Transport charges in sugarcane purchases form part of taxable turnover when delivery is contractually required at the factory.

Transport charges paid to third-party lorry owners for moving sugarcane from growers' fields to the factory were held to form part of the taxable purchase turnover. The agreed price and statutory scheme required delivery at the factory premises, and the growers were contractually bound to supply cane there. Because the mill's transport arrangement was only facilitative and did not alter the purchase price basis, rule 6(c) of the Tamil Nadu General Sales Tax Rules, 1959 did not exempt the charges. The earlier contrary decision was distinguished on its facts, and the revisions were dismissed.

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Issues: Whether transport charges paid to third-party lorry owners for carrying sugarcane from the growers' fields to the factory premises were excludible from the purchase turnover and exempt under rule 6(c) of the Tamil Nadu General Sales Tax Rules, 1959.

Analysis: The agreed and statutory scheme showed that the sugarcane price was fixed for delivery at the factory site, and the growers were contractually bound to supply cane at the mill premises. There was no contractual provision permitting a reduced price where transport was arranged by the mill. The earlier decision allowing exclusion of transport charges was distinguishable on its facts, because in the present case the arrangement did not alter the contractual obligation of delivery at the factory. The governing precedent held that where transport is only a facilitative arrangement and the statutory purchase price remains the basis of billing, transport charges recovered or borne in connection with such delivery form part of the taxable purchase price.

Conclusion: The transport charges were not exempt and were includible in the taxable purchase turnover; the revisions were rightly dismissed.

Ratio Decidendi: Where the contract and price-fixation scheme require delivery at the factory premises and the mill merely facilitates transport without altering the statutory purchase price, transport charges remain part of the purchase turnover and are not deductible as exempt amounts.

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