TMI Blog1973 (7) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly, issued a notice under section 24(4) of the Act read with rule 36(5)(a) of the Bihar Sales Tax Rules, 1949. The notice was issued on 21st March, 1966. Before the Commissioner, a stand was taken on behalf of the assessee that the various amounts of railway freight paid by the purchasers and excluded by the assessee from its invoices could not be exigible to sales tax. The assessee stated that in the past in relation to the assessment years prior to the assessment year in question the railway freight had not been treated as a part of the price and sales tax had not been charged on that. The Commissioner of Commercial Taxes overruling the objection of the assessee passed the order dated 31st August, 1966, and held that the railway freight was a part of the sale price and the whole of the amount was chargeable to sales tax. He, therefore, remanded the case to the Assistant Commissioner of Commercial Taxes, Shahabad, for disposal in accordance with the direction given in that order. The assessee went up before the Commercial Taxes Tribunal in Revision Case No. 298 of 1966. The Tribunal has set aside the order of the Commissioner by its judgment dated 8th July, 1967, and held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge, damage or delay in transit or at destination ceases(?) once the goods are delivered to the carriers (Railway, etc.) and a receipt is obtained. All claims on these accounts should be preferred against the carrier concerned." 5.. In the Act "turnover" has been defined in section 2(i) to mean: "the aggregate of the amounts of sale prices received and receivable by a dealer in respect of sale or supply of goods........" The definition of "sale price" is given in clause (h). Only subclause (i) is important and must be quoted: "the sale or supply of any goods, less any sum allowed as cash discount according to ordinary trade practice, but including any sum charged for anything done by the dealer in respect of the goods at the time of, or before delivery thereof, other than the cost of freight or delivery or the cost of installation when such cost is separately charged." The first part and the main part of the definition says that sale price is the amount payable to the dealer as valuable consideration, namely, the price, as is popularly known, charged for the goods sold or supplied. Sub-clause (i) permits the deduction from the sale price of any sum allowed as cash discount accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the circumstances of this case, the railway freight which was paid by the customer was a part and parcel of the price paid or payable to the dealer on account of the cement supplied by it or whether it was an obligation of the customer over and above his obligation to pay certain price to the dealer. If the price fixed and charged by the dealer would have been f.o.r. despatching station or f.o.r. factory gate, then there is no difficulty in taking the view that the price charged would have been the price calculated at that rate and the railway freight paid by the customer would have been a payment to the railway over and above the price paid by him to the dealer. But it is difficult to accept as correct the view expressed by the Tribunal that the price charged by the dealer was, on the facts of this case, f.o.r. despatching station. It must be clearly borne in mind that in either of the two situations just discussed by me the actual payment of railway freight is by the customer. In one case, it is as obligation to pay over and above the price which he has paid to the dealer. In the other, he pays it as a part of the price because the price charged by the dealer is inclusive of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such a freight ought to be excluded from the price. This argument was repelled and it was observed: "That the dealer gave the purchaser credit for the amount paid in respect of the railway freight does not make any difference to the legal position. This is shown also by the consideration that the dealer would be bound to give credit to the purchaser for any sums paid in advance towards the price of the goods to be supplied." Whether a part of the price is paid earlier or, say, later in the form of railway freight makes no difference. 8.. The Tribunal has followed a Bench decision of this Court reported in Tata Iron Steel Co. Ltd. v. The State of Bihar[1957] 8 S.T.C. 26. Question No. (7) which was relevant one in that judgment was in these terms: "Whether the addition of the amount of railway freight collected by the petitioner along with the price of materials sold by him had been legally included in his turnover and taxed under the Bihar Sales Tax Act?" The enunciation of the principle of law in that regard was: "If the cost of freight or delivery is separately charged by the petitioners, the taxing authorities are not legally right in including the cost of freight in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a decision of the Supreme Court in Hyderabad Asbestos Cement Products Ltd. v. State of Andhra Pradesh[1969] 24 S.T.C. 487 (S.C.). This decision appears to be very much in favour of the assessee at first sight-almost covering its case squarely; but on a close scrutiny a vital point of distinction is to be found. The terms of contract in Hyderabad Asbestos Cement case(2) were known. Clause (16) of the contract provided that in all cases where the consignments were sold free on railway destination, railway freight had to be paid by the customer at the destination and the amount of freight shown on the railway receipt had to be deducted from the invoice of the company. Interpreting such a term of the contract, Shah, J., as he then was, said: "In our judgment, under the terms of the contract there is no obligation on the company to pay the freight, and under the terms of the contract the price received by the company for sale of goods is the invoice amount less the freight." When argument was put forward on behalf of the department with reference to an identical invoice, it was repelled in these words: "But the form in which the invoice is made out is not determinative of the contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f.o.r. destination. The decision of the Supreme Court has not altered this position and has not laid down any principle of law of universal application. That decision must be appreciated with the special facts of that case as discussed and pointed out by me above. 12.. Learned counsel for the assessee cited before us a decision of the Andhra Pradesh High Court in K.C.P. Ltd. (Ramakrishna Cements) v. Government of Andhra Pradesh[1972] 29 S.T.C. 507. The Andhra Pradesh High Court has merely followed the decision of the Supreme Court in Hyderabad Asbestos Cement case(1) and if I may say so with very great respect without noticing the crucial and vital points of distinction between that case and the kind of case which was being dealt with by the Andhra Pradesh High Court and which falls for consideration before us. 13.. In United Timber Corporation v. Commissioner, Sales Tax[1972] 29 S.T.C. 646., following the decision of the Supreme Court in Tungabhadra Industries case(5), when the bills issued by the assessee were found to have been drawn up on the same terms as the bills which were considered by the Supreme Court in Tungabhadra Industries case[1960] 11 S.T.C 827 (S.C.)., it was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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