Air freight charges included in taxable turnover by Tribunal based on pre-sale service distinction

The Sales Tax Appellate Tribunal dismissed the revision petitions regarding the inclusion of air freight charges in the taxable turnover of a company dealing in import and sale of raw films. The Tribunal found that the air freight charges were collected as a pre-sale service, not a post-sale charge, based on evidence including specimen invoices and correspondence. Relying on legal precedents, the Tribunal concluded that such charges incurred before the sale are part of the sale price and taxable turnover. Consequently, the revision petitions were dismissed, and costs were awarded to the revenue.

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Issues:
Assessment of taxable turnover including air freight charges in sales of imported raw films.

Analysis:
The revision petitions were filed against the order of the Sales Tax Appellate Tribunal dismissing the appeals regarding the inclusion of air freight charges in the taxable turnover of the assessee, a company dealing in import and sale of raw films. The assessing authority determined the taxable turnover slightly less than reported due to the inclusion of air freight charges in the total turnover. The assessee explained that the price fixed did not include air freight charges, as it was based on f.o.b. price, sea freight, and insurance. The Revenue proposed to revise the assessments by including the air freight charges, leading to disputes and subsequent appeals.

The Sales Tax Appellate Tribunal examined a specimen invoice raised by the assessee, confirming the inclusion of air freight charges in the sale price. The imported film rolls were sold in India, and the assessee admitted that the price collected included shipping charges. The Tribunal found that the air freight charges were collected as a pre-sale service, not a post-sale charge. Various letters exchanged by the assessee indicated that the air freight charges were incurred before sale and were ultimately collected from the purchaser, supporting the Tribunal's decision.

The Tribunal's decision was further supported by legal precedents such as Dyer Meakin Breweries Ltd. v. State of Kerala and State of Tamil Nadu v. Parry & Company, where it was held that charges incurred before the sale are part of the sale price and taxable turnover. The Tribunal concluded that the air freight charges were pre-sale expenses and should be included in the taxable turnover. Therefore, the revision petitions were dismissed, and the revenue was awarded costs. The judgment highlights the importance of considering all charges incurred before the sale in determining the taxable turnover, as supported by legal principles and precedents.

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