1982 (3) TMI 226 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether freight charges incurred by a dealer in the despatch of cement to the customer's place can be deducted from the total turnover under the Tamil Nadu General Sales Tax Act?

Analysis:
The judgment by the Madras High Court, delivered by Justice Padmanabhan, addressed the issue of whether freight charges incurred by a dealer, Dalmia Cement (Bharat) Ltd., in the despatch of cement to customers could be deducted from the total turnover under the Tamil Nadu General Sales Tax Act. The dealer claimed that the freight charges should be excluded from the total turnover, but this claim was rejected by the Deputy Commercial Tax Officer, leading to appeals and subsequent rejections by the Appellate Assistant Commissioner and the Sales Tax Appellate Tribunal. The Tribunal relied on a Supreme Court decision in Hindustan Sugar Mills Ltd. v. State of Rajasthan. The judgment detailed the historical context of Cement Control Orders and the role of the Cement Allocation and Co-ordinating Organisation in regulating cement distribution during the relevant period. The Tribunal found that the dealer despatched goods on a "freight to pay" basis and allowed reduction in invoices for actual freight paid, which was not disputed. The judgment highlighted Rule 6(c) of the Tamil Nadu General Sales Tax Rules, which allows for deduction of specified amounts like freight when charged separately by the dealer.

Furthermore, the judgment referenced a previous case involving transport charges, emphasizing that where charges are separately specified and not included in the price of goods sold, a dealer is entitled to a deduction under Rule 6(c). The judgment also addressed the impact of the Cement Control Order coming into force in 1968 on the dealer's entitlement to deduct freight charges from the total turnover. It cited a previous decision involving the Central Sales Tax Act and held that even after 1968, the dealer could claim deduction under Rule 6(c) of the Tamil Nadu General Sales Tax Rules. The judgment concluded that the dealer was entitled to exclude freight charges from the total turnover for both the period before and after 1968, allowing the tax revision cases and deleting the freight charges with costs.

In summary, the judgment clarified the dealer's right to deduct freight charges from the total turnover under the Tamil Nadu General Sales Tax Act, emphasizing the importance of separate specification and charging of such amounts by the dealer. It provided a detailed analysis of relevant rules, historical context, and previous decisions to support the conclusion reached by the Madras High Court.