TaxTMI 
TaxTMI 
2018 (4) TMI 650
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.... before the Appellate Assistant Commissioner, who vide order, dated 28.02.1989, held that the planting subsidy cannot be taxed. With regard to transport subsidy, he purported to follow Tax Case Nos.101 and 102 dated 04.01.1984. In the further appeal under Section 36 of the Act, the Tribunal held the transport subsidy was includiable. It was stated that in respect of sugarcane within 40 Kms., the petitioners had deducted the freight charges and paid the balance. Where it was beyond 40 Kms., the petitioners absorbed the freight paid and expenses incurred by them to their own transport contractors. It held that in view of Section 2(r), the freight charges would be part of turnover. It was also stated that the petitioners had agreed to give subsidy beyond 40 Kms. It distinguished the judgment in 38 STC 238 and purported to follow 60 STC 113 (Kallakurichi Co-operative Sugar Mills Ltd v. State of Tamil Nadu). Hence the revision. 3. The revision petitioner has been filed the instant Tax Case Revision, on the following grounds are that, "i. The Sales Tax Appellate Tribunal should have followed the judgment of the Hon'ble High Court in 38 STC 238 (State of Tamil Nadu v. Madu....
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....5,83,302.14 being the addition of plant % development Rs. 9,22,696.67 subsidy made in the same assessment year 1984-85 iii) Rs. 14,023.00 at 12% being the addition made towards sale of scrap and transport subsidy for the assessment year 1982-83 disputed by the appellants. 7. As rightly pointed out by the learned authorised representative, it is seen that Madurai Tribunal in MTA 554 and 555/80 dated 15-5-81 have deleted the assessment made on the turnover of planting and development subsidy and transport subsidy, the decision of the Tribunal has not been reversed by the higher judicial forums, so far and therefore the Assessing Officer is bound to follow the above decision of the Tribunal cited. Respectively following the above decisions of the Tribunal, I order deletion of assessment made on the turnover of Rs. 5,83,302.14 at 12% made by the assessing officer as the same is not includible in the purchase turnover of sugar cane for the assessment year 1984-85. 8. However in respect of inclusion of the turnover of transport subsidy it is seen that Madras High Court in TC 101 & 102 dated 4-1-84 in the case of Kallakurichi Co-operative....
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....gar from the filed to the mill it was also agreed that the appellant would make an arrangements for the transport of the sugar cane from the filed by sending its own transport vehicle or arranging some other lorries for the said purpose. If the distance from filed to the mills is within 40 kms. the transport charges will be deducted from the purchase price of the sugarcane at the time of finals settlement. The appellants has also agreed to pay the transport charges to be incurred by these sugar cane growers whose sugarcane filed is situated beyond 40 kgs. These transport charges were paid by the appellant in almost all the cases to the third party lorry owners who had transported the sugar cane from the filed of these sugar cane growers to the mill and finally such payment is set of by paying a transport subsidy and thereby the transport charges paid for the difference beyond 40 kgs was adjusted at the time of final settlement between the appellant and the case growers. The disputed turnover of Rs. 14,023/- and Rs. 3,39,394.67 relate to such transport subsidies. All the above facts are admitted as correct by both the sides. The contention of the appellant is that inasmuch ....
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....t is to be noted that the expenditure viz. the transport charges have been incurred prior to the purchase of sugar cane at the mill premises. As per the distum of the Supreme Court in the case mentioned above such ore-sale expenses including the freight charges cannot be deducted under Rule 6(a) of the Tamil Nadu General Sales Tax Act. As per the definition of turnover as provided under Section 2(r) of the Act turnover means ......the aggregate amount for which the goods are bought . As we have already mentioned that the point of sale of sugar cane by they agriculturists is the sugar mill premises and any amount spent for the transport of the sugar cane to the factory has to be necessarily included as the purchase turnover of the sugar cane by the appellant. In fact the very claim of exemption on the freight charges by virtue of Rule 6(c)(i) shows that the appellant himself has accepted the freight charges come within the definition of 'turnover' as provided under the Act. It is also to be noted that in case where the sugar cane filed is situated within 40 kms from the sugar mill, the appellant had deducted freight charges from the price of the sugar cane ....
