TMI Blog1991 (9) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... on Tribunal Act, 1987. 2.. In brief, the facts leading to these applications may be stated thus: Black Diamond Beverages Pvt. Ltd. filed six of the applications for six different assessment periods. RN-414(T) of 1989 relates to 12 months ending June 30, 1981. RN-414(T) of 1989 relates to the next year ending June 30, 1982. RN-415(T) of 1989 relates to the periods of 12 months ending June 30, 1984 and three months ending September 30, 1984. RN-431 of 1989 concerns the period of 12 months ending September 30, 1985. RN-354 of 1990 involves the period of 12 months ending September 30,1986. RN-130 of 1991 relates to the period of 12 months ending September 30, 1987. RN-512 of 1989 was filed by Pawan Kumar Kheria and others carrying on the business under the trade name of "Farinni Eleven Up" concerning the periods from November 11, 1977 to January 17, 1978, January 18, 1978 to 15th KB 2035 samvat year and 4 quarters ending 14th KB 2036 samvat year. The case of Black Diamond Beverages Private Ltd. is that the company manufactures and sells aerated water called "Gold Spot", "Limca", "Bisleri Soda", "Thums Up", and "Maaza". It started production in its factory at P-41, Taratola Road, Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the period of 12 months ending June 30, 1979, stating that transportation charges for delivery of the goods at buyer's destination are components of "sale price" as defined in section 2(d) of the 1954 Act. The company resisted the proposed revision by making a written submission. Various documents were produced including affidavits of 20 dealers who allegedly purchased the goods of the company on regular basis. It was also submitted to the Assistant Commissioner that on the basis of letter dated March 12, 1979 issued by the Regional Transport Authority, the company surrendered the private carrier's permit and obtained public carrier's permit instead. But the Assistant Commissioner passed the revisional order dated March 6, 1987, assessing further tax payable by the company on the basis that the transportation charges were includible in the turnover. 3.. The applicant-company preferred an appeal against the said order dated March 6, 1987, before the West Bengal Commercial Taxes Tribunal. The appeal is still pending. Thereafter the Assistant Commissioner again issued a notice dated September 16, 1987, wanting to reopen the concluded assessment for the period of 12 months endin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery nature, aerated water does not require any ascertaining or identification for transportation of the same after the sale is effected at the factory gate. Thus, the delivery charges realised from the customers cannot be treated as component of the "sale price ". According to the applicants, if the definitions of "sale price" and "purchase price" in the 1954 Act are read and considered together, it will appear that the Legislature never intended to include delivery charge in "sale price". If, on the facts of these cases, delivery charges are included in the "sale price", the provision will be violative of articles 14, 19(1)(g), 265 and 300A of the Constitution. It is claimed that for interpreting section 2(d) of the 1954 Act, a reference to section 2(h) of the 1941 Act is necessary. It is allegedly inconceivable that the Legislature gave one meaning to "sale price" under the 1941 Act and another meaning to the same expression under the 1954 Act. If, however, it is thought to be so, definition in the 1954 Act apart from being hit by article 14 would be beyond entry 54 of List II of the Seventh Schedule to the Constitution. Further contention is that in the absence of any contrary e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evised the assessments suo motu by revisional orders passed on November 28, 1983, under section 20(3) of the 1941 Act. But the intention was to revise the assessments under the 1954 Act. Revisions were unsuccessfully preferred against those orders before the Tribunal below, namely, the West Bengal Commercial Taxes Tribunal. That Tribunal held that the situs of sale was the customer's place and "sale price" as defined in section 2(d) of the 1954 Act should include delivery charge. The view taken by the Tribunal below is alleged to be erroneous. According to the applicants, "sale price" as defined in section 2(d) does not include delivery charge. 7.. The case of the respondents as made out in their affidavits-inopposition is briefly this. Aerated water including soda water was originally taxable under the 1941 Act and those became taxable under the 1954 Act with effect from September 1, 1977 and not from September 3, 1977. The authorities were competent to issue notices for reopening completed assessments with the object of ascertaining whether the assessments had correctly been made. Where Accountant-General, Audit or other authority competent to look into the completed assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds at the buyer's destination against cash or in cases of credit sales against receipted challans. The volume of credit sale of the second variety is also not of considerable magnitude. The contracts of sales of the second type are claimed to be in essence f.o.r. destination contracts, though the price charged in the cash memo/bills is ex-factory price, while separate memo/ bills are raised for delivery charge. In such cases, the soft drinks and soda water in sealed bottles are brought out of factory against excise gate pass issued in the name of a salesman who is in charge of a particular vehicle. The salesman is accountable to the company for the sale proceeds and for the unsold goods. All the necessary documents are in the name of the salesman, who upon return to the factory and office, at first furnishes a "statement of sales account". Delivery charge realised by the salesman is always at an uniform rate irrespective of the products sold and the distance traversed. In the aforesaid statement, unsold goods returned and goods returned by the customers for inherent manufacturing defects are also shown, along with recovery for breakage of empty bottles which were in the custody of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not have been included in the "sale price" of aerated or soda water. The assessing Commercial Tax Officer having allegedly committed an error in excluding delivery charge from turnover, the revisional authority was competent to take into account the escaped turnover on the authority of the decision of the Supreme Court in the case of Ram Kanai Jamini Ranjan Pal Pvt. Ltd reported in [1976] 38 STC 1. The Accountant-General, Audit, merely drew the attention of the respondents in the matter, for which there was nothing wrong in assumption of jurisdiction for revision. The notice for revision was issued not merely on a change of opinion but for rectifying a mistake committed by the assessing officer. In the case where the assessment order was confirmed in an appeal by the Assistant Commissioner, the Additional Commissioner was competent to revise the appellate order for rectifying an underassessment. 