CONSOLIDATED COFFEE LIMITED AND ANR. versus COFFEE BOARD AND ANR.

Citation: [1994] SUPP. 5 S.C.R. 632 · Decided: 22-11-1994 · Supreme Court of India · Bench: B.P. JEEVAN REDDY · Disposal: Disposed off

Judgment (excerpt)

A 
CONSOLIDATED COFFEE LIMITED AND ANR. 
v. 
COFFEE BOARD AND ANR. 
NOVEMBER22, 1994 
B 
[B.P. JEEVAN REDDY, N.P. SINGH AND S.B. MAJMUDAR, JJ.) 
Karnataka Sales Tax Act, 1957-Section 6-Coffee Act, 1942-
Sections 25, 26, 30, 31 and 32-Payment of Purchase Tax-Liability of 
Coffee Board to pay-Application of Pool Fund-Whether Coffee Board 
was entitled to make payment of Purchase Tax out of Pool Fund maintained 
C • u!s 30-Held, Yes. 
D 
E 
F 
G 
H 
The appellants the growers of coffee filed writ petitions for 
injuncting the Coffee Board from making any payment under the head 
'Purchase Tax' out of the Pool Fund maintained u/s 30 of the Coffee 
Act, 1942. According to tht'\ appellants, the Board cannot discharge its 
liability in respect of payment of 'Purchase Tax' to the State 
Government, under the provisions of the Karnataka Sales Act, 1957 
out of the Pool Fund. 
The High Court held that growers/producers were not liable u/s 
5(3) (9) of the Karnataka Sales Tax Act to pay the tax in respect of the 
sales of coffee by them to the Coffee Board. It also held that the Board 
was liable to pay the 'Purchase Tax' u/s 6 of the Act and the Board was 
authorize"d in Jaw to pay the tax out of the Pool Fund. On that finding, 
the writ petitions, filed on behalf of the appellants, were dismissed. 
These appeals have been filed by the appellants against the finding 
·of the High Court. According to the appellants, the action of the Board . 
in making payments of 'Purchase Tax' to the State Government.under 
the provisions of the Act, is without any authority in law and in 
contraventfon of the mandate 'of sub-section 2 of Section 32 of the 
Coffee Act. It was pointed out that the High Court was not justified in 
holding that any such payment of 'Purchase Tax' shall be part and 
parcel of marketing by the Board and as such covered by Section 32 (2) 
(b) of the Act. According to the appellant, the expression 'marketing' 
used in sub-section 32 (1) (b) refers to the process of marketing after 
the coffee has been delivered by the growers for inclusion in the 
Surplus Pool and is stored and cured by the Board; the expression 
'marketing' shall not include the process or purchase from the growers 
632 
CONSOLIDATED COFFEE LTD. v. COFFEE BOARD 
633 
which precedes the delivery of coffee to the Board for inclusion in the A 
surplus pool. 
On behalf of the Board, it was pointed out that the contention of 
the appellants that the payment of the 'Purchase Tax' should be made 
from the General Fund as maintained u/s 31, should not be accepted 
because the General Fund does not have capacity to pay the 'Purchase B 
Tax' after meeting the general expenses of the Board under different 
heads. 
Disposing ofthe matter, this Court 
HELD 1.1 In such a case the appellants have to establish that in the 
process of making payment from the Pool Fund any right or interest of C 
the growers like appellants were being affected. Any balance left in the 
Pool Fund should not be available to the growers like appellants. Sub-
section 6 of Section 25 of the Coffee Act specifically says that after the 
coffee has been delivered for inclusion in the Surplus Pool, the 
registered owner whose coffee has been so delivered shall have no right D 
in respect of such coffee except his right to receive the payments 
referred to in Section 34 of the Coffee Act. Proviso to sub-section 2 of 
Section 32 also says that if after the requirements of clauses of that sub-
section have been met and there remains an excess in the Pool Fund, 
the board may with previous sanction of the Central Government, 
transfer the whole or any part of such excess to the credit of the E 
General Fund. In the instant case, the appellants could not point out as 
to how the growers have any say in the matter of application of the 
Pool Fund including for payment of the 'Purchase Tax' by the Board, 
except that in this .process the interest of the growers to receive the 
payment in accordance with Section 34 of the Act is not affected. In 
view of Section 34, the Board has to make payment to the registered F 
owners who have delivered coffee for inclusion in the Surplus Pool. The 
expression 'as it may think proper' obviously means that the payment 
is made on reasonable basis to the growers in respect of coffee delivered 
by them for inclusion in the Surplus Pool. A procedure has been 
prescribed to determine the rate of payment to the registered owners· 
who have delivered coffee for inclusio

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