Purchase tax on sugarcane follows actual consideration paid, not merely the advised minimum price under the Control Order.

Purchase tax on sugarcane under the Karnataka Sales Tax Act is based on the actual consideration for which the cane is bought, and the Sugarcane (Control) Order, 1966 does not alter that tax concept. A higher amount paid by the sugar producer beyond the statutory minimum remains the real purchase price, even if described as advance, incentive, or compelled payment. The State advised minimum price is only recommendatory and cannot be used as the tax basis unless it was actually paid or agreed to be paid. Accordingly, the levy extends to the amount actually paid to the cane growers, not merely the minimum price.

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Issues: Whether purchase tax on sugarcane is leviable on the entire amount actually paid by the sugar producer to the cane growers, including the amount paid over and above the minimum price fixed under the Sugarcane (Control) Order, 1966, and whether the State advised minimum price can be taken as the basis for levy when it has not been paid or agreed to be paid.

Analysis: The statutory scheme under the Karnataka Sales Tax Act, 1957 levies tax on the dealer's taxable turnover of purchases, which is the aggregate amount for which the goods are bought for valuable consideration. The Sugarcane (Control) Order, 1966 fixes only a minimum price and also contemplates an additional price, while expressly permitting an agreed price higher than the statutory minimum and additional price. The Court held that the concepts of price, consideration and turnover under the sales tax law are not altered by the Control Order. Therefore, where the sugar producer pays an amount higher than the minimum price, the real consideration for the purchase is the amount actually paid, irrespective of the description placed upon it such as advance, incentive or payment under compulsion. The Court also held that the State advised minimum price is only recommendatory and has no binding force of law; purchase tax cannot be levied on that advised price unless it has in fact been paid or agreed to be paid.

Conclusion: Purchase tax is payable on the entire price of Rs. 395 per M.T. actually paid to the cane growers, and the levy could not be confined to the minimum price fixed by the Central Government alone. The writ petition failed.

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