TMI Blog2023 (3) TMI 492X X X X Extracts X X X X X X X X Extracts X X X X ..... the materials that are ordered will have to be fully insured from the time of despatch from the manufacturer to the destination station, including one month's storage, thereafter at the cost of the contractor. The clauses in Annexures 1 and 2 clearly show that the transfer of title to the goods would take place only on delivery of goods at the customer's place and the customer's obligation to effect payment would arise only after the delivery is effected. Also the provisions of Chapter 3 of the Sale of Goods Act, in particular, section 22 that applies where the contract of sale of specific goods in a deliverable state, including the conditions to do such acts with reference to the goods for the purpose of ascertaining the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act entered into between the appellant and M/s. Kothamangalam Aggregates, Kothamangalam, for the manufacture and supply of electrical poles. 2. Board contends that it had invited tenderers for the purchase of Prestressed concrete poles (for short PSC poles ), and Annexure-A purchase order contains the basic price, transportation charges, taxes, and duties, and in all the invoices they are separately shown as is evident from Annexure-B and therefore, except the sale price other components do not form part of the same price and therefore, determining the taxable turn including those charges other than the basic price was illegal going by the provisions of the KVAT Act. Initially, the manufacturers filed their monthly returns showing only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specifically excluded while determining taxable turnover, and as the invoice shows these items separately, freight and charges for delivery ought to have excluded from the taxable turnover. His further submission is that the decision of the Supreme Court in India Meters Limited v. State of Tamil Nadu [(2010) 9 SCC 423] is clearly distinguishable as the factual situation was different. It is also his argument that the terms of the agreement determine whether the sale consideration included the transportation, unloading, and other charges, and it cannot be said that in every case, transportation or freight charges will be included as the sale price. 4. On the other hand, the learned counsel for the Revenue, Smt. Jasmine submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parately, the cost of freight/transportation must be treated as excluded from the sale consideration. A similar contention was considered by the Supreme Court in Hindustan Sugar Mills v. State of Rajasthan Others [(1978) 4 SCC 271] wherein the Apex Court held as follows: 3. Where a dealer transports goods from his factory to his place of business and sells them at a price which is arrived at after taking into account freight and handling charges incurred by him in transporting the goods, the amount of freight and handling charges , included in the price would be part of the sale price because, it would be payable by the purchaser to the dealer as part of the consideration for the sale of the goods. The same would be the legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them in the price of goods sold are alone excluded. (emphasis supplied). This rule is not intended to exclude from the taxable turnover any component of the price/expenditure incurred by the dealer before the sale and to make the goods available to the intending customer at the place of sale. In the instant case, we have already held that the freight and transportation charges are part of the sale consideration being incidental to the sale, and as such, 10 (e) of the KVAT Rules, 2005 which excludes those charges when they are not included in the price of the goods sold has no application in the instant case. 9. That apart, the definition of the sale price in the KVAT Act, is relevant which reads as follows: 2 (xliv) sale price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... du General Sales Act and Rules Act, both of which are pari materia to Rule 10 (e) of KVAT Rules held that the amounts paid by way of consideration by the purchaser to the seller of goods in pursuance of the contract of sale could legitimately be regarded as purchase price while calculating the turnover for the purposes of sales tax legislation. All the payments should have been made pursuant to the contract of sale and not dehors it. In other words, all charges till the passing of the title to the goods are liable to be included in the sale consideration. 12. As we have already held, the clauses in Annexures 1 and 2 clearly show that the transfer of title to the goods would take place only on delivery of goods at the customer's place ..... X X X X Extracts X X X X X X X X Extracts X X X X
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