TMI Blog1998 (9) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, therefore, the leave that has been granted must be held to be limited to the aspect of freight. - Civil Appeal No. 7499 of 1995, - - - Dated:- 23-9-1998 - BHARUCHA S.P., NANAVATI G.T. AND KIRPAL B.N. JJ. Dhruv aggarwal and Praveen Kumar, Advocates, for the respondent. R.S. Hegde, K.K. Tyagi, K.R. Nagaraja, Ms. M. Sharada and Ms. M. Sweta, Advocates, for the appellants. -------------------------------------------------- [The judgment of the division Bench of the Karnataka High Court consisting of S. Rajendra Babu and B. Padmaraj, JJ., in Bangalore Soft Drinks Private Ltd. v. State of Karnataka and another (S.T.R.P. No. 55 of 1991 decided on December 15, 1994) runs as follows:] B. PADMARAJ, J.- This revision petition under section 23(1) of the Karnataka Sales Tax Act, 1957, is directed against the judgment dated October 15, 1990 passed by the Karnataka Appellate Tribunal, Bangalore in S.T.A. No. 819 of 1983. 2.. The facts in brief are: The petitioner is a manufacturer of aerated drinks popularly called as Coco- cola and Fanta having its factory at Mysore road, Bangalore. For the assessment year 1977-78 in relation to the period from April 1, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 of the order as under: The Full Bench of this Court has stated that the test applied by the Supreme Court in Dyer Meakins case [1970] 26 STC 248 and D.C. Johar Sons case [1971] 27 STC 120 is the basic test. If the cost incurred by the dealer is incidental to his acquisition of goods, being part of his expenditure, it forms a component of the price when he sells the goods. If the cost of freight is charged by the dealer for the transportation of the goods, which is for and on behalf of the purchaser, it will be a case of post-sale expenditure, to which benefit of rule 6(4)(f) will be available. Cost of freight incurred for the inward journey of the goods to the dealer is not deductible, but freight outwards is deductible. 6.. According to the revision petitioner, he had entered into a contract with the buyers, which clearly stipulated that at the option of the buyer, the petitioner- company will undertake transportation of the products purchased from the company and that the transportation charges will be charged extra. It is the specific case of the revision petitioner that the sale was completed only at the factory site and the delivery of the goods at the place of cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner having regard to the above nature of the contract entered into between the parties. The above condition or term of the contract would clearly go to indicate that the revision petitioner has a dual role to play; one that of seller of the goods and the other that of a transporter or the carrier of the goods. It is to be seen here that the revision petitioner had acted both as a seller of the goods as well as the transporter of the goods for effecting delivery of the goods at the buyers place. In his capacity or while acting as a seller or manufacturer of the goods, he sold and delivered the goods at the site of the factory and in his other capacity, while acting as a transporter or the carrier of the goods, he had undertaken to deliver the goods at the place of the buyers, which is very clear from the nature of the contract entered into between the parties as well as from the fact that he had collected the freight charges separately from the buyer. 8.. In this case, the Tribunal having found that the revision petitioner had sold Fanta and Coca-cola, the products manufactured by the revision petitioner, during the relevant assessment year, at Rs. 23 per crate, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and not in his capacity as a seller of the goods. The Tribunal as well as the assessing and the appellate authority having forgotten about dual role of the revision petitioner, one as that of a seller of the goods and the other as that of a carrier of the goods having collected the freight charges separately from the buyer, have fallen into a serious error in including the freight charges to the sales turnover of the assessee, which is patently incorrect in view of the nature of the contract entered into between the parties and in view of the fact that the petitioner had collected the freight charges separately. In fact, the Tribunal has also found on facts that these amounts, i.e., the transportation charges were collected not in the regular invoice, but by raising a separate debit note. If this is so, then the freight charges being collected separately, they do not form part of the sale price and therefore, the question of the freight charges being included in the turnover of the assessee will not arise. Even assuming that the buyer had no option but to transport the goods only through the vehicles belonging to the revision petitioner, that makes no difference because that is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly indicate that the revision petitioner in his capacity as a seller delivered the goods at the factory site and in his another capacity as a carrier of the goods, he took delivery of the same for and on behalf of the buyer as his transport agent and he transported the same in the vehicles belonging to him to the place of the buyer for its delivery to the buyer in his capacity as a carrier and not as a seller of the goods. This is the only inference that could be drawn from the facts and circumstances of this case, and having regard to the nature of the contract entered into between the parties. Therefore, the freight charges which were collected separately by the revision petitioner in his capacity as the carrier of the goods cannot be included in the sales turnover of the revision petitioner for the purpose of computation of the sales tax. So, they are liable to be excluded from the turnover of the assessee for computing the sales tax. 10.. In view of our finding that transport of the goods from the factory to the place of the buyer was done or undertaken by the revision petitioner in his capacity as a transporter or a carrier agent of the buyer and the said transportation ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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