TaxTMI 
TaxTMI 
2010 (8) TMI 863
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....W.P. No. 50189 of 2006 own lands, from which sugarcane was procured for crushing, apart from purchasing sugarcane from other growers. It is common ground that by virtue of section 3 of the Essential Commodities Act and pursuant to the Sugarcane (Control) Order, 1966 came into being, the Central Government used to fix the price of the sugarcane to be procured apart from additional price fixed by the State Government. Under the Madras Sugar Factories Control Act, 1949 (Act 20 of 1949) and the Madras Sugar Factories Control Rules, 1949, cess also became payable on entry of sugarcane into the factory. Such cess levied on the sugar mills were to be remitted to the Director of Sugars. The question involved herein is as to whether such cess payable under Act 20 of 1949 would form part of the sugarcane price and thereby would attract payment of sales tax under the provisions of the Tamil Nadu General Sales Tax Act. To appreciate the issue involved, it is worthwhile to refer to sections 2(r) and 3(2) of the Tamil Nadu General Sales Tax Act read along with Part E of the First Schedule as well as clauses 3 and 5A of the Sugarcane (Control) Order, 1966 and section 10(2) of the Act 20 of 1949 ....
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....uses 3 and 5A of the Sugarcane (Control) Order, 1966 reads as under: "3. Minimum price of sugarcane payable by producer of sugar. - (1) The Central Government may, after consultation with such authorities, bodies or associations as it may deem fit, by notification in the Official Gazette, from time to time, fix the minimum price of sugarcane to be paid by producers of sugar or their agents for the sugarcane purchased by them, having regard to - (a) the cost of production of sugarcane; (b) the return to the grower from alternative crops and the general trend of prices of agricultural commodities; (c) the availability of sugar to the consumer at a fair price; (d) the price at which sugar produced from sugarcane is sold by producers of sugar; and (e) the recovery of sugar from sugarcane: Provided that the Central Government or with the approval of the Central Government, the State Government may, in such circumstances and subject to such conditions as specified in clause 3A, allow a suitable rebate in price so fixed. . . . 5A. Additional price for sugarcane purchased on or after October 1, 1974. - (1) Where a producer of sugar or his agent purchases sugarcane, from a s....
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....o determined apart from imposing penalty of Rs. 6,42,790. Aggrieved against the said order of the assessing authority, the writ petitioner approached the Appellate Assistant Commissioner who by its order dated December 14, 2000, allowed the appeal holding that no tax is leviable on the cess paid under the provisions of the Act 20 of 1949. As against the order of the Appellate Assistant Commissioner, the State went on appeal before the Tribunal in S.T.A. No. 907 of 2001 and the Tribunal by the order impugned in these writ petitions dated September 9, 2005, held that the cess was part of pre-purchase expenses and in the light of the decision of the honourable Supreme Court in State of Kerala v. Madras Rubber Factory Ltd. reported in [1998] 108 STC 583, the revision of assessment made by the assessing authority was justified. The Tribunal while setting aside the order of the Appellate Assistant Commissioner, restored the order of the assessing authority. However, the Tribunal confirmed the order of the Appellate Assistant Commissioner in so far as deletion of penalty by holding that there was a change of opinion based on which tax came to be levied. In so far as the petitioner in W.....
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....(SC), Neyveli Lignite Corporation Ltd. v. Commercial Tax Officer [2001] 124 STC 586 (SC) and Joint Commercial Tax Officer v. Spencer & Co. [1975] 36 STC 188 (SC) in support of his submissions. As against the above submissions, Mr. Haja Nazuruddin, learned Special Government Pleader appearing for the State, contended that section 14 of the Act, being a regulatory provision and the petitioners having entered the payment of cess as part of their purchase expenses in their ledger, which finding has been made by the Appellate Assistant Commissioner, there was every justification for the respondents to have raised the demand by way of revision of assessment under section 16 of the Act and therefore the orders of the assessing authority and the Tribunal do not call for interference. Having heard the respective counsel and having perused the relevant provisions as well as the orders impugned herein, we are of the view that the stand of the petitioner merits acceptance. When we refer to sections 2(r) and 3(2) of the Tamil Nadu General Sales Tax Act, we find that under section 2(r) of the Act, the "turnover" has been defined to mean aggregate amount of goods bought or sold whether for cash....