9.. Similar is the case of the respondents in the remaining cases, namely, RN-415(T) and 431 of 1989 and RN-354 of 1990 as well as RN-130 of 1991, in all of which Black Diamond Beverages Pvt. Ltd. is the main applicant. In RN-130 of 1991, however, no affidavit-in-opposition was filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goodwill of the business. The mode of delivery vis-a-vis fructification of sale has been narrated by the applicants at pages 14 and 15 of the affidavit-in-reply in the following manner: "I say that the crates of the bottles for soft drinks or soda water were allotted and arranged in the vehicle according to the proximate distance of the delivery point. That means, the customers nearest would get the supply of the crates of bottles which are in the top layer of the vehicle. Moreover, the nature of the peculiar nature of the business is such that it does not call for any earmarking. I deny that the goods did not become ascertained and were not unconditionally appropriated to the contract of sale until they reach a particular buyer's premises, as alleged." 11.. Affidavits-in-reply in the other cases of Black Diamond Beverages Pvt. Ltd. are substantially on the identical lines. In affidavit-inreply of the applicants in RN-512 of 1989, it is stated that sections 18 and 23(1) of the Sale of Goods Act, 1930, apply only to unascertained or future goods, and in any event, are always subject to the intention of the parties as to when property is to pass. Section 20 of the Act of 193 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear from the respective cases of the parties. Nevertheless, relevant facts necessary for deciding the questions may be briefly stated. All the applicants are manufacturers of aerated and soda water for sale. The commodities are sold under various brand names in sealed bottles of glass. Some of these commodities are sold and delivered by the applicants to the buyers at the factory and the buyers make their own arrangements for carriage of the bottles. In those cases, the applicants have no responsibility for transportation of the commodities and hence, the question of recovery of delivery charge does not arise. In the rest of the cases, the bottles of aerated and soda water of different brands are delivered at the places of the buyers by transporting them in the motor vehicles belonging to the applicants under a public carrier's permit. Each such truck used for carriage of the goods is specially designed and built, having regard to the nature of the goods and is sent out of the factory under the charge of an employee of the respective manufacturer. (There was a controversy whether such employee was called a "salesman". But it appears from the documents produced before us that such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that orders are placed by telephone or by personal visit to the factory and, on many occasions, by communicating to the employee of the applicant-company who visits the place of the buyers for delivery of the goods. Admittedly payment of price is deferred till the time of delivery of goods. It is also stated that sometimes price is paid at the factory itself. It may be noted that in cases of sales where payment of price was made at the factory or delivery of the goods was taken at the factory, no problem crops up, since buyers make their own arrangements for carriage. Even these affidavits admit that most of the transactions commenced with placement of orders to the company's delivery man at the buyer's place. Cost of the goods together with delivery charge is paid to the delivery man at the place of the buyer after delivery is completed. According to Mr. Bhattacharya, the averment regarding sales taking place at the seller's address made in the affidavits of buyers and stated in the application in RN-413(T) of 1989, particularly paragraph 32 thereof, was not denied, and hence that position should be accepted. He relied on a single Bench decision of the Calcutta High Court in Sahu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was no argument on the side of appellants to the effect that the above finding of fact was in any way perverse or assailable. Like in the cases involving Black Diamond Beverages Pvt. Ltd., in this case also the goods of the same nature are sold/delivered through an employee who is put incharge of a vehicle which carries the goods to the places of the buyers. 15.. The following definition of "sale price" is given in section 2(d) of the West Bengal Sales Tax Act, 1954, which is applicable to the commodities in question: "(d) 'Sale-price' used in relation to a dealer means the amount of the money consideration for the sale of notified commodities manufactured, made or processed by him in West Bengal, or brought by him into West Bengal from any place outside West Bengal for the purpose of sale in West Bengal, less any sum allowed as cash discount according to trade practice, but includes any sum charged for containers or other materials for the packing of notified commodities;" Now, the primary question is what should be its true construction regarding inclusion or exclusion of delivery charge. The arguments advanced, the provisions of the Bengal Finance (Sales Tax) Act, 1941, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n clause (d) of section 2 assumes importance. The object of the West Bengal Sales Tax Act, 1954 (in short, "the 1954 Act") is generally to levy a single point tax at the first stage. The general taxation law is the Bengal Finance (Sales Tax) Act, 1941 (or, "the 1941 Act") which is a multi-point taxing statute. But as soon as a commodity is notified under section 25 of the 1954 Act, it ceases to be taxable under the 1941 Act and becomes taxable generally at the first point of sale only so long as it retains its original character as a commercial commodity. This position will be further evident from the definition of "dealer" in section 2(b) of the 1954 Act. Under section 4, only a dealer is to pay tax, and under section 2(b), a dealer is a person who sells notified commodities manufactured, made or processed by him in West Bengal or brought by him into West Bengal from outside for the purpose of sale in West Bengal. The 1954 Act being a taxing statute is to some extent a technical legislation. The term "sale price" has been assigned an inclusive definition. "........ where the word defined is declared to 'include' so and so, the definition is extensive, e.g., 'sheriff' includes 'u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration must be in the form of money. Now, does the term "consideration" in section 2(d) include delivery charge? The word "consideration" is defined in section 2(d) of the Indian Contract Act, 1872, thus: "when, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise". It may be noted that the word "consideration" is not defined in either the 1954 Act or the 1930 Act. In section 2(15) of the 1930 Act it is stated that. expressions used but not defined in that Act and defined in the Indian Contract Act, 1872, have the meanings assigned to them in the latter Act. That being the position, "consideration" for a sale does not include a payment for a post-sale event or activity. In other words, if delivery charge is a part of the agreed payment for a sale, it forms a part of the consideration or the money consideration for sale. The 1954 Act being to an extent a technical legislation, while searching for ordinary meaning of "money consideration for sale", we must take the aid of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed) from "sale price" in the 1941 Act, but did not do so in the 1954 Act, a later Act, it may be reasonably presumed that the Legislature knowingly did so, namely, it did not want to exclude delivery charge (separately charged), from "sale price" in the 1954 Act. It is wellsettled that previous legislation may be relevant to the interpretation of later statutes (see Maxwell, ibid., page 64). The definition of "sale price" in section 2(h) of the 1941 Act is extracted below: "'sale price' means the amount payable to a dealer as valuable consideration for- (i) the sale, other than that referred to in section 6D, of any goods, less any sum allowed as cash discount according to ordinary trade practice, but including any sum charged for any thing 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 or interest when such cost or interest is separately charged;" It is clear that the definition excludes cost of delivery, if separately charged. The definitions of "sale price" in the Acts of 1941 and 1954, both the Acts being still in operation, are divergent in so far as separately ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ascertained prior to actual delivery at buyer's place, becomes sufficiently weak due to the fact that buyer returns defective goods after delivery is completed. In plain and simple words, money consideration in this context comprises the sum total of all payments made by a buyer for the goods sold to him. Put in a different way, money consideration is the total money paid (by whatever term called) by a buyer to the seller for the goods purchased by buyer. The buyer, in the instant cases, promises to pay two sums, one as cost of goods and another as delivery charge, to the seller and he actually pays those sums or the total thereof to the seller's employee. Therefore, plainly the sum total of the payments, irrespective of the nomenclature, is the money consideration. The contract of sale is made and the transaction of sale fructifies at buyer's place at the point of time when delivery of the goods is completed. The case might be otherwise, had the sale been completed and then followed by a separate contract for transportation of the goods. Here, the bargain was composite and indivisible. Mere separate collection does not alter that character. 20.. As discussed earlier, the Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... event, the time when property in the ascertained goods passes is when the buyer signifies his approval or acceptance or retains the goods without notice of rejection. In case section 24 is applicable, the sale is complete after delivery of the goods, when the buyer decides to return or not to return the defective goods. Thus, whether the goods are ascertained or unascertained at the time the contract is made, the result is the same, viz., property in the goods passes to the buyer after delivery is made at the buyer's place and after the buyer exercises his right to return the defective goods, if any. It may be noted that when the goods are despatched by truck, those are not earmarked for individual customers. 21.. The discussion will not be complete if a reference to sections 31, 32 and 33 of the 1930 Act is not made. Unless otherwise agreed, according to section 31, the seller's duty is to deliver the goods and the buyer's duty is to accept and pay for them as per terms of the contract. In these cases, there is no case that any terms were otherwise agreed. Section 32 similarly says that unless otherwise agreed, delivery of the goods and payment of the price are concurrent condi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contracting parties is not what they subsequently proclaim in the face of a dispute or litigation, as in these cases, but what transpires from the manner in which the transactions were actually carried out. 23.. Mr. Bhattacharya, appearing for the applicants, referred to the report of the Special Committee headed by Sir B.L. Mitter, which emphasised certain points with respect to the draft legislation for the enactment of the Sale of Goods Act, 1930. He also referred to the Select Committee report on the Bill. Extracts from these reports have been printed in P. Ramanatha Aiyar's Sale of Goods Act, 1930, 4th Edition, under the title "History of the Act". Mr. Bhattacharya made such reference for bolstering his argument that the parties to a contract have the freedom to make any bargain they please and the Act of 1930 lays down rules for the cases where the parties formed no intention or failed to express it. His further argument was that in the instant batch of applications the parties made the bargain that the goods should be treated as sold at the factory of the applicants and transportation to buyer's place was a post-sale and separate contract. Mr. P.K. Chakraborty, appearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods were sold at the places of the buyers, because the place of business of the selling dealer was mentioned in the registration certificate and according to him, the sellers cannot make sales elsewhere. He referred to rules 5 to 8 of the Bengal Sales Tax Rules, 1941, in this connection. Mr. Chakraborty appearing for the respondents rightly called this aspect irrelevant. Rule 5 requires a dealer to state in his application for registration, among other things, location of his place of business. Rule 7 says that along with other particulars, location of business should be specified in the registration certificate. In our view, place of business mentioned in a registration certificate does not undergo a change because certain sales have fructified at buyers' places, being places other than the place of business. In the present cases, the legal effect is that sales were made at the time of delivery at the buyers' places and that does not alter the place of business. The object of section 7 of the 1941 Act or rules 5 to 8 of the 1941 Rules is to fix the dealer with his declared location of business for various purposes under the statute. It will, in our opinion, rather be an absu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on different days, separate gate pass shall be made out in respect of each such lot............" Gate pass forms are of two types, one for duty-paid goods and another for goods without payment of duty. Both the forms (G.P.1 and G.P.2) require that name and address of consignee should be stated. Therefore, having regard to rule 52A(3) read with the gate passes stating the name of the selling dealer's employee as consignee in respect of the entire consignment loaded in one truck, the obvious conclusion is that the goods loaded in the truck were despatched in one lot at one time. This is an undisputed position. That being so, the presumption is that the goods had not yet been sold to various customers, in which case, there ought to have been several gate passes for several lots for different buyers. This lends support to the contention of the respondents that sales were made through the employee who was put in charge of the truck. There is nothing to rebut the presumption. 