Purchase tax on sugarcane includes the State advised price actually paid, not just the minimum controlled price.

State advised price paid by sugar factories for sugarcane formed part of the actual purchase consideration and was includible in the purchase price for purchase tax under the Karnataka Sales Tax Act, 1957. The Court treated the minimum price under the Sugarcane (Control) Order, 1966 as only a floor price and held that a higher State advised price actually paid for procurement could not be excluded merely because it arose from an advisory mechanism or was subject to later adjustment. Purchase tax therefore turned on the real price paid, not on a narrower contractual characterisation adopted by the assessee.

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Issues: Whether the State advised price paid by sugar factories for sugarcane forms part of the purchase price liable to purchase tax under the Karnataka Sales Tax Act, 1957.

Analysis: The statutory scheme treated the minimum price fixed under the Sugarcane (Control) Order, 1966 as only the floor price. The Court held that where the buyer in fact pays a higher State advised price, that amount represents the real consideration for the purchase and cannot be excluded from the purchase price merely because it is fixed under a State advisory mechanism or because later adjustments may be contemplated. The liability to purchase tax depends on the actual purchase price paid for the transaction, not on a narrower contractual characterisation adopted by the assessee. The Court further held that the view taken in the earlier cases supported inclusion of the State advised price where it is the amount actually paid for procurement of sugarcane.

Conclusion: The State advised price paid for sugarcane is includible in the purchase price and is liable to purchase tax; the assessee's challenge failed.

Ratio Decidendi: For purchase tax purposes, the relevant amount is the actual consideration paid for the purchase of sugarcane, and a State advised price paid above the minimum price fixed under the Control Order forms part of that purchase price.

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