Rajasthan High Court - Jaipur
M/S Indian Oil Corporation Limited vs The Assistant Commissioner on 20 March, 2015
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR (1) SB Sales Tax Revision Petition No.1/2011 M/s Indian Oil Corporation Limited Vs. The Assistant Commissioner, Commercial Taxes, Special Circle, Rajasthan, Jaipur. (2) SB Sales Tax Revision Petition No.39/2013 M/s Indian Oil Corporation Ltd. Vs. Asstt. Commissioner, Anti Evasion, Rajasthan-I, Jaipur (3) SB Sales Tax Revision Petition No.40/2013 M/s Indian Oil Corporation Ltd. Vs. Asstt. Commissioner, Anti Evasion, Rajasthan-I, Jaipur (4) SB Sales Tax Revision Petition No.41/2013 M/s Indian Oil Corporation Ltd. Vs. Asstt. Commissioner, Anti Evasion, Rajasthan-I, Jaipur (5) SB Sales Tax Revision Petition No.43/2013 M/s Indian Oil Corporation Ltd. Vs. Asstt. Commissioner, Anti Evasion, Rajasthan-I, Jaipur Judgment reserved on 20th January, 2015 Judgment pronounced on 20th March, 2015 PRESENT HON'BLE MR. JUSTICE J.K. RANKA Mr. TC Jain ] Mr. Alkesh Sharma ], counsel for the petitioner. Ms. Tanvi Sahai on behalf of Mr. RB Mathur, counsel for the respondent.
Reportable
1. These five sales tax revision petitions are directed against orders of the Rajasthan Tax Board dt.12/10/2009, 12/10/2012, 12/10/2012, 12/10/2012 and 12/10/2012 respectively relating to Assessment Year 1999-2000, 2006-07, 2007-08, 2008-09 and 2009-10 respectively. Since the facts are identical in all the petitions, therefore, for the sake of convenience, the same are being decided by this common order.
2. Brief facts are that the petitioner is an Oil Company and is a Public Sector Undertaking of the Union of India. During the year under reference, the petitioner-assessee sold diesel to the Railways. The dispute revolves on a short point about the diesel being delivered by Road through containers by the petitioner-assessee to the Railways at the delivery point and whether the freight should be included as part of the sales turnover or not. While the mode of transport was either through Railways or by road but in so far as the mode through Railways is concerned, there is no dispute. The dispute noticed above and raised by the respondent-Revenue finds support and all the three authorities in unison have come to the conclusion that in so far as the freight by road is concerned, it forms part of the sales turnover for the purposes of levy of sales tax and freight is required to be included in the sales turnover and thus sales tax is required to be levied.
3. The Assessing Officer (for short, 'AO'), after analyzing the evidence on record and the agreements entered into by and between the petitioner-assessee and the Railways, came to the conclusion that freight, being part of the bill (invoice), is required to be added while levying sales tax. However, contention of the petitioner-assessee all throughout is that freight is entirely different and is separately reimbursable by the Railways and thus it cannot be added for the purposes of levy of sales tax.
4. Dissatisfied with the aforesaid finding and addition thereon, the matter was carried in appeal before the Deputy Commissioner (Appeals) (for short, 'DC(A)') by the petitioner-assessee and the DC(A) came to the conclusion that under Section 2(36) of the Rajasthan Sales Tax Act (for short, 'RST Act'), the petitioner-assessee was unable to satisfy that the freight charges were separately reimbursed, the freight was part of the bill amount and accordingly dismissed the appeal.
5. The matter was further carried in appeal by the petitioner-assessee before the Rajasthan Tax Board (for short, 'Tax Board'). The Tax Board also, after analyzing the material placed on record, the clauses of the agreements and the authorities cited before it, sustained claim of the respondent-Revenue in so far as the freight is concerned. However, in so far as penalty under Section 65 is concerned, it was deleted.
