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Issues: Whether freight separately shown in the sale invoice was includible in the sale price and taxable turnover, or was deductible under the definition of sale price.
Analysis: The bid and purchase order required separate quotation of freight, but the contract also showed that delivery was deemed complete on inspection at the supplier's factory. In that setting, the subsequent transportation to the purchaser's site was not part of the consideration for the sale. Section 2(h) of the Central Sales Tax Act, 1956 excludes the cost of freight or delivery when such cost is separately charged. The Tribunal's approach overlooked the contractual clauses fixing the place and stage of delivery and wrongly treated the uniform freight per unit as part of the sale price. The principle applied in the cited decisions was that separately charged freight does not enter sale price merely because it is shown at a uniform rate per unit.
Conclusion: Freight separately charged in the invoices was not part of the sale price and had to be excluded from taxable turnover. The answer to the question was in the negative, in favour of the assessee and against the Department.
Ratio Decidendi: Where delivery is completed at the seller's premises under the contract and freight is separately charged for onward transport, such freight is excluded from sale price under section 2(h) of the Central Sales Tax Act, 1956.
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