Cane cess is not part of sugarcane purchase price, so it cannot be included in taxable turnover.

Cane cess levied under the Madras Sugar Factories Control Act, 1949 was treated as a statutory levy on sugarcane brought into a notified area, not as part of the consideration payable for purchase. Since turnover under the Tamil Nadu General Sales Tax Act, 1959 covers the aggregate amount for which goods are bought or sold, and sugarcane tax is attracted at the last purchase point, the cess had no nexus with the purchase price fixed under the Sugarcane (Control) Order, 1966. The earlier Division Bench view that the cess did not form part of the purchase price governed the issue, and its inclusion in taxable turnover was held unsustainable.

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Issues: Whether the cane cess levied under the Madras Sugar Factories Control Act, 1949 formed part of the purchase price of sugarcane and therefore constituted part of the taxable turnover under the Tamil Nadu General Sales Tax Act, 1959.

Analysis: Turnover under section 2(r) of the Tamil Nadu General Sales Tax Act, 1959 is the aggregate amount for which goods are bought or sold, and in the case of sugarcane the tax under section 3(2) read with entry 22 of Part E of the First Schedule is attracted at the point of last purchase in the State. The cess under section 14(1) of the Madras Sugar Factories Control Act, 1949 is a levy on sugarcane brought into a notified area for consumption, use or sale, and it arises from the occupier's statutory liability, not from the transaction of purchase. It has no nexus with the price fixed under the Sugarcane (Control) Order, 1966 and is not part of the consideration payable to the grower. The earlier Division Bench ruling that such cess does not form part of the purchase price squarely governed the matter, and the decision under the Rubber Act was held distinguishable.

Conclusion: The cane cess did not form part of the purchase price or taxable turnover, and the addition of that amount to the assessment was unsustainable.

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