AI Drafter 
TaxTMI 
TaxTMI 
2020 (2) TMI 474
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....of Chengalvarayan Co-operative Sugar Mills Limited v. State of Tamil Nadu ((1997) 105 STC 497(Mad)) which came to be affirmed by the Hon'ble Supreme Court in the case of E.I.D. Parry (I) Ltd. v. Assistant Commissioner of Commercial Taxes ((2000) 2 SCC 321) and later on followed by the Hon'ble Supreme Court in the case of Ponni Sugars (Erode) Ltd. v. Deputy Commercial Tax Officer ((2005) 13 SCC 102. 3. The relevant portions of the above decisions are quoted below for ready reference:- In the case of EID Parry (I) Limited ((2000) 2 SCC 321): "In support of this last submission not only the relevant provisions under the Act but the decision of this Court in Andhra Sugars Ltd. v. A.P. State, [1968] 1 SCR 705, was also relied upon. Apparently, the two agreements-one agreement in respect of planting subsidy and the other agreement for the sale of sugarcane appear to be independent but on a close scrutiny it can be noticed that they constitute one single transaction. In their petitions filed before the High Court the appellants have stated that the planting or varietal subsidy is by way of incentive to the cane grower. It is given to motivate the cane grower to grow....
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....t between the appellants and the sugarcane growers. They were not post-sale expenses. Those amounts were paid to ensure scheduled delivery of sugarcane. The sale of sugarcane became complete only thereafter. Those payments can be regarded either as payments made on behalf of the sugarcane growers or payments made in modification or variation of the earlier agreements entered into by the sugarcane growers for selling sugarcane. In either case they could legitimately be regarded as the components of the sale price as the sellers would have otherwise included those amounts in the sale price." In the case of Ponni Sugars ((2005) 13 SCC 102: "8. Clause (6) of the agreement did not say that the sale was to take place in the field as contended by the appellant. It merely provided for the method of sale. This is also clear from the conduct of the parties. The appellant has admittedly included the transport charges up to 40 km. from the mill within the purchase price and has admittedly paid tax thereon. If the sale took place at the field and transportation charges did not have any connection with the cane growers, there was no need either to include the transport....
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....ith the sugarcane-grower to purchase sugarcane in the form prescribed under the Madras Sugar Factories Control Act, 1949 and the Rules framed thereunder. It was found that the prescribed form of agreement disclosed that sugarcane had to be delivered by the grower at the factory premises. 10. After considering earlier authorities, this Court upheld the view of the Full Bench of the Madras High Court and concluded: (SCC p.336 para 18) "18. What transpires from the above case-law is that the amounts paid by way of consideration by the purchaser to the seller of goods in pursuance of the contract of sale can legitimately be regarded as purchase price while calculating the turnover for the purposes of sales tax legislation. What can legitimately be brought to sales tax or purchase tax is the aggregation of the consideration for the transfer of property. All the payments should have been made pursuant to the contract of sale and not dehors it. Any amount paid as ex gratia payment or as an advance cannot be the component of the purchase price and therefore cannot legitimately be included in the turnover of the purchasing dealer. Whether one of the components of ....
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....omponents of the sale price as the sellers would have otherwise included those amounts in the sale price." (Emphasis added). It is of significance that this view was expressed despite the fact that the State Government's directive was not incorporated in that particular agreement for purchase of sugarcane. The principles would therefore be applicable a fortiori to the present case where the directive formed part of the agreement. The issue raised by the appellant before us has thus been answered in the negative by this Court in E.I.D. Parry((2000) 2 SCC 321) which view we respectfully adopt." 4. The learned Tribunal, in the order impugned before us, has taken a similar view with the following observation:- "The dealer-appellants are sugar mills and manufacturers of sugar. They are governed by the Madras Sugar Factories Control Act, 1949 and the Rules framed thereunder and the Sugar Cane (Control) Order, 1966. Under the Madras Sugar Factories Control Act, 1949, an area was declared to be an area reserved for a sugar factory for a specified crushing season and before every planting season the sugarcane grower in the reserved area was to offer to the ....
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....t pressing the issue related to planting subsidy. However, in respect of levy of tax on transport charges paid to third party lorry owners, by producing the order of the Hon'ble High Court of Madras in Tax Case Nos.1742, 1738 and 1740 of 2008 dated 19.8.2010 rendered in dealer-appellant's own case argued that charges have been as per the terms of the agreement between the cane grower and the dealerappellants and that the same cannot be included in the taxable turnover. Apart from this, the learned counsel had argued that the dealer- appellants had taken the sugarcane from the field of ryots and then only transported the sugarcane by arranging lorries on their own. We have gone through the order of the Hon'ble High Court of Madras produced by the learned counsel. A careful reading of the same revealed the fact that the disputed assessment years involved in the above cases are 1975-76 and 1976-77. In that order, the High Court of Madras had approved the order of this Tribunal passed in CTA Nos.82 and 84/79 dated 26.4.1980. In the above said order, this Tribunal, by following the case law reported in 38 STC 238 had deleted the freight charges paid to third party lorry owne....
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....nder the agreement that the sugarcane growers had to deliver the sugarcane at the mill gate of the dealer-appellants. This contractual obligation for delivery of the sugarcane at the mill gate had not been departed from or varied. The method adopted for transporting sugarcane had been devised only to enable the sugarcane growers to arrange for the speedy transport of sugarcane to the mill. Above all, it is seen from the assessment records that after paying transport charges to third party lorry owners, the dealer-respondents had deducted such transport charges from the statutory price to be paid as per 5-A price of Sugar Control Order, 1966. Then, they had claimed exemption on such amount with the claim that such payments are not includible in the purchase price of sugar. Thus, it is clear that the transport charges paid to third party owners were deducted from statutory cane price and therefore the claim of dealer-appellants that transport charges paid to third party lorry owners are not to be included to the purchase price is not acceptable. Hence, the reliance of learned Counsel on the Tax Case Nos.1742, 1739 and 1740 of 2008 dated 19.8.2010 is not acc....
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....its judgement dated January 4, 1984 in the case of Kallakurichi Sugar Mills case reporter in 60 STC 113 and subsequently on July 15, 1991 in the case of Perambalur Sugar Mills Limited v. State of Tamil Nadu reported in 86 STC 17. Further, the learned Appellate Joint Commissioner has recorded that the dealer-appellants deliberately remained silent without paying any tax even though they would well aware of the decision reported in 117 STC 457 in the case of E.I.D. Parry (I) Limited case, in which, the Hon'ble Supreme Court has confirmed the decision of the Hon'ble High Court of Madras reported in 105 STC 497 (Chengalvarayan Co-operative Sugar Mills Limited case). The dealer-appellants have contended that they had acted bonafide and their conduct was not contumacious of guilt that they still in bonafide belief that the facts are distinguishable from the case decided by the Hon'ble Supreme Court of India. 15. We have considered the order of the learned Appellate Joint Commissioner and the contention of the dealer-appellants. As far as the case on hand is concerned, it is an admitted fact that every turnover is found in the accounts. It is submitted by the....