6. Ld. counsel for the petitioner contended that on perusing the terms and conditions of the agreement, which has been placed on record by the petitioner-assessee, reading of Section 2(36) of the Rajasthan Value Added Tax Act, 2003 (for short, RVAT Act') and terms of delivery goes to show that freight was reimbursable by the Railways separately. Counsel further contended that since the petitioner-assessee does not have its own containers to carry diesel for delivery at the destination, therefore, it hired services of containers from container owners on cost basis which was paid to the transporters. Counsel drew attention of this Court to the terms of contract and in particular the terms of delivery in the agreement. It was contended that the delivery of goods was at selling point and that the petitioner-assessee was required to send the goods (diesel) to various places. He contended that the terms and conditions with regard to transportation by road specified that supplies made in trucks/tank lorries from refinery/MI/pipeline, Taps/Depot gates shall be charged as per actual. Highlighting the terms and conditions, he further laid stress that as per Clause 14 of the agreement, it specified that the dispatches will be made freight prepaid basis and the price payable will be normal MI/refinery/MI/Pipeline Tap off point to the destination. It further transpired that the transport risk/insurance was entirely on the assessee and it had to bear other expenses which was reimbursable. He further contended that Clause 12(b) of the agreement specifically stated that other elements like freight etc. will be extra. He also drew attention of this Court to Clause 16.3 of the agreement which clearly specifies that the reimbursement of freight will be on actual road freight or the freight rate as per Industry rate whichever is lower. Counsel stressed that on conjoint reading of the aforesaid clauses, it goes to show that the freight was reimbursable separately and could not be part of the sale transaction and thus the lower authorities have grossly erred in adding the freight as part of the turnover. In support of the said contention, counsel relied upon the judgments rendered in the case of Vinod Coal Syndicate Vs. Commissioner of Sales Tax : (1989) 73 STC 317 (SC); Board of Revenue (Taxes), Kerala Vs. K.P. Moideenkutty (Decd.): (1993) 90 STC 36 (SC); Hyderabad Asbestos Cement Products Ltd. Vs. State of Andhra Pradesh: (1969) 24 STC 487 (SC); Hindustan Sugar Mills Ltd. Vs. State of Raj. & ors.: (1979) 43 STC 13(SC); Assistant Commissioner Vs. Ajanta Soya Limited: (2007) 8 VAT Reporter 205; State of Karnataka and another Vs. Bangalore Soft Drinks Pvt. Ltd.: (2000) 117 STC 413 (SC); Commercial Taxes Officer, Jodhpur Vs. Indian Rayon & Industries Ltd.: [2009] 26 VST 299 (Raj.) and M/s Mewar Khaniz Udyog Vs. Commercial Taxes Officer: 11 STO 1994 (Rajasthan).
7. Per-contra, ld. counsel for the respondent-Revenue contended that a reading of Section 2(36) of the RVAT Act, as a whole, would read that the freight is required to be considered as part of the sales turnover. She contended that the freight was included in the bill and therefore, once the freight was part of the bill amount itself, then there was no occasion of claiming that freight is not part of sales turnover and that freight was reimbursable separately. She contended that there is only one agreement, one bill and no evidence has been placed on record by the petitioner-assessee that freight was separately paid by the Railways in terms of the agreement, if any. She further contended that the judgments relied upon by counsel for the petitioner-assessee are distinguishable on facts and submits that the judgments rendered by the Hon'ble Apex Court in the case of Hindusthan Sugar Mills Vs. State of Rajasthan & ors.: AIR 1978 (SC) 1496 and India Meters Limited Vs. State of Tamil Nadu: 2010 (9) UJ 4287 supports the claim of the respondent-Revenue and thus she pleaded that the Tax Board, after analyzing the judgments, has decided the controversy correctly and strongly supported the judgment of the Tax Board.
8. The controversy in brief, as has been noticed earlier, is as to whether freight is part of the sales turnover or not is a mute question to be considered in the matter.
