IMPORTANT POINT
A purchaser of sugar-cane from the cane growers is liable to pay purchase tax under the State Sales Tax Act on the aggregate of price fixed under clauses 3 and 5A of the Sugar Cane (Control) Order, 1966. But if there is an agreement between the purchaser and the grower of pay a higher price than that fixable under the Control Order, the purchaser would pay purchase tax on that agreed higher purchase price and not on the statutory lower price fixed as the aggregate of price fixation under clauses 3 and 5A of the Control Order.

JUDGMENT

J.S. Verma, J.-The question for decision is : Whether for the purchase of sugar-cane from the cane growers, a purchaser is liable to pay purchase tax under the State Sales Tax Act on the amount paid by the purchaser to the cane grower over and above the price fixed under Clauses 3 and 5-A of the Sugar-cane (Control) Order, 1966?

2. Clause 3 of the Control Order issued under the Essential Commodities Act, 1955 empowers the Central Government to fix the minimum price for sugar-cane for each season and different prices are permitted to be fixed for different areas or different quantities or varieties of sugar-cane. Since 1.10.1974 pursuant to the acceptance of Bhargava Commission Report, the Central Government introduced Clause 5-A in the Sugar-cane (Control) Order, 1966, the material part of which is as under:

"5-A. Additional Price for Sugarcane purchased on or after 1st October, 1974

(1) Where a producer of sugar or his agent purchases sugarcane, from a sugar-cane grower during each sugar year, he shall, in addition to the minimum sugarcane price fixed under clause (3) pay to the sugarcane grower an additional price, if found due in accordance with the provisions of the Second Scheduel annexed to this Order.

(2) The Central Government or the State Government, as the case may be, may authorise any person or authority, as it thinks fit, for the purpose of determining the additional price payable by a producer of sugar under sub-clause (1) and the person or authority, as the case may be, who determines the additional price, shall intimate the same in writing to the producer of sugar and sugarcane grower connected with the supply of sugarcane to such producer of sugar.

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3. In Tamil Nadu, the State Government duly exercised its power by appointing the Director of Sugar and Cane Commissioner, who, by order dated 2.7.1983 determined the "additional cane price" under Clause 5-A at Rs. 28.15 per MT for the respondent i.e. Thiru Arroran Sugars Ltd., making the final statutory cane price as per the Control Order at Rs. 179.55 per MT, the "minimum cane price" fixed by the Central Government being Rs. 151.40 per MT. There is no dispute that this additional price fixed under Clause 5-A attracts purchase tax which has already been paid. However, the dispute is with regard to the claim of the State Government for payment of purchase tax on the excess amount paid by the purchaser in addition to the aggregte of the minimum cane price fixed under Clause 3 and the additional cane price fixed under Clause 5-A by the Central Government.

4. The occasion for payment by the purchaser of the amount in excess of the aggregate of the minimum cane price and the additional cane price so fixed, arises on account of an Order of the State Government dated 15.11.1980 purporting to fix a higher revised minimum cane price and directing the sugar factories in Tamil Nadu to pay that price to the cane growers. Pursuant to the direction, each sugar factory was directed to make that payment and in compliance thereof this sugar factory paid the excess amount as an "Advance" described as under :

"............. being advance payment towards cane supply during 1980-81 Season, against probable additional cane price under Section 5A of the Sugarcane (Control) Order, 1966."

5. This amount paid as "advance" by the sugar factory for purchase of sugar-cane in anticipation of fixation of the additional cane price under Clause 5-A was Rs. 52.40 per MT. Accordingly, on fixation of the additional cane price at Rs. 28.15 per MT, the excess amount of advance came to (Rs. 52.40 per MT minus Rs. 28.14 per MT) Rs. 24.25 per MT. While the sugar factory claims that this excess amount of Rs. 24.25 per MT paid by it to the cane grower is towards advance and liable to adjustment or refund, even if it remains with the cane grower, it cannot form part of the price of sugar-cane which cannot exceed the aggregate of the minim