1973 (11) TMI 70 - HC - VAT and Sales Tax

Summary

Issues:
- Whether the freight charges incurred by the petitioner for transporting motor cycles are exempt from sales tax.
- Whether the freight charges can be considered as part of the consideration paid for the motor cycles.

Analysis:
The petitioner, a company dealing in motor cycles, spare parts, and tractors, claimed deduction for freight charges in transporting motor cycles from Haryana to Bangalore under the Mysore Sales Tax Act, 1957. The assessing authority disallowed the claim, leading to the petitioner filing a revision petition. The petitioner argued that the freight charges should be exempt from sales tax based on rule 6(4)(f)(i) of the Mysore Sales Tax Rules, 1957 and that the charges did not form part of the consideration. The petitioner relied on a Division Bench decision supporting exemption of such charges. However, the High Court noted that Supreme Court decisions in similar cases held that freight charges unconnected to sales could not be deducted from turnover. The Court found no evidence that the freight charges were incidental to the sales, ultimately rejecting the exemption claim based on previous rulings.

The second issue addressed whether the freight charges could be considered part of the consideration for the motor cycles. The Court referred to the Act's definition of 'turnover' as the aggregate amount for which goods are bought or sold, including any valuable consideration. Since the freight charges were included in the amount recovered from customers and not permitted to be deducted under any provision, the Court rejected the argument that the charges did not form part of the assessable turnover. Consequently, the petition was dismissed, and costs were awarded to the respondent. The judgment emphasized the importance of established legal principles and precedent in determining tax liability and consideration in commercial transactions.