27.. Mr. Bhattacharya argued with certain amount of force that the vehicles by which the goods were transported by Black Diamond Beverages Pvt. Ltd. to the places of buyers had taken public carrier's permits unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r". Section 42(1) says that no owner of a transport vehicle shall use or permit use thereof in any public place except in accordance with the conditions of the permit. The third proviso to section 42(1) provides that a public carrier's permit shall, subject to any conditions that may be specified in the permit, authorise the holder to use the vehicle for the carriage of goods for or in connection with a trade or business carried on by him. This proviso is in keeping with sub-section (2) of section 42, which lays down in its various clauses the situations where a transport vehicle shall not be deemed to be used for the carriage of goods for "hire or reward". According to clause (a) of section 42(2), one of those situations is where the vehicle is used for the delivery by the owner of the goods "sold", or used or let on hire in the course of any trade or business carried on by him. Thus, upon consideration of these provisions, it is clear that a public carrier is entitled to use the vehicle for the carriage of goods for or in connection with his own trade or business. This conclusion finds further support from sections 52 to 55 which deal with the procedure of (a) applications for pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry and has found the same in good condition and free from foreign particles" (emphasis supplied by me). It is indeed difficult to brush aside this contention, because had the goods been really sold away at the selling dealer's premises and had the delivery been a separate post-sale activity, no such condition could be there. 29.. Mr. Bhattacharya, appearing for the applicants contended that the definition of "sale price" in section 2(d) of the 1954 Act does not include delivery charge in express terms. If now it is held that the definition includes within it delivery charge also, it will amount to supplying a casus omissus. He relied on Craies (ibid. pages 69-70) and the decision in Hira Devi v. District Board AIR 1952 SC 362 in this connection. According to Craies, a statute may not be extended to meet a case for which provision has clearly and undoubtedly not been made. Where the literal reading of a statute provides intelligible result, there is no ground for reading in words or changing words according to what may be the supposed intention of Parliament. The judges may not wrest the language of Parliament even to avoid the obvious mischief. When an Act contains a special savi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utes whether fiscal or otherwise. The underlying principle is that the meaning and intention of a statute must be collected from the plain and unambiguous expression used therein rather than from any notions which may be entertained by the court as to what is just or expedient. The expressed intention must guide the court. We have followed the rules of construction of a statute, as laid down in the aforesaid decisions. We have imported neither any new thing, nor our own notion. We have construed the impugned definition according to wellsettled rules of construction and have arrived at the interpretation that absence of an inclusive clause regarding delivery charge does not amount to exclusion of the element of delivery charge from "sale price". We have noted that the inclusive clause regarding charges for containers and packing materials, does not have the effect of excluding delivery charge from the meaning of "sale price", as defined in the 1954 Act. True, we have referred to the definition of "sale price " in the 1941 Act, because learned advocate for the applicants and the learned State Representative profusely referred to the same at the time of arguments. In our view, the man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. It is true that the facts are not identical and the provision of law is also different. But, one point has been clearly settled in this case that expenditure incurred by the dealer before sale and for making the goods available to any intending customer at the place of sale is a component of the price of the goods. The ratio of the decision is that the aforesaid expenditure is a component of the price. The main part of the definition of "sale price" in our 1954 Act is money consideration for sale. So, the first thing is what constitutes money consideration. The ratio of decision in [1970] 26 STC 248 (SC) (Dyer Meakin Breweries Ltd. v. State of Kerala) is applicable to appreciate what are the components of "sale price". If the delivery charge is an expenditure incurred by the dealer before sale and/or for making the goods available to the customer at the place of sale, it is clearly a component of the "sale price". 31.. The next case is Hyderabad Asbestos Cement Products Ltd. v. State of Andhra Pradesh [1969] 24 STC 487 (SC) which was also referred to on behalf of the respondents. According to the terms of the contract in that case, it was an f.o.r. destination contract and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in sales of cement effected under the Cement Control Order, 1967, the amount of freight formed part of the "sale price". The facts were that the assessee manufactured cement in its factory at Udaipur in Rajasthan and sold the same in and outside Rajasthan. During the impugned periods, sale of cement was controlled under the Cement Control Order, 1967. Maximum price of cement and packing charge were prescribed under the Cement Control Order. There was a provision that the expenditure incurred by the producer on freight by the cheapest or the specified mode of transport should be reimbursed to the producer by the Cement Controller out of a fund called the Cement Regulation Account. The Supreme Court held as follows: (a) The first part of the definition of "sale price" means the amount payable to a dealer as consideration for the sale of goods. Here, the concept of actual price retainable by the dealer is irrelevant. The test is, what is the consideration passing from the purchaser to the dealer for the sale of the goods. "It is immaterial to enquire as to how the amount of consideration is made up, whether it includes excise duty or sales tax or freight. The only relevant question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... properly constituted a component of the "sale price" or the money consideration which the buyer was to pay and