Planting and transport subsidies paid to sugarcane growers are considered part of the sale price and must be included in taxable turnover; penalties for earlier non-inclusion are unjustified due to legal ambiguity.

1 Leave granted.

2 These eight appeals arise out of three different judgments of the Madras High Court in Writ Petition Nos. 15530-31 of 1995, 15532-35 of 1995 and 15705-15706 of 1995. S.L.P.(C) Nos. 4973-4974 of 1997 are against the decision in Writ Petition Nos. 15530-31 of 1995, S.L.P.(C) Nos. 5589-92 of 1997 are against the decision in Writ Petition Nos. 15532-35 of 1995 and S.L.P.(C) Nos. 5441-52 of 1997 are against the decision in Writ Petition Nos. 15705-15706 of 1995.

3 The appellant in the appeals arising out of SLP (C) Nos. 4973-74 of 1997 and SLP(C) nos. 5589 to 5592 of 1997 is Thiru Arooran Sugars Ltd. (hereinafter referred to as 'Arooran Sugars'). Arooran Sugars is engaged in manufacturing sugar in its units at Vadapathimangalam and Tirumandankudi. The Madras Sugar Factories Control Act, 1949 , (hereinafter referred to as 'the Act') the Rules framed thereunder and also the Sugar Control Order, 1966 apply to its sugar manufacturing activity. In order to provide incentives to sugarcane growers and to ensure sufficient supply of sugarcane of good quality it has been announcing every year planting subsidy payable to those sugarcane growers who are able to grow, for the immediately following crushing season, that variety of sugarcane which it requires. For the year 1990-91 it had announced on 5.11.1989, planting subsidy payable to those sugarcane growers who were willing to plant CO.C.661. For those growers who were to plant that variety in December, 1989 and January, 1990 the subsidy was to be paid at the rate of Rs. 800/- per acre and for those who were to plant in February, June and July, 1990 it was to be paid at the rate of Rs. 600/- per acre. On the basis of that announcement willing cane growers had entered into agreements with it. Pursuant to those agreements the sugarcane growers were supplied seeds by it and the cane growers after sowing and raising the crops had offered the same for sale to it in the prescribed manner. One of the terms of the agreement was that sugarcane was to be delivered at the factory gate by the sugarcane growers. Price as fixed by the Central Government was to be paid against delivery of sugar cane. Though the sale contemplated by the Act was 'factory gate sale' and under the agreements also the obligation of the sugarcane growers was to deliver sugarcane at the factory gate, in view of the general advice of the Tamil Nadu State Government, which was in the nature of administrative instruction, it did subsidise freight/transport charges. For the year 1990-91 the advice was that the sugarcane growers should bear transportation charges up to the distance of 30 kms. and for the distance beyond 30 kms, the charges should be borne by the sugar manufacturers. In its sales tax returns for that year it did not include the amounts paid as planting subsidy and transport subsidy in its taxable turnover as according to is the same were not includible therein. The Assistant Commissioner of Sales Tax did not agree with it and assessed tax after including these amounts. Against that order and the demand raised on its basis the appellant preferred an appeal to the Deputy Commissioner but it was dismissed. The appellant then preferred an appeal to the higher appellate authority. For the years 1991-96 also it had followed the same pattern. Same view was taken by the Sales Tax authorities and against the orders passed it had filed appeals and they were pending when on 6.11.1996 to avoid recurring of such situation every year it filed six writ petitions in the Madras High Court, seeking a declaration that words 'aggregate', 'or delivered or supplied or otherwise disposed', 'either directly or through another', and 'account of others' in the definition of the term 'turnover' as contained in S.2(r) of the Tamil Nadu General Sales Tax Act, 1959 ((hereinafter referred to as the 'Tamil Nadu Sales Tax Act') and the Explanation (2)(ii) thereto are ultra vires Entry 54 of List II of the 7th Schedule of the Consti