Freight charges as part of sale price excluded deduction where cement was sold on f.o.r. destination terms.

Freight charges were treated as part of the sale price where cement sales were made on f.o.r. destination terms under the Cement Control Order, and the amount was not charged as a separate independent component. On that basis, the freight formed part of the taxable turnover, so the deduction under rule 6(c)(i) of the Tamil Nadu General Sales Tax Rules was not available. The governing test is whether freight has been incorporated into the sale price; if it has, deduction is excluded and the amount is taxable.

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Issues: Whether freight charges formed part of the sale price and were therefore outside the deduction available under rule 6(c)(i) of the Tamil Nadu General Sales Tax Rules.

Analysis: The sales of cement were governed by the Cement Control Order and were on f.o.r. destination terms. On the findings recorded by the taxing authorities and the Tribunal, the freight was treated as part of the price payable under the contract and not as an independent amount charged separately without inclusion in the price. The governing test is whether freight has been made part of the sale price; only then can it be included in taxable turnover and the deduction under rule 6(c)(i) be denied. Applying that test, the claimed deduction was not available.

Conclusion: The freight charges were rightly included in the taxable turnover and the assessee was not entitled to deduction under rule 6(c)(i).

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