9. Admittedly, in so far as the freight by rail transport is concerned, there is no dispute but the dispute is with reference to the goods (diesel) being transmitted by road transport to the destination as would be directed by the buyer i.e. Railways. While the contention of the counsel for the petitioner-assessee is that freight is separately reimbursable and in actuality whatever amount has been charged has been paid to the transport operator who provides vehicles in which the goods are to be loaded and sent to the destination. The contention is that the petitioner-assessee for the convenience of the buyer and on the dictates of the buyer had arranged for the vehicle in which the goods were to be supplied at the destination and thus, the freight was charged separately which was to be reimbursed separately and therefore, had no concern or connection with the sales turnover. It would be appropriate to quote Section 2(36) of the RVAT Act which provides ad-infra:-
Section 2 - Definitions 2(36) "sale price" means the amount paid or payable to a dealer as consideration for the sale of any goods less any sum allowed by way of any kind of discount or rebate according to the practice normally prevailing in the trade, but inclusive of any statutory levy or any sum charged for anything done by the dealer in respect of the goods or services rendered at the time of or before the delivery thereof, except the tax imposed under this Act;
Explanation I.-In the case of a sale by hire purchase agreement, the prevailing market price of the goods on the date on which such goods are delivered to the buyer under such agreement, shall be deemed to be the sale price of such goods;
Explanation II.-Cash or trade discount at the time of sale as evident from the invoice shall be excluded from the sale price but any ex post facto grant of discounts or incentives or rebates or rewards and the like shall not be excluded;
Explanation III.-Where according to the terms of a contract, the cost of freight and other expenses in respect of the transportation of goods are incurred by the dealer for or on behalf of the buyer, such cost of freight and other expenses shall not be included in the sale price, if charged separately in the invoice;
10. The explanation III, appended to Section 2(36) would provide that if according to the terms of a contract, the cost of freight and other expenses in respect of transportation of goods, are incurred by the dealer for or on behalf of the buyer, such cost of freight and other expenses shall not be included in the sale price but the burden of such proof shall lie on the dealer which in effect means that if the terms of a contract provide that the said amount is reimbursable, the burden is shifted to the assessee to prove that the said amount was separately reimbursable.
11. The note appended to Schedule-A, which is a rate contract between the assessee and the Government of India, Directorate General of Supplies and Disposals, New Delhi and other relevant clauses read as under:-
Note:-The prices are subject to change and prices ruling on the date of supply will be payable. The prices are ex-storage point prices at Refineries/Installations and are exclusive of excise duty. Transportation from Refineries to depots/Terminals and consignee destinations. Sales Tax/VAT, State specific cost, octroi duty, local levies, entry tax etc. shall be charged extra as applicable.
6.Terms of Delivery : FOR EX-MI-Refineries.
7. Excise Duty : Excise duty will be charged on actual rate basis on date of supply and is extra over the quoted price and other cast elements as per excise rules. In case of downward revision of excise duty, actual of excise duty shall be charged/billed to the purchaser by the supplier. All such adjustments shall also include relief exemption, concession etc., if any obtained by the supplier.
17.Place where the stores are tendered for inspection: Mumbai/Panipat/Vizag/Chennai/Mangalore/Haldi-a/Cochin/Narimanam/Koyali/Mathura/BRPL/NRL/Palam/Lucknow/Allahabad/Fursatganj/Kanpur/Ja-mmu/Bhuvaneshwar/Calcutta/Guwahati/Jamshe-dpur/Patna/Ahmedabad/Santacruz/Bhopal/Indo-re/Nagpur/Dabolim/Bangalore/Begumpet/Dindugal.
4.1 Prices: Prices of all items of the Rate Contract have been deregulated with effect from 01.04.2002 and are being fixed by Oil companies on import parity principle or any other basis considered appropriate, from time to time, depending on the market driven factors. The Master Price Lists (MPL) will be submitted by individual PSUs duly certified by their auditors to DGS&D with a copy to Chief Controller of Accounts, New Delhi.
CONSTITUENTS OF THE RATE BUILT UP
a) Prices Ex-refinery/MI/Pipeline Taps/Depot rates
b) Railway Freight Notional Railway Freight for all supplies made by rail from normal source of supply. Actual Railway Freight for alternate source of supply as per MOP&NG/OCC directives. Difference of Actual Railway Freight and Notional Railway Freight to be borne by the suppliers and claim subsidy from the OCC. However, if products come in Free Trade and Freight Subsidy is withdrawn by MOP&NG/OCC, the Actual Railway Freight shall be borne by the consignee.
c) Excise Duty As per rates and applicability provided for by Government from time to time.
d) Transportation by Road:
Supplies made in Tank, Trucks by road from Refineries/MI/Pipeline/Tops/Depot shall be charged as certified by company officer.
e) All taxes applicable, i.e. Sales Tax, State Surcharges, Octroi/ Municipal levies/ Entry Tax or any other tax levied by Central/ State Government Municipal Bodies, etc., shall be charged & billed at actuals. Notifications of the taxes applicable and revisions, if any, from time to time shall be conveyed to the Chief Controller of Accounts, New Delhi/ State Paying Authority by means of a certificate from the Internal Audit Officer of the firms. Bills submitted will be according to Master Price Lists (MPLs).
