Purchaser-borne freight excluded from taxable turnover; cinder ash treated as coal ash under commercial parlance classification.

Freight paid by the purchaser and later adjusted from invoices was excluded from taxable turnover because, in the absence of any control order fixing freight liability on the producer, taxability depended on the contract terms rather than invoice form. The document also states that cinder ash was treated as the same commodity as coal ash in commercial parlance, so the lower rate applicable to coal ash was sustained. The stated ratio is that purchaser-borne freight is not part of sale price unless contract or overriding control order says otherwise, and commodity classification may rest on a supported factual finding of commercial identity.

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Issues: (i) whether railway freight paid by the purchaser and later adjusted from the bills formed part of the taxable sale price and turnover; (ii) whether cinder ash was classifiable and taxable as coal ash at the lower rate applied by the Tribunal.

Issue (i): whether railway freight paid by the purchaser and later adjusted from the bills formed part of the taxable sale price and turnover.

Analysis: In the absence of any control order fixing freight liability on the producer, the matter turned on the terms of sale. Freight payable by the purchaser, even where initially shown in the invoice and later adjusted, does not form part of the consideration for sale. The earlier decision between the parties and the principle that the nature of the contract, not the invoice form, governs the taxability of freight supported exclusion of the freight amount from taxable turnover.

Conclusion: The freight amount was not liable to be included in the taxable turnover.

Issue (ii): whether cinder ash was classifiable and taxable as coal ash at the lower rate applied by the Tribunal.

Analysis: The Tribunal had found as a fact that cinder ash and coal ash were treated as the same commodity in commercial parlance. That finding was supported by the nature of cinder as the burnt residue of coal and by the statutory rate applied to coal ash under the relevant provision. A pure factual finding on commercial identity was not shown to be perverse or warranting interference.

Conclusion: Cinder ash was correctly taxed as coal ash at 4 per cent.

Final Conclusion: No interference was called for with the Tribunal's findings on either freight or cinder ash, and the revision failed.

Ratio Decidendi: Where freight is payable by the purchaser under the contract and no overriding control order shifts that liability to the producer, the freight does not form part of the sale price; classification may also be sustained on the basis of commercial parlance where the factual finding is supported by the record.

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