TaxTMI 
TaxTMI 
TaxTMI 
1989 (8) TMI 311
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....tio of the Hyderabad judgment is applicable to the sales transactions in these cases? The factual matrix giving rise to these questions may be viewed: M/s. Janki Dass and Co., Sonepat, i.e., the respondent, is a registered dealer under the Punjab General Sales Tax Act, 1948, as applicable to the State of Haryana at the material time and the Central Sales Tax Act, 1956. The respondent is the sole distributor of M/s. Atlas Cycle Industries Ltd., Sonepat, all over the country. The Assessing Authority while framing assessment for the year 1964-65, under the State Sales Tax Act, vide his order dated July 12, 1973, held that the amount of freight charged on the goods and later on reduced from the bill was a part of the turnover of the dealer and the same was liable to sales tax under both the Acts. Similarly, while framing assessment for the assessment year 1965-66, the Assessing Authority levied tax on the freight amount included in the price of goods in the first instance and later on reduced from the bill under the State Sales Tax Act and the Central Sales Tax Act, vide order dated August 19, 1973. Aggrieved by these orders, the respondent went up in appeal before the Deputy Excise....
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....red to us under section 42(1) of the Act for our opinion. It has been urged on behalf of the State of Haryana that the terms and conditions in the price list in the present cases are substantially different from the terms and conditions in the contract in Hyderabad Asbestos Cement Products Ltd. case [1969] 24 STC 487 (SC). The contract in this case was essentially an f.o.r. destination and in such contracts it is the responsibility of the seller to send the goods up to the destination and, for that reason, the amount of freight up to the destination necessarily forms a component of the price charged. In such a case, the freight paid at the destination by the purchaser, for which rebate is given in the bill, is actually on behalf of the seller and the payment is made in pursuance of the agreement between the seller and the buyer and is only for the sake of convenience of the parties concerned. Terms of an f.o.r. contract necessarily imply that the parties intended that freight up to destination is payable by the seller and in fact a part and parcel of the gross price charged when the goods are sent. The language of clauses (4) and (16) is susceptible to only one construction that i....
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.... the stockists otherwise at the absolute discretion shall be the current general gross of the Co. The railway receipt shall list price charged by the company, be freight "to pay". The railway free on rail, less such discount as freight will be deducted from the may be fixed by the company from invoice and will be payable by the time to time. dealer at destination. (II) Form of order (16) ........the date of delivery We request you to despatch on shall mean the date of the railway our account and risk by goods train receipt and in the case of consignto.........the whole or any portion of ments sold free on rail destination, the undermentioned goods at the the railway freight shall be prices ruling at the time of despatch. nevertheless payable by the We authorise you to draw on us by stockists at the destinations and the V.P.P. or through your bank for the amount of freight shown on the full amount of the invoice, includrailway receipt shall be deducted ing usual charges and such draft, we from the invoice of the company. bind ourselves to pay on presentation. RR/GR should be made out on "to pay" basis and the freight be adjusted in the invoice. It is clear from the definition of "s....
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....le of the goods was the invoice amount less the freight; (ii) that the form in which the invoice was made out was not determinative of the contract between the company and its customers. If, apprehending that it may have to pay sales tax on the freight, the company collected sales tax on the freight, the true nature of the contract between the company and the purchasers could not on that account be altered. That the company might be liable to refund the amount of excess sales tax to its purchasers was a matter between the company and the purchasers and the State could not seek to levy tax on railway freight if it was not made part of the price." This very view has been reiterated by the Supreme Court in Hindustan Sugar Mills Ltd. v. State of Rajasthan [1979] 43 STC 13. It was observed by their Lordships: "There may be a case where the contract of sale may not be f.o.r. destination railway station, but the price alone may be so. Where such is the case, the contract does not have all the incidents of a f.o.r. destination railway station contract, but merely the price is stipulated on that basis. The terms of such a contract may provide that the delivery shall be complete when the ....
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....ver and Assessment Rules, which provided that in determining the net turnover of a dealer, he shall be entitled to a deduction of 'all amounts falling under the following two heads, when specified and charged for by the dealer separately, without including them in the price of the goods sold: (i) freight; (ii) .........'. This Court held that the deduction claimed was not permissible since the conditions for the applicability of rule 5(1)(g) were not satisfied. It was pointed out that it was clear from the contents of the specimen invoice produced by the appellant that 'the appellant has charged a price inclusive of the railway freight and would therefore be outside the terms of rule 5(1)(g), which requires that in order to enable a dealer to claim the deduction it should be charged for separately and not included in the price of goods sold. The conditions of the rule not having been complied with, the appellant was not entitled to the deduction in respect of freight'. Here the freight was payable by the appellant because the price was inclusive of the freight and there was no stipulation in the contract, as in Hyderabad Asbestos Cement Company's case [1969] 24 STC 487 (SC), that t....