1982 (3) TMI 245 - HC - VAT and Sales Tax

Summary

Issues:
Whether the assessee is liable to pay sales tax on freight charges for transporting goods from Erode to Madras.

Detailed Analysis:

The case involves the question of whether the assessee, a dealer in hides and skins, is liable to pay sales tax on freight charges incurred in transporting goods from Erode to Madras. The Commercial Tax Officer initially disallowed the deduction claimed by the assessee for freight and loading charges, considering them as pre-sale expenses not eligible for deduction from the taxable turnover. However, the Appellate Assistant Commissioner allowed the deduction, leading to an appeal before the Board of Revenue, which overturned the decision and held the deletion of the freight charges as incorrect.

The legal contention raised by the counsel for the assessee was based on rule 6(c) of the Tamil Nadu General Sales Tax Rules, 1959, arguing that the assessee should be entitled to a deduction for the separately shown freight charges. The Additional Government Pleader, on the other hand, relied on various Supreme Court decisions to oppose the deduction claim.

The Court examined the facts of the case, including the contracts between the parties specifying prices per baram and separately charging for freight and loading. It was observed that the invoices were prepared in a manner indicating separate consideration for the goods and the transport charges, unlike a mere bill-making routine. The Court held that rule 6(c) was applicable in this case, following a previous decision by the Court in a similar matter.

The Court distinguished the Supreme Court decisions cited by the Additional Government Pleader, emphasizing the factual distinctions in those cases where the treatment of pre-sale expenses differed from the present case. The Court concluded that the assessee was entitled to deduct the freight and loading charges from the taxable turnover, setting aside the Board of Revenue's decision and restoring that of the Appellate Assistant Commissioner.

In light of the above analysis, the Court allowed the tax case in favor of the assessee, granting them the entitlement to deduct the freight charges incurred. The Court also awarded costs to the assessee, thereby concluding the judgment in favor of the assessee.