F.O.R. destination sales of controlled goods: railway freight forms part of sale price unless separately charged.

Railway freight in inter-State sales of cement sold on F.O.R. destination terms was held to form part of the sale price under the Central Sales Tax Act, 1956. Because the commodity was sold under a controlled-price regime and the statutory and contractual structure made the freight inclusive up to destination, the freight could not be excluded from taxable turnover. Under section 2(h), freight is deductible only when it is separately charged and not embedded in the price; the billing form was not decisive. On these facts, the freight was liable to be included in the sale price.

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Issues: Whether railway freight in inter-State sales of cement sold on F.O.R. destination terms was excludible from the taxable turnover under the Central Sales Tax Act, 1956.

Analysis: The sales were of a controlled commodity governed by the Cement Control Order, 1961, under which the price fixed for sale by the State Trading Corporation was F.O.R. destination and therefore inclusive of freight up to the destination. Under section 2(h) of the Central Sales Tax Act, 1956, sale price includes the consideration payable for the goods, while exclusion of freight is available only when such cost is separately charged and not embedded in the price. The form of billing was not decisive; the controlling factor was the contractual and statutory structure of the sale. On the facts, the freight formed part of the price and was not separately charged in the statutory sense.

Conclusion: The freight was not deductible from the taxable turnover and was liable to be included in the sale price.

Ratio Decidendi: Where goods are sold at an F.O.R. destination price under a controlled-price regime, railway freight forms part of the sale price and is deductible only if it is separately charged and not included in the price of the goods sold.

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