1997 (9) TMI 585 - HC - VAT and Sales Tax

Summary

Issues Involved:
The judgment involves the assessment of whether freight handling and incidental charges, billed separately from the price of goods sold, are liable to be taxed under the Central Sales Tax Act, 1956.

Assessment of Grievance:
The assessee challenged the Joint Commissioner's decision to revise the order of the Appellate Assistant Commissioner regarding the assessment for the year 1986-87, specifically concerning the taxation of freight handling and incidental charges separately billed for goods sold f.o.r. factory.

Contractual Terms and Sale of Industrial Gas:
The industrial gas sold by the petitioner is contained in cylinders to be returned by customers, with the price of gas sold at Rs. 3 per cubic meter. The cylinder is not part of the sale, merely a container, with additional charges like excise duty and sales tax. The transportation of goods was not a contractual obligation but undertaken at the customer's request, with separate bills for freight and incidental expenses.

Interpretation of Sale Price:
The Court highlighted the separate billing of goods and freight charges, emphasizing that the cost of freight and handling charges should not be considered part of the sale price under the Central Sales Tax Act, 1956. The definition of "sale price" excludes the cost of freight or delivery when separately charged, which was the case in this instance.

Comparison with Previous Case Law:
The Court distinguished a previous case where separate freight charges were deemed part of the sale price, emphasizing that each case must be analyzed based on its specific facts and the relevant statutory definitions. The Court clarified that the Central Sales Tax Act has its own definition of "sale price," which excludes separately charged freight and delivery costs.

Decision and Conclusion:
The Court found the Joint Commissioner's decision erroneous in including separately billed freight and incidental charges in the petitioner's turnover for assessment under the Central Sales Tax Act, 1956. Consequently, the impugned order was set aside, and the appeal was allowed.