TMI Blog2004 (4) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax case (Appeal), by a common order dated January 24, 2002, since the issue involved in both the cases is common. 3.. The case of the petitioner, as found in the affidavit filed in support of the writ petition (W.P. No. 6169 of 2002), can be set out as under: The petitioner is a public limited company, incorporated under the provisions of the Companies Act, 1956, with registered office at Hyderabad and having sales depot all over India, including the one at Chennai. The petitioner, who has registered itself as a dealer under the provisions of the Tamil Nadu General Sales Tax Act, 1959, is a manufacturer of asbestos cement sheets, etc. The products of the petitioner are marketed by effecting sales to stockists and consumers directly. The petitioner entered into an agreement with its dealers, which contains various clauses and out of which, clauses (4), (5), (8) to (10) and (19) would be relevant for the purpose of this case. Clause 8 stipulates that in case of products despatched by railway wagons/lorries railway freight/lorry freight shall be payable by the stockists and the amount of freight shown on railway receipt/lorry receipt and/or any other sum mutually agreed upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing authority, for the assessment year 1988-1989, determined the taxable turnover at Rs. 1,86,36,922.49, as compared to the taxable turnover of Rs. 1,80,90,025.87, reported by the petitioner in the returns filed. The difference between the taxable turnover determined by the assessing authority and the returns filed by the petitioner is to the extent of Rs. 5,46,896.62 and according to the petitioner, the said sum represents deductions in various invoices during the assessment year, representing transport rebate allowed. The contention of the petitioner is that such rebate is not a part of the sale price and the deduction claim of transport rebate is separately shown and it is not part of the sale price. The assessing authority rejected the contention of the petitioner and redetermined taxable turnover by disallowing the claim of transport rebate and levied a penalty of Rs. 54,689. The aggrieved assessee filed an appeal before the Appellate Assistant Commissioner (CT)-II, Madras, however, that was dismissed by an order dated September 6, 1991. The petitioner filed further appeal before the Tamil Nadu Sales Tax Appellate Tribunal, Chennai, in T.A. No. 870 of 1993 and the second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the petitioner. The petitioner filed its objection dated November 3, 1995 to the proposed suo motu revision proceedings initiated by the second respondent for the assessment year 1990-1991. However, the second respondent did not accept the submissions put forth by the petitioner against the proposed revision and by his order dated April 16, 1996, set aside the order of the Appellate Assistant Commissioner and restored the order of the assessing authority, disallowing the claim of deduction of transport rebate. This prompted the assessee to file Tax Case (Appeal) No. 40 of 1997 before the Tamil Nadu Taxation Special Tribunal. 5.. As already stated, the above writ petitions have been filed by the assessee, questioning the correctness of the order of the Tamil Nadu Taxation Special Tribunal, Chennai. 6.. Before this Court, the learned counsel appearing for the petitioner/assessee, reiterated the submissions already made before the Taxation Special Tribunal so also before the respondents 1 and 2. The sum and substances of the contention is that the freight charges cannot be included in the turnover in view of the fact that (a) the agreement entered into between the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the effect that the tax or taxes under section 3 or 4 shall be leviable on the taxable turnover of the dealer. It is necessary to quote the said rule: "Rule 6.-The tax or taxes under section 3 or 4 shall be levied on the taxable turnover of the dealer. In determining the taxable turnover, the amounts specified in the following clauses shall, subject to the conditions specified therein, be deducted from the total turnover of a dealer: (a) to (b).............. (c) all amounts falling under the following three heads when specified and charged for by the dealer separately, without including them in the price of the goods, sold: (i) freight; (ii) ............. (iii) charges for delivery." 