TMI Blog1995 (1) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... alance and then gave credit for the amount of freight to be paid by the customers at the destinations. In its returns under the Central Sales Tax Act, 1956 ("the Act"), for the periods July 1, 1962 to June 30, 1963 and July 1, 1974 to June 30, 1975, the assessee claimed that the amount of freight paid by the customers at the destination railway stations, for which credit had been given to them in the invoices made out by it, did not form part of its sale price. The Sales Tax Officer did not accept this contention of the assessee as he was of the opinion that the price of the goods having been fixed f.o.r. destination, freight formed part of the sale price of the goods and hence, the assessee was liable to pay sales tax on the price of the goods inclusive of freight. Accordingly, the Sales Tax Officer added the amount of freight to the turnover of the assessee. Against the above order of the Sales Tax Officer, the assessee appealed to the Assistant Commissioner of Sales Tax, who confirmed the order of the Sales Tax Officer and dismissed the appeal of the assessee. The assessee went in further appeal to the Maharashtra Sales Tax Tribunal ("the Tribunal"). The contention of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision which the Tribunal found applicable to the facts of the present case, and accordingly, decided the controversy in favour of the assessee. The Revenue contends that the Tribunal erred in doing so. According to it, the later decision of the Supreme Court in Hindustan Sugar Mills Ltd. [1979] 43 STC 13 applies to the facts of the present case and hence freight would form part of the sale price. 5.. We have perused the facts of the present case and the terms of contract of sale between the parties. On a careful consideration of the same, we find that the facts of the present case are identical to the facts of Hyderabad Asbestos Cement Products Ltd. case [1969] 24 STC 487 (SC) and the Tribunal was correct in applying the ratio of the said decision and arriving at a conclusion that freight did not form part of the sale price of paper sold by the assessee. The decision of the Supreme Court in Hindustan Sugar Mills Ltd. [1979] 43 STC 13 has no application to the facts of the present case. In that case, the Supreme Court arrived at a different conclusion in view of the scheme and provisions of Cement Control Order which governed all contracts of sales of cement. While doing so, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulation would make the railway the agent of the purchaser for taking delivery of the goods. The freight in such a case would be payable by the purchaser though the price agreed upon is f.o.r. destination railway station. The price of goods receivable by the dealer would, in that event, be the f.o.r. destination railway station price less the amount of freight payable by the purchaser. That would be the consideration payable by the purchaser to the seller for the sale of the goods and the amount of freight being payable by the purchaser would not be included in the "sale price". The position would be the same even if the seller pays the freight and obtains railway receipt "freight pre-paid" and claims the full f.o.r. destination railway station price in the bill. The amount representing freight would not be payable as part of the consideration for the sale of goods but by way of reimbursement of the freight which was payable by the purchaser but in fact disbursed by the seller and hence it would not form part of the sale price. [See Hindustan Sugar Mills Ltd. [1979] 43 STC 13 (SC)]. 7.. Hyderabad Asbestos Cement Products Ltd. case [1969] 24 STC 487 (SC) was a case of the second ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the invoice made out by the company. By clause (16) the company received the catalogue rate less the railway freight as price of the goods sold. We are unable to agree with the High Court that 'the term relating to the price in the contract between the company and the stockist envisaged by this clause [clause (16)] implies an obligation on the part of the company to pay the railway freight'. 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." 8. In Hindustan Sugar Mills Ltd. case [1979] 43 STC 13, the Supreme Court reiterated and reaffirmed the ratio of its earlier decision in Hyderabad Asbestos Cement Products Ltd. case [1969] 24 STC 487 but arrived at a different conclusion in view of the provisions of the Control Order governing the sales of cement which having statutory force and authority had an overriding effect over the terms and conditions of the contract between the parties. This is evident from the following observations: "..........The scheme of the Control Order clearly proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce lists issued by the assessee from time to time. In the price list issued on January 8, 1960, the following notes are relevant: "2. Prices noted above are for delivery f.o.r. destination station. "8. We shall not be responsible for any loss or damage once the goods are handed over to the carriers. Claim or damage, if any, should be lodged with the carriers." The forwarding letter reads: "To All Distributors of Shree Gopal Paper Mills Limited and Ballarpur Paper Straw Boards Mills Ltd. Dear Sirs, Our revised price lists are being sent to you separately. You would observe that the prices mentioned in the price lists are for delivery f.o.r. destination station, but as per practice in vogue we shall continue to deduct the railway freight in the invoices. To be precise railway receipts, will be continued on the basis of 'freight to pay' as already being done, and it would be the responsibility of the distributors to pay railway freight at the destination. Allowance for the incidence of railway freight would, however, be made in the invoices as usual." Note Nos. 2 and 8 in price list dated March 18, 1969 are in identical terms as in price list dated January 8, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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