Freight deduction and best judgment assessment limits: separate invoice freight was deductible, and no further suppressed turnover could be added later.

Freight shown separately in invoices and excluded from the sale price was held deductible from taxable turnover under rule 6(4)(f)(i), and that deduction could not be refused on irrelevant considerations such as the place of contract or delivery. The text also states that once a best judgment assessment had been completed, the assessing authority could not later enlarge it by adding another amount as suppressed turnover. The assessment was accordingly modified to allow the freight deduction and delete the further turnover addition.

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Issues: (i) whether freight shown separately in the invoices and not included in the sale price was deductible from taxable turnover under rule 6(4)(f)(i); (ii) whether, after a best judgment assessment had been made, an additional amount could be added as suppressed turnover.

Issue (i): whether freight shown separately in the invoices and not included in the sale price was deductible from taxable turnover under rule 6(4)(f)(i)

Analysis: The deduction under rule 6(4)(f)(i) depended on whether freight was specified and charged separately without being included in the price of the goods sold. The place where the contract was made, or whether delivery occurred in the forest, was irrelevant to that enquiry. The recorded finding was that the freight had been shown separately in the bills and had not formed part of the sale price. That finding attracted the statutory deduction, and the authorities were wrong in refusing it on an unrelated ground.

Conclusion: The freight charges were deductible, and the disallowance was ?

Issue (ii): whether, after a best judgment assessment had been made, an additional amount could be added as suppressed turnover

Analysis: Once the assessment was completed on best judgment basis, it was not open to the assessing authority to superadd another sum as suppressed turnover. The inclusion of the further amount lacked legal basis and had to be removed from the assessment.

Conclusion: The additional sum of Rs. 1,000 could not validly be added as suppressed turnover.

Final Conclusion: The revision petition succeeded in full, with the assessment modified by allowing the freight deduction and deleting the additional turnover addition.

Ratio Decidendi: Where a sales tax rule permits deduction of freight only if it is separately specified and charged without inclusion in the sale price, the deduction cannot be denied on extraneous considerations such as the place of contract or delivery; likewise, a best judgment assessment cannot later be enlarged by adding a further suppressed item of turnover.

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