Post-sale freight separately charged for the buyer's transport is deductible from taxable turnover and not part of sale price.

Freight and transportation charges separately collected by a dealer were held deductible from taxable turnover where the sale price was fixed at the extraction site and transport to the buyer's premises was undertaken at the buyer's instance after sale. Applying the rule that post-sale freight incurred for and on behalf of the purchaser is deductible, the Court treated the debit-noted transport charges as separate from the sale price and not as inward freight forming part of turnover. The revisional and appellate orders were set aside, and the assessment order granting deduction for the separately collected freight charges was restored.

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Issues: Whether freight and transportation charges separately collected by the dealer were includible in the taxable turnover or were deductible under rule 6(4)(f) of the Karnataka Sales Tax Rules, 1957.

Analysis: The written agreements fixed the sale price at the extraction site and treated transport to the buyers' premises as the buyers' responsibility, while the dealer undertook carriage at the buyers' instance and charged freight separately by debit notes without including it in the sale price. The governing test was that freight incurred for and on behalf of the purchaser after the sale is deductible, while expenditure incurred by the dealer before sale for making the goods available is not. Applying that test to the facts, the transportation charges were treated as post-sale freight charged separately and not as an element of the sale price or inward freight forming part of the dealer's turnover.

Conclusion: The freight charges were deductible and not includible in the petitioner's taxable turnover.

Final Conclusion: The revisional and appellate orders were set aside and the assessment order allowing exemption for separately collected freight charges was restored.

Ratio Decidendi: Where freight is separately charged for transportation undertaken for and on behalf of the purchaser after the sale, it is deductible from turnover under the sales tax rules and does not form part of the sale price.

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