1974 (9) TMI 88 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the amount of freight would be deemed to be separately charged by the seller from the purchaser?
2. Whether the learned Additional Revising Authority was justified in excluding the amount of freight from the total sales?

Analysis:
The judgment of the Court pertains to the assessment year 1965-66 under the Central Sales Tax Act. The assessee disclosed a turnover, including freight paid by purchasers, which was contested by the assessing authority as part of the sale price subject to tax. However, on appeal, it was held that the amount of freight could not be included in the sale price. The revising authority referred questions regarding the treatment of freight charges for the court's opinion. It was established that the sales were made on a f.o.r. basis, and the freight was paid by the purchasers, as reflected in the bill preparation by the assessee.

The Court considered precedents and legal interpretations to determine the treatment of freight charges in the sale price. Citing previous cases, it was highlighted that if the cost of freight was not separately charged and the purchasers were liable to pay it under the contract terms, then it should not be included in the sale price. In the present case, it was found that the purchasers invariably paid the freight, indicating their liability as per the agreement. This led to the conclusion that the price shown in the bill for freight was incorrectly added, aligning with the decision in a similar case. Consequently, the Court upheld the Judge (Revisions)'s decision to exclude the amount of freight from the turnover, ruling in favor of the assessee against the department.

In conclusion, the Court answered both questions in the affirmative, supporting the exclusion of freight charges from the total sales turnover. The reference was resolved in favor of the assessee, affirming the justification for excluding the amount of freight based on the terms of the contract and the understanding between the parties regarding the liability for freight payment.