ORDER
R. Gururajan. J.
1. Petitioner is before us challenging the order of the Karanataka Appellate tribunal dtd. 1-12-2003 passed in STA No. 1597 & 1598/2002.
2. Petitioner is a company engaged in the manufacture of sugar from sugar cane. It sells the same along with its by-products like molasses and bagasses etc., For the assessment year period from 1-4-1990 to 31-3-1991 petitioner filed a return of turnover and declared the total and taxable turnover at Rs. 10,54,41,976.21 and Rs. 31,01,297.16 respectively. The assessing authority rejected the said return of turn over and passed an assessment order under Section 12(3) of the KST Act on 10-2-1998 and determined the total and taxable turnover at Rs. 19,35,80,540/- and Rs. 9,10,92,480/- respectively to the best of its judgment and levied tax of Rs. 97,86,260/-. In the said assessment order he had determined the purchase price of sugarcane at Rs. 390/- per MT. An appeal was filed before the Joint Commissioner of Commercial Taxes, Appeals. Appeal stood dismissed. The second appeal filed before the tribunal also stood dismissed. It is in these circumstances, petitioner is before us.
2. The following questions of law is framed by this Court;
1. Whether the authorities below are justified in upholding the determination of purchase price of sugarcane at Rs. 390 per MT which is not in conformity with the Circular No. CI 49 SGF 90 dtd 28-7-1990 issued by the Government of Karnataka (Commerce and Industry Department) in total disregard of the provisions of Section 3-A of the KST Act, 1957 which deals with instructions to Sub-ordinate authorities.?
3. Matter is heard for final disposal.
4. Learned Counsel for the petitioner would invite our attention to the material facts to say that the authority is wrong in not properly understanding the Government Orders issued from time to time in the case on hand. He in particular would refer to a circular to contend that the incentive payment to the sugarcane growers by the Sugar Factory has been misunderstood by the authority while fixing the rate in terms of the material on record. He would invite our attention to the circular dtd 28-7-1990. In this regard, learned Counsel would say that the authorities have passed the orders in total disregard to the provisions of Section 3A of the Act. It deals with instructions to subordinate authorities. Per contra, Smt Sujatha, learned Counsel would support the order.
5. After hearing, we have carefully perused the material on record.
6. The assessing authority while considering the case of the petitioner has chosen to notice the various aspects of the matter. The authority has also taken note of the purchase tax rebate of Rs. 12 per ton in his order. He notices that the petitioner-company is permitted to deduct Rs. 12 per ton from the tax payable to the Government and paid it to the sugarcane suppliers as Government subsidy which is a post purchase activity, hence the claim of exemption from tax payment and purchase value is not acceptable. Ultimately, he would pass an assessment order against the petitioner. When the same was challenged before the appellate authority. Appellate Authority notices that the record indicates that the appellant paid the total consideration to the sugarcane growers for supply of sugarcane for the crops season of 1989-90, and comprehensive price at Rs. 365/- per ton and for crop season 1991-92 at Ra. 410/- per ton. Therefore these are the net purchase price paid by the appellant as consideration for supply of sugarcane by the growers which is liable to tax under the Act for the respective years. When this order was challenged before the tribunal. The tribunal after noticing the various material facts and the case laws has chosen to say that what is paid/payable as per purchase price is a most important factor. The seller is sugarcane grower and purchaser is the sugar factory and the consideration for supply of a ton of cane is the computable turnover. The Appellate Authority has rightly computed such turnovers which are actual purchase values. The tribunal also notices that the Government has said that Rs. 12/- per ton + the tax thereon is the subsidy in terms of the finding. In the light of the argument we have carefully seen the various government orders. Government Orders only provide a subsidy to the cane growers. What is required to be seen for the purpose of levy of tax is the mutual purchase value in the case on hand. The authorities after taking into consideration the factual details have chosen to rightly not to give the deduction of Rs. 12/- per ton for the purpose of tax in the case on hand. We do not find any illegality in the said order.
7. At this stage, we must also notice a judgment of the Supreme Court reported in 1996 (101) STC 197 (State of Tamilnadu v. Kothari Sugars and Chemicals Ltd.). In the said judgment, the Supreme Court has considered the excess over prices fixed under control order paid under state advice. After noticing the various aspects of the matter, the Apex Court noticed as under;
It was argued by the learned Counsel for the State that the higher price inclusive of the excess amount included in the advance paid on State advice is deemed to have been paid by an agreement between the grower and the purchaser and, therefore, the entire amount would be the price of sugarcane. This is a question of fact in each case. It is true that if in a given case, it is found as a fact on the basis of evidence that the purchaser had agreed with the grower to pay the/higher price described as 'advance' including the amount in excess of the additional price fixed under Clause-5-A then in that case the entire amount would be the price of sugarcane.
The Supreme Court further noticed that the statute does not prohibit an agreement between the grower and the purchaser for payment of a higher price for the sugarcane by the purchaser.
8. From the judgment of the Supreme Court what is clear to us is that for the purpose of levy of tax what is to be taken into consideration is the factual price made over by the company in the given circumstances. In the case on hand, all the three authorities on facts noticed the consideration and on that basis tax is levied. The circular as referred to, is of no consequence in the light of the factual price made over in terms of the finding of the three authorities in the case on hand. We do not find any acceptable grounds available to the petitioner to challenge the orders passed by authorities on facts.
9. However, we must notice a judgment of the Supreme Court repeatedly read to us by the learned Counsel for the petitioner in the case of Assistant Commissioner of Commerial Taxes v. Dharmendra Trading Company 1988 (70) STC 59. That judgment is of no assistance in so far as the present set of facts are concerned. That was a case in which the court was considering the doctrine of promissory estoppel in the light of Section 8A of the Act. That stands totally on a different footing. The exemption provided would depend upon the facts of each case. A mere exemption would not by itself come to the rescue of an assessee in the matter of levy particularly in the light of the factual price of higher value by the assessee. On facts we find that the authorities are justified in passing the impugned orders.
10. In these circumstances, questions of law are answered against the assessee and in favour of the revenue.