Freight charges included in sale price when delivery completes the sale; reassessment upheld on audit-based escaped turnover

Freight charges were treated as part of the sale price and taxable turnover where the contract required door delivery, the seller remained responsible until delivery at the purchaser's premises, and freight was included in the landed cost. The separate showing of freight did not exclude it from tax because the sale was completed only on delivery and the freight component formed an integral part of the consideration. Reassessment was also upheld because the original assessment had not formed any view on freight taxability, and audit information supplied reason to believe that turnover had escaped assessment; this was not a mere change of opinion.

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Issues: (i) Whether freight charges payable under the contract formed part of the sale price and taxable turnover under the Chhattisgarh Vanijyik Kar Adhiniyam, 1994. (ii) Whether reassessment could be initiated on the basis of audit information without it amounting to a mere change of opinion.

Issue (i): Whether freight charges payable under the contract formed part of the sale price and taxable turnover under the Chhattisgarh Vanijyik Kar Adhiniyam, 1994.

Analysis: The contractual terms showed door delivery, payment on weighment at the purchaser's premises, and inclusion of freight in the landed cost. Where the sale is completed only at destination and the seller remains responsible for transportation until delivery, freight charged separately still forms part of the consideration for sale. The exclusion for separately charged freight applies only where the sale is complete independently of delivery arrangements. On the contract in question, freight was an integral component of the sale price and therefore of taxable turnover.

Conclusion: The issue was decided against the assessee and in favour of the Revenue.

Issue (ii): Whether reassessment could be initiated on the basis of audit information without it amounting to a mere change of opinion.

Analysis: No opinion on the taxability of freight had been formed in the original assessment. The audit objection brought the escaped turnover to the assessing authority's notice, furnishing information on which the authority recorded reason to believe that turnover had escaped assessment. Since the original assessment had not decided the freight issue, the proceedings were not based on a mere change of opinion. Reassessment under the relevant provision was therefore valid.

Conclusion: The issue was decided against the assessee and in favour of the Revenue.

Final Conclusion: The reassessment proceedings and the view that freight formed part of the taxable sale consideration were upheld, leaving no ground for interference in the appeals.

Ratio Decidendi: Where a sale under the contract is completed only on door delivery and the price is settled on delivery at the purchaser's premises, separately shown freight remains part of the sale price; reassessment is valid where escaped turnover is noticed through information and the original assessment had not formed any opinion on the issue.

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