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of <h1>Court Upholds Tax Decisions on Railway Freight & Cinder Ash</h1> <h3>Commissioner of Sales Tax, UP., Lucknow Versus Modi Industries</h3> Commissioner of Sales Tax, UP., Lucknow Versus Modi Industries - [1997] 105 STC 436 (All) Issues:1. Taxability of railway freight2. Rate of tax on cinder ashTaxability of Railway Freight:The case involved a dispute regarding the taxability of railway freight and the rate of tax on cinder ash for the assessment year 1976-77. The assessing authority initially held that tax was payable on the railway freight and imposed tax at 8% on cinder ash. The appellate authority partially allowed the appeal, excluding the amount of railway freight from the taxable turnover but upholding the tax on cinder ash. Subsequently, the Tribunal upheld the tax liability on railway freight and determined that cinder ash is taxable as coal ash at a rate of 4%. The Commissioner of Sales Tax filed a revision challenging these conclusions.In determining the taxability of railway freight, the Court referred to the case of Hindustan Sugar Mills Ltd. v. State of Rajasthan, emphasizing that the control order's stipulations regarding freight payment prevail over contractual terms. The Court analyzed the agreement between the parties and concluded that since the freight was initially included in the sale price but later deducted, it should not be considered part of the turnover. Citing previous cases, including Commissioner of Sales Tax v. Modi Industries, the Court held that the freight paid by the producer should not be included in the turnover.Rate of Tax on Cinder Ash:Regarding the rate of tax on cinder ash, the Court rejected the argument that cinder ash is different from coal ash, citing Mahabir Singh Ram Babu v. Assistant Sales Tax Officer, Firozabad. The Court upheld the Tribunal's finding that cinder ash and coal ash are considered the same in commercial terms, despite any chemical differences. The Court concluded that the taxability of cinder ash as coal ash at 4% should not be disturbed.In summary, the Court dismissed the revision, upholding the Tribunal's decisions on both the taxability of railway freight and the rate of tax on cinder ash. The parties were directed to bear their own costs.
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