Madras High Court
Ram Oxygen Private Limited vs Joint Commissioner (Smr) Of Commercial ... on 29 September, 1997
Author: R. Jayasimha Babu
Bench: R. Jayasimha Babu
ORDER Jayasimha Babu, J.
1. The assessee's grievance is against the order of the Joint Commissioner who has suo motu revised the order of the Appellate Assistant Commissioner in respect of the petitioner's assessment for the year 1986-87 and has held that the freight handling and incidental charges though billed separately for the price of the goods sold for factory are liable to be taxed.
2. Having perused the orders of the Joint Commissioner, and the records produced by the assessee which included the terms of the contract between the assessee and its customers, we are clearly of the view that the impugned order cannot be sustained.
3. The industrial gas sold by the petitioner is sold by it in cylinders which are to be returned by the customers. The price of the gas sold as Rs. 3 per cubic metre. The cylinder is not the subject-matter of the sale. It is merely a container. The other charges required to be paid by the customer are the excise duty and sales tax on that price of Rs. 3 per cubic metre.
4. It is not the term of the contract that the goods must be delivered by the assessee at the premises of the customer. Such transportation had been undertaken by the assessee at the request of the customer and separate supplementary bills for the freight and other incidental expenses were raised.
5. The fact that there are two separate bills, one for the value of the goods sold, and the other for freight charges and handling charges, is not in dispute. It is surprising as to how the Joint Commissioner on these facts reached the conclusion that he did namely, that the cost of freight and handling charges forms part of the sale price for purpose of Central Sales Tax Act.
6. The Joint Commissioner has extracted a portion of the decision of this Court reported in [1976] 38 STC 122 (State of Tamil Nadu v. Parry and Company). It was held therein that even where freight and handling charges are billed separately, it could still form part of the sale price for the purposes of the State Act. The definition of "sale price" in the State Act is that the same as in the Central Act. The court on the facts of that case had found that the parties had in fact intended to sell the goods for place of delivery and not the place of despatch, and that the purchaser in that case was not concerned as to where the goods came from, the bills show only charges at a uniform rate per metric tonne and was not related to the actual freight paid with reference to the consignment. It was in that context the court held that such expenses are presale expenses.
7. That decision is not of assistance in deciding the present case. The Central Sales Tax Act, 1956, has its own definition of "sale price" which is as under :
"2(h) 'sale price' means the amounts payable to a dealer as consideration for the sale of any goods, less any sum allowed as cash discount according to the practice normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof other than the cost of freight or delivery or the cost of installation in cases where such cost is separately charged."
8. It is clear from a reading of this definition that cost of freight or delivery or cost of installation is excluded from the sale price where they are separately charged. It has been found by the Joint Commissioner that the assessee had in fact separately charged for the amounts of freight and delivery. What has been excluded in the definition itself cannot be made a part of the sale price, on the basis of the definition of "sale price" in another enactment. Moreover, the transportation, in this case was undertaken on behalf of the buyer.
9. The Joint Commissioner was clearly in error in holding that the freight and other incidental charges, though billed separately, were to be included in the turnover of the petitioner for assessment, under the Central Sales Tax Act, 1956. The impugned order of the Joint Commissioner is therefore set aside and the appeal is allowed.
10. Appeal allowed.