edition, Volume 9. "660. General rule.-A person who voluntarily pays a sum of money on another person's demand cannot claim a return of it from a payee as money had and received to his use, for, since lie might have resisted the demand, the payment must be taken to have been voluntary, if, however, the payment is made under duress or some f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or his agents acting upon his instructions, always paid the tolls under protest. Subsequently, whenever the plaintiff challenged the defendant's right, or disputed the amount of tolls, in particular cases there was a seizure or threat of seizure followed by payment under protest. From the decision in Attorney-General v. Horner [1913] 2 Ch 140, it appeared that the tolls had been unlawfully demanded, and, in consequence, the plaintiff brought this action for money had and received to recover the tolls so paid, claiming that he paid them (1) under a mistake of fact and (2) not voluntarily but under the pressure of seizure of his goods- Held by the Court of Appeal, affirming the decision of Rowlatt, J. on this point, that the plaintiff did not pay under a mistake either of law or fact, but because he found that other sellers were paying tolls and he did not wish to be involved in litigation with the defendant, and that the plaintiff could not recover under this head of claim; but Held, further (Pickford L.J. doubting) reversing the decision of Rowlatt, J. on this point, that the circumstances of the payments and the conduct of the plaintiff throughout the period of years showed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the second head of claim the plaintiff asserts that he paid the money not voluntarily but under the pressure of actual or threatened seizure of his goods, and that he is therefore entitled to recover it as money had and received. If the facts proved support this assertion the plaintiff would, in my opinion, be entitled to succeed in this action. If a person with knowledge of the facts pays money, which he is not in law bound to pay, and in circumstances implying that he is paying it voluntarily to close the transaction, he cannot recover it. Such a payment is in law like a gift, and the transaction cannot be reopened. If a person pays money, which he is not bound to pay, under the compulsion of urgent and pressing necessity or of seizure, actual or threatened, of his goods he can recover it as money had and received. The money is paid not under duress in the strict sense of the term, as that implies duress of person, but under the pressure of seizure or detention of goods which is analogous to that of duress. Payment under such pressure establishes that the payment is not made voluntarily to close the transaction (per Lord Abinger C. B. and per Parke B. in Atlee v. Backhouse 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he evidence, and the authorities which were cited to him and to us, that the payment was not a voluntary one. I entirely agree with this view. The payment is best described, I think, as one of those which are made grudgingly and of necessity, but without open protest, because protest is felt to be useless." (Emphasis* supplied) At page 67 it is stated: "Further, I am clear that the payment by the petitioners in this case was not a voluntary payment so as to prevent its being recovered back. It was demanded by the Shipping Controller colore officii, as one of the only terms on which he would grant a licence for the transfer. It was a case where in Abbott C.J.'s language in Morgan v. Palmer 2 B & C 729, 735, 739: 'One party has the power of saying to the other "that which you require shall not be done except upon the conditions which I choose to impose",' or, in the language of Littledale J. in the same case, 'The plaintiff was merely passive, and submitted to pay the sum claimed, as he could not otherwise procure his licence'. In fact here the petitioners made several inquiries and protests as to the legality of the claim." Again at page 72 it is observed: "Sargant L.J. As regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in thinking that the moneys paid were due when in fact they were not due and that mistake on being established entitled it to recover the same back from the State under section 72 of the Indian Contract Act. It was, however, contended that the payments having been made in discharge of the liability under the U.P. Sales Tax Act, they were payments of tax and even though the terms of section 72 of the Indian Contract Act applied to the facts of the present case no moneys paid by way of tax could be recovered. We do not see any warrant for this proposition within the terms of section 72 itself. Reliance was, however, placed on two decisions of the Madras High Court (1) reported in Municipal Council, Tuticorin v. Ralli Bros. AIR 1934 Mad. 420 and (2) Municipal Council, Rajahmundry v. Subba Rao AIR 1937 Mad. 559. It may be noted, however, that both these decisions proceeded on the basis that the payments of the taxes there were made under mistake of law which as understood then by the Madras High Court was not within the purview of section 72 of the Indian Contract Act. The High Court then proceeded to consider whether they fell within the second part of section 72, viz., whether the mo ..... 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