Freight adjusted in the invoice is excluded from turnover where it is not part of the sale consideration.

Freight that is payable by the purchaser and merely deducted or adjusted in the invoice does not form part of sale price or turnover under the Central Sales Tax Act and the Punjab General Sales Tax Act. The Court treated the contractual arrangement as decisive, noting that the railway receipt was on a freight-to-pay basis and the dealer did not receive freight as consideration for sale. Supreme Court authority on freight and turnover therefore applied, while High Court decisions involving controlled commodities were distinguished as turning on statutory control orders not present here.

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Issues: (i) Whether freight charged on goods and later deducted from the bill forms part of the dealer's turnover under the relevant sales tax laws. (ii) Whether the ratio of the Supreme Court decision on freight and turnover applies to the present sales transactions.

Issue (i): Whether freight charged on goods and later deducted from the bill forms part of the dealer's turnover under the relevant sales tax laws.

Analysis: The definitions of "sale price" under section 2(h) of the Central Sales Tax Act, 1956 and "turnover" under section 2(i) of the Punjab General Sales Tax Act, 1948 excluded freight where such cost was not payable to the seller as part of the consideration for sale. On the contract terms found by the Tribunal, the railway receipt was on "freight to pay" basis and the freight was deductible from the invoice, showing that the dealer did not receive freight as part of the sale consideration. The Court distinguished cases involving controlled commodities, since there was no statutory regulation here overriding the contractual arrangement.

Conclusion: Freight deducted from the bill did not form part of the turnover. The issue was answered in favour of the assessee and against the Revenue.

Issue (ii): Whether the ratio of the Supreme Court decision on freight and turnover applies to the present sales transactions.

Analysis: The contractual terms in the present matters were treated as materially similar to those considered by the Supreme Court in the freight-turnover decisions. The Court held that where freight is payable by the purchaser and merely adjusted in the invoice, it is not part of the sale price or turnover. The contrary High Court decisions relied on by the Revenue were held inapplicable because they dealt with transactions governed by control orders, which were absent in the present case.

Conclusion: The Supreme Court ratio applied fully to the present transactions, and the Revenue's reliance on the other High Court decisions failed. The issue was answered in favour of the assessee and against the Revenue.

Final Conclusion: The reference was disposed of by holding that freight deducted from the bill was not includible in turnover and that the controlling Supreme Court authority governed the transactions.

Ratio Decidendi: Where freight is not payable to the seller as part of the consideration and is merely adjusted or deducted under the contract, it does not form part of the sale price or turnover unless a statutory control scheme requires otherwise.

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