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TMI Blog2001 (1) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... es noted in the bills, was not in order. Out of a sum of Rs. 9,05,442 claimed as exemption towards freight and delivery charges, the assessing authority found that a sum of Rs. 7,90,192 represented collection and delivery charges on the sale of medical oxygen and industrial gas cylinders. The assessing authority held that the claim allowed in the original assessment, is not in order for the following reasons: (i) The dealers have undertaken to deliver the gas cylinders at the doors or at the nearest point of customer's place and also undertaken to collect the empty cylinders from the customer's place. (ii) The dealers charged the customers towards transport charges at fixed rate on pro rata basis. These charges are subject to a minimum of Rs. 25 for door delivery and at Rs. 28 for places connected by road or rail for sales involving up to four cylinders. (iii) In other cases, the charges for delivery are at fixed rate of Rs. 5.50, 6.50, 8.00 and Rs. 10 and Rs. 12 and in the case of compressed gases at Rs. 110 or at Rs. 135 as the case may be. Hence, these charges collected for delivery of gas cylinders and collection of empty cylinders are at fixed rate, they do not represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he volume of gases supplied in cylinders taking into account the distance involved, viz., for delivery of gas and collection of the empty cylinder back from the customer's premises situated within 25 kms., the minimum charge is Rs. 25 per trip. For delivery and collection of cylinders to and from Railway Station and Road Transport Agencies situated within 20 km. distance by road subject to a minimum of Rs. 28 per trip. These delivery and collection charges are charged for separately in the bills. The gases are delivered in secured cylinders of the dealers at the customer's premises and the empty cylinders are collected back. Thus the transfer of property in goods passes on to the customers at the point of delivery and the signs of sale is at delivery point only." Accordingly, the assessing authority brought to assessment the collection and delivery charges relating to industrial gases for Rs. 7,04,433 at 10 per cent and delivery charges relating to medical gases for Rs. 2,18,191 at 8 per cent. 4.. In the first appeal, the Appellate Assistant Commissioner observed that the cylinders for industrial gases belonged to the assessee and the medical gas cylinders belonged to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1992 in the decision reported in Ramco Cement Distribution Co. (Pvt.) Ltd. v. State of Tamil Nadu [1993] 88 STC 151. Thus, by excluding the period, during which, the issue was pending before the Supreme Court, if the time-limit is calculated, then, the revision initiated under section 34 of the Tamil Nadu General Sales Tax Act, was in order. The Joint Commissioner categorically held that the delivery charges collected are combined charges covering both delivery of full cylinders and collection of empties. It was categorically indicated in the terms and conditions for the supply of gases that the delivery charges should be invoiced along with the cost of the gas or under separate bill. The cost of collection charges was increased when there was increase in the price of diesel. Further, medical gases and industrial gases by the very nature cannot be transported without a suitable container. The liquefied gases have to be supplied in the special cylinders specifically meant for that purpose. Therefore, for the supply of gas cylinders to the customers, the charges pertaining to delivery and collection have to be included in the price of the goods supplied, though such charges have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges in the bills separately. The Joint Commissioner has categorically shown that the intention of the parties was to supply the gases in secured cylinders at customers' place. Therefore, the ratio of the decision of the Supreme Court in Ramco Cement Distribution Co. Pvt. Ltd. v. State of Tamil Nadu [1993] 88 STC 151, is very much relevant and the orders made by the Joint Commissioner are not barred by limitation. The delivery and collection charges are pre-sale charges only and therefore, the tax levied in the suo motu revision order, is in order. 9.. We have considered the contentions carefully and perused the records. The relevant portion of rule 6(c) of the Tamil Nadu General Sales Tax Rules, 1959 is as follows: "Rule 6.-The tax or taxes under section 3, 4 or 5 shall be levied on the taxable turnover of the dealer. In determining the taxable turnover, the amounts specified in the following clauses shall, subject to the conditions specified therein, be deducted from the total turnover of a dealer- (a) and (b)............... (c) all amounts falling under the following three heads when specified and charged for by the dealer separately, without including them in the price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the invoices, the claim allowed by the Appellate Assistant Commissioner, is in order and the order of the Joint Commissioner is contrary to law. To find out the correctness of the plea, the various terms and conditions specified in the contract have to be analysed. It is an admitted fact that except in the case of I.C.F., in all other cases, only the assessee has supplied the gas in secured cylinders to the customers. The dispute before us relates to collection and delivery charges collected from such customers. In the nature of trade, as rightly pointed out by the Joint Commissioner, the liquefied gas has to be supplied in secured cylinders only. Even after supply, the assessee has to return the empty cylinders in good condition. In fact, the charges collected as collection and delivery charges in reality, relates to freight charges incurred for delivery of the goods to the customers within the standard delivery zone and charges incurred for bringing back the empty cylinders from the standard delivery zone. In this connection, it is relevant to refer to a few of the conditions as indicated below: "5.4. Company's cylinders will be supplied in whatever size available and whilst