Separate freight charges are deductible from taxable turnover only when the dealer proves a distinct transport charge.

Freight and delivery charges were deductible from taxable turnover only if the dealer proved that outward freight was separately charged under the Orissa Sales Tax Act, 1947. The court noted that sale price included sums charged for work done in respect of goods, while deduction was available only for separately charged outward freight or delivery cost. On the record, the agreement was initially composite and the later correspondence showed bifurcation of several items, but not a distinct transport charge alone. The amount was treated as transport and other charges together, so the dealer failed to establish entitlement to deduction and the entire receipt remained taxable.

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Issues: Whether the dealer was entitled to deduction of freight and delivery charges from taxable turnover on the ground that such charges were separately charged.

Analysis: Under section 2(h) of the Orissa Sales Tax Act, 1947, sale price includes sums charged for work done in respect of goods, while section 5(2)(A)(a)(iii) permits deduction only of the cost of outward freight or delivery when such cost is separately charged. The onus lay on the dealer to establish that the freight element was separately charged. The materials showed an initial composite agreement, and the subsequent correspondence indicated bifurcation of various items, but not a separate charge for transport alone. The record supported the finding that the amount related to transport and other charges together, and not to freight by itself.

Conclusion: The dealer was not entitled to the deduction, and the entire amount received was taxable. The reference was answered in favour of the Revenue and against the dealer.

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