1984 (2) TMI 302 - HC - VAT and Sales Tax

Summary

Issues:
1. Deduction of transportation charges from total turnover for assessment year 1973-74.
2. Interpretation of purchase price and turnover under the Karnataka Sales Tax Act.
3. Disagreement between assessing officer and Tribunal regarding inclusion of transportation charges in taxable turnover.

Analysis:
The case involved a petitioner-company manufacturing synthetic fibres that purchased firewood from various suppliers, claiming a deduction of transportation charges from the total turnover for the assessment year 1973-74. The Commercial Tax Officer included these charges in the taxable turnover, which was upheld by the Deputy Commissioner of Commercial Taxes. However, the Appellate Tribunal disagreed and directed the assessing officer to modify the assessment, leading to the State filing a revision petition.

The assessing officer contended that transportation charges were part of the purchase price, as the firewood was delivered at the company's depots, thus inclusive of transport charges. The Tribunal, however, viewed these charges as incurred by the sellers after the sale, based on the agreement terms for delivering firewood at the company's depot. The Tribunal found the deduction claimed by the company justly allowable, despite lack of the actual agreement on record.

The State's counsel argued against the Tribunal's findings, emphasizing that even if freight charges were separately shown in bills, they form part of turnover as per the definition under the Karnataka Sales Tax Act. On the other hand, the company's counsel focused on the concept of "purchase price" under the Act, stating that the total amount paid to the seller for goods, inclusive of freight charges, constitutes the purchase price, citing a Supreme Court observation in a similar context.

The Court, aligning with the assessing officer's view, emphasized that the property in goods passed to the company at the depot, making freight charges a component of the purchase price. Consequently, the Court allowed the revision petition, setting aside the Tribunal's order and reinstating the assessment order. No costs were awarded in the case.