t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l not accept responsibility for damage to the customer's buildings, roadways, bridges, weigh bridges, mains approche, pipes or any structures adjacent thereto within the customer's premises unless such damage is caused by the wilful negligence of the company or its servants. The customer shall accept all responsibility for damage to the company's employees or its servants, vehicles, or loads caused by unsuitability of means of access to the loading or unloading points." "Delivery Charges The prices quoted by the contractor are for supply ex-their works/depots. The delivery and collection service is effected at contractor's option as it is dependent upon availability of transport. In case of difficulties in delivery or collection of cylinders to/from consignees premises/railway station/road transport agencies' premises for lack of transport, motorable accessible and permissible roads, lack of proper arrangements for collection, loading and unloading of cylinders, unfavourable weather conditions and other similar circumstances, contractor may not be able to render delivery and collection service by their own hired trucks: (a) Compressed oxygen, dissolved acetylene and nitroge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnee establishment situated within 20 kilometres distance by road from any of contractor's works/depots. (iv) Cylinders over 3,000 litres capacity Rs. 6.30 per cylinder subject to a minimum charge of Rs. 24 per trip will be made for delivery of full cylinders to railway station and road transport agencies establishments situated within 20 kilometres distance by road from any of the contractor's works/depots. (c) High altitude oxygen and dry compressed air (i) Cylinders up to 3,000 litres capacity Rs. 5.40 per cylinder subject to a minimum charge of Rs. 22 per trip will be made for delivery of full cylinders to consignee's establishments situated within 20 kilometres distance by road from any of contractor's works at Bombay, Calcutta and Delhi. (ii) Cylinders of 16,000 litres capacity Rs. 21.60 per cylinder subject to a minimum charge of Rs. 43 per trip will be made for delivery of full cylinders to consignees' establishments, railway stations and road transport agencies establishments situated within 20 kilometres distance by road from any of contractor's works at Bombay, Calcutta and Delhi. Notes: (i) This service is not available at the contractor's works at Gauhati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cylinders at the place of the customers. In fact, the delivery and collection, service was at the option of the assessee and it was dependent upon availability of transport, as indicated under the head, delivery charges. Though it was stated that the responsibility of the assessee ceases on delivery of cylinders ex-works, the condition regarding the responsibility of the customer to check the cylinders on receipt for any defect or discrepancy and advise the company in writing immediately and lack of such advice will be construed as acceptance of the cylinders in good condition as supplied, clearly shows that the responsibility does not cease at ex-works on supply of cylinders as claimed. Further, in condition 5.8, though it was stated that the transit of the cylinders was at customers' risk, in the same condition, it has been clearly specified that any cylinder received in damaged condition, should be reported to the company with a label attached to the cylinder valve worded, "defective" and a letter giving details of the apparent damage. Therefore, the claim of ex-factory delivery of cylinders at buyers' risk, clearly fails in the light of the position indicated above. Sub-clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion continues till the return of the empties. Even if there was a wrong delivery to some other works/depots/warehouses by the customers, then, for the charges incurred for transporting empty cylinders to the place from where supply was originally made, the customer is bound to pay the charges, as contemplated in condition 5.3, which reads as follows: "5.3. A cylinder holding charges in respect of the cylinders of which the custody is permitted to be retained by the customer will be payable by the customer from the date of delivery/despatch of full cylinders from the Company's works/depots/warehouses till the date of physical receipt of empty cylinders at the Company's works/depots/ warehouses from where supplies were made. If these are returned to some other works/depots/warehouses, charges incurred in transporting these to the place from where supply was originally made are payable by the customer. The customer will be required to pay the cylinder holding charge on the basis of total number of cylinders held by the customer and the duration of such holding. As and when supply of full cylinders is made and/or empty cylinders are received, the Company will submit bills for the cy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not a sham, as concluded by the Tribunal, so far as it related to the transportation of the soft drinks sold. 14.. In State of Tamil Nadu v. Sree Kamaraj Waste Paper Store reported in [2000] 118 STC 132, the Madras High Court held that the intention of the assessee was to charge the freight and delivery charges separately and that was shown in the bills prepared by him. Therefore, even if the freight and delivery charges are deducted from the price of the goods sold, still, the assessee was eligible to claim exemption under section 2(h) of the Central Sales Tax, 1956. 15.. The decision in State of Tamil Nadu v. Fedders Lloyd Corporation (P) Ltd. reported in [1984] 56 STC 191 (Mad.), relates to handling charges claimed as deduction under rule 6(c) of the Tamil Nadu General Sales Tax Rules, 1959. The Madras High Court observed that the Tribunal found that handling charges were separately charged for by the assessee to the customers and were not included in the price of the goods sold. Therefore, the claim is to be allowed. 16.. Thus, the various decisions relied on by the assessee, clearly show that the point to be considered is whether the intention between the parties was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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