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TMI Blog1978 (3) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... ich we are concerned states: "(c) all amounts falling under the following two heads, when specified and charged for by the dealer separately, without including them in the price of the goods, sold: (i) freight;...... shall be excluded from the total turnover." This rule, on a reading of it proceeds on the basis, as is clear from what is stated earlier, that freight would form part of the total turnover because the direction is that freight be deducted from the total turnover of the dealer. There is some ambiguity in this regard. To be included in the turnover, freight must necessarily form part of the price for which the goods were sold. The latter part of the rule insists, however, that freight should not be included in the price of the goods sold and it must be specified and charged for by the dealer separately. The expression is "without including them in the price of the goods sold". To give sense to this rule, we have to understand this as meaning that even in cases where the freight formed part of the price, it can be excluded from the total turnover in cases where it is specified and charged for separately and by not including it in the price of the goods sold. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the definition of "turnover" in section 2(s) of the Andhra Pradesh General Sales Tax Act and section 5 of that Act as well as the expression "total turnover". It is stated that "total turnover" is the aggregate of the consideration received for the sale or purchase of goods inclusive of any sums charged by the dealer for anything done in respect of the goods sold at the time of or before the delivery of the goods. After adverting to the terms of the contract and the provisions in the statute, the Supreme Court observed: "If clause (4) stood alone the price charged by the company may be deemed to be the catalogue rate less the discount payable to the purchasers. But by clause (16) the purchasers clearly undertook to pay railway freight which was deducted from the invoice made out by the company. By clause (16) the company received the catalogue rate less the railway freight as price of the goods sold. We are unable to agree with the High Court that 'the term relating to the price in the contract between the company and the stockist envisaged by this clause [clause (16)] implies an obligation on the part of the company to pay the railway freight'. In our judgment, under the te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ungabhadra Industries Ltd. v. Commercial Tax Officer[1960] 11 S.T.C. 827 (S.C.). , the goods were delivered at the place of buyer free of freight. This is a vital distinction between the case in Tungabhadra Industries Ltd. v. Commercial Tax Officer[1960] 11 S.T.C. 827 (S.C.). and the case before us which is on all fours with the decision in Hyderabad Asbestos Cement Products Ltd. v. State of A.P.[1969] 24 S.T.C. 487 (S.C.). We, therefore, follow the latter decision and hold that the amount of freight is not includible in the total turnover of the assessee as the freight did not form part of the price payable for the sale. The second contention raised by the counsel with which we are concerned relates to scrap. The assessee is engaged in the business of manufacture of hides and skins and other items. They have sold various items such as drums and containers, gunny bags, iron scraps, brass scraps, etc., sundry items of scraps, car spare parts, condemned frigidaire and sewing machine. All these items of sale related to goods that were handled by the assessee is not disputed. Prima facie, the position is as indicated in State of Tamil Nadu v. Burmah Shell Co. Ltd.[1973] 31 S.T.C. 426 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machine, etc., also formed part of what became useless for the purpose of the business of the assessee and are connected with the business of the assessee and the sale of those items will be a transaction connected with the business and will form part of the business of the assessee. The price received for those items also would have to be included in its turnover. We, therefore, negative this contention advanced on behalf of the assessee by the counsel. The only remaining item with which we are concerned relates to raw hides and skins admittedly purchased by the assessee. It is also admitted that the assessee was the last purchaser of those raw hides and skins. After purchasing the raw hides and skins, they were tanned by the assessee and it is said that those tanned hides and skins were sold in inter-State transactions. From these facts, the counsel contended that when once raw hides and skins had been converted into tanned hides and skins, the tax imposed on raw hides and skins by item 7(a) of the Second Schedule to the Tamil Nadu General Sales Tax Act, 1959, is shifted to the latter transaction of sale of the tanned hides and skins. The assessee got inspiration for this c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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