2008 (12) TMI 701 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Whether freight charge was a component of and included within the agreed sale price.
2. When the sale of the insulators was completed and the property in the insulators was transferred from the seller to the buyer.
3. Whether freight was charged for post-sale delivery effected by petitioner No. 1-company as an agent of the buyer or bailee of the goods.

Issue-wise Detailed Analysis:

1. Whether Freight Charge was a Component of and Included within the Agreed Sale Price:
The Tribunal examined whether the freight charge was part of the sale price based on the terms and conditions of the agreement. The Tribunal referred to the definition of "sale price" under section 2(31) of the West Bengal Sales Tax Act, 1994. The Tribunal noted that the freight and insurance charges were quoted separately from the ex-works price in the tender, agreement, and invoices. The Tribunal distinguished the case from Hindustan Sugar Mills Ltd. [1979] 43 STC 13 (SC) by emphasizing that the freight was not included in the sale price but was a separate charge agreed upon by both parties. The Tribunal concluded that the freight charge was not a component of the sale price and thus not subject to sales tax.

2. When the Sale of the Insulators was Completed and the Property in the Insulators was Transferred from the Seller to the Buyer:
The Tribunal analyzed the terms and conditions of the contract to determine the point of transfer of property. It referred to section 23 of the Sale of Goods Act, 1930, which deals with the appropriation of unascertained goods to the contract. The Tribunal found that the property in the insulators passed to the SEB when the goods were inspected, tested, packed, sealed by the SEB's officers, and despatch clearance was issued. The Tribunal noted that the contract stipulated that the date of successful inspection and issuance of the works test certificate was the date of delivery. The Tribunal held that the sale was legally completed at the point of despatch clearance, and the property in the goods transferred to the SEB at that time.

3. Whether Freight was Charged for Post-Sale Delivery Effected by Petitioner No. 1-Company as an Agent of the Buyer or Bailee of the Goods:
The Tribunal considered whether the petitioner acted as an agent of the SEB for the transportation of goods post-sale. The Tribunal found that the contract was for both the supply and delivery of insulators, with the petitioner obligated to deliver the goods physically to the SEB's stores. The Tribunal noted that the freight charge was separately quoted and agreed upon, indicating that it was a separate charge for the transportation service provided by the petitioner. The Tribunal concluded that the petitioner was not acting as an agent of the SEB but was fulfilling its contractual obligation to deliver the goods, and the freight charge was a separate reimbursement for this service.

Conclusion:
The Tribunal set aside the impugned assessment order, appellate order, and revisional order that imposed sales tax on the freight and insurance charges. The Tribunal held that the freight charge was not part of the sale price, the sale was completed upon despatch clearance, and the petitioner was not acting as an agent of the SEB for the transportation of goods. The application was allowed to the extent indicated, with no order as to costs.