Sugarcane price settlement treated as sale consideration, with excess over controlled price included in taxable turnover

The agreed cane price settled at Rs. 110 per tonne was treated as the operative sale consideration, not a subsidy outside the sale price. Although the sugarcane had already been delivered, the later amicable settlement validly varied the original price term and operated as novation of the contract. On those facts, the excess over the Government-fixed minimum price formed part of the consideration for supply and was therefore included in taxable turnover; the subsidy contention was rejected.

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Issues: Whether the additional amount paid by the sugar mills to cane-growers over the Government-fixed minimum price was a subsidy outside the sale price, or whether the entire agreed amount formed part of the taxable turnover.

Analysis: The agreement originally contemplated payment of the price lawfully payable under the Sugarcane Control Order, but a dispute arose when the growers demanded more than the minimum price fixed by the Government of India. The parties then amicably settled on Rs. 110 per tonne, and that settled amount represented the price payable for the sugarcane. The fact that the cane was already delivered did not prevent the later settlement from operating as a novation of the price term. On the facts, the excess over the controlled price was not a subsidy but part of the consideration for the supply.

Conclusion: The entire amount of Rs. 110 per tonne was rightly included in the taxable turnover, and the contention that the excess was a subsidy was rejected.

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