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TMI Blog2016 (12) TMI 1023X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that first part of the definition would apply in the present case also and the exclusion clause is irrelevant and cannot be called in aid by the petitioners. The assessment order has only referred to separate billing of freight charges by the petitioners but it has not dealt with the issue as to whether the freight charges are part of 'sale price' or not so as to conclude that it cannot be included in the taxable turn over. There being no finding to this effect by Assessing Officer, it is a case where there is omission or escape to deal with the issue by the Assessing Officer and Section 28 has rightly been invoked for initiating escapement proceeding. By clause 14 of the agreement, the parties have bound themselves that the price of contract shall remain firm during the currency of contract and as such, no escalation is payable on any amount whatsoever including freight, however, any change in the statutory levies viz. Royalty, Sales Tax and Labour Welfare Cess during the pendency of the contract shall be borne by the buyer as per the actuals against the documentary evidence/Government notification. Admittedly, there is no change in the statutory levies like Royalty, Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent re-assessment, all the petitioners were held liable to pay commercial tax on the taxable turn over by including the freight charges. The Revision Application preferred by the petitioners before the Deputy Commissioner, Commercial Tax has also been dismissed by a detailed order. 3. Shri Rajeev Shrivastava, learned counsel for the petitioners would