1968 (11) TMI 93 - HC - VAT and Sales Tax

Summary

Issues:
1. Deduction of freight charges claimed by the petitioner under rule 6(4)(f)(i) of the Mysore Sales Tax Rules.
2. Disallowance of the deduction by the Commercial Tax Officer, Assistant Commissioner, and Sales Tax Appellate Tribunal based on the location of the contract and delivery of goods.
3. Interpretation of rule 6(4)(f)(i) regarding the deduction of freight charges when specified and charged separately.
4. Consideration of the agreement between the petitioner and the purchaser for delivery of goods and payment of transportation charges.
5. Legitimacy of adding a sum of money to the total turnover determined as suppressed amount in the assessment.

Analysis:
The judgment pertains to a case where a firewood dealer in Uppinangady claimed a deduction of freight charges under rule 6(4)(f)(i) of the Mysore Sales Tax Rules for the year 1961-62. The Commercial Tax Officer disallowed the deduction, a decision upheld by the Assistant Commissioner and the Sales Tax Appellate Tribunal, citing the absence of proof regarding the completion of the sale inside the forest or delivery to the purchaser at the collection spot. However, the Court emphasized that the crucial factor for the deduction was the separate specification and charging of freight in the bills, not the location of the contract or delivery. The Court ruled that as long as freight was specified and charged separately in the invoices and not included in the sale price, the deduction was permissible under rule 6(4)(f)(i).

Furthermore, the judgment highlighted the misconception of the tax authorities that freight could only be deducted if goods were delivered inside the forest to the purchaser. The Court reasoned that including transportation charges in the bills indicated that the delivery was at the factory, making it unnecessary for the petitioner to transport the goods further. The agreement between the petitioner and the purchaser, as evidenced in correspondence, supported the claim for deduction as it outlined the delivery at the factory with the purchaser bearing transportation charges. The Court found no basis to deny the deduction based on the location of delivery or alleged shortages at the factory.

Regarding the suppressed amount added to the total turnover by the Commercial Tax Officer, the Court deemed it illegitimate, especially after a best judgment assessment had been conducted. The Court directed the exclusion of this amount from the assessment and instructed the Commercial Tax Officer to prepare an amended assessment order in line with the judgment. The petitioner was awarded costs, including advocate's fees. Ultimately, the Court allowed the revision petition, setting aside the previous decisions disallowing the deduction of freight charges and ordering the deletion of those charges from the assessment.