actually paid to the selling dealer. (c) In respect of contract of sale f.o.r. destination railway station, the court held that the seller undertakes an obligation to put the goods on rail and arrange for carriage to the destination railway station at his expense. The delivery of the goods to the buyer in such a case is complete at the destination railway station and the risk continues till then to remain with the seller. "Freight" is payable by the seller and there is no obligation on the buyer to pay the "freight". The buyer is concerned only to pay the agreed price and such price being inclusive of the "freight", it would be a matter of indifference to the purchaser as to what is the amount of "freight". In such a case, the seller may pay the "freight" and charge the agreed price (obviously including the freight) or he may obtain the railway receipt on the basis of "freight to pay" and request the buyer to pay the "freight" when he takes delivery from the destination station and give the buyer credit for the amount of "freight" against the agreed price. The latter w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harge is collected by a separate bill as in cash sales or whether it is collected together with the cost of the goods as combined charges as in credit sales. The ratio of this decision on the abovementioned type of cases cannot apply to the instant cases before us. (e) In the facts of the case in [1979] 43 STC 13 (SC) (Hindustan Suguar Mills Ltd. v. State of Rajasthan) however, the finding of the Supreme Court was that the amount of "freight" formed part of the "sale price" within the meaning of the first part of the definition, because the Cement Control Order was paramount and had overriding effect and because it stipulated that the "freight" should be payable by the producer. That stipulation must prevail, notwithstanding any term or condition of the contract to the contrary. 33.. Mr. Bhattacharya referred to a single Bench decision of the Calcutta High Court in the case of Indian Explosives Ltd v. State of Bihar [1986] 62 STC 61 (Cal). On the peculiar facts and circumstances of that case, it was held that the amount of "freight " was identifiable as a separate element and did not form part of the composite "sale price". Mr. Chakraborty, learned State Representative, pointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the Tribunal below, sitting singly. The facts were completely different. There, the job of additional testing of the goods, viz., shipping chains was undertaken at the instance of the buyer and the exact charge for the job was to be paid by the buyer. The buyer had the option to purchase the commodity without additional cost incurred for the additional testing. Therefore, it was held that the testing charges did not form a part of the "sale price". The finding being distinguishable on facts, we do not express any opinion on the correctness or otherwise there. In the next case, in [1984] 17 STA 159, a learned single Member of the Tribunal below, held that the delivery charges did not form a part of "sale price". The reason for holding so is clearly erroneous. The learned Tribunal held that as the charges for containers or other packing materials have been expressly included in the definition of "sale price" but delivery charges have not been so included, upon a benign construction of the statute for the benefit of the assessee, "sale price" should not embrace delivery charges. The rules of interpretation of statute applied by the learned Tribunal below were clearly misconceive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d.) (Agricultural Farms Ltd. v. State of Tamil Nadu) were to the effect that the price of limestone was payable at the place of extraction, but the transportation was subsequent thereto. That being so, there is no similarity of the findings of facts as to the time of sale between [1974] 34 STC 143 (Mad.) (Agricultural Farms Ltd v. State of Tamil Nadu) and the instant batch of applications. 36.. Apart from [1969] 24 STC 487 (SC) (Hyderabad Asbestos Cement Products Ltd. v. State of Andhra Pradesh) and [1979] 43 STC 13 (SC) (Hindustan Sugar Mills Ltd. v. State of Rajasthan), already discussed, reliance was placed on behalf of the respondents on a few more cases. Mr. Chakraborty, for the respondents, referred to the case of Commissioner of Sales Tax v. Kansari Udyog Sahakari Samiti [1979] 43 STC 176 (MP). There, the customer gave an equal weight of "kansa" in the shape of old goods plus some money as labour charges including profit for obtaining utensils. It was held by the Madhya Pradesh High Court that in the absence of money consideration, the transaction did not amount to "sale" and was not exigible to sales tax under the Madhya Pradesh General Sales Tax Act, 1959. We do not fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be delivered at the destination to the purchasers and till then the property in the goods did not pass to the buyers, and therefore, all consideration which had been charged for completing the contract of sale would be sale price proper. We find a substantial amount of similarity of that case with the cases before us. Here also, the contract was to deliver the goods for a uniform rate of charge at the destinations of buyers by means of specially designed trucks for ensuring safety of the goods packed in glass bottles. We have found that property in the goods could not pass to the buyers before delivery. Therefore, delivery charge was a consideration for completing the contract of sale. That would, therefore, form a part of the money consideration for the sale, which is the total agreed price. 38.. Mr. Chakraborty also relied on the decision in the case of Atic Industries Ltd. v. H.H. Dave, Assistant Collector of Central Excise AIR 1975 SC 960. In our view, that case has no relevance to the instant cases. That was a case involving the question as to what should be the appropriate price for determination of value of the goods for the purpose of excise duty. It was held that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assistant Commissioner initiated the suo motu revision upon a reference made to him by the Commercial Tax Officer under a threat from a higher authority following the opinion of Accountant-General, Audit. Two communications have been made annexures to the affidavit-in-reply. Pages 21 and 22 thereof comprise Memo. No. 453(L) dated October 9, 1985, which was addressed to Accountant-General, Audit as reply to audit query No. 106 dated August 14, 1985. It appears from that reply that audit was of the opinion that delivery charge should have been included in the definition of "sale price" in section 2(d) of the 1954 Act. The Commercial Tax Officer justified his assessment to audit for having excluded delivery charge from the turnover. Pages 23 to 25 comprise a letter from the same Commercial Tax Officer to the Assistant Commissioner on the proposal for revision of the assessment order dated March 14, 1983 for the period of 12 months ending June 30, 1979. It was stated in that letter that Accountant-General, Audit, raised an objection and according to the Commercial Tax Officer, the objection was misconceived. He finally said that Accountant-General, Audit, was not prepared to accept t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptember 30, 1986, one under the 1941 Act and another under the 1954 Act are challenged. Here also, no argument was advanced regarding the notice under the 1941 Act. Identical contention was made about the notice under the 1954 Act, alleging that it was going to end in an assessment by taking into account delivery charges according to the audit objection. Similar is the case with RN-130 of 1991 for the period of 12 months ending September 30, 1987. 