Freight borne by the seller is includible in turnover, while arbitrary best judgment estimates can be reduced on weak factual assumptions.

Freight or truck hire incurred to bring coal from outside Uttar Pradesh was held includible in turnover where it was the seller's legal burden under the U.P. Coal Control Order, 1977 and formed part of the cost of supply, even if paid directly by the buyer to the transporter. The definition of turnover did not exclude such freight on these facts. On assessment, rejection of the books justified best judgment estimation, but arbitrary quantity assumptions and unsupported profit additions were modified. For one dealer, the 15-tonnes-per-truck estimate was found arbitrary and the disclosed quantity accepted; for other years, excessive turnover estimates were reduced on the available material.

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Issues: (i) Whether truck hire or freight paid for importing coal from outside Uttar Pradesh formed part of the dealers' turnover under the trade tax law and the U.P. Coal Control Order, 1977. (ii) Whether the turnover estimates made by the authorities for the relevant assessment years were arbitrary to the extent that they required modification.

Issue (i): Whether truck hire or freight paid for importing coal from outside Uttar Pradesh formed part of the dealers' turnover under the trade tax law and the U.P. Coal Control Order, 1977.

Analysis: The revisionists were licensed coal dealers under the U.P. Coal Control Order, 1977. The licence conditions required sale of coal by the licensee and regulated the permissible components of price, including handling charges. The record did not establish that the dealers were acting merely as commission agents for buyers or that the buyers had appointed them to procure coal on their behalf. The dealers had hired the trucks for transport of coal to their business premises and were legally obliged to bear that freight. The fact that the buyers may have paid the transporter directly did not change the character of the freight as part of the dealer's cost and of the aggregate amount for which the goods were supplied. The definition of turnover excluded freight only in the limited sense contemplated by the statute and did not exclude freight which was the seller's legal burden and was discharged by the buyer on the seller's behalf.

Conclusion: The freight or truck hire incurred for importing coal was includible in the dealers' turnover and the Tribunal's finding on that question was sustained.

Issue (ii): Whether the turnover estimates made by the authorities for the relevant assessment years were arbitrary to the extent that they required modification.

Analysis: The books of account had been rejected and best judgment assessment was therefore permissible. However, the estimated profit components for some years were found to be excessive and unsupported by any cogent basis, particularly having regard to coal being an essential and controlled commodity. For one dealer, the quantity estimate based on 15 tonnes per truck was held arbitrary and the actual disclosed quantity was accepted. For the other years, the Court interfered only to the extent of reducing excessive profit additions and fixing more reasonable turnover figures on the material available.

Conclusion: The turnover estimates were upheld in principle, but modified where the profit or quantity assumptions were found arbitrary; the revisions were thus partly allowed.

Final Conclusion: The legal position on freight was decided against the revisionists, but the assessments were revised downward wherever the estimated turnover was found to be excessive, resulting in partial relief overall.

Ratio Decidendi: Freight or truck hire that is the seller's legal burden and forms part of the cost of bringing goods to sale is includible in turnover even if paid directly by the buyer to the transporter, and best judgment estimates may be interfered with only where the quantity or profit assumptions are shown to be arbitrary or unsupported.

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