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TMI Blog2001 (2) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... ing, it was contended by the authorised representative of the appellant that the commodity, namely, gas sold by the appellant is a highly inflammable material requiring utmost care and caution in its handling and therefore, the appellant undertook to deliver the cylinders at the premises of the buyer clients and for which, a separate invoice has been raised towards services rendered and the amount collected included services for getting back the empty cylinders. The Appellate Assistant Commissioner accepting this argument and also noting that the freight charges have been charged for separately without including with the ex-factory price in the invoices, allowed the claim of exemption. 3.. This order was set aside in the suo motu revision order by the Joint Commissioner. In the suo motu revision notice, the Joint Commissioner observed that no orders or contract were produced at the time of appeal, in respect of collection of freight and handling charges. Further, in all these cases, the deliveries to the buyers were made free on rail factory basis. Further, as against the cost of gas for ₹ 10,08,401.89, the collection of freight, etc., amounted to ₹ 11,96,640.99. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 48 1552.68 On a perusal of the contract, the Joint Commissioner noted that the contract is FOR destination, namely, that the goods shall be delivered at buyers' premises. Therefore, it was held that merely by bifurcating the sale price as value of gas and freight charges, no deduction could be claimed in terms of the decision of the Madras High Court in the case of State of Tamil Nadu v. Parry and Company reported in [1976] 38 STC 122. The Joint Commissioner further observed that the freight amount calculated has no relevance to the actual transportation cost, having regard to the distances involved. Finally, on facts, the Joint Commissioner concluded that the assessee transported the goods for delivering the goods at buyers' site and therefore, the price of the gas cylinder should include the cost of delivery also. Accordingly, a turnover of ₹ 10,87,632 for which, relief was granted by the Appellate Assistant Commissioner, was brought to assessment at 10 per cent. Hence, the present appeal. 4.. Mr. K.J. Chandran, learned Senior Counsel for the appellant, contended that in respect of the assessment year 1986-87 under the Central Sales Tax Act, involving the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to get back the empty cylinders. The decision of the Special Tribunal in T.C. (R). Nos. 2954 and 2955 of 1997 dated January 5, 2001* in the case of Indian Oxygen Ltd. v. Commercial Tax Officer also is not applicable to the present case, inasmuch as that case was decided based on interpretation of various terms and conditions of the contract. The present case of the assessee is a simple agreement clearly showing sale of gas at ex-factory price and collection of freight charges separately by raising invoices based on the request of the customers. Further, the intention of the party is not contemplated in law, so as to determine the character of the transaction. In fine, the claim of the assessee has to be allowed, by following the ratio of the Madras High Court's decision in the case of the assessee pertaining to freight charges in T.C. No. 199 of 1992 dated September 29, 1997 . 5.. Mr. M. Venkateswaran, learned Senior Standing Counsel referred to the decision of the Madras High Court in T.C. No. 199 of 1992 dated September 29, 1997 and urged that the claim under the Central Sales Tax Act was allowed, because the definition in section 2(h) of the Central Sales Tax Act specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een furnished indicating the terms of sale, wherein the price is shown as ex-works at Thekkalur and that the gas cylinders will be delivered at the site of the customers as per the request made by them, for which, supplementary bill will be raised. As rightly admitted by the assessee at the time of first appeal, the liquefied gas has to be supplied in secured cylinders only. Even after supply, the assessee has to return empty cylinders in good condition. As rightly admitted by the assessee, the charges collected as freight charges related to expenses incurred for the delivery of the goods to the customers at the premises and to bring back the empty cylinders from the premises. In the additional typed-set at page 1, the terms for supply of oxygen in cylinders read as follows: Rate: ₹ 3 per cu.m. (excise duty and tax will be charged extra as applicable at the time of taking delivery.) The above price is ex-our works at Thekkalur, Avanashi Taluk. Since you require the cylinder to be delivered through our own transport arrangement at your factory, we would like to mention that a separate supplementary bill will be raised for freight, insurance, handling and other incide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties is for delivery of the bricks at the site of the kiln. The question of transport charges will crop up only in a case where the contract between the parties involves delivery of the bricks at the work-spot of the customer. It is only in that context that the application of rule 6(c) becomes pertinent. 11.. In State of Karnataka v. Bangalore Soft Drinks Pvt. Ltd. reported in [2000] 117 STC 413 (SC), the issue related to supply of soft drinks by a manufacturer to a wholesale dealer and collection of freight charges and octroi charged for separately in the bills in pursuance of the contract, which specified price ex-works. The claim was disallowed on the ground that the agreement was a sham and therefore, the assessee was not entitled for the deduction in respect of freight charges and octroi. However, the High Court held that the contract clearly showed the delivery of the goods in another capacity as a carrier of the goods and therefore, in terms of the agreement, the assessee was eligible for exemption in respect of freight charges. This order of the High Court was upheld by the Supreme Court in respect of freight charges, which was the issue before the Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the sale price under the Central Sales Tax Act and under the Tamil Nadu General Sales Tax Act. 13.. As discussed supra, the intention of the parties in the present case before us, was to supply the liquid gas in safe containers in good condition at the place of the customers and to get back the empty cylinders. Thus, the consideration of price payable by the buyers includes the value of gas as well as the freight charges incurred for despatch of the gas cylinders free on rail and to get back the empty cylinders. In such circumstances, we find that the present Reported as Ram Oxygen Private Limited v. Joint Commissioner (SMR) of Commercial Taxes in [1999] 115 STC 629. Case of the assessee is similar to the one decided by us in Indian Oxygen Ltd. v. Commercial Tax Officer in T.C. (R). Nos. 2954 and 2955 of 1997 dated January 5, 2001, though in that case, various terms and conditions of the contract have been elaborately considered by us. Even with reference to the terms and conditions in the present case, we find that there is no change in the basic fact, namely, supply of liquid gas in safe containers at the places of the customers and to get back the empty cylinders. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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