TMI Blog2010 (8) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... al Sales Tax Act. Appeal allowed. - W.P. Nos. 50189,50190, 50111 of 2006 - - - Dated:- 6-8-2010 - IBRAHIM KALIFULLA F.M. AND SUNDARESH M.M. , JJ. ORDER:- The order of the court was made by F.M. IBHRAHIM KALIFULLA J. The petitioners in W.P. Nos. 50189 and 50190 of 2006 are common and the petitioner in W.P. No. 50111 of 2006 is one of the appellants before the Tribunal in which a common order came to be passed by the Tribunal dated September 9, 2005 in T.A. Nos. 101 and 102 of 2001, S.T.A. Nos. 907 and 908 of 2001. Therefore, these writ petitions 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. 50189 of 2006. The assessment order pertains to 1993-94. The assessment was completed on October 30, 1995. The assessment was however revised by an order dated April 23, 1999 under section 16 of the Tamil Nadu General Sales Tax Act, 1959. The petitioners are sugar mills. The petitioner in W.P. No. 50189 of 2006 own lands, from which sugarcane was procured for crushing, apart from purchasing sugarcane from other growers. It is common ground that by virtue of section 3 of the Essential Commo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable to tax under that Schedule: Provided further that in the case of goods mentioned in the First Schedule which are taxable at the point of first sale, the tax under this Act shall be payable by the first or earliest of the successive dealers in the State who is liable to tax under this section. 22. Original entry from March 12, 1993 Sugarcane excluding sugarcane setts At the point of last purchase in the State 12-03-93 Note: 1 This entry is as per substituted First Schedule to the TNGST Act, 1959 introduced by Act No. 24 of 1993-Tamil Nadu Government Gazette-Extraor-dinary, Part IV, section 2 dated May 28, 1993-Effective from March 12, 1993. 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 consultati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein. Keeping the above provisions in mind, the issue involved has to be examined. The assessing authority after completion of the assessment on October 30, 1995, issued a revised pre-assessment notice dated March 16, 1999 and called upon the petitioner to show cause as to why the cess payment should not also be included in purchase price for the assessment year 1993-94. The learned counsel for the petitioners contended that the same will not form part of the purchase price and therefore, it would not fall within the prescription contained under section 3(2) read along with entry 22 of Part E of the First Schedule and therefore no tax could be levied. However, rejecting the contention of the petitioner, by an order dated April 23, 1999, the taxable turnover on the cess levied under the Act 20 of 1949 was determined at a sum of Rs. 23,73,97,145 and after giving credit to whatever tax paid, the balance tax due was determined at a sum of Rs. 1,55,83,108. On the said sum, the surcharge due and the additional tax was also determined apart from imposing penalty of Rs. 6,42,790. Aggrieved against the said order of the assessing authority, the writ petitioner approached the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 of the Act 20 of 1949, has no relation at all with the price of the sugarcane and the event of purchase alone would attract payment of tax under section 3(2) of the Tamil Nadu General Sales Tax Act, the very demand made by the assessing authority under section 16 of the Act was not valid in law and consequently the order of the assessing authority and the confirmation of the same by the Tribunal are liable to be set aside. As far as the decision in State of Kerala v. Madras Rubber Factory Ltd. reported in [1998] 108 STC 583 (SC) is concerned, according to the learned counsel, the same is clearly distinguishable and therefore the Tribunal's reliance upon the said decision for imposing of tax liability under the provisions of the Tamil Nadu General Sales Tax Act is liable to be interfered with. The learned counsel also relied upon the decisions in State of Tamil Nadu v. Kothari Sugars Chemicals Ltd. reported in [1996] 101 STC 197 (SC), E.I.D. Parry (I) Ltd. v. Assistant Commissioner of Commercial Taxes [2000] 117 STC 457 (SC), Neyveli Lignite Corporation Ltd. v. Commercial Tax Officer [2001] 124 STC 586 (SC) and Joint Commercial Tax Officer v. Spencer Co. [1975] 36 STC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of such last purchase of sugarcane taking place at the instance of the petitioner, the same would attract payment of tax at the rate of 12 per cent on the turnover to be assessed as prescribed under section 2(r) of the Act. Therefore, in order to find out what is the turnover