Sales tax valuation excludes free issue materials supplied by the buyer and incorporated into manufactured goods.

Free issue materials supplied by the buyer and incorporated in manufactured goods do not form part of the dealer's turnover under the Andhra Pradesh General Sales Tax Act, 1957, because sales tax is charged on the actual consideration received or receivable for the transfer of property in goods. The valuation approach applicable in excise law, which may account for manufacturing value additions, cannot be imported into sales tax assessment where the relevant measure is the real sale price. Accordingly, the value of such materials could not be added to turnover merely because they were used in the finished product, and the issue was answered against the Revenue.

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Issues: Whether, for the purpose of levy of sales tax under the Andhra Pradesh General Sales Tax Act, 1957, the value of free issue materials supplied by the buyer and incorporated in the manufactured goods forms part of the dealer's turnover and assessable sale price.

Analysis: The goods supplied free of cost by the buyer were not part of the amount actually received or receivable by the dealer. The relevant measure of tax under the Act is the actual consideration for the transfer of property in goods, i.e., the real sale price, and not any notional or deemed addition. The distinction between excise valuation principles and sales tax valuation was material, because excise law may take account of manufacturing value additions, whereas sales tax is levied on the agreed consideration for the sale. Accordingly, the value of free issue materials could not be included in turnover merely because those materials were incorporated in the finished sleepers.

Conclusion: The value of free issue materials does not form part of the dealer's turnover for sales tax purposes, and the question was answered in the negative and against the Revenue.

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