TaxTMI 
TaxTMI 
2016 (12) TMI 1023
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.... For Respondent/State : Shri UNS Deo, Govt. Advocate. For Respondent/BSP : Dr. N.K. Shukla, Sr. Advocate with Mr. Shailendra Shukla & Miss Priya Mishra, Shri Ashish Shrivastava and Shri Animesh Verma and Shri Kasif Shakeel, Advocates. ORDER 1. In the present batch of writ petitions, the seminal issue falling for consideration is whether the freight charges for transporting dolomite by the petitioners to the respondent/Bhilai Steel Plant (for short 'the BSP') would be a part of sale price and hence exigible to commercial tax or not. 2. Facts of the case, briefly stated, are that the petitioners are carrying on business of selling dolomite, quartzite, runner sand and silica. They have entered into an agreement with the BSP for sale of dolomite, however, as per the petitioners, they have entered into separate contract concerning freight charges. While filing return for the relevant assessment years (assessment years being different in some writ petitions), the petitioners did not include the freight charges in the taxable turnover of the sale price impliedly seeking exemption or deduction. The Assessing Officer (AO) completed the assessment proceeding without inc....
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....ax, M.P. (1987) 65 STC 20, Shree Rani Sati Mining Traders Vs. Sales Tax Officer, Rourkela Circle, Uditnagar and Others (1983) 53 STC 322, Indian Explosives Ltd. And Another Vs. The State of Bihar and Others (1986) 62 STC 61, Commissioner, Trade Tax, U.P., Lucknow Vs. Indian Aluminium Cable Co. Ltd. (1999) 115 STC 444. No other argument has been raised by the petitioners. 4. Per contra, Shri UNS Deo, learned State Counsel would vehemently oppose the submission on contention that the issue is settled by the Supreme Court in the matters of Black Diamond Beverages and Another Vs. Commercial Tax Officer, Central Section, Assessment Wing, Calcutta and Others (1998) 1 SCC 458 and Hindustan Sugar Mills Vs. State of Rajasthan & Others (1978) 4 SCC 271 wherein it is held that freight charges are included in the sale price, therefore, the Writ Petitions deserve to be dismissed. 5. Dr. N.K. Shukla, learned Senior Advocate, Shri Ashish Shrivastava and Shri Kasif Shakeel, learned counsel appearing for the BSP would submit that under clause-5 of the agreement the BSP would be liable to pay any additional amount only when there is escalation in tax and not in cases of re-assessment as a resu....
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.... seller including loading, unloading into bunkers and proper stacking of the material in the bed. The transportation charges shall be paid to the seller alongwith the bills and will not be paid to the transporter directly in any case. In case of despatch by Rail, freight to be pre-paid by Seller and billed separately for reimbursement." 8. The above quoted terms of the agreement would manifest that the consignee is AGM, In-charge (Raw Materials), SAIL, BHILAI STEEL PLANT, BHILAI. The quantity of dolomite mentioned in clause-2 of the agreement is to be weighed at Bhilai Steel Plant weigh bridge which shall be final for the purposes of payment. However, in case of despatch by Rail, if wagons escape weighment at BSP or at both ends, RR weight shall be final for payment. Sampling and Analysis are to be done at BSP and shall be final for all purposes with further stipulation that random samples shall be collected before unloading from the trucks. The break-up of landed cost per tonne has been provided in clause-13 which includes freight by road on pre-paid door delivery basis. The landed cost is thus inclusive of freight by road. The said landed cost has been made firm under clause-1....
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....on for the sale of any goods less any sum allowed as case discount according to ordinary trade practice but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before delivery thereof other than the cost of freight or delivery or the cost of installation when such cost is separately charged; Explanation.- Where goods are sold on hire purchase or any system of payment by instalments, the sale price of such goods shall be exclusive of insurance charges, interest and hire charges and such other charges as may be prescribed." 15. In para-7 of the judgment in the matter of Hindustan Sugar Mills (Supra), the Supreme Court reproduced the definition of sale price in the Rajasthan Sales Tax Act. The said para-7 containing definition of sale price in the Rajasthan Sales Tax Act is reproduced hereunder:- "7. Though we are concerned in these appeals with assessments made under both Rajasthan Sales Tax Act, 1954 and Central Sales Tax Act, 1956, it would be sufficient to refer only to the provisions of the Rajasthan Sales Tax Act, 1954, since the material provisions of both the Acts are identical. Section 3 of the Rajasthan ....
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....he balance would be realised by the assessee. There would be no question of the assessee realising the amount of freight from the purchaser because the purchaser would have paid the freight in discharge of his own liability and the assessee would have no claim to recover it from the purchaser. Then how would the terms of Clause 9, proviso to that clause and Clause 11 of the Control Order be satisfied? How would it be possible to give effect to Clause9 if what is realised by the assessee is not the F.O.R. destination railway station price but that price less the amount of freight? How would the assessee claim to be entitled to be reimbursed under the proviso to Clause 9 if he has not incurred any expenditure on the freight? The entire statutory scheme would become unworkable. The scheme of the Control Order clearly proceeds on the basis that the freight is payable by the producer and he recovers it from the purchaser as part of the F.O.R. destination railway station price. The provision in the contract that the delivery to the purchaser shall be complete as soon as the goods are put on rail and payment of the freight shall be the responsibility of the purchaser is wholly inconsisten....
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....are included in the sale price of the goods. Even if freight and insurance charges are shown separately in the bill and added to the price of the goods, the character of payment would remain the same. Since freight and insurance charges represent expenditure incurred by the dealer in making the goods available to the purchaser at the place of sale, they would constitute an addition to the cost of the goods to the dealer and would clearly be a component of the price to the purchaser. The amount of freight and insurance charges would be payable by the purchaser not under any statutory or other liability but as part of the consideration for the sale of the goods and would therefore, form part of the sale price. 38. We may reiterate that in this case, there was a specific contract entered into by and between the parties and according to the relevant clause of the contract, the ownership of the goods will remain with the supplier till they are delivered at the destination station. In view of the clear clause of the contract, no other view is possible. In our considered view, the High Court was totally justified in affirming the judgment of the Tribunal. No interference is calle....
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....industan Sugar Mills (Supra) to hold that first part of the definition would apply in the present case also and the exclusion clause is irrelevant and cannot be called in aid by the petitioners. 22. In Hindustan Sugar Mills (Supra), the Supreme Court has further observed that even if the exclusion clause were read as an exception to the first part of the definition which, according to the Supreme Court, cannot be done, it cannot avail the assessee. It is only where the cost of freight is separately charged that it would fall within the exclusion clause and in the context of the definition as a whole, it is obvious that the expression "......cost of freight.......is separately charged" is used in contradistinction to a case where the cost of freight is not separately charged but is included in the price. It is not intended to apply to a case where the cost of freight is part of the price but the dealer chooses to split up the price and claim the amount of freight as a separate item in the invoice. Where the cost of freight is part of the price, it would fall within the first part of the definition and to such a case, the exclusion clause in the second part have no application. Th....