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2018 (4) TMI 650

e price liable to be taxed? - Held that: - In Ponni Sugars (Erode) Limited Vs. Deputy Commercial Tax Officer [2005 (11) TMI 247 - SUPREME COURT OF INDIA], the issue as regards transport subsidy has been considered by the Hon'ble Supreme Court and it was held that As found as a matter of fact that the transport subsidy formed part of the consideration for the purchase of the sugarcane by the appellant from the sugarcane growers - tax case revision dismissed. - T.C.(R).Nos.50 and 51 of 2018 C.M.P.No.5932 of 2018 - Dated:- 19-3-2018 - S. Manikumar And V. Bhavani Subbaroyan, JJ. For Petitioners : Mr. N. Inbarajan ORDER ( Order of this Court was made by S. Manikumar, J. ) Tax Case Revisions are filed to revise the order, dated 27.02.1990, made in M.T.A.Nos.231 and 232 of 1989, on the file of the Sales Tax Appellate Tribunal (Additional Bench), Madurai. 2. The Petitioner was assessed by the Deputy Commercial Tax Officer, Thirumangalam, vide orders, dated 27.02.1987 and 31.03.1987, for the respective assessment years 1984-85 and 1982-83, including transport subsidy paid for transport of sugarcane beyond 40 Kms and the same was accounted as cane development charges. The revisional assessme .....

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over. v. The Sales Tax Appellate Tribunal failed to appreciate that transport charges by itself cannot be taxed as long as it was distinctly permitted. 4. Before the Appellate Authority, the revision petitioner has contended that the assessment cannot be made on the turnover plant subsidy according the decision of the Madurai Tribunal in MTA No.555 of 1980 dated 15-5-1981 and therefore, the assessment made on a turnover of ₹ 5,83,302.14 relating to plant end development subsidy has to be deleted, in respect of assessment year 1984-85. 5. The revision petitioner has further contended that relying on the decision of the this Court reported in 40 STC 73, the appellants contended that transport charges incurred is not liable to tax under purchase turnover. Based on this decision, the transport subsidy in question incurred by the appellant and fully borne by them, could not be included in the purchase turnover of sugar cane and assessed to tax. Further, such subsidy on which assessment made for the earlier years have been deleted by the Madurai Tribunal in MTA 554 and 555/80 dated 15-5-81. 6. The Appellate Authority considered the issues involved in both the appeals as hereunder:- .....

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ported in 40 STC 73. Further, Madras Tribunal in a similar issue in A 1281/82 dated 20-5-83 in the case of Tvl. Tirupattur Co-op. Sugar Mills Kothandapatti, North Arcot District have upheld the inclusion of transport charge and transport subsidy. Therefore respectfully following the above decisions or the Madras High Court cited by the Departments Representative the assessment made on the turnover of transport subsidy is upheld. 9. The Tribunal framed the following points for consideration, The point for consideration in MTA 231/89 & 232/89 is, 1. Whether the transport subsidy is part of the purchase price liable to be taxed. The point for consideration in MTMP 42/90 is 1. Whether the plant developmental subsidy given by the sugar mills to the sugar cane growers is liable to be taxed Point I in both the appeals (MTA 231/89 & 232/89) The appellant, the National Co-Operative Sugar Mills Ltd., Alanganallur had entered into contract with cane growers for the purchase of sugar cane at an agreed price Normally to be fixed by the Central Government. As per the agreement between the appellant and cane growers, the letter have to deliver the sugar cane to the appellant at this mills .....

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pellant is the mill premises or sugar factory and not the sugar cane filed. Our High Court in 38 STC 238 has held that Rule 6(e)(i) of TNGST Rules is not applicable to a purchasing dealer and the dealer who is liable to pay tax for this sales alone is entitled to deduct the freight charges from the taxable turnover. Therefore the appellants are not entitled to deduct the transport subsidies given for the transport of the sugarcane from the filed to the mill under the above said rule. The Full Bench of our Supreme Court has held in Dyer Meakin Broweries Ltd. Vs. State of Kerala reported in 26 STC 248 that Rule 9(f) of Kerala General Sales Tax Rules, 1963 seeks to exclude only those charges which are incurred either expressly or by necessary implication for and on behalf of the purchaser, after the sale, when the dealer undertakes to transport the goods and the same. It is not intended to exclude from the taxable turnover any component of the price, expenditure incurred by the dealer he had to incur before sake and to make the goods available to the intending customer at the place of sale. Rule 9(f) of the Kerala General Sales Tax Rules, 1963 is in all respect similar to rule 6(a) of .....

