TMI Blog2010 (8) TMI 862X X X X Extracts X X X X X X X X Extracts X X X X ..... 78, 47, 46 and 279 of 2002, these writ petitions have been filed. Therefore they are being disposed of by this common order. For the sake of convenience, we refer to the facts relating to the petitioner in W.P. No. 31176 of 2007. The assessment order pertains to 1992-93. The assessment was completed on February 28, 2000. The petitioner is sugar mills. The petitioner procured sugarcane for crushing from sugarcane growers. It is common ground that by virtue of section 3 of the Essential Commodities Act and pursuant to the Sugarcane (Control) Order, 1966 came into being, the Central Government used to fix the price of the sugarcane to be procured apart from additional price fixed by the State Government. Under the Madras Sugar Factories Control Act (in Act 20 of 1949) and the Madras Sugar Factories Control Rules, 1949, cess also became payable on entry of sugarcane into the factory. Such cess levied on the sugar mills were to be remitted to the Director of Sugars. The question involved herein is as to whether such cess payable under Act 20 of 1949 would form part of the sugarcane price and thereby would attract payment of the sales tax under the provisions of the Tamil Nadu General ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. See item No. 62 of First Schedule existed till March 11, 1993. 3. Reduction in rate of tax payable to eleven per cent on the purchase of sugarcane by the sugar mills was notified in G.O. P. No. 88 CT RE dated March 17, 1993-Notification No. II(1)/CTRE/41(b)/93-Gazette dated March 17, 1993 effective from October 1, 1992. Relevant para of clauses 3 and 5A of the Sugarcane (Control) Order, 1966 reads as under: 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 producers of sugar; and (e) the recovery of sugar from sugarcane: Provided that the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gust 20, 2001, partly modified the appeal holding that cane cess paid by the petitioner forms part of the purchase price of sugarcane and hence the assessment made on the cane cess amount of Rs. 15,81,417 for the assessment year 1992-93 is found to be in order. As against the order of the Appellate Assistant Commissioner, the petitioner went on appeal before the Tribunal in T.A. No. 45 of 2002 and the Tribunal by the order impugned in this writ petition dated July 2, 2007, held that the cess was part of pre-purchase expenses and in the light of the decision of the honourable Supreme Court reported in State of Kerala v. Madras Rubber Factory Ltd. [1998] 108 STC 583, the assessment made by the assessing authority was justified. The Tribunal confirmed the order of the Appellate Assistant Commissioner. Assailing the order of the Tribunal Mr. Prasad, learned counsel appearing for the petitioner, after referring to the clause contained in the Sugarcane (Control) Order, under which the minimum price and the additional price are fixed by the Central and State Governments, respectively, as well as the cess leviable under sections 10(2) and 14 of Act 20 of 1949 and after taking us through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the relevant provisions as well as the orders impugned herein, we are of the view that the stand of the petitioner merits acceptance. When we refer to sections 2(r) and 3(2) of the Tamil Nadu General Sales Tax Act, we find that under section 2(r) of the Act, the turnover has been defined to mean aggregate amount of goods bought or sold whether for cash or for deferred payment or other valuable consideration. What is excluded is agricultural or horticultural purchase other than tea grown within the State by the assessee of any land in which he has interest whether as owner or as usufrcturary mortgagee tenant or otherwise. Therefore, for the purpose of inclusion of an amount as turnover, it should be the aggregate amount for which the goods are bought or sold. The said provision has relevance inasmuch as the levy of tax in so far as the petitioner is concerned and the same is to be worked out by invoking section 3(2) of the Tamil Nadu General Sales Tax Act, as the taxable event in respect of sugarcane is under entry 22 of Part E of the First Schedule and the point of such levy is the last purchase in the State. Under section 3(2) of the Act, it is specifically stipulated that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugarcane brought into any area specified in the notification. When the said prescription contained in section 14(1) of the Act is analysed and read along with sections 3(2) and 2(r) of the Tamil Nadu General Sales Tax Act, it is plain and unambiguous that there is no element of any purchase or sale involved for the purpose of levy of cess. The mere factum of the sugarcane entering into the factory would attract the levy of cess on the occupier of factory manufacturing sugar. Such entry of sugarcane brought into the notified area of notification issued under section 14 of the Act would thus result in levy of cess. Significantly, the leviability of cess is on the person who owns the sugar factory and the location of such sugar factory, in a notified area and nothing more. The only other event to be ascertained is the entry of sugarcane into an area, which is specified in the notification either for own consumption, use or even for sale. As far as the petitioner is concerned, in so far as the liability to pay the tax under the provisions of the Tamil Nadu General Sales Tax Act is concerned, as was stated earlier, the liability is by virtue of the prescription in section 3(2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for the purchase of sugarcane. The cess paid is not taken into account in fixing the price under section 12(1). The grower-seller has neither any liability for the cess, nor is it paid on its behalf. It is true that where a seller pays excise duty and includes it in the purchase price, such excise duty will undoubtedly form part of the consideration like sales tax or any other tax which he has included in the consideration. But that cannot be the case where cess, as in this case, is paid by the purchaser on his own liability and not on behalf of the seller. In fact the payment of cess under section 14 read with relevant rule is unconnected with the transaction of the purchase and price fixed under section 12(1). The view of the Department as well as the Tribunal that cess is integral part of the purchase turnover of sugarcane cannot, therefore, be accepted as correct. . . Then again the court observed that (page 4 of 29 STC): In fixing the price of the sugarcane, cess was not taken into account. There was also no stipulation between the assessee and the growers-sellers that the duty should, as between them, be borne by the seller and that when a buyer, on whom the liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt head noted therein is cane cess . The entry made therein discloses the cane cess paid for the relevant month based on the total quantity in metric tonnes subtracted by the quantity of sugarcane which were brought into the factory from within the local area itself and for arriving at the total quantity of sugarcane brought within the factory premises from outside the local areas, the value was made and the cess payable was debited to the concerned accounts for different months. Therefore when the ledger entry distinctly discloses that the payment of cess debited to the concerned account was not by way of any purchase price, it can only be held that the said factor was completely omitted to be noted both by the Tribunal as well as by the Appellate Assistant Commissioner. When we examine the decision of the honourable Supreme Court reported in State of Kerala v. Madras Rubber Factory Ltd. [1998] 108 STC 583, as rightly contended by the learned counsel for the petitioner, the said decision has to be understood in the light of the specific provision contained in section 12 of the Rubber Act, 1947 and section 5 read along with entry 71 of the Kerala General Sales Tax Act, 1963. S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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