F.O.R. destination freight deductions exclude freight from taxable turnover when the seller's liability ends on delivery to the carrier.

Under an F.O.R. destination contract, freight deducted from invoices was treated as outside taxable turnover where the seller's responsibility ended on delivery to the carrier, the freight was not payable by the seller, and no freight amount was received from customers. The article also notes that rejection of the books of account for the assessment year in question was held unwarranted because the adverse inference from one chalan discrepancy was unsupported by the record, with the relevant bill issued and the entry made in the books. The revisions therefore failed on both issues, and the Tribunal's findings were left undisturbed.

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Issues: (i) Whether freight deducted from bills under the F.O.R. destination arrangement formed part of the taxable turnover. (ii) Whether rejection of the books of account for the assessment year 1987-88 was justified.

Issue (i): Whether freight deducted from bills under the F.O.R. destination arrangement formed part of the taxable turnover.

Analysis: The contract terms showed that the seller's responsibility ended on handing over the goods to the carrier and that the freight was not payable by the seller. The bills reflected the F.O.R. destination price less freight, and the assessee had not received any freight amount from the customers. On these facts, the freight component was not part of the sale price or turnover. The conclusion was supported by the principle that where property and risk pass to the buyer on delivery to the carrier under such a contract, freight deducted from the invoice does not enter the taxable turnover.

Conclusion: The freight deducted from the bills did not form part of the taxable turnover, and the finding was in favour of the assessee.

Issue (ii): Whether rejection of the books of account for the assessment year 1987-88 was justified.

Analysis: The adverse inference drawn from the discrepancy in chalan No. 238 was found to be erroneous, since the related bill had been issued and the relevant entry was made in the books of account. The finding on the books was a factual determination based on the record and no error warranting interference was shown.

Conclusion: The rejection of the books of account was not justified, and the finding was in favour of the assessee.

Final Conclusion: The revisions failed, as no interference was called for with the Tribunal's conclusions on either the freight component or the books of account.

Ratio Decidendi: Under an F.O.R. destination contract, where the seller's responsibility ends on delivery to the carrier and freight is not borne by the purchaser, the freight deducted from the invoice does not form part of the taxable turnover; concurrent factual findings on books of account are not to be disturbed absent demonstrated error.

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