1972 (2) TMI 71 - HC - VAT and Sales Tax

Summary

Issues:
Whether the cost of railway freight could be excluded from the turnover and not be held liable to sales tax under the Central Sales Tax Act.

Analysis:
The judgment pertains to a dealer in timber who was assessed under the Sales Tax Act for various assessment years. The assessing authority rejected the account version disclosed by the dealer for certain years and assessed an enhanced turnover. On appeal, the appellate authority maintained the rejection but reduced the assessed turnover for some years. The Sales Tax Officer rejected the account version for other years as well and enhanced the turnover. However, the appellate authority accepted the book version for those years. The Commissioner of Sales Tax applied in revision, contending that the appellate authority erred in excluding the cost of freight from the turnover. The judge (Revisions) upheld the contention, citing the definition of "sale price" in the Central Sales Tax Act. The judge concluded that the freight should not have been excluded from the turnover.

The definition of "turnover" under the Central Sales Tax Act includes the aggregate sale prices received and receivable by the dealer. The definition of "sale price" explicitly excludes the cost of freight unless separately charged. The judge (Revisions) found that the bills issued by the dealer were similar to those considered by the Supreme Court in a previous case. The Supreme Court held that if freight is included in the sale consideration, it cannot be separately excluded. The judge noted that there was no evidence of a contractual condition requiring the purchaser to pay for freight, unlike in a previous Supreme Court case. The judge rejected the argument based on general custom in the timber trade of excluding freight from the price.

The judgment relies on precedents set by the Supreme Court in similar cases and concludes that the amount on account of freight cannot be deducted from the sale consideration. The question referred was answered in the negative, in favor of the State and against the assessee. The Commissioner of Sales Tax was awarded costs, and the reference was answered accordingly.