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TMI Blog2009 (8) TMI 1100X X X X Extracts X X X X X X X X Extracts X X X X ..... ce raised by the local dealers. The authorities during the course of the audit noticed that the assessee had charged and collected VAT charges at 12.5 per cent separately in the tax invoice on the basic value of the goods and that the same was not in accordance with rule 3(2) of the Karnataka Value Added Tax Rules, 2003 (hereinafter referred to as "the Rules"). On issue of notice by the authorities, the assessee has filed a reply on March 31, 2006 and it is admitted therein to the following effect by the assessee. "3. We are selling out motorcycle to dealers and we are showing freight amount separately on the invoices and we are not paying VAT on freight amount. The reason for non-payment of VAT on the freight amount is that out form of sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e customer and accordingly has passed the order. This order was in challenge before the first appellate authority in appeal No. 96/2007. The appellate authority after considering the contentions raised by the appellant has held that even at the stage of appellate proceedings, the assessee had failed to establish that the freight charges were paid at the instance of the buying dealers and that only actual freight charges paid to the transporter were recouped in the tax invoices with the documentary evidence and it has also held that the goods are sent through lorries and the appellant itself had arranged for the transportation and the risk of the goods continued till it was delivered at the place of the dealer. This conclusion was arrived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revision and has contended that: (a) Tribunal grossly erred in not taking into consideration the invoice dated June 23, 2005 which was produced before assessing authority, wherein it is clearly mentioned by the petitioner that freight and insurance cost from depot to dealer is to be borne by the dealer itself and contends that this has to be construed as separate and distinct contract. (b) It is also contended that the freight paid by the dealer is a separate amount and is not to be included in the total taxable turnover as contemplated under rule 3(2) of the Rules. In this connection the learned counsel for the petitioner has relied upon the decision of Kurkunta and Seram Stones (P) Ltd. v. State of Karnataka reported in [1992] 87 STC 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther the Tribunal has also held that the petitioner had taken the risk of transportation during the transit till the vehicles/goods were delivered to the door-steps of the local dealers and has come to the conclusion that the assessing authority has rightly included the freight charges to the total taxable turnover. In view of the above, we are of the opinion that it does not call for our interference with the findings of all the three authorities. In so far as the decision relied upon by the assessee to contend that the cost of freight of delivery is included by the dealer not in his capacity as the seller, but as a matter of convenience and on behalf of the purchaser and that it is independent of the cost of the element of the goods in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as part of the taxable turnover." In view of this decision of the honourable Supreme Court and the findings of all the three authorities that the assessee had failed to prove that there was any independent contract entered into with the dealers to hold that the freight charges were independent of the transaction and could not be included in the total taxable turnover, the contention of the assessee cannot be accepted and the same is liable to be rejected. One another reason as found by the authorities was that the freight charges were not collected on the basis of actuals, but on a assumption depending upon the distance of the local dealers' show-room from the assessee's distribution point and varied from local distributor t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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