41.. The substance of the case of the respondents on this point is that while it is true that the matter attracted the attention of the authorities upon being highlighted by audit, the revising authorities applied their mind and became satisfied that prima facie the exclusion of delivery charges was not according to law and, therefore, was incorrect. The suo motu revisions by the Assistant Commissioner and the Additional Commissioner were started after such prima facie satisfaction. The contention for the respondents further is that the assessing officers, viz., Commercial Tax Officers while making assessment for any period had the jurisdiction to consider this matter irrespective of whether at some point of time audit raised objection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, the learned Judge relied on the case of Sirpur Paper Mills Ltd. [1970] 77 ITR 6 (SC). In the case of Sirpur Paper Mills [1970] 77 ITR 6 (SC) the matter arose in connection with a revision under section 25(1) of the Wealth Tax Act, 1957. It was also a suo motu power as well as upon application by an assessee. The Supreme Court held, in the facts of that case, that the Commissioner had surrendered his judgment to the direction of the Board of Revenue. The court perused the order sheet of the Commissioner and held that the Commissioner had merely carried out the direction of the Board of Revenue instead of deciding the case according to his own judgment. The court further held that such a quasi-judicial power must be exercised with an unbiased mind and impartiality according to a procedure consistent with the principles of natural justice. The revisional authority cannot permit his judgment to be influenced by matters not disclosed to the assessee, nor by dictation by another authority. That was a case of revision on the application by the assessee and the dictates were of the Commissioner's superior authority, viz., the Board of Revenue. In spite of those facts being different fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant records and documents produced before them or as might be available to them and after considering the legal position afresh. According to Mr. Chakraborty for the respondents, they acted freely without any threat or dictation of any other authority like audit. We are of the opinion that the records of the revision proceedings initiated for the periods of 12 months ending June 30, 1981 and June 30, 1982, respectively [RN-413(T) and 414(T)], if produced, might substantiate the truth or otherwise of these contentions. As already said, it is necessary to determine whether the revisional authorities mechanically followed the audit's views or whether they formed their own independent opinion for exercising the suo motu power. No amount of argument can establish this aspect. The contemporaneous records of the cases could be the only source of this information and those have been withheld from us. Those records are in the custody of the respondents and the burden of proof lay with them to show the manner in which the revisional authorities formed their opinion. With or without an adverse inference for non-production of the records, we find that although the Commercial Tax Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be given by the Commissioner in his administrative capacity to the Income-tax Officer, who was entrusted with quasi-judicial functions, and the Income-tax Officer was to apply his mind uncontrolled by such direction. The same High Court in [1974] 96 ITR 78 (Commissioner of Income-tax v. T.R. Rajkumari) held that initiation of reassessment proceedings under the Income-tax Act, 1961, on the direction of the Commissioner was invalid, though in the facts it was established that there was non-disclosure of income by the assessee. In the case of Atul Products Ltd. [1980] 125 ITR 452 (Guj.) it was held that an audit objection on its own interpretation of the provisions of the Income-tax Act, in the absence of any legislative enactment or interpretation by a judicial or quasi-judicial authority does not constitute an "information" as contemplated in section 147(b) of the Income-tax Act, 1961 and therefore, reassessment proceedings cannot be taken on that basis. The same High Court expressed almost the same views in [1981] 129 ITR 718 (Guj) (Surat District Co-operative Purchase and Sale Union Ltd. v. Income-tax Officer) where the Incometax Officer was held to be under a duty to determine hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to interpret a judicial decision or a statute; see [1971] 80 ITR 188 (SC) (Kasturbhai Lalbhai v. R.K. Malhotra, Income-tax Officer). Mr. Chakraborty also referred to Swamy's Compilation of Introduction to Indian Government Accounts Audit. In paragraph 240(ii) of that book the chief aim of receipt audit is stated as per section 16 of the Act of 1971, already referred to. The author has cautioned that audit has to exercise certain restraint while commenting on orders passed in exercise of quasi-judicial and discretionary powers by the assessing authorities under fiscal law; see paragraph 240(vii). In paragraph 242 of that book, however, it is stated that any obvious errors in computation of assessment, etc., can be pointed out in audit leaving it to the administrative authorities to set right errors by adopting such legal course as they may deem necessary. We do not like to make any observation on the import and extent of the audit's functions as per the author's opinion in paragraph 242. But, even this opinion of the author, whatever value it may be entitled to, does not cast any duty on the audit to state the correct law or to interpret a decision or statute. 48.. Reference w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions were cited by the parties. Mr. Bhattacharya cited [1972] 83 ITR 456 (Cal) (Commissioner of Income-tax v. Assam Oil Company Ltd.), [1962] 44 ITR 788 (SC) (Commissioner of Income-tax v. National Finance Ltd.) and [1975] 35 STC 413 (SC); AIR 1975 SC 1039 (Commissioner of Sales Tax v. Parson Tools and Plants), while Mr. Chakraborty for the respondents cited [1980] 121 ITR 535 (SC) (Commissioner of Income-tax v. National Taj Traders), [1974] 93 ITR 505 (SC) [Pooran Mal v. Director of Inspection (Investigation), Income-tax], [1974] 96 ITR 390 (SC) (Director of Inspection of Income-tax (Investigation) v. Pooran Mall Sons), [1983] 54 STC 364 (AP) (Padma Oil Company v. State of Andhra Pradesh) and [1962] 13 STC 914 (AP) (Immidisetti Ramakrishnaiah v. State of Andhra Pradesh). It is felt not necessary to discuss those decisions. 