TaxTMI 
TaxTMI 
2019 (12) TMI 800
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....rnover as defined in Section 2(p) of the Tamil Nadu General Sales Tax Act, 1959 (in short 'TNGST Act'). 2.The relevant observations of the learned Tribunal in the impugned order are quoted below for ready reference. "As indicated earlier, in the present cases before us, the terms as found in the contract clearly suggest that freight has been realized by the assessee only in pursuance of the transfer of property in the goods at the buyer's place of business after weightment and delivery of gypsum of good quality. In this connection, it is relevant to refer to the recent decision of the Madras High Court in W.P.No.21298 of 2001 dated 20th November 2001 in the case of "M/s.India Meters Limited Vs. State of Tamil Nadu". In that case, the assessee supplied electrical meters manufactured by it to the State Electricity Board. The contract provided that the ownership of the goods will remain with the supplier till they are delivered at the destination station in good and acceptable condition as per the despatch instructions. Thus, the contract contemplated that the transfer of title to the goods was to take place only on delivery of the goods at the custome....
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.... separate bargain for the freight charges which was fixed between the parties at Rs. 120 per Metric Tonne, besides the price of the Gypsum sold by the petitioner/Assessee at Rs. 137.15 per Tonne of the Gypsum and also Rs. 9.80 for unloading and stacking charges at Ariyalur Factory Site of the customer, therefore, such freight charges or delivery charges could not be treated as part of the taxable turnover of the Assessee seller. 4.On the other hand, the learned counsel for the Revenue Mr.Mohammed Shaffiq submitted that since the contract of sale is admittedly "F.O.R. Destination" and the sale concludes only at the business place of buyer viz., Tamil Nadu Cement Corporation at Ariyalur, therefore, all expenses incurred prior to transfer of property in the goods from Assessee to the purchaser company, the same will be pre-sale expenses and will be part of taxable turnover and merely because the price of the goods is bifurcated by the Assessee or by an agreement between the Assessee and the purchaser, that cannot escape from the definition of taxable turnover under the TNGST Act. He submitted that the controversy is covered by a Division Bench decision of this Court in the case ....
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....t and claimed under Rule 6(c) of the TNGST Rules that the freight charges were not part of taxable turnover. Negativing the said contention of the Assessee, the Division Bench of this Court held as under: "12. It is no doubt true that Rule 6(c) of the Rules permits deduction of the cost on freight while determining the taxable turnover. However, that provision must be read in the context of the definition of "turnover" as also the definition of "sale" in Sections 2(r) and 2(n), respectively, of the Act. "Turnover" is defined in the Act, inter alia, to mean "the aggregate amount for which goods are bought or sold, or delivered or supplied or otherwise disposed of in any of the ways referred to in Clause (n)....". "Sale" is defined in Section 2(n), inter alia, as meaning "every transfer of the property in goods (other than by way of a mortgage, hypothecation, charge or pledge) by one person to another in the course of business for cash, deferred payment or other valuable consideration...". The definition goes on to include a number of other transactions also within that definition of "sale". The turnover of an assessee/dealer would include the aggregate amount for which good....
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....he transfer of title to the goods as provided in clause 10 read with clause 6 of the agreement was to be at the place of delivery in the premises of the buyer. Though the contract mentioned the price of the electric meters as ex-factory price, the delivery was not at the factory gate. The specification of what the price would be at the factory gate, therefore, does not in the context of the term subject to which the sale was agreed to be effected, render it the point or the location at which the sale can be said to have been completed. Had the sale been completed at the factory gate, the expenses incurred thereafter by way of freight charges would then be capable of being regarded as expenditure which was in the nature of a post-sale expenditure and, if paid by the seller, regarded as an amount paid by such seller on behalf of the buyer. 16. Both the aforementioned cases emphasise the fact that expenses incurred by a seller on freight would be part of the sale price, as until the transfer of title to the goods takes place that being the only way made in which sale could have taken place prior to the introduction of clause 29A of Article 366 of the Constitution. ....