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....trol Order, 1966. Further the Sugar Cane Control Order only the minimum price is fixed. Therefore that control does not prohibit the sugar mill from paying voluntarily any amount over and above the price fixed under the said order. Admittedly the appellants himself has agreed to give the alleged transport a subsidy to the sugar cane growers whose sugar cane filed is situated beyond 40 kms from the sugar mills. The decision of our High Court referred above relates to certain payments made by the sugar mill owners on compulsion. Therefore that decision is not applicable to the facts of the case before us. For the above said reasons, we hold that the transport subsidy paid by the appellant is liable to be taxed. In the result, the appeals are dismissed. Point: 1 in MTMP 42/90 in MTA 232/89 The disputed turnover of Rs. 5,83,302/- relates to early planting and variety subsidy paid by the appellant to various cane growers as on incentive to grow more sugar cane so as to keep the sugar factory running throughout the year. It is not disputed that the said subsidy amounts were paid by the appellant to some of the ryots who planted in the specifie....
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....deration to the grower for supply of sugarcane ? (7) Are the transport charges incurred by the sugar mills excludable as not forming part and parcel of the price of the sugarcane sold by the sugarcane supplier ? (8) Is transport subsidy includible as consideration for the sale of sugarcane by the grower ? (9) Are development charges paid to the registering mill by the assessees-sugar mills, part of sugarcane price paid or payable to the cane growers ? 11. As regards freight charges and subsidy, points 7 and 8, the Hob'ble Full Bench at Paragraphs No. 59 and 60, held as follows:- "59. Pertinent it is to recapitulate at this juncture that the Tribunal in the present Tax Case Nos. 474 to 478 of 1993, following the ratio in Madurantakam Co-operative Sugar Mills [1976] 38 STC 238 (Mad.) recorded a finding that the transport subsidy charges paid by the assessees-sugar mills to third party lorry owners do not form part of purchase turnover, since they are not connected with pre-purchase expenses and consequently, the claim, as respects the transport subsidy made by the assessees-sugar mills was allowed. It cannot be said that the Revenue is not a....
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....red by the Hon'ble Supreme Court as hereunder:- "10. The Full Bench of the Madras High Court was called upon to resolve a dispute between conflicting decisions of the High Court inter alia as to whether transport subsidies were includible in the purchase turnover of the sugar mills which were purchasing sugarcane under the Tamil Nadu General Sales tax Act, 1959 (referred to hereafter as the Act) in Chengalvarayan Co-operative Sugar Mills Ltd. V/s. State of Tamil Nadu, (supra). The Court while affirming the view expressed in Kallakurichi Co operative Sugar Mills Ltd. V/s. State of Tamil Nadu and overruling the decision in State of Tamil Nadu V/s. Madurantakam Cooperative Sugar Mills said :- " if subsidy - whatever name or nomenclature, it may assume and whether paid or payable prior to or subsequent to the entering into contract of sale - is linked to the supply of sugarcane, such subsidy and expenses incurred for the transportation of the sugarcane to the factory site - whether incurred by the grower initially and paid by the sugar mills subsequently or incurred by the sugar mills and shown separately in the invoices - by adopting whatever procedure reflecting....
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....if the sale price is fixed statutorily then the only obligation of the purchaser under the agreement would be to pay that price only and no other amount can be included in the purchase price even if the same is paid by the purchaser to the seller". (Emphasis supplied) 13. The appellant has relied on the last line of the quoted paragraph to contend that it showed that the statutory price fixed would be the only price includible in the taxable turnover of the purchasing sugar mill. This is not what the Court meant. In the preceding sentence it has been made clear that the total amount of consideration not only included the price but also other amounts which represent the expenses required for competing the sale. This is clear from the paragraph 21 of the Judgement where this Court said:- "For the same reasons we hold that the transport subsidy was a part of the consideration for which sugarcane was sold by the sugarcane-growers to the appellants. Though the agreements between the parties provided for delivery by the sugarcane-growers at the factory gate and though the transport charges paid by the appellants were not to the sugarcane-growers but to third-pa....