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It is not intended to exclude from the taxable turnover any component of the price, expenditure incurred by the dealer which he had to incur before sale and to make the goods available to the intending customer at the place of sale.
In view of this, transport charges incurred before delivery at work site inside the plant would be included in the sale price of the goods.
The petitioner has contended that the transport charges charged separately were not assessable to tax and the Sales Tax Officer clearly went wrong in including the same in the assessable turnover of the petitioner.
The words "other than the cost of freight or delivery or the cost of installation when such cost is separately charged" were omitted by the Orissa Sales Tax (Amendment) Act (3 of 1976). The same Amendment Act inserted the following provision in Section 5(2)(A) of the Act :
In this Act, the expression 'taxable turnover' means that part of a dealer's gross turnover during any period which remains after deducting therefrom :-
(a) his turnover during that period on-
(i) ....
(ii) ....
(iii) the cost of outward freight or of delivery or the cost of installation for the purpose of sale or supply of goods by the dealer when such cost is separately charged.

The Orissa Act 3 of 1976 has, therefore, taken the words from the definition of "sale price" and has put them as admissible deduction from taxable turnover. There is no dispute that sales tax is payable on the taxable turnover and taxable turnover is arrived at by deducting the admissible items as provided in Section 5(2)(A) of the Act from the gross turnover.

The assessing officer relied upon two decisions of the Supreme Court to come to his conclusion against the assessee. The first case is that of Dyer Meakin Breweries Ltd. v. State of Kerala [1970] 26 STC 248 (SC). The assessee there was a manufacturer of liquor and the manufacture was carried at various places in U. P. and Haryana States, transported from the breweries and distilleries to its place of business in Ernakulam and sold there. When selling the liquor to the customers, the assessee made separate bills for ex-factory price and for freight and handling charges. It claimed that the amount charged for freight and handling charges incurred by it in transporting the goods from the breweries and distilleries to the warehouse at Ernakulam had to be deducted under Rule 9(f) of the Kerala General Sales Tax Rules, 1963, for computing the taxable turnover. The court held that all the expenditure incurred by the assessee towards freight and handling charges was incurred prior to the sale and was a component of the price for which the goods were sold and the assessee was not entitled to the deductions claimed. The rule relied upon provided :

In determining the taxable turnover, the amount specified in the following clauses shall, subject to the conditions specified therein, be deducted from the total turnover of the dealer....
(f) all amounts falling under the following two heads, when specified and charged for by the dealer separately, without including them in the price of goods sold ;
(i) freight ;
(ii) charges for packing and delivery.

The court negatived the assessee's plea by holding :

It is common ground that the sale of the liquor took place in Ernakulam. The company arranges to transport liquor for sale from the factories to its warehouse at Ernakulam. It was not brought for any individual customer. All the expenditure incurred is prior to the sale and was evidently a component of the price for which the goods were sold. It is true that separate bills were made out for the price of the goods ex-factory and for freight and handling charges. But, in our judgment, the Tribunal was right in holding that the exemption under Clause (f) of Rule 9 applies when the freight and charges for packing and delivery are found to be incidental to the sale and when they are specified and charged for by the dealer separately and expenditure incurred for freight and packing and delivery charges prior to the sale and for transporting the goods from the factories to the warehouse of the company is not admissible under Rule 9(f). Rule 9(f) seeks to exclude only those charges which are incurred by the dealer either expressly or by necessary implication for and on behalf of the purchaser after the sale when the dealer undertakes to transport the goods and to deliver the same or where the expenditure is incurred as an incident of sale. It is not intended to exclude from the taxable turnover any component of the price, expenditure incurred by the dealer which he had to incur before sale and to make the goods available to the intending customer at the place of sale.