TMI Blog1972 (2) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... n at the price fixed under clause 6(1)(a). That price is ex works price. The petitioner then acts as an agent of the State Trading Corporation in effecting sales to the consumers. The sales are of two different types: (a) to Government departments, through the Director-General of Supplies and Disposals, New Delhi, and (b) sales to non-Government consumers. The price at which the State Trading Corporation may sell cement to such persons is fixed under clause 6(2)(a), and that price is F.O.R. destination. 3.. During the period from 1st April, 1965, to 31st March, 1966, the gross turnover of inter-State sales effected by the petitioner amounted to Rs. 7,81,58,770.03. Out of this, the amount of Rs. 1,54,69,579.77 represented the freight on despatches of cement sold to consumers. These figures are taken from the quarterly returns (annexures E-1 to E-4) and the statement of railway freight (annexure E-6). The petitioner had in its quarterly returns claimed a deduction of the freight amounting to Rs. 1,54,69,579.77 as a "rebate" from its taxable turnover and pressed that claim during the assessment proceedings. The Assistant Commissioner of Sales Tax has, however, disallowed the claim f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same manner. In case of such non-Government buyers, the order was placed by such buyers in accordance with the allotment of cement to them by the Cement Controller; the acceptance of the order by the petitioner was in the form, annexure D. Among other conditions, the following are relevant: "(2) The cement will be consigned freight to pay'. (3) The supply will be billed at the standard rate ruling on the date of despatch and will be subject to credit being given for railway freight from our works, the actual freight being payable by you." 7.. The question whether sales tax was payable on freight was under consideration of the Director-General of Supplies and Disposals in respect of sales to Government departments. The relevant correspondence on the subject is placed on record (annexures R-1 to R-3). The Government of India in the Ministry of Industrial Development and Internal Trade, having pursued the matter with the Director-General of Supplies and Disposals and the Ministry of Law, informed the petitioner that sales tax was payable only on the net price after deducting the actual freight from the F.O.R. destination price. Along with the letter of the Government of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ination", in his contracts with his customers and despatched the goods "freight to pay". The customers paid the freight separately to the railway company. The net amounts billed to the customers by the assessee excluded the railway freight which were paid separately by the customers. In dealing with the question whether the railway freight, in the circumstances, formed part of the sale price, the Division Bench observed as follows: "If we adhere to the words of the statute, as we are bound to do, the definition of sale price would in the circumstances stated include railway freight, though actually paid by the purchaser. In other words, the determining factor is not the terms in which the bill is made but the terms of the actual contract between the parties, and if the contract was, as stated, 'F.O.R. destination' it must mean that the price was intended between the parties to be inclusive of the railway freight." The decision turned on the definition of sale price in section 2(h) of the C.P. and Berar Sales Tax Act, 1947. In Commissioner of Sales Tax, M.P. v. Maratha Syndicate Pvt. Ltd., Gwalior 1970 R.N. 235., another Division Bench, in dealing with an assessee who adopted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een complied with, the appellant was not entitled to the deduction in respect of freight." 12.. Two other decisions of their Lordships of the Supreme Court in Dyer Meakin Breweries Ltd. v. State of Kerala[1970] 26 S.T.C. 248 (S.C.). and D. C. Johar Sons (Private) Ltd. v. Sales Tax Officer, Ernakulam, and Another[1971] 27 S.T.C. 120 (S.C.). were relied upon by the revenue before us. In Dyer Meakin Breweries Ltd.(1), the assessee who was a manufacturer of liquor, transported the goods from its breweries and distilleries in Uttar Pradesh and Haryana to its place of business in Ernakulam and sold them there. When selling liquor to the customers, the assessee made out separate bills for ex factory price and for "freight and handling charges". The assessee claimed that the amount charged for "freight and handling charges " incurred by it in transporting the goods from the breweries and distilleries to the warehouse at Ernakulam had to be deducted under rule 9(f) of the Kerala General Sales Tax Rules, 1963, in determining the taxable turnover. In rejecting the claim, their Lordships stated that all the expenditure incurred by the assessee towards freight and handling charges was i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure is that in the present case the sales, whether to Government buyers or to non-Government buyers, were sales of a controlled commodity. The contracts of sale were, therefore, subject to the provisions of the Cement Control Order, 1961. Under clause 6(2)(a), the price at which the State Trading Corporation could sell cement was the price fixed thereunder, from time to time, F.O.R. destination, i.e., inclusive of railway freight. That being so, the amount of freight forms part of the price. The term "F.O.R." has significance to the rate or the price. Under section 2(h) of the Central Sales Tax Act, 1956, the expression "sale price" means the amount payable to a dealer as consideration for the sale of any goods, etc. The price of cement sold by the petitioner, as agent of the State Trading Corporation, being F.O.R. destination was an all-inclusive price, including the cost of freight till destination. The Cement Control Order, 1961, has the object of making cement available to buyers throughout the country at a fixed price. 15.. In our opinion, the decision of their Lordships in Hyderabad Asbestos Cement Products Ltd. v. State of Andhra Pradesh[1969] 24 S.T.C. 487 (S.C.). is dist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction of the cost of freight made by the petitioner must also fail because, in the circumstances, the railway freight could not be considered as "separately charged" for purposes of the definition contained in section 2(h) of the Central Sales Tax Act. As stated by their Lordships in Tungabhadra Industries Ltd. v. Commercial Tax Officer, Kurnool(1), in order to enable a dealer to claim the deduction, the cost of freight should be charged for separately and not included in the price of the goods sold. In Dyer Meakin Breweries Ltd. v. State of Kerala(3), their Lordships reiterated that such deduction from the sale price is only permissible when such freight is incurred by the seller for and on behalf of the purchaser, after the sale and the freight is "separately charged " within the meaning of the section, i.e., in addition to the price. That is also the view taken by this court in Commissioner of Sales Tax, M.P. v. Anwarkhan Mahboob Co.(4) 17.. The petition, therefore, fails and is dismissed with costs. Counsel's fee Rs. 100. The remaining amount of security deposit, if any, shall be refunded to the petitioner. Petition dismissed. - - TaxTMI - TMITax - CST, VAT & Sales T ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