12.Transit Risk/Insurance:
The firm shall be responsible and liable for any shortage, damages of deterioration to the consignment in transit if the same is to be carried in their own or Contractor trucks/tank lorries to the destination station in case of Rail consignments, the firm shall be responsible and liable for, such shortage, damage or deterioration only if the consignment has been booked under said to contain RR as a full wagon load and the Railway seals of the wagons are found intact at the destination station in that case a notice of the seals of the wagon being found intact and the details of shortage, damage or deterioration as the case may be as early as possible, but in any case before the expiry of 30 days from the date of taking delivery from the Railway, has to be given by the consignee to the supplier. In all other cases of rail consignments the firm will not be responsible and liable for any shortage loss, damage or deterioration accruing in transit and the matter will be taken up by the consignee expeditiously with the concerned Railway Administration. For ex MI/Depot supplies the responsibility of the firm for supplies will cease once the product leaves the oil company premises.
14.Supplies from Alternative Sources in Tank Wagons:
The rate of Sales Tax will vary with the source of actual supply of product from time to time depending Supplies from the normal pricing source will be made on freight to pay basis. In case, however, supplies are made from sources other than the main Installation/ Refineries/ Pipelines, Tap off points as authorized from the Ministry of Petroleum & Natural Gas from time to time. The despatches will be made freight prepaid basis and the prices payable will be normal MI/Refinery/Pipeline Tap off points price plus national Railway Freight from the normal MI/Refinery/Pipeline Tap Off point to the Destination. However, in case, the Government decides to withdraw subsidy on additional Railway Freight, the same shall be borne by the Buyer. If supply point is changed at the instance of the buyer to avail CST or other benefits, the buyer will bear the actual Rail Freight.
Price build up will be as under:
a) Ex-Depot price plus delivery charges/ Octroi / Local levies/ Surcharges Transportation charges at actual Sales Tax and any other levy as applicable from time to time.
b) Un country supplies: For delivery in bulk tank wagons/ buyer's tank lorries/ containers Ex-firm's operated depot:
Firm's depot selling prices as applicable to the general trade on the date of delivery.
27.Deliveries AT Consignee's Premises:
i) In call cases, quantities filled and dispatched/delivered Ex-your depots above will count for payment. Variation in volume after despatch will be to the buyer's account. The consignee may, if desired, verify (supervise) the filling at your depot and check your seals on the vehicles and may also put additional seals of their own, if considered necessary.
ii) Supplies will be subject to accessibility by road and suitability of Bridges.
iii) if supplies are made from longer route because of closure of normal/ shorter route, extra transportation charges shall be borne by the consignee on certification by IOC's authorised officers attestation.
iv) Handing and decantation of product from the Tank trucks into buyers containers at the consignee's premises will be the buyer's responsibility.
v) IOCs Tank trucks will be released by the consignee within a reasonable time of arrival at the destination & they will not be subject to any inordinate detention. The firm shall, if desired, charge detention charges, if the tank trucks is delayed beyond reasonable time.
vi) Deliveries will be in full truck loads only. For indenting delivery of a lesser quantity, the transportation charges for full truck, load as may be certified by your authorised officer will be charged.
vii) For returning the tank truck without taking delivery of the product for any reason whatsoever, delivery charges will be payable by the CCA at the applicable rates on the basis of your authorised officers certificate.
viii) When supplies cannot be undertaken to consignee's premises for any reason, the buyer's shall draw their requirement from your supplying Depots under their own management. For such supplies, Ex-Depot rates will apply.
ix) Distance between MI/Refinery/Pipeline Top/Depot and consignee's storage/consumer pumps as certified by Corporation's authorised officer in the bills will be treated as final and accepted by the CCA for purpose of payment of bills. In the event of dispute regarding the distance a joint verification will be undertaken by you and the consignee. You agree to adjust the overdrawal/ under payments based on the agreed final distances.
