1969 (1) TMI 53 - HC - VAT and Sales Tax

Summary

Issues:
- Deduction of freight charges under Mysore Sales Tax Rules.
- Interpretation of rule 6(4)(f)(i) regarding deduction of freight charges.
- Disagreement between Commercial Tax Officer, Deputy Commissioner, and Commissioner of Commercial Taxes.
- Whether freight paid for the purpose of a sale can be included in taxable turnover.

Analysis:
The appellant, a private company selling motor trucks in Mysore and Coorg, claimed a deduction of freight charges under rule 6(4)(f) of the Mysore Sales Tax Rules for the assessment years 1957-58 and 1958-59. The dispute arose when the Commissioner of Commercial Taxes disallowed the deduction of freight charges, which had been allowed by the Deputy Commissioner but initially disallowed by the Commercial Tax Officer. The key issue revolved around the interpretation of whether the freight charges incurred by the appellant for bringing trucks from Jamshedpur to Bangalore could be deducted under rule 6(4)(f)(i) of the Sales Tax Rules.

The Commissioner contended that only "outward freight" was deductible under the rule, while the appellant argued that the freight paid for bringing goods from the place of manufacture to the place of sale to the customer should also be considered deductible. The Court analyzed the provisions of rule 6 of the Mysore Sales Tax Rules, particularly sub-rule (4)(f)(i), which allows deductions for freight charges when specified and charged separately by the dealer. The Court emphasized that the freight paid by the dealer for transportation of goods sold to the customer is deductible under the rule.

The Court rejected the Commissioner's view that only "outward freight" was deductible, stating that the freight paid for bringing goods from the manufacturer to the dealer's place of business for the purpose of sale to the customer falls within the ambit of rule 6(4)(f)(i). The Court clarified that as long as the freight is paid for the sale agreed upon with the customer, it should not be included in the taxable turnover.

Furthermore, the Court declined to address the broader question raised by the appellant's counsel regarding the deduction of freight in other circumstances, as it was not directly relevant to the cases at hand. Ultimately, the Court allowed the appeals, set aside the Commissioner's order, and reinstated the Deputy Commissioner's decision, ruling in favor of the appellant. The appellant was awarded costs, and the appeals were allowed.