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TMI Blog1991 (10) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... al before the Appellate Assistant Commissioner disputing the inclusion of Rs. 1,49,295.02, representing the "transit insurance charges", in the taxable turnover. The Appellate Assistant Commissioner agreed with the assessees and found that insurance charges had been collected separately in accordance with the terms of the contract and agreement between the buyer and the seller and that the said amount did not form part of the taxable turnover. The Appellate Assistant Commissioner accordingly deleted this amount from the taxable turnover and allowed the appeal. The Joint Commissioner was not satisfied and proposed to revise, in exercise of the suo motu powers of revision, the order of the Appellate Assistant Commissioner. Notice was issued to the assessees and their objections were invited. After considering the objections and hearing the parties, the Joint Commissioner confirmed the proposal. It was found by the Joint Commissioner that the "transit insurance charges" had been taken into consideration by the assessees while arriving at the sale price and, therefore, they formed part of a consideration of the sales. The assessees have questioned that order through this appeal. 3.. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harges for the transit insurance were separately shown in the invoices and claimed from the buyers on the basis of the actual amount spent on insurance charges, the sale price could not be deemed to have included the transit insurance charges. The appellate authority referred to the fact that the assessees furnished certificates to the purchasers to the effect that the amount of insurance charges collected from the purchasers had been paid over to the insurance companies on their behalf. The disputed amount of Rs. 1,49,295.02 relates to collection of such insurance charges, which was separately collected by the assessees, according to the terms and contracts of the agreement between the buyers and sellers and are the actual charges which were received from the buyers. This amount was held really not to form part of the taxable turnover and hence, liable to be granted exemption from tax. The Joint Commissioner, however, noticed that though insurance charges had been collected separately from the customers, only to the extent of the charges paid to the insurance companies, the same was done as per the terms and conditions of the contracts and, therefore, there was an implied contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not follow the law laid down therein, observing that in the case in the Kerala High Court, the question whether insurance charges in respect of the goods during transit have to be excluded from determination of the sale price or the taxable turnover "was not an issue before them". We fail to understand as to how the Joint Commissioner arrived at this finding. The specific issue in a group of tax revision cases also related to the exclusion of the cost of insurance of the goods for determining the turnover and, therefore, the Bench had applied its mind to that specific issue. Indeed, it was while considering the definition of "turnover" and not the definition of "sale price" that the Kerala High Court rendered the finding, but that would not make any difference for determination of the question before us. The Kerala High Court was influenced by the fact that general insurance had become so much of a part of commercial activity in the country that the freight charges should be deemed to include the transit insurance charges. We are in agreement with that view subject, of course, to a rider that the transit insurance charges would be deemed to be included in the freight charges unl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... freight charges in our bills." It was in view of these express stipulations between the parties that the insurance charges incurred by the assessees were claimed in the invoices separately, since insurance had been done at the risk, instance and at the cost of the buyers. Indeed, the expression "sale price" within the meaning of section 2(h) of the Act, excludes cost of "freight or delivery" and the cost of "installation" from the sale price, where such cost is charged separately and the "transit insurance" charges have not been specifically excluded from the expression "sale price" under the Act, but, considering the nature of the transaction and the purpose for which transit insurance is undertaken, it would imply that the expression "freight charges" would take within its ambit and scope the "transit insurance charges" also and the same would be excluded from the sale price where they are separately charged and paid for by the purchasers. Like the freight charges which, according to the terms and conditions of the agreement, are payable by the purchaser, the cost of transit insurance also is payable by him as a part of the expenses involved in freight or delivery of the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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