2014 (11) TMI 836 - SC - VAT and Sales Tax

Denial of deduction on account of freight from sales price - representation of the freight in respect of the goods sold by the appellant, asserting that they had been charged for separately - high court has observed that, the buyer pays the catalogue price less transport rebate allowed, irrespective of the amount paid for freight charges by the assessee. Fluctuation in freight charges is not the concern of the buyer as he is bound to pay only the catalogue price or F.O.R. price. Thus, the agreed price being inclusive of freight subject to fixed transport rebate allowed, it would be a matter of indifference to the customer as to what is the amount of freight Following decision of Tungabhadra Industries Ltd. Kurnool 1960 (10) TMI 51 - SUPREME COURT OF INDIA , decision of high court upheld - Decided against assesee.

Summary

Issues:
1. Appeal against judgment of High Court of Madras in Writ Petition
2. Questioning order of Tamil Nadu Taxation Special Tribunal
3. Interpretation of law on freight charges deduction
4. Application of principles from Tungabhadra Industries Ltd. case
5. Dismissal of appeals by Supreme Court

Analysis:
1. The appeal was filed against the High Court of Madras' judgment in Writ Petition No. 6169 of 2002, which rejected the appellant's writ petition challenging the order of the Tamil Nadu Taxation Special Tribunal. The Tribunal had allowed the Revenue's appeal against the order of the Tamil Nadu Sales Tax Appellate Tribunal, Additional Bench, Chennai. The assessment year in question was 1988-1989.

2. The High Court, in paragraph 13 of the judgment, observed that the buyer pays the catalogue price less transport rebate allowed, regardless of the freight charges paid by the assessee. The High Court's decision was based on the Constitution Bench's ruling in the Tungabhadra Industries Ltd. case. The appellant claimed exemption on freight charges but failed to meet the conditions specified in the law for deduction.

3. The Supreme Court concurred with the High Court's decision, citing similarities between the present case and the Tungabhadra Industries Ltd. case. The Court upheld that the appellant did not meet the criteria for claiming the deduction on freight charges. Therefore, the Division Bench of the High Court did not commit any error warranting interference, leading to the dismissal of the appeal.

4. Additionally, Civil Appeal No. 6247 of 2004 was also dismissed by the Supreme Court based on the observations and directions made in Civil Appeal No. 6246 of 2004. The dismissal was on the same terms as the first appeal, maintaining consistency in the application of legal principles and judgments.

In conclusion, the Supreme Court upheld the High Court's decision, emphasizing the importance of adhering to legal requirements for claiming deductions on freight charges and applying established legal principles from previous cases like Tungabhadra Industries Ltd. The appeals were dismissed accordingly, maintaining the integrity of the legal interpretation and application in the matter at hand.