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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether transport charges were deductible from taxable turnover under rule 6(c) of the Tamil Nadu General Sales Tax Rules, 1959, when the original contract fixed an all inclusive price for delivery at the buyer's mill site but the bills were later split up separately for price and freight.
Analysis: Deduction under rule 6(c) is available only where freight or delivery charges are specified and charged separately without including them in the price of the goods sold. The decisive factor is the bargain struck at the time of the contract of sale. Here the contract provided for supply of bamboos at a consolidated price at the mill site and did not contemplate a separate freight component. Later separate billing and acceptance by the buyer did not, by themselves, show a prior bargain for separate freight payment. There was also no amendment of the original agreement; therefore the subsequent split-up could not alter the character of the original all inclusive price. Earlier decisions allowing deduction were distinguished because they involved an express separate bargain or an amended agreement.
Conclusion: The transport charges were not deductible under rule 6(c) on the facts of this case, and the exclusion from taxable turnover was held to be incorrect.
Final Conclusion: The assessment was restored to the extent that the disputed freight component formed part of the taxable turnover, and the petition was allowed in favour of the Revenue.
Ratio Decidendi: For deduction of freight or delivery charges from taxable turnover, there must be a separate bargain or valid contractual variation at the time of sale; a later split-up of an all inclusive sale price does not by itself satisfy rule 6(c).
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