50.. To sum up, the decisions arrived at are, inter alia, the following: (1) Having regard to the facts of these applications, we are of the opinion that transportation of the goods to the places of buyers was a presale activity as an integral part of contract of sale and was necessary in order to complete the sale. So, even where delivery charge was colle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of orders of completed assessment for the said two periods of 12 months each are invalid. (7) But, audit's views do not matter to the making of a statutory assessment in respect of cost of delivery. The assessing authority must be free to perform his duty according to law. 51(a). In the result, the notice No. 9107 C.T. dated May 20, 1988, issued by respondent No. 3, the Additional Commissioner of Commercial Taxes, initiating suo motu revision in respect of the order of assessment dated May 15, 1984, for the period of 12 months ending June 30, 1981, as confirmed in appeal by order dated March 29, 1985 is quashed. The application in RN-413(T) of 1989 being previously Matter No. 1679 of 1988 in the High Court is allowed to that extent. By an interim order dated July 18, 1989, we had permitted the suo motu revision case No. 239/86-87 pending before the Additional Commissioner to be proceeded with and concluded, but we directed that the final result should not be given effect to. In view of our present decision, the said interim order stands vacated and the said suo motu revision case No. 239/86-87 stands quashed. (b) In RN-414(T) of 1989 being previously Matter No. 2418 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at any given point or place. All sales were ex-factory but those, who wanted to take advantage of transportation of their sold goods to their place in specially designed vehicles, had to pay separate charges for such services. Delivery and transport were actually post-sale activities and charges on that account were on the incidence of despatch and not on that of sale. Freight and delivery charges cannot, therefore, be included in the sale price, as such charges were raised for services rendered independently of the value of the notified commodity contracted to be bought and sold. 56.. The case of the respondents is that the delivery charges were on the incidence of sale, which actually took place at the customers' destination upon delivery of the commodity. Though ex-factory price is charged but sale could not take place at the factory because the goods were not ascertained. There was sale at the point of delivery when the goods were, in fact ascertained. 57.. For the determination of the main issue it is important to construe the true meaning of the expression "sale price" as defined in section 2(d) of the West Bengal Sales Tax Act, 1954. It is also imperative that we ascert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anything done by the dealer in respect of the goods at the time of or before the delivery thereof' is to be regarded as part of 'sale price', even if it does not fall within the first part of the definition. But there is an exception carved out of this inclusion. Not all sums charged for something done by the dealer in respect of the goods at the time of or before the delivery thereof are covered by the inclusive clause. The cost of freight or delivery or the cost of installation certainly represents an amount charged for transportation or installation of the goods at the time of or before the delivery thereof and would, therefore, fall within the inclusive clause on its plain terms but it is taken out of the exclusion clause, 'other than the cost of freight or delivery or the cost of installation in case where such cost is separately charged'. Obviously, therefore, this exclusion clause can be availed of by the assessee only if the State seeks to rely on the inclusive clause for the purpose of bringing a particular amount within the definition of 'saleprice'. But if the State is able to show that the particular amount falls within the first part of the definition and is, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or excluded in the later Act. The concept of exclusion of delivery charge, when separately charged, was applicable to both the Acts. 66.. It was contended on behalf of the applicants that from the reading of the two provisions in the context of the charging section it would appear that delivery charges were never intended to be included by the Legislature, otherwise it would have specifically mentioned it. 67.. It was further contended that the definition of "purchase price" in 1954 Act is on similar lines as in 1941 Act and sale and purchase being facets of the same transaction will have to be harmoniously and beneficially construed, otherwise definition of "purchase price" and that of "sale price" will remain incongruous. 68.. It is not correct to say that sales tax and purchase tax are the same. Their nature is different according to the scheme of taxation. It is not the duty of the court to find out a consistent theory of taxation so that the seemingly divergent provisions in the taxing statute could be reconciled to fit in with such theory. Whether a particular item will be taxable is a matter germane to legislative policy. We have to interpret the expression as it is, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of delivery if not a part of sale, cannot be taxed in a scheme of sales tax drawn up in terms of entry 54 (List II) of the Seventh Schedule. 72.. It is one thing to charge for a particular activity and quite another to include a particular element of charge in costing a commodity for the purpose of realising selling price. To realise a sum for providing a specific service like delivery is clearly different from fixing the selling price of a commodity after taking into consideration all the elements like cost of manufacturing, freight, transportation, profit, interest charges, etc., culminating in sale. 73.. Sale and delivery may be simultaneous or contemporaneous or delivery may take place after sale. The question is whether these are separate activities or transactions. If sale involves delivery it is one composite activity, entailing one composite charge. If these are separate activities, delivery becomes a post-sale activity and. charges on account of such delivery cannot be taxed according to 1954 Act and also according to 1941 Act, if these are separately charged. 74.. When delivery is a part of sale or is integrated with safe, cost of such delivery becomes a compone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent activities. If delivery follows sale there will be one consequence. But when these are concurrent or integrated, an altogether different consequence will follow. The main question to be decided, therefore, is if the activity of transportation for delivery in these cases is a post-sale activity or a pre-sale activity. 