Court rules freight charges not part of sale price for tax; transportation services not taxable under CST Act.

The Court ruled in favor of the petitioner/assessee, setting aside the orders of the M.P. Commercial Tax Appeal Board, the appellate authority, and the Assessing Officer. The freight charges, when separately invoiced, were held not to form part of the sale price for tax purposes. Additionally, the Court determined that transportation services should not be taxed under the CST Act and that the Appellate Authority cannot exercise suo-motu revisional powers under Section 47 of the VAT Act. The decision in Goldie Glass Industries was found applicable to the case, pending the outcome of the SLA(C) before the Apex Court.

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Issues Involved:
1. Whether the freight charged separately from the buyer forms part of the sale price and if tax levied on the freight component is legally correct.
2. Whether the activity of transportation, being a service, can be taxed under the CST Act.
3. Whether the freight charges collected separately should be excluded from the sales turnover for the purpose of computing sales tax/VAT.
4. Whether the Appellate Authority can exercise power under Section 47 of the VAT Act while taking Suo Moto Revision of the Appellate order under Section 3A of the VAT Act.
5. Whether the mandates and interpretation held in Goldie Glass Industries vs. State of MP apply to the present case.

Summary:

Issue 1: Freight Charges as Part of Sale Price
The Court examined whether the freight charged separately from the buyer would fall part of the sale price and if the tax levied on the freight component is legally correct. The Orissa High Court in M/s Utkal Moulders vs. State of Orissa concluded that freight charges, when separately shown in the invoice, do not form part of the sale price. The freight charge for further transportation of the goods to the purchaser's site was not part of the sale price as per Section 2(h) of the CST Act. The Court found this reasoning applicable to the present case.

Issue 2: Taxability of Transportation Services
The Court addressed whether the activity of transportation, being a service, is taxable under the CST Act. It was argued that service tax and VAT are mutually exclusive, and transportation services should not be taxed under the CST Act. The Court referred to the Orissa High Court's decision, which supported the exclusion of freight charges from the taxable turnover.

Issue 3: Exclusion of Freight Charges from Sales Turnover
The Court considered whether the freight charges collected separately should be excluded from the sales turnover for computing sales tax/VAT. The Orissa High Court's decision in M/s Utkal Moulders held that freight charges, when separately invoiced, should not be included in the sale price. The Court found this applicable to the present case, supporting the exclusion of freight charges from the sales turnover.

Issue 4: Appellate Authority's Power under Section 47 of VAT Act
The Court examined whether the Appellate Authority can exercise power under Section 47 of the VAT Act while taking Suo Moto Revision of the Appellate order under Section 3A of the VAT Act. The decision in Goldie Glass Industries vs. State of MP clarified that the order passed by the Deputy Commissioner of Commercial Tax (Appeal) is final and not amenable to suo-motu revisional powers under Section 47 of the Act. The Court found this reasoning applicable to the present case.

Issue 5: Applicability of Goldie Glass Industries Judgment
The Court considered whether the mandates and interpretation held in Goldie Glass Industries vs. State of MP apply to the present case. Despite the pending SLA(C) No.16541/2018 before the Apex Court, no stay had been granted against the decision. Therefore, the decision in Goldie Glass Industries was applicable to the present case.

Conclusion:
The Court answered all five substantial questions of law in favor of the petitioner/assessee. The orders of the M.P. Commercial Tax Appeal Board, the appellate authority, and the Assessing Officer were set aside. However, the execution of the order is subject to the outcome of the pending SLA(C) and any future orders by the Apex Court regarding the Orissa High Court's decision in M/s Utkal Moulders' case. No order as to costs.

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