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er referring to the decision of our High Court in 38 STC 238 that the freight charges paid by the sugar mills for having transported sugar canes from the filed to the sugar mills liable to be taxed as part of the price of the sugar cane purchased by the sugar mills. We have already found that the purchase price of sugar cane includes the freight charges also as per the definition of 'turnover' provided under Section 2(r) of the Act. The appellant has also admitted that the freight charges from part of purchase price where the sugar cane filed is situated within 40 kms from sugar mills. Once the freight charges become part of the turnover as per Section 2(r) of the Act, then it becomes a taxable turnover as per Section 2(p) of the Act unless and until that turnover is deductable under Rule 6. Even though the learned Authorised Representative for the appellants has relied on a decision of our High Court in 9 STC 119 that no tax can be levied on any amount paid more than the price fixed under the Sugarcane Control Order 1966, no material was placed before us that the aggregate amount paid by the appellant to the sugar cane growers exceeds the price fixed under Sugarcane Contro .....

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provisions of Section 2(r) and Explanation (2)(ii) appended thereto of the TNGST Act ultra vires of entry 54 - List II of the Seventh Schedule to the Constitution of India ? (2) Is the provision of rule 6(c) of the Tamil Nadu General Sales Tax Rules, 1959 (for short, "TNGST Rules") ultra vires and violative of Article 14 of the Constitution of India, when especially the classification, according to the said rule, of "turnover chargeable on sale" and "turnover chargeable on purchase" cannot at all be stated to have rationale or reasonable nexus to the object to be achieved ? (3) Is "planting or varietal subsidy" to be treated as consideration for the "sale" and "purchase" of sugarcane ? (4) Does it make any difference, if such subsidy is disbursed later at the time or after the supply of sugarcane ? (5) Are expenses incurred by the assessee - sugar mills, up to the supply to commercial nursery and cane subsidy to cane-growers on supplies from commercial nursery part of sugarcane paid/payable to cane-growers ? (6) Is supply of farm inputs at subsidised rates to be treated as consideration to the grower for supply of sugarca .....

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present tax cases in reopening the question relatable to the "transport subsidy" in respect of which the Tribunal passed an order favourable to the petitioners herein, notwithstanding the fact that no revision had been filed by the Revenue aggrieved by such an order of the Tribunal. In the light of the view that we have taken, the decision in Madurantakam Co-operative Sugar Mills [1976] 38 STC 238 (Mad.), is no longer a good law and it is accordingly overruled. The correct legal position is reflected by the decision in Kallakurichi Co-operative Sugar Mills Limited [1985] 60 STC 113 (Mad.) the finding of the Tribunal in its common order in respect of the present Tax Case Nos. 474 to 478 relatable to "transport subsidy" requires to be set aside and the same is accordingly set aside. 60. For the reasons as above Tax Case Nos. 474 to 478 of 1993 shall stand dismissed. However, as stated above, the transport subsidy is set aside. 12. In Ponni Sugars (Erode) Limited Vs. Deputy Commercial Tax Officer reported in 2005 (13) SCC 12 = AIR 2006 SC 496, the issue as regards transport subsidy has been considered by the Hon'ble Supreme Court as hereunder:- 10. The Full Be .....

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y the purchaser to the seller of goods in pursuance of the contract of sale can legitimately be regarded as purchase price while calculating the turnover for the purposes of sales tax legislation. What can legitimately be brought to sales tax or purchase tax is the aggregation of the consideration for the transfer of property. All the payments should have been made pursuant to the contract of sale and not dehors it. Any amount paid as ex gratia payment or as an advance cannot be the component of the purchase price and therefore cannot legitimately be included in the turnover of the purchasing dealer. Whether one of the components of the purchase price goes to the coffers of the seller or not will not cease to be so if it is necessary for completing the same. Thus the total amount of consideration for the purchase of goods would include the price strictly so called and also other amounts which are payable by the purchaser or which represent the expenses required for completing the sale as the seller would ordinarily include all of them in the price at which he would sell his goods. But if the sale price is fixed statutorily then the only obligation of the purchaser under the agreeme .....

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ied upon by the appellants namely Commissioner of Sales Tax, U.P. V/s. M/s. Rai Bharat Das & Bros., does not support the appellant. In fact the Court found in that case that the costs of freight or delivery were included in the sale price. 16. The assessment orders of the Department in respect of the earlier years also relied on by the appellants were based on the earlier decision of the High Court in State of Tamil Nadu V/s. Madhurantakam Cooperative Sugar Mills (supra) which was specifically overruled by the Full Bench in Chengalvarayan's case. 17. The findings of the Tribunal sought to be relied upon by the appellant related to a previous stage of proceedings. The order of the Special Taxation Tribunal which was passed on an enhancement petition filed by the respondents and which was the subject matter of the writ petition before the High Court, had held against the assessee following the decision of the Full Bench of the Madras High Court in Chengalvarayan Co-operative Sugar Mills Ltd. V/s. State of Tamil Nadu (supra) which was affirmed by this Court in E.I.D. Parry's case. 18. The appellants then said that the decision of this Court in EID Parry (supra) was limited .....

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