9.. The petitioner/assessee entered into an agreement with the stockist and the same contains various terms and conditions. Clauses (8) and (10) of the said agreement would be relevant for the purpose of this case, which read as under: (8) The company shall effect supplies of the products against the orders received from the stockists and duly acknowledged by the company subject to delays in transportation, non-availability of the products or any other reason and the company shall n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime, the petitioner evolved a scale of rate on the basis of distance in kms., and per tonne basis to commensurate the transport charges. The said rate of scale of transport charges evolved by the petitioner is informed to all the customers and wherever the customers arrange for their own transport, depending on the place of delivery and the distance of such place from the petitioner's factory/depot, the applicable scale of rate is adopted and a deduction is given from the f.o.r. price to arrive at ex-factory sale price of the products. The said deduction from the price of products is allowed to all customers arranging the mode of conveyance by themselves. The said deduction in the form of transport rebate is allowed, apart from the discount given in the normal trade practice. The scale of rate of transport rebate evolved by the petitioner has a close nexus to the normal cost of transportation prevailing in the market. The transport rebate as evolved by the petitioner on the basis of distance and tonnage by mutual agreement with the stockist is changed from time to time, whenever there is substantial change in the transport rate in the market. Thus, the scale evolved by the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the price list and in the invoice and also in view of the subsequent rulings of the Supreme Court and this Court, so far as the present case is concerned, the petitioner/assessee would be entitled to exclude the freight charges from its turnover. We have already referred to the various conditions found in the agreement, price list and invoice so also the freight rate fixed. 12.. The learned counsel for the petitioner/assessee referred to the following rulings in support of his contention that the freight charges have to be excluded from the taxable turnover. (a) First he referred to the ruling reported in [1969] 24 STC 487 (SC) (Hyderabad Asbestos Cement Products Ltd. v. State of Andhra Pradesh). In that case, the concerned assessment year was 1959-60 and a deduction of Rs. 57,970.37 was made in respect of railway freight on articles supplied to outstation customers. To meet the competition from other manufacturers, the company maintained a uniform catalogue rate all over the country in respect of its manufactures and sent goods to outstation customers by railway under railway receipts with freight to pay. The company made out an invoice at the catalogue rate, and the custome ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not be given to the assessee in view of the scheme and provisions of the Cement Control Order and their implications. The terms of the Cement Control Order have been fully analysed and discussed at pages 33 to 35 of the Report. There is, therefore, no difference either on facts or in principle between this case and the Hindustan Sugar Mills Ltd. case [1979] 43 STC 13 (SC)." The learned counsel further submitted that the court in those two rulings declined to include the freight charges from the taxable turnover only in view of the Control Orders in force at that time, which prevailed over the terms of the contract. As far as the ruling reported in [1969] 24 STC 487 (SC) (Hyderabad Asbestos Cement Products Ltd. v. State of Andhra Pradesh) is concerned, that was a matter arising under the Andhra Pradesh General Sales Tax Act (6 of 1957). The term "turnover" has been defined in section 2(s) of that Act as under: " 'turnover' means the total amount set out in the bill of sale (or if there is no bill of sale, the total amount charged) as the consideration for the sale or purchase of goods (whether such consideration be cash, deferred payment or any other thing of value) includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering that, the Supreme Court examined the implication of the Cement Control Order and observed as quoted supra, which is being relied on by the writ petitioner. Coming to the second question, viz., as to whether under the Tamil Nadu General Sales Tax Act, the freight charges to be excluded or not, the court observed as follows: "We agree with the learned counsel for the State of Tamil Nadu that, in coming to the above conclusion, the High Court has overlooked the significance of the inclusion of the words 'without including them in the price of the goods sold' in clause (c). These words make it clear that the freight charges are not to be deducted in the computation of the taxable turnover merely because they are specified and charged for separately by the dealer. A further prerequisite for their deduction is that these charges should not have been included in the price of the goods sold." That being so, we are of the view that Ramco Cement Distribution Co. Pvt. Ltd. v. State of Tamil Nadu [1993] 88 STC 151 (SC) would not in any way advance the case of the petitioner. (c) The learned counsel appearing for the petitioner then drew the attention of this Court to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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