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TMI Blog2011 (8) TMI 1037X X X X Extracts X X X X X X X X Extracts X X X X ..... time of delivery or before the delivery thereof is included in the turnover. As held by the Supreme Court in the aforesaid judgment, the real test to be applied is whether the goods have passed to the buyer. In the case of cost of freight if delivery forms part of the sale consideration, then, those expenses would form part of the turnover. It is only in case where cost of freight or 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 it is independent of the cost element of the goods in question for the seller, then it will not form part of the sale price. Therefore, it depends on the facts of each case. The assessee is a manufacturer of ready mix concrete. The said ready mix concrete is manufactured with its ingredients like jelly, cement, sand, etc., and in order to avoid hardening of the RMC after certain period of time due to exposure to moisture, chemicals are added to keep the RMC in a liquefied stature till its delivery to the customers depending upon the distance the vehicle carrying RMC is to reach the customer's place. If the RMC is hardened it becomes un-usable. As is clear from the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see any merit in this appeal - Decided against assessee. - S.T.R.P. Nos. 124 of 2011 (TAX) And S.T.R.P. Nos. 146 - 156 of 2011 - - - Dated:- 25-8-2011 - KUMAR N. AND RAVI MALIMATH, JJ. For the Appellant : D. Venkatesh For the Respondent : K.M. Shivayogiswamy, High Court Government Pleader, ORDER:- The order of the court was made by N. KUMAR J. The assessee has preferred these petitions challenging the order passed by the Karnataka Appellate Tribunal, which confirmed the order passed by the appellate authority as well as the original authority, who held that the sale is complete only when the goods are delivered at the works site of the customers and therefore, the pumping charges collected by the assessee constitute pre-sale expenses and included in the sale price of goods sold by the assessee. 2. The subject-matter of these petitions is the assessment year 2005-06 (April, 2005-March, 2006). The assessee is a public limited company registered under the provisions of the Karnataka Value Added Act, 2003 (for short hereinafter referred to as the Act ) and is engaged in the manufacture and sale of cement including ready mix concrete. The assessee had e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efined under section 2(36) of the KVAT Act, 2003 anything done at the time of delivery or prior to delivery of goods would constitute part of the turnover. The sale is complete only when the goods are delivered at the work site of the customers and not at the factory premises or business premises of the assessee. Thus, the pumping charges collected by the assessee constitutes pre-sale expenses and includable in the sale price of goods sold by the assessee. Accordingly, he upheld the order of the assessing authority and dismissed the appeal. Aggrieved by the same, the assessee preferred an appeal to the Karnataka Appellate Tribunal. The Tribunal held that RMC being a product having special characteristics, till delivery it must be protected from atmosphere. Hence, the property in goods, viz., RMC does not pass to the buyer till the delivery of RMC. Therefore, all expenses prior to such delivery constitute the sale price and therefore the Tribunal declined to interfere with the well-considered order passed by the lower authorities and dismissed the appeal. Aggrieved by the said order, the assessee has preferred these revision petitions. 3. The learned counsel for the petitioner as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as that of seller and the other as that of a carrier or transporter of the goods in view of the above nature of the contract and in view of the fact that the freight charges were collected by him for transportation of the goods from the factory site to the place of the buyer. This is clearly borne out from the nature of the contract entered into between the parties particularly in view of condition No. 4 of the contract and as a consequence thereof, he had also collected the freight charges separately from the buyer as per the debit note issued or prepared separately, which has been extracted in the assessment order made by the assessing authority. Therefore, the Tribunal had lost sight of the fact that the petitioner here has a dual role to play, one of a seller and other of a carrier of the goods and it is in his other capacity as a carrier of the goods, he received the goods for and on behalf of the buyer, who is a wholesaler in this case, for the purpose of transportation of the goods to the buyers' place. So the Tribunal is not correct in saying that the goods were delivered at the door of the buyer. True, the petitioner had transported the goods to the place of wholesal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, admittedly the transportation charges are included in the cost price. Therefore, the aforesaid judgment has no application to the facts of this case. 8. In Kurkunta and Seram Stones (P) Ltd. v. State of Karnataka reported in [1992] 87 STC 105 (Karn) explaining the meaning of the word sale price , this court held as under (page 111 in 87 STC): Therefore, at the outset, the transaction of the sale has to be considered with reference to the first part of the definition of 'sale price' in section 2(h) of the Central Act. In case the cost of freight or delivery is invariably part of the sale consideration, then no further question would arise. However, in a case where the cost of freight or 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 it is independent of the cost element of the goods in question for the seller, then the second part of the definition would be attracted; in which case, applicability of the exclusory words has to be examined. 9. In the instant case, section 2(36) of the Act defines Turnover as under: 'Turnover' means the aggregate amount fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturer of ready mix concrete. The said ready mix concrete is manufactured with its ingredients like jelly, cement, sand, etc., and in order to avoid hardening of the RMC after certain period of time due to exposure to moisture, chemicals are added to keep the RMC in a liquefied stature till its delivery to the customers depending upon the distance the vehicle carrying RMC is to reach the customer's place. If the RMC is hardened it becomes un-usable. As is clear from the material on record, the assessee transports the RMC from the manufacturing place to the customer's site. Therefore, in the case of RMC, transportation charges invariably forms part of the sale consideration. After it reaches the site of the customer, the RMC is to be delivered to the customer. The choice of taking the delivery is given to the customer. He has the option of getting the entire RMC dumped at the site from the lorry or he has also been provided an option to get the RMC to a particular place such as roof top or any floor. Therefore, the RMC is delivered by pumping the RMC from the lorry to the specified place by the customer. All expenses incurred till the delivery constitutes sale price. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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