Freight deduction in turnover applies only when the selling dealer separately charges freight; purchase-side transport payments are not deductible.

Freight deduction under the turnover rule was confined to cases where the selling dealer separately specified and charged freight in the invoice; a purchasing sugar mill could not claim the deduction merely because transport charges were separately recorded in vouchers or paid to third-party lorry owners. On that basis, transport charges paid to cane-growers for bringing cane to the factory formed part of the purchase price and were not deductible. The turnover from sale of press-mud, bagasse and standard mixture was also held includible in taxable turnover under the governing precedent.

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Issues: Whether transport charges paid by a purchasing sugar mill to cane-growers or third-party transporters were deductible from taxable turnover under rule 6(c)(i), and whether the turnover relating to sale of press-mud, bagasse and standard mixture was includible in taxable turnover.

Analysis: The statutory definition of turnover covered the aggregate amount for which goods were bought or sold, and sugarcane was taxable at the purchase point. Rule 6(c)(i) allowed deduction of freight only where the dealer specified and charged it separately without including it in the price of the goods sold. On that language, the deduction was held to apply to a selling dealer who prepares the invoice, not to a purchasing dealer whose own accounts or vouchers merely record separate payment. Accordingly, freight paid by the mill to third-party lorry owners could not be included in purchase turnover, but transport charges paid to cane-growers for bringing cane to the factory site formed part of the purchase price and were not deductible merely because they were separately shown in vouchers. The turnover relating to sale of press-mud, bagasse and standard mixture was also liable to be included in taxable turnover in view of the governing precedent.

Conclusion: The transport charges of Rs. 37,104.34 were not deductible, the amounts relating to press-mud, bagasse and standard mixture were includible in taxable turnover, and the revision succeeded to that extent in favour of the Revenue.

Ratio Decidendi: A freight deduction under a turnover rule framed in terms of amounts separately specified and charged by the dealer is available only where the selling dealer separately charges freight in the invoice; a purchasing dealer cannot claim the deduction merely because transport charges were separately paid or recorded.

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