Kerala High Court: Freight not taxable if not claimed as deduction. Revision allowed for assessing added freight. The High Court of Kerala ruled in favor of the petitioner, emphasizing that unless freight is claimed as a deduction from the taxable turnover, there is ...
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Kerala High Court: Freight not taxable if not claimed as deduction. Revision allowed for assessing added freight.
The High Court of Kerala ruled in favor of the petitioner, emphasizing that unless freight is claimed as a deduction from the taxable turnover, there is no need to show it separately. The Court held that if the freight was given as a rebate by the assessee, there was no basis for adding it to the taxable turnover. The Court allowed the revision, setting aside the Tribunal's order, and remanded the matter to the assessing officer for verification of invoices and accounts to revise the assessment by reducing added freight if included in the taxable turnover returned.
Issues: 1. Whether the addition of freight to the taxable turnover is justified or not.
Analysis: The judgment delivered by the High Court of Kerala revolved around the issue of the justification of adding freight to the taxable turnover. The petitioner argued that the addition of freight was duplicative as it formed part of the price on which tax was collected and remitted. The petitioner relied on an invoice from the Tribunal's order, showing that the assessee had charged value-added tax on the sale price reduced by discount and had also shown a rebate of freight in the invoice. The Government Pleader contended that unless freight is claimed as a deduction from the taxable turnover, there is no need to show it separately. The Court emphasized that if the facts presented by the assessee were accurate, there was no basis for adding freight, especially if it was given as a rebate by the assessee, regardless of whether it represented the actual freight cost for the goods. The taxable turnover of the assessee should be the sale price reduced by the discount if freight was not claimed as a deduction. The Department was deemed to have no authority to question the incentives provided by the assessee to dealers, including freight. The Court allowed the revision, setting aside the Tribunal's order, and remanded the matter to the assessing officer for verification of invoices and accounts to revise the assessment by reducing added freight if it was included in the taxable turnover returned.
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