TMI Blog1955 (10) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the assessing officer by holding that when the Cement Control Order of the Central Government was not in force, the abovesaid two amounts were not liable to be included in the turnover since the freight charges do not form part of the sale price. 3.. Aggrieved, the department is in revision before this Court in both these assessment years under consideration. 4.. The point for consideration is whether the freight charges are liable to be assessed and are to be included in the total turnover for the assessment year under consideration. 5.. During the whole of the assessment year 1966-67 and up to December 31, 1967 and in the assessment year 1967-68, the Cement Control Order was not in force. If the Cement Control Order was not in force the parties are bound by the contract. 6.. The freight charges are liable to be included in the sale price for the period of assessment when the provisions of the Cement Control Order of the Central Government was in force. As otherwise the parties are bound by the contract in the matter of inclusion of freight charges in the total turnover. Authorities for these proposition are contained in Ramco Cement Distribution Co. (P) Ltd. v. Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yable separately and they are not included as a component with the sale price. Even in the bills, the freight charges are shown separately and, therefore, the freight charges are not included in the total turnover for tax purposes. 9.. We have heard the learned counsel appearing for the assessee, as well as the learned Additional Government Pleader (Taxes). 10.. The fact remains that in the assessment years 1966-67 and 1967-68, the assessee collected Rs. 79,43,992 and Rs. 47,53,709 respectively under the head "freight charges". According to the assessee, the Cement Control Order was not in force during the whole of the assessment year 1966-67 and till December 31, 1967, in the assessment year 1967-68. When the Cement Control Order was not in force, the freight charges cannot be included as a part of the price so as to enable the department to include the sale price along with the freight charges, as total turnover for tax purposes. According to the department, it is no doubt true that during the assessment years under consideration, the Cement Control Order was not in force and the parties are bound by the contract. The returns filed by the assessee for these assessment years u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the definition and is, therefore, part of the 'sale price', the exclusion clause cannot avail the assessee to take the amount out of the definition of 'sale price'. The exclusion clause is not intended to apply to a case where the cost of freight is part of the price but the dealer chooses to split up the price and claim the amount of freight as a separate item in the invoice. Where the cost of freight is part of the price, it would fall within the first part of the definition and to such a case, the exclusion clause in the second part has no application." 14.. In Ramco Cement Distribution Co. Pvt. Ltd. v. State of Tamil Nadu [1993] 88 STC 151, the Supreme Court held that for the purpose of the Central Sales Tax Act freight charges cannot be deducted from the controlled price to arrive at the turnover of the dealer producing cement. Admittedly in the assessment years under consideration, the Cement Control Order was not in force. Therefore, the parties are bound by the contract entered into between themselves in the matter of collecting the freight charges. 15.. In the assessment year 1966-67 the Cement Control Order was not in force from April 1, 1966 to December 31, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder, it was the producer who was liable to pay the freight charges, though he might be able to recover it from the purchaser as part of the sale price. By virtue of the provisions of the Cement Control Order freight charges formed part of the definition "sale price" within the meaning of the first part of the definition contained in section 2(h) of the Central Sales Tax Act. Therefore, freight formed part of the sale price under the Central Sales Tax Act and was liable to be included in the sale price for the purpose of assessment. On the other hand, freight paid by a dealer in despatch of the goods to the customers cannot be included in the sale price for the purpose of sales tax under the Central Sales Tax Act in terms of the definition "sale price" under section 2(h) of the Act. Therefore, freight will have to be excluded from the sale price, for the computation of sales tax under the Central Sales Tax Act. 18.. In Hyderabad Asbestos Cement Products Ltd. v. State of Andhra Pradesh [1969] 24 STC 487, the Supreme Court while considering the provisions of section 2(r) of the Andhra Pradesh General Sales Tax Act (6 of 1957) held that the State would not seek to levy tax on railwa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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