12(b)Price payable on the date of supply
(i)The prices are subject to variation without notice and the revision in the list prices as applicable from time to time will be advised by M/s IOC, HPC, BPC and MRPL to Zonal Railways. In support of these prices and revision thereto, Master Price List (MPL) duly signed by your internal auditor will be submitted. In case of variation in the price of M/s IOC, HPC, BPC and MRPL the lowest of the four will be applicable. However, the ex-supply location price payable to M/s IOC, HPC, BPC & MRPL on the date of supply will be lowest of the ex-supply location price of the MPLs of M/s IOC, HPC, BPC & MPRL minus a discount of Rs.150,00 per KI (before Excise duty & Sales tax). State specific cost for the product destination state is inclusive and other elements like freight etc. will be extra. PSUs should indicate the ex-supply location price, and state specific cost and other charges separately in their MPL.
16.Freight shall be payable as under:-
16.1 In case Dispatches by Rail transport:
HSD Oil when consigned to the Railways will be exempted from the condition of pre-payment of freight and will be booked as freight to pay without levy of 'To pay' surcharge on freight as destination. The other surcharges wherever applicable shall also be leviable (autority Railway board's letter No.TCR/1078/2006/15 dt.4.12.2006).
16.2.In case of dispatches by rail, the date of RR (Railway-Receipt) will be taken as the date of delivery.
16.3.In case of delivery by Road:
(a)Delivery charges of Rs.44/kl are included in price for delivery within 39 km of round trip distance (RTD). No separate freight charges should be claimed for such locations.
(b)Any location beyond 30 Kms round trip distance (RTD) the freight charges at applicable rates will be as per prevailing industry practice. The reimbursement of freight will be on actual road freight or the freight rate as per Industry rate whichever is lower. Supply orders placing DDOs (Railways) will place supply orders keeping in view that option of the Road transport to the exercised only after Rail transport has failed subject to following:
i.Transit Risk/Insurance will be to the suppliers account.
ii.Octroi duty will be applicable a per Clause 15 iii.Payment shall be made on receipt of material as per specification and in satisfactory condition.
16.4 For dispatches by road, the date of receipt of material by consignee(s) will be taken as date of delivery.
WEIGHTS AND MEASURES:
Weights/Measures as shown in the delivery/despatch documents will be subject to Clause 8- Transit Risk. The purchaser may have the weights/ measurements checked before the products leave firm's premises, if he so desire.
7.TRANSIT RISK:
a)Firm shall be responsible and liable for any shortages, damages or deterioration to the consignment in transit if the same is to be carried in their own or contractor's trucks/ tanks/ lorries to the destination.
b)In case of rail consignments, firm shall be responsible and liable for such shortage, damage or deterioration only if the consignment has been booked under said to contain RR as a full wagon load and the Railway seals of the wagons are found intact at the destination station. In that case a notice is to be served on the supplier by Regd. Post indicating the date of the seals of the wagons being found intact and the details of shortage, damage or deterioration, as the case may be, as early as possible, but in any case before the expiry of 30 days from the date of taking delivery from the Railway.
12. On a conjoint reading of the aforesaid clauses entered into by and between the parties, in my view, as per terms and conditions in the contract, when the seller was required to deliver the goods at the destination after taking into consideration the transit risk and all other liability namely; delivery charges plus sales tax plus octroi duty plus local tax/levies etc, in transit and at destination on the corporation selling price to the general trade on the date of delivery for each supply and when there is a specific reference of delivery at consignees storage/consumer pumps in corporation/ transporters in bulk and for delivery at consignees' storage/ consumer pumps, it prescribes that price built up will be ex-depot price plus delivery charges/octroi/local levies/ Surcharges, Transportation charges at actual Sales Tax and any other levy as applicable from time to time and it will be the responsibility of the assessee and the IOC/BPC/HPC shall be responsible & liable for any shortage, damages or deterioration to the consignment in transit if the same is to be carried in their own or contractor's truck's/tank lorries to the destination station and as per the terms and conditions of DGS & D, the rate contract, as noticed earlier and specifically mentioned herein above, it was the duty of the assessee to deliver the goods at the destination. Therefore, in my view, the Tax Board has rightly come to the conclusion that the freight is includable in the sale price and accordingly, in my view, the Tax Board was justified in coming to the conclusion to which it has reached. On perusal of the terms and conditions of DGS & D rate contract, it goes to show that the assessee shall be liable and responsible to pay for any shortage, damage and deterioration during the consignment of the goods in the way upto the destination of the purchaser by the assessee himself or through the truck/tank/lorry of the contractor. In the same manner, according to the conditions of the rate contract that the sale price of the petroleum products includes the actual delivery charges, freight and the transit risk of the goods is upon the assessee and as such, the amount received by the assessee from the purchasers towards delivery charges and freight falls within the definition of Sec. 2(36) of the Act.
