1988 (10) TMI 261 - HC - VAT and Sales Tax

Court rules advance payment for cane supply not price; State Govt can't compel extra payment. Excess amount not taxable.

The court held that the advance payment made by the petitioners was not to be considered as the price but as an advance payment towards cane supply. It ... - Issues Involved:1. Whether the advance payment could be treated as price.2. Whether the State Government had the authority to compel the petitioner to pay over and above the statutory minimum price.3. Whether the amounts paid under compulsion could be recovered.Summary:Issue 1: Whether the advance payment could be treated as price.The petitioners argued that they were liable to pay only the price declared under clause 3 of the Sugarcane (Control) Order, 1966, and that further sums paid were only ad hoc amounts by way of advance adjustable against additional cane price payable under clause 5-A(6) of the Sugarcane (Control) Order, 1966. The court, after examining the facts, concluded that the excess price paid over and above the minimum price was not as price but as advance payment towards cane supply against probable additional cane price under clause 5-A of the Sugarcane (Control) Order. Therefore, by no stretch of imagination could this advance payment be considered as price.Issue 2: Whether the State Government had the authority to compel the petitioner to pay over and above the statutory minimum price.The court noted that the Essential Commodities Act (Central Act 10 of 1955) exhausts the field of price fixation, and the State has no power to fix any price. The price fixation has been completely taken over by the Essential Commodities Act and the orders issued thereunder. The court agreed with the petitioners that the State Government had no legal authority to direct the payment of price and that the directives issued by the Director of Sugar were without statutory authority and had no binding force.Issue 3: Whether the amounts paid under compulsion could be recovered.The court found that the payments made by the petitioners were not voluntary but were made under compulsion due to the directives issued by the Director of Sugar. The court referred to various legal precedents and concluded that payments made under compulsion, even if not under duress in the strict sense, could be recovered. The court held that the payment was not voluntary and was made under the pressure of the directive, and therefore, the petitioners were entitled to recover the excess amount paid.Conclusion:The court allowed the writ petitions, setting aside the assessment orders and ruling that the petitioners were not liable to be taxed on the excess over and above the price fixed under clause 5-A of the Sugarcane (Control) Order, 1966. The said excess was not exigible to sales tax or additional tax.