Voluntary cane price payments not backed by contract or statute excluded from taxable turnover under sales tax law.

State Advisory Price paid by a sugar mill to cane growers, where it was not backed by any contractual or statutory obligation, was treated as a voluntary payment and not part of the purchase price under the Tamil Nadu General Sales Tax Act, 1959. The governing control regime recognised only the minimum cane price and additional cane price as the statutory price, unless a higher price was proved by agreement. Because the SAP was paid on State advice and not under an enforceable obligation, it was excluded from taxable turnover, and the reassessment based on its inclusion could not stand.

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Issues: Whether the State Advisory Price paid by the sugar mill to cane growers, absent a contractual or statutory obligation, formed part of the purchase price and taxable turnover under the Tamil Nadu General Sales Tax Act, 1959.

Analysis: The payment of SAP was made in a context where, until the enactment of the Tamil Nadu Sugarcane (Regulation of Purchase Price) Act, 2018, the price was evolved through a tripartite consultative process and not by statutory compulsion. The governing principles drawn from the control order and the earlier authorities were that only the minimum cane price and additional cane price fixed under the control regime formed the statutory price, unless there was a proved agreement for a higher price. A payment made merely under State advice, goodwill, or commercial compulsion, without an enforceable contractual or statutory obligation, could not be treated as part of the sale price for purchase tax purposes.

Conclusion: The SAP paid for the relevant assessment years was not includible in the purchase price or turnover, and the reassessment based on its inclusion could not be sustained.

Ratio Decidendi: A voluntary payment made by a purchaser to growers, not supported by contract or statute and not shown to be part of an agreed higher sale price, does not form part of the taxable purchase price under the sales tax law.

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