13. It is also on record that despite specific query before the assessing officer and lower appellate authorities and opportunity having been granted to the assessee to place adequate material on record about the freight charges separately borne by the purchasers (Railways), no such evidence was led. Therefore, this fact also goes against the assessee as it was neither proved before the AO nor upto the Tax Board about the factum that the purchaser (Railways) paid/borne separately the freight charges. Therefore, on this factual finding also, when the assessee was unable to lead any evidence, this view strengthens the claim of the Revenue. The burden casted on the assessee was not discharged despite opportunities granted.
14. In my view, the judgment of the Hon'ble Apex Court in the case of Hindustan Sugar Mills Ltd. (supra), which has been relied upon by both i.e. the Revenue as well as the assessee, supports the contention of the Revenue. It would be appropriate to quote the relevant observations in the aforesaid judgment, which, in my view, also governs in the instant petition, which reads ad-infra:-
15. We are of the view that the former, and not the latter, represents the correct legal position. If the obligation to pay the freight were on the purchaser and in fact the purchaser paid the freight, as happened in both the cases before us in respect of every transaction of sale of cement, the amount of freight would obviously be deducted from the F.O.R. destination railway station price in the invoice and only the 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 Cl. ( 9 ), proviso to that clause and Cl. (11) of the Control order be satisfied ? How would it be possible to give effect to Cl. (9) if what is realised by the assessee is not 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 Cl. (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 inconsistent with the scheme of the Control order and must be held to be excluded by it. The Control order is paramount: it has overriding effect and if it stipulates that the freight shall be payable by the producer, such stipulation must prevail, notwithstanding any term or condition of the contract to the contrary. The conclusion is, therefore, inevitable,- that the amount of freight forms part of the 'sale price' within the meaning of the first part of the definition.
16. This renders it unnecessary to consider the second part of the definition, but the latter clause of the second part was strongly relied upon on behalf of the assessee to support the exclusion of the amount of freight from 'sale price' and hence we must proceed to consider it. The second part enacts an inclusive clause. It says that 'sale price' includes "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 case where such cost is separately charged." Therefore, 'any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof' is to be regarded as part of 'sale price', even if it does not fall within the first part of the definition. But there is an exception carved out of this inclusion. Not all sums charged for something done by the dealer in respect of the goods at the time of or therefore the delivery thereof are covered by the inclusive clause. The cost of freight or delivery or the cost of installation certainly represents an amount charged for transportation or installation of the goods at the time of or before the delivery thereof and would, therefore, fall within the inclusive clause on its plain terms but it is taken out by the exclusion clause, "other than the cost of freight or delivery or the cost of installation in case where such cost is separately charged". This exclusion clause does not operate as an exception to the first part of the definition. It merely enacts an exclusion out of the inclusive clause and takes out something which would otherwise be within the inclusive clause. Obviously, therefore, this exclusion clause can be availed of by the assessee only if the State seeks to rely on the inclusive clause for the purpose of bringing a particular amount within the definition of 'sale price`. But if the State is able to show that the particular amount falls within the first part of the definition and is, therefore, part of the 'sale price', the exclusion clause cannot avail the assessee to take the amount in question out of the definition of 'sale price'. Here on the view taken by us, the amount of freight forms part of the 'sale price' within the meaning of the first part of the definition and it is not necessary for the State to invoke the inclusive clause and in fact the State has not done so. The exclusion clause is, therefore, irrelevant and cannot be called in aid by the assessee. We 'may point out that even if the exclusion clause were read as an exception to the first part of the definition which, as we have pointed out, 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 contradiction 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.