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....hile section 10(2) of the Act stipulates that the occupier of sugar factory should enter into an agreement with the grower for production of all sugarcane offered by the grower in accordance with sub-section (1) and the agreement should be in such form where it should contain the terms and conditions as may be prescribed. We are not concerned with the proviso to section 10(2) of the Act. Under section 14(1) of the Act 20 of 1949, it is prescribed that the Government have consulted the advisory committee by notification levied a cess not exceeding four annas per standard maund as defined in the Standards of Weight Act, 1939, on sugarcane brought into any area specified in such notification, for consumption, use or sale therein. Therefore, the crucial words are "the levy of cess at the prescribed rate by the notification on the sugarcane brought into any area specified" in the notification. When the said prescription contained in section 14(1) of the Act is analysed and read along with sections 3(2) and 2(r) of the Tamil Nadu General Sales Tax Act, it is plain and unambiguous that there is no element of any purchase or sale involved for the purpose of levy of cess. The mere factum o....
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....d under section 14(1) of the Act 20 of 1949, we do not find any scope at all for the respondents to seek for and make a demand for payment of tax on the cess so levied by invoking the provisions contained in the Tamil Nadu General Sales Tax Act. The above legal position stated by us is also fortified by the Division Bench decision of this court in Cauvery Sugars and Chemicals Ltd. v. Joint Commercial Tax Officer reported in [1972] 29 STC 1. This very issue, namely, as to whether the cess will form part of transaction of purchase of sugarcane was the direct question involved in the said decision and the Division Bench after a detailed consideration has held as under (page 4): ". . . The cess does not even form part of the transaction of purchase of sugarcane and is not, by any means, in any case, part of the consideration for the purchase of sugarcane. The cess paid is not taken into account in fixing the price under section 12(1). The grower-seller has neither any liability for the cess, nor is it paid on its behalf. It is true that where a seller pays excise duty and includes it in the purchase price, such excise duty will undoubtedly form part of the consideration like sales ta....
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....t examining the issue with reference to the relevant provisions, has taken the view that the cess payment made by the petitioner under the provisions of the Act 20 of 1949 came to be disclosed in the ledger as purchase expenses and consequently it should be held to be part of the sales turnover as prescribed under section 2(r) of the Tamil Nadu General Sales Tax Act, apart from relying upon State of Kerala v. Madras Rubber Factory Ltd. reported in [1998] 108 STC 583 (SC). As far as the reasoning that the petitioner disclosed the payment of cess as part of purchase price is concerned, the learned could brought to our notice the relevant entry made by the petitioner in its ledger, a copy of which was stated to have also been placed before the Tribunal by filing necessary application. We had the benefit of perusing one such extract of the general ledger at page No. 107 of the material papers filed as volume 2 in W.P. Nos. 50189 and 50190 of 2006. We find that the account head noted therein is "cane cess". The entry made therein discloses the cane cess paid for the relevant month based on the total quantity in metric tonnes subtracted by the quantity of sugarcane which were brought in....
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....oses of this Act, a duty of excise on all rubber produced in India at such rate, not exceeding fifty naye paise per kilogram of rubber so produced, as the Central Government may fix. (2) The duty of excise levied under sub-section (1) shall be collected by the Board in accordance with Rules made in this behalf either from the owner of the estate on which the rubber is produced or from the manufacturer by whom such rubber is used." A reading of section 12 of the Rubber Act discloses that though the levy of cess was on the rubber produced at a particular rate, as provided under section 12(1) of the Rubber Act, the collection of the said cess is made obligatory both on the manufacturer by whom such rubber is used as well as the owner of the estate concerned. In the event of there being a manufacturer intervening in the production of rubber as provided under subsection (2) of section 12 then and there alone by virtue of the specific stipulation contained in section 12(2) it will be mandatory either for the owner or the manufacturer to pay the cess on the quantum of rubber produced. Thus, there is a statutory liability of inclusion of cess also in the price of the rubber payable by t....