79.. This issue has to be decided in terms of the contract or consensual understanding, express or implied, between the parties. It is actually the intention of the parties which is determinative of the fact as to when the sale, in fact, took place. 80.. In order to appreciate what actually was the bargain, when sale, in fact, took place and whether delivery charges related to post-sale activity or pre-sale activity, it is necessary for us to refer to certain provisions in the Sale of Goods Act, 1930. There is no definition of the term "sale" or "delivery" in the 1954 Act. Though sale has not been separately defined in the Sale of Goods Act, but, according to the said Act, transfer of property in goods for a price constitutes sale. In other words, sale means the transfer or passing of the title to the general property in goods for a price. In the said Act, "de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he dealer either by telephone or through the salesman visiting his shop. The quality, type and quantity of the goods, which would be delivered to him, are known to the buyer. All the sales were completed at the factory itself at ex-factory price and payments are deferred till the time of the delivery of the goods. Sometimes payments are made at the factory itself. The company, which was having its own transport organisation, delivered the goods at the shop as an after-sale service on payment of charges. If any of the goods received were found to be having manufacturing defect such as bottle bursting, leakage and had taste, these were returned to the company, who replaces them forthwith. Save as aforesaid the risk during transport is that of the customer. 85.. It appears from the printed terms and conditions appearing on the reverse of the printed bill that the goods would be available at the specified price and if so desired by the customer the company can transport the material to the customer's place on payment of separate delivery charges indicated therein. 86.. It has been admitted by the respondents that sales are also effected ex-factory where goods are delivered to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppear to be necessary to test such consensual agreement based on usage and practice in the specific line of trade in the light of the provisions of the Sale of Goods Act. 89.. When the court has to form an opinion as to usage of trade common to a body of traders in a particular trade, the opinions of persons having special means of knowledge thereon are relevant facts. The company and its customers, who are in that particular trade and have special knowledge of the trade practices, have produced evidence of such usage. To controvert such evidence, the opinion of the Commercial Tax Officer or the Additional Commissioner of Commercial Taxes, who does not claim to have any special knowledge of the said usage, will hardly have any value. In the circumstances, the existence of the usage and the consensual agreement based on such usage have to be accepted. 90.. It is not disputed by the respondents that the dealer charges ex-factory price for his products in both types of sales, viz., (i) sales which are completed at the factory gate and where no delivery charges are realised from the customers and (ii) where goods are delivered to buyers' destinations and delivery charges are realis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icable proposition. But no inference can be drawn that it is an element of sale price, only because the rate is uniform up to a specific distance. The invoices clearly state the actual price of the commodity and the delivery charges in separate and distinct columns. It is admitted that the printed terms and conditions indicate that goods would be available at the factory at specified rates and that if so desired by the customers the company can transport the material to the customers' place on payment of separate delivery charges so specified. It is, therefore, obvious that it is not compulsory for a customer to take resort to the transport arrangement. He has the option and the company undertakes to transport the goods of the customers opting for such an arrangement. The dealer is not bound to send or carry the goods to the buyers. It is because of the arrangement at the instance of the customers that the dealer organises delivery at their places. From all these facts coupled with other evidences produced by the dealer it is sufficiently clear what the intention of the parties was with regard to sale and delivery and that delivery was a separate and distinct service undertaken by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Bihar [1986] 62 STC 61 (Cal) the matter refers to the Central Sales Tax Act, 1956. The ratio of the case is that where price is fixed by a contract and the freight is an identifiable and separate element, it does not form part of the composite sale price. Here ex-factory price was the sale price as per terms and delivery charges were separately charged. 96.. Kutty Co. v. State of Kerala [1978] 42 STC 294 (Ker) and Deputy Commissioner of Sales Tax v. K.P.M. Kunhammed [1978] 42 STC 298 (Ker) are concerned with the provisions of law analogous to the provisions of 1941 Act. Transport charges there related to post-sale activity as in the present case. 97.. Vallabh Glass Works Ltd. v. State of Gujarat [1982] 50 STC 352 (Guj) is clearly distinguishable. Firstly the provisions of law referred to were analogous to those of 1941 Act. Substance of the contract was that goods had to be delivered at the destination to the buyers and till then property did not pass. So all considerations, which had been charged for completing the contract would be sale price proper. Here delivery was postsale and hence not included in sale price. 98.. It has been held by a Division Bench of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words, the buyer had fixed the sale price of goods at the point of extraction and agreed to pay separately the freight and delivery charges from the place of extraction to the buyer's factory. 101.. This case lends support to the proposition that it is the bargain which is determinative of the fact whether delivery charges in a particular case should be included in the sale price. The court had even gone to the extent of saying that it is immaterial where the sale takes place. It is the terms of the contract, which will decide if the delivery charges are on the incidence of sale or whether it was in respect of a separate and distinct activity. 102.. The present case is even on a stronger wicket. Unlike the case cited above, the dealer in the present case did not have the obligation to complete the sale by delivery of the goods at the buyers' doors. 103.. There is another aspect of the matter, which is of no mean consequence. Before September 3, 1977, when the goods in question were notified as a commodity under 1954 Act, deductions were allowed to the dealer on the basis of the second part of the definition of "sale price" in 1941 Act in respect of delivery charges separat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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