15. The judgment in the case of India Meters Limited Vs. state of Tamil Nadu (supra) also relied upon by counsel for the Revenue had also an occasion to consider identical issue and after placing reliance on the judgment of the Hon'ble Apex Court in the case of Hindustan Sugar Mills (Supra) and also several other authorities, is also applicable on the facts of the instant case wherein it has been held that when transfer of the property or the goods is at the place of the buyer to which the seller is under obligation to transport the goods, the freight and insurance charges form part of the sale price. In the instant case as well, as per the terms and conditions, specified herein above, the ownership of the liabilities as noticed above remained with the supplier i.e. the assessee till they are delivered at the destination station. Therefore, the judgment of India Meters Limited is applicable on the facts of the instant case.
16. In the judgment, relied upon by counsel for the assessee in the case of Vinod Coal Syndicate Vs. Commissioner of Sales Tax, U.P. Lucknow (U.P.) (supra), the facts were clearly proved from the material placed on record by the assessee that freight was separately charged and was paid separately, by the principals and the Hon'ble Apex Court went into the plain language of the Act. However, in the present case, the assessee, as observed herein above, even despite opportunities having been granted, was not able to provide the material to claim that the freight was separately charged and was paid separately by the principals (Railways).
17. In the case of Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Kerala Vs. K.P. Moideenkutty (Decd.), the Hon'ble Apex Court had again an occasion to consider a case on a specific finding which was reached by the High Court as under:-
There is abundant material on record which has been referred to by the Tribunal itself and by the Appellate Assistant Commissioner to show that in the cases under consideration the transport charges were specified and charged for separately under the rule.
17.1 The Hon'ble Apex Court, on the basis of above, agreed with the finding and conclusion of the High Court whereas, as pointed out herein above, the assessee in the instant case was unable to file any material on the basis whereof it can be seen that the freight was charged separately and was paid separately by the principals (Railways).
18. In the case of Hyderabad Asbestos Cement Products Ltd. Vs. State of Andhra Pradesh (supra), the Hon'ble Apex Court found that the company sent goods to outstation customers by railway under railway receipts with freight to pay and the company made out an invoice at the catalogue rate, and the customer paid the amount of the invoice less the freight for releasing the railway receipt and took delivery of the goods on payment of the railway freight. The result was that the net price received by the company was the catalogue rate less the railway freight charged in respect of the goods transported to the destination and on such finding of fact, it was held that there was no obligation on the part of the company to pay the freight and the price received by the company for the sale of the goods is the invoice amount less the freight.
19. Counsel for the assessee has also relied upon judgment rendered in the case of Hindusthan Sugar Mills Ltd. Vs. State of Rajasthan and ors. (supra), which has also been relied upon by counsel for the Revenue and in view of facts given herein above, in Para 14, this Court finds that the judgment on facts rather supports the case of the Revenue as against the assessee.
20. The facts of the case rendered by the Hon'ble Apex Court in the case of State of Karnataka and another Vs. Bangalore Soft Drinks Pvt. Ltd. (supra) were that in that case the assessee was able to lead evidence that the delivery of the property has been made at the site of the factory and that subsequent transportation of the goods from the place of sale to the place of buyer was done or made at the instance of the wholesale buyer against the payment of freight charges paid separately by the buyers and on such finding of fact as well as the material placed on record that the freight was charged separately and paid separately, the Hon'ble Apex Court came to the said conclusion that the freight is not includible.
21. The other judgments relied upon by counsel for the assessee are also on the same lines and therefore, are inapplicable on the facts of the instant case.
22. Thus, in view of the categorical finding of fact by all the authorities in unison that the assessee was unable to lead any evidence of the freight being charged separately and having been paid separately, in view of the terms, quoted herein above and judgments of Hon'ble Apex Court in Hindustan Sugar Mills and India Meters Ltd., in my view, the Tax Board has rightly come to the conclusion that the freight is part of the turnover and sales tax is leviable on the part of the freight.
23. Accordingly, the question of law is answered against the assessee and in favour of Revenue with no order as to costs.
(J.K. Ranka), J.
Raghu Certificate:All corrections made in the judgment/order have been incorporated in the judgment/order being e-mailed.
Raghu, Sr. PA