1973 (7) TMI 77 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the railway freight formed part of the sale price.
2. Interpretation of the term "sale price" under the Bihar Sales Tax Act, 1947.
3. Applicability of past judicial decisions to the current case.

Detailed Analysis:

1. Whether the railway freight formed part of the sale price:
The primary question referred to the court was whether the railway freight, in the facts and circumstances of the case, formed part of the sale price. The assessee-company, a registered dealer in cement, excluded the railway freight from the gross turnover in its return for the assessment year 1958-59. The Assistant Commissioner of Commercial Taxes accepted this exclusion, but the Commissioner of Commercial Taxes revised the assessment suo motu, holding that the railway freight was part of the sale price and chargeable to sales tax. The Tribunal, however, set aside the Commissioner's order, stating that the freight did not form part of the sale price. The court ultimately held that the Tribunal was not justified in excluding the railway freight from the sale price, emphasizing that the price fixed by the Cement Control Order was inclusive of the freight, and the method of payment did not alter the taxable amount.

2. Interpretation of the term "sale price" under the Bihar Sales Tax Act, 1947:
Section 2(h) of the Act defines "sale price" as the amount payable to the dealer as valuable consideration, including any sum charged for anything done by the dealer in respect of the goods at the time of, or before delivery thereof, other than the cost of freight or delivery or the cost of installation when such cost is separately charged. The court clarified that if the freight or cost is separately charged, it is excluded from the sale price. However, in this case, the price was fixed on an f.o.r. destination basis, meaning it included the railway freight. The court concluded that the railway freight paid by the customer was part of the price charged by the dealer and thus formed part of the sale price.

3. Applicability of past judicial decisions to the current case:
The court discussed several past decisions to elucidate the legal position. The Nagpur High Court's decision in Commissioner of Sales Tax, Madhya Pradesh v. Anwarkhan Mahboob Co. was cited, where it was held that the inclusion of railway freight in the price quoted to the purchaser did not change the legal position even if the freight was paid by the purchaser. The Supreme Court's decision in Tungabhadra Industries Ltd. v. Commercial Tax Officer was also referenced, which held that if the price charged is inclusive of the railway freight, then the entire amount is considered the sale price. The court distinguished the present case from the Supreme Court's decision in Hyderabad Asbestos Cement Products Ltd. v. State of Andhra Pradesh, noting that the terms of the contract in that case explicitly separated the railway freight from the sale price, which was not the situation in the present case. The court also referenced the Madhya Pradesh High Court's decision in Birla Jute Manufacturing Co. Ltd. v. Commissioner of Sales Tax, supporting the view that railway freight forms part of the sale price when the price is f.o.r. destination.

Conclusion:
The court concluded that the Tribunal was not justified in excluding the railway freight from the sale price. The railway freight, being part of the price fixed under the Cement Control Order, was chargeable to sales tax. The reference was answered in favor of the Commissioner of Commercial Taxes and against the assessee.