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TMI Blog1967 (10) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Advocate for the respondent-company, who are also the petitioners in the writ petitions, contends that under the terms of the agreement, the price at which the goods produced by the company were supplied to the stockists was the current general gross list price F.O.R. less such discount as may be fixed by the company from time to time, that the railway freight was payable by the stockists and since the contract does not make it obligatory for the company to pay the railway freight, the railway freight paid by the stockists cannot be said to have been paid on behalf of the company to justify the Sales Tax Authorities to include the railway freight in the turnover of the company., The company, according to the learned Advocate, followed this procedure because they wanted to have a uniform price throughout India for the sale of their products and in order to enable the stockists to do so, it allowed, apart from the stockist's discount a further deduction of railway freight and charged only the net amount after such deductions as the price of the goods sold to the stockists. The price so charged, he submits, constitutes the turnover and there is no justification for adding to it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question is what is the price or the total amount charged for the goods. We are however not concerned in this case by the ne.essity to include any sums charged by the dealer in respect of anything done at the time of or before the delivery It is strenuously contended by Mr. Ramachandra Reddy by reference to the invoices that the price or the total amount charged is not only the list price minus the discount but the freight charges which were included in the list price and that therefore the freight charged has been properly included by the Sales Tax Authorities in the total turnover of the respondent-company. We may now examine the relevant clauses of the agreement which are clauses (4) and (16). Clause (4) is in the following terms: "The price of the said productions supplied to the stockists shall be the current general gross list price charged by the company, free on rail, less such discount as may be fixed by the company from time to time; but the terms and the times of delivery and the payments therefor shall be in the absolute discretion of the company who may vary the same from time to time." Under this clause, generally, unless the terms and times of delivery are var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown on the railway receipt shall be deducted from the invoice of the company. (a)..........................." (b) Where the materials for despatch to any destination falls below the minimum load for a wagon prescribed by the railway, the company will be at their discretion to increase or decrease the quantities up to the required tonnage or to suit the size-wagons allotted." This clause shows that sales are made by the company in variation of the terms under clause (4), at a price which is free on rail destination, implying that the company will pay the railway freight, as otherwise, there is no meaning in saying that railway freight shall nevertheless be payable by the stockist at the destination and that the amount of freight shown in the railway receipt shall be deducted from the invoice of the company. The term relating to the price in the contract between the company and the stockist envisaged by this clause implies an obligation on the part of the company to pay the railway freight. In contracts where the company undertakes to pay the freight and the purchaser is asked to pay the freight at the destination after the goods are received, it will be deemed that the purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Commercial Tax Officer[1960] 11 S.T.C. 827. In that case rule 5(1)(g) of the Rules made under the Madras General Sales Tax Act, which corresponds to rule 6(1)(g) of the Andhra Pradesh Rules was considered, under which freight charges were not to be included in the total turnover when they are specified and charged for by the dealer separately without including them in the price of the goods sold. It appears that in the specimen bill which the learned counsel for the appellants placed before their Lordships, after setting out the quantity sold by weight, the price was specified as 15 annas 9 pies per lb., and the total amount of the price was determined at Rs. 23,388-12-0. From this, the railway freight of Rs. 1,439-12-0 was deducted and the balance was shown as the sum on which sales tax had been computed. Notwithstanding that sales tax was computed, after deduction of the railway freight from the price, Rajagopala Ayyangar, J., speaking for the Court observed at page 836: "From the contents of this invoice it would be seen that the appellant has charged a price inclusive of the railway freight and would therefore be outside the terms of rule 5(1)(g) which requires that in or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es (Private) Ltd. v. State of Madras[1961] 12 S.T.C. 476., their Lordships of the Supreme Court have held it to have been validly included. S.K. Das, J., observed at page 488: "Under the definition of turnover the aggregate amount for which goods are bought or sold is taxable. This aggregate amount includes the tax as part of the price paid by the buyer. The amount goes into the common till of the dealer till he pays the tax. It is money which he keeps using for his business till he pays it over to Government. Indeed, he may turn it over again and again till he finally hands it to Government. There is thus nothing anomalous in the law treating it as part of the amount on which tax must be paid by him." It is no doubt true that it is not the invoice that determines the price, but the contract-vide Arun Electrics v. Commissioner of Sales Tax[1966] 17 S.T.C. 576. But inasmuch as we have construed clauses (4) and (16) and having regard to the admitted course of conduct between the parties, the contract was to charge a price inclusive of railway freight, the railway freight has to be included in the turnover. In this view, we agree with the Sales Tax Authorities and the dissenting o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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