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TMI Blog2004 (8) TMI 744X X X X Extracts X X X X X X X X Extracts X X X X ..... ixed, the government of Karnataka also fixes the price payable to sugarcane growers by the sugar factory as State Advise Price ('SAP' for short). The price paid by sugar factories to sugarcane growers also comprises of harvesting subsidy, transportation subsidy, plantation subsidy and the advance payment towards these subsidies. 3. The assessing authority for the assessment years namely, 1990-1991, 1991-1992, 1992-1993 and 1993-1994, had passed assessment orders taking into consideration the statutory minimum price fixed by the Central Government, the advice price fixed by the State of Karnataka and all the other amounts paid to sugarcane growers by the respondent company as the purchase price paid to sugarcane growers and had levied purchase tax under the Act. The orders of assessment passed by the assessing authority had been questioned by the respondent company by filling a writ petition before this Court. The grievance of the respondent company was that the assessing authority was not justified in levying purchase tax on the amount paid by the factory to the sugarcane growers over and above the statutory minimum price fixed by the Central Government. This Court rejected t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the amount paid as advance prior to the fixation of the additional price under clause 5-A, cannot be automatically treated as part of total price of sugarcane." 4. In so far as the decision of this Court in Tungabhadra Sugar Works Limited's case, the Supreme Court was pleased to remand the matter to this Court for a fresh decision in the light of certain observation and directions made therein. 5. After such remand, this Court by its order dated 9.7.1996 in W.P. No. 4583/1993 and connected matter was pleased to remit the matter to the assessing authority with certain directions. The relevant portion of the order passed by this Court is extracted and it is as under: "We also think that the proper course to be adopted in these cases is to remit the matter to the assessing authority for fresh consideration in the light of what has been stated by the Supreme Court in its order in Civil Appeal Nos. 11605-608 of 1995. Hence, we quash the assessment orders or the orders made in appeals arising therefrom or any demands subsisting thereto and direct the assessing authorities concerned to redo the assessments, in the light of the decision of the Supreme Court aforesaid." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessing authority as well as before them that the additional amounts paid as advance towards SAP represented the price of sugarcane paid in terms of the agreement between the sugar factory and the sugarcane growers and that there was no material to suggest that the higher price including excess amount was paid as price of sugarcane under an agreement between the grower and the purchaser. In aid of his submissions, the learned Government Advocate relies upon certain observations made by the Supreme Court in the case of EID Parry (I) Ltd., Vs. Asst. Commissioner of Commercial Taxes and another - [2000] 117 STC 457. 9. Sri Rabinathan, learned Counsel appearing for the respondent company justifies the findings of the Tribunal, by placing reliance on the observations made by the Supreme Court in the case of State of Tamilnadu and Others Vs. Kothari Sugars and Chemicals Limited - [1996] 101 STC 197. 10. The question of law raised by the revenue for consideration and decision of this Court in these revision petitions is: "Whether the Tribunal was justified in holding that the advance towards SAP cannot be subjected to tax even though the other incentive subsidies were to be tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugarcane. In either case, they could legitimately be regarded as the components of the sale price as the sellers would have otherwise included those amounts in the sale price." 13. In so far as transport charges paid by the sugar factory to the third party lorry owners at the instance of the State Government, the Apex Court in the aforesaid decision has observed that it becomes a part of the implied agreement between the sugar factory and the sugarcane growers and the payment made can be regarded either as payments made on behalf of the sugarcane growers or payments made in modification or variation of earlier agreements entered into by the sugarcane growers for selling sugarcane and in either case, they could be legitimately regarded as the components of the salle price as the sellers would have otherwise included those amounts in the sale price. 14. In the present case, the only issue raised for consideration and decision of this Court is whether the excess amount paid over and above statutory price fixed by the Central Government by the respondent company to the sugarcane growers on the advice of the State Government could be aggregated with the price of sugarcane and include ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the reason, that in EID Parry's case, the issue before the Supreme Court were whether the planting subsidy paid by the sugarcane purchaser to the sugar cane growers can be part of the price of sugarcane purchased by them and secondly, whether the transport subsidy charges in excess of 30 kms. paid by the sugarcane purchaser to third party lorry owners for transporting sugarcane pursuant to the State Government's direction can be aggregated with the price of sugarcane and could be included in the turnover. While answering these two issues, the Apex Court has observed that the planting subsidy was part of the sugar cane price and had to be included in the taxable turnover of the sugarcane purchaser, for the reason, that the payment so made to the sugarcane growers was for planting sugarcane of the desired and improved variety and the supply of sugarcane was closely linked with the planting subsidy paid by sugarcane purchaser, and therefore, the whole transaction constituted one contract of sale. The Apex Court has adopted the same reasoning while holding that the transport subsidy paid to the sugarcane growers forms part of the turnover of the sugarcane purchaser. The facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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