2019 (1) TMI 711 - HC - VAT and Sales Tax

Valuation - includibility - deduction on freight and pumping charges shown separately in the invoice disallowed - assessee s specific case is that they have a dual role one that of seller and the other of transporter as agent of the buyer - Held that - In the instant case, as a matter of fact, the first Appellate Authority found that the freight charges, pumping charges have been separately shown in the invoices without including the same in the cost of the goods. Further, the purchase order also clearly says that the delivery is ex-RMC Works. Further, the Assessing Officer has not pointed out even a single instance of collection of consolidated amount and that the sale is completed only after delivery of RMC at the site of the customer and not even a single buyer was enquired and there was no material available with the Assessing Officer. The Tribunal committed a serious error in deciding the questions against the assessee - appeal allowed - the substantial questions framed for consideration are decided in favour of the assessee.

Summary

Issues:
Challenge to order passed by Tamil Nadu Sales Tax Appellate Tribunal regarding deduction on freight and pumping charges in invoices.

Analysis:
1. The appeals by the assessee were filed under Section 38 of the Tamil Nadu General Sales Tax Act, 1959, challenging the order passed by the Tamil Nadu Sales Tax Appellate Tribunal. The substantial questions of law included issues such as the disallowance of deduction on freight and pumping charges, disagreement with previous decisions, misconceptions of law, and the sale of Ready Mix Concrete (RMC) ex-works.

2. The assessee, engaged in various businesses, claimed deductions for freight and pumping charges of RMC manufactured at their factory. The RMC was stored and sold ex-works, with subsequent transportation facilitated as an agent of the buyer. The Assessing Officer disallowed the deductions, leading to appeals and subsequent legal proceedings.

3. The first Appellate Authority allowed the assessee's claim, considering the goods delivered on an ex-RMC plan basis and post-sale services like freight and pumping charges. The authority cited relevant legal precedents and held that the charges were not part of the turnover. However, the Tribunal overturned this decision, relying heavily on a Karnataka High Court judgment without proper discussion of the factual matrix.

4. The High Court found the Tribunal's decision lacking in reasoning and factual analysis. It emphasized the importance of judicial discipline in following earlier decisions, especially when they favor the assessee. The Court disapproved of the Tribunal's approach in not crediting the first Appellate Authority's findings and not considering the assessee's case law in its favor.

5. The Court further analyzed legal precedents regarding the exclusion of freight and delivery costs from the sale price if separately charged. It highlighted that the invoices showed separate charges for freight and pumping, not included in the cost of goods. The absence of evidence of consolidated amounts or incomplete sales by the Assessing Officer supported the assessee's position.

6. Ultimately, the Court allowed the appeals, deciding the substantial questions of law in favor of the assessee. The Tribunal's decision was deemed erroneous, and the Court emphasized the correct application of legal principles regarding the exclusion of transportation costs from the sale price. No costs were awarded in the judgment.