in the case of the petitioners, necessarily the price of the sugarcane at which it is bought by the petitioner has to be found out. In the said circumstances, the question arises as to whether apart from clauses 3 and 5A of the Sugarcane (Control) Order, the cess levied under section 10(2) read along with section 14(1) of the Act 20 of 1949 would also fall within the component of price of sugarcane. In so far as the minimum price of sugarcane fixed under clause 3 by the Central Government and the additional sugarcane price fixed under clause 5A by the State Government are concerned, the petitioner has rightly disclosed the same in its return and the tax has also been duly paid. When we come to the cess levied under section 10(2) of the Act, we find that while section 10(2) of the Act stipulates that the occupier of sugar factory should enter into an agreement with the grower for production of all su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no relations to the petitioner which is a sugar factory. Therefore, the turnover which can be ascertained in relation to the petitioner can only relate to the purchase of sugarcane as has been prescribed under entry 22 of Part E of the First Schedule read along with section 3(2) of the Act. In so far as the aggregate amount of the purchase involved in the case of the petitioner the same was duly ascertained and assessed and such assessment indisputably was complete as early as on October 30, 1995. Therefore, we are at a loss to understand whether the cess levied under section 14(1) of the Act 20 of 1949 read along with section 10(2) of the said Act and remitted to the Director of Sugars could be held to be even remotely relatable to the event of purchase of sugarcane which alone would make the petitioner liable for assessment being made for the purpose of payment of tax under the provisions of the Tamil Nadu General Sales Tax Act. In other words, there being no event of purchase of sugarcane in so far it related to the levy of cess as stipulated under section 14(1) of the Act 20 of 1949, we do not find any scope at all for the respondents to seek for and make a demand for payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench Decision. Once we are clear on the legal position and when we examine the correctness of the orders impugned, we find that the assessing officer in his order has not given any reasons except stating that the petitioner failed to include the cess payment in the taxable purchase turnover and failed to pay tax thereon and therefore the assessment was being made and for the very same reason also imposed the penalty. In the case of the petitioner in W.P. No. 50189 of 1990, the Appellate Assistant Commissioner in his order dated December 14, 2000, in the first instance, rightly held that the cess would not form part of the purchase price and therefore no tax could be levied. The Appellate Assistant Commissioner also followed the earlier Division Bench decision in Cauvery Sugars and Chemicals Ltd. v. Joint Commercial Tax Officer reported in [1972] 29 STC 1 (Mad) and the Appellate Assistant Commissioner also distinguished the decision in State of Kerala v. Madras Rubber Factory Ltd. reported in [1998] 108 STC 583 (SC). The Tribunal, unfortunately without examining the issue with reference to the relevant provisions, has taken the view that the cess payment made by the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate with any definite terms that the petitioner at no point of time construed or treated the cess paid under the provisions of the Act 20 of 1949 as an element of either purchase price or even purchase expenses. Therefore, the said finding of the Tribunal cannot be a ground at all for affirming the revised assessment made by the original authority. When we examine the decision of the honourable Supreme Court reported in State of Kerala v. Madras Rubber Factory Ltd. reported in [1998] 108 STC 583 (SC), as rightly contended by the learned counsel for the petitioners, the said decision has to be understood in the light of the specific provision contained under section 12 of the Rubber Act, 1947 and section 5 read along with entry 71 of the Kerala General Sales Tax Act, 1963. Section 12 of the Rubber Act has been extracted in the said decision at page No. 589, which reads as under: Imposition of new rubber cess. (1) With effect from such date as the Central Government may, by notification in the Official Gazette, appoint, there shall be levied as a cess for the purposes of this Act, a duty of excise on all rubber produced in India at such rate, not exceeding fifty naye paise per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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