F.O.R. destination pricing includes freight in sale price when freight is not separately charged

Where goods are sold at a uniform F.O.R. destination price, freight is part of the sale price if it is not separately charged. The statutory exclusion for freight applies only when the charge is separately shown or the contract makes freight an independent buyer obligation. On these facts, the purchaser's payment of freight at delivery was only the mechanism for realising the agreed price, not a separate amount outside it. The Court held that railway freight was includible in the sale price and taxable turnover, and the Tribunal was not justified in excluding it.

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Issues: Whether railway freight formed part of the sale price where cement was sold at a uniform F.O.R. destination rate and the freight was paid by the purchaser at delivery.

Analysis: Under the statutory definition, sale price means the amount payable as consideration for the goods, and freight is excluded only when it is separately charged. On the facts, the dealer charged a uniform F.O.R. destination price fixed under the Cement Control Order, and the fact that the purchaser paid the freight at the time of delivery did not alter the character of the price. The freight payment was part of the mechanism by which the agreed sale price was realized, not a separate payment outside the price. The distinction drawn by authorities dealing with expressly separable freight charges or contracts fixing the buyer's obligation to pay freight independently did not assist the assessee on these facts.

Conclusion: The railway freight formed part of the sale price, and the Tribunal was not justified in excluding it from taxable turnover.

Final Conclusion: The reference was answered in favour of the taxing authority, and the freight amount was held to be includible in the sale price for sales tax purposes.

Ratio Decidendi: Where goods are sold at a price expressed on an F.O.R. destination basis and freight is not separately charged, the freight paid in the course of delivery is part of the sale price and is includible in taxable turnover.

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