Freight deduction from taxable turnover fails where transport rebate is built into the sale price and not separately charged.

Deduction of freight from taxable turnover under the Tamil Nadu General Sales Tax Act, 1959 depended on rule 6(c) of the Tamil Nadu General Sales Tax Rules, 1959 read with section 2(p): freight had to be separately specified and charged, and it must not be embedded in the sale price. On the facts, the invoice and price list showed an f.o.r. sale basis with transport rebate built into the pricing structure, and the buyer paid only the catalogue price less rebate. The agreement and invoice terms did not show that freight was kept outside the price of the goods, so the freight charges were not deductible and formed part of taxable turnover.

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Issues: Whether the freight charges or transport rebate claimed by the assessee were deductible from taxable turnover under the Tamil Nadu General Sales Tax Act, 1959.

Analysis: Deduction of freight from taxable turnover was held to depend on the statutory scheme in rule 6(c) of the Tamil Nadu General Sales Tax Rules, 1959, read with section 2(p) of the Tamil Nadu General Sales Tax Act, 1959. The governing requirement was that freight must be specified and charged separately by the dealer and must not have been included in the price of the goods sold. On the facts, the invoice and price list showed that the sale price was on f.o.r. basis with transport rebate built into the pricing structure, and the buyer paid only the catalogue price less the rebate. The agreement and invoice terms did not establish that the freight component was kept outside the price of the goods sold.

Conclusion: The freight charges were not deductible from taxable turnover and were liable to be included in the turnover.

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