STATE OF KARNATAKA Vs. CHAMUNDESWARI SUGAR LTD

JUDGEMENT

(1.) Noticing that there was slight controversy on principle in the decisions of this Court in State of T.N. and Ors. v Kothari Sugars & Chemicals Ltd. and Ors. (1996 (7) SCC 751), E.I.D. Parry (I) Ltd. v. Assistant Commisioner of Commercial Taxes and Anr. (2000 (2) SCC 321) on one hand and Ponni Sugars (Erode) Ltd. v. Dy. Commercial Tax Officer (2005 (13) SCC 102) the matter was referred to a larger Bench and that is how the matter was placed before us. The controversy lies within a very narrow compass and is essentially as follows:

(2.) The respondent company is a dealer registered under the provisions of the Karnataka Sales Tax Act, 1957 (in short the 'Act') and Central Sales Tax Act, 1956 (in short the 'Central Act') and is engaged in the manufacture of sugar and is liable to pay tax on purchase of sugarcane. The price payable for purchase of sugarcane by a sugar factory is fixed by the Government of India in exercise of its powers under clause 3 of the Sugarcane (Control) Order, 1966 (in short 'Control Order'). The price so fixed is called the Statutory Minimum Price. In addition to statutory price so fixed, the Government of Karnataka also fixes the price payable to sugarcane growers by the sugar factories as State Advised Price ('SAP' for short). The price paid by sugar factories to sugarcane growers also comprises harvesting subsidy, transportation subsidy, plantation subsidy and the advance payment towards these subsidies.

(3.) The assessing authority for the assessment years 1990- 1991, 1991-1992, 1992-93 and 1993-94 had passed assessment orders taking into consideration the statutory minimum price fixed by the Central Government, SAP fixed by the State of Karnataka and all other amounts paid to sugarcane growers by the respondent-company as the purchase price paid to sugarcane growers and had levied purchase tax under the Act.