Controlled sale price includes freight where statutory pricing is free on rail destination, so freight cannot be deducted from turnover.

Under the Cement Control Order, 1961, a statutory price fixed as free on rail destination railway station included freight in the sale price, so the seller could not exclude freight from taxable turnover merely because the buyer ultimately paid it at destination. The controlled price left no contractual freedom to shift the incidence of freight, and the legal character of the sale was governed by the statutory order rather than the payment arrangement between the parties. Freight was therefore not deductible from turnover, and the assessee's claim to exclude it failed.

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Issues: Whether, under clause 6(2)(a) of the Cement Control Order, 1961, freight could be excluded from the assessee's taxable turnover on the footing that the buyer ultimately bore the freight.

Analysis: The price fixed by the Cement Control Order was a statutory price expressed as free on rail destination railway station, which meant that delivery was to be made without freight being added to the buyer's liability. The statutory price structure left no freedom to the seller to alter the incidence of freight by contract. The arrangement by which freight was paid at the receiving end did not change the legal position that the seller was bound to adhere to the controlled price and could not treat freight as deductible from turnover. The decision relied on the distinction between a purely contractual sale and a sale governed by a statutory price control order, and applied the earlier Division Bench view that where the controlled price is inclusive of freight, freight cannot be carved out of the taxable turnover.

Conclusion: The assessee was not entitled to exclude freight turnover from the taxable turnover, and the answer was against the assessee.

Ratio Decidendi: Where a controlled price under a statutory order is fixed as free on rail destination, freight forms part of the sale price and cannot be deducted from taxable turnover merely because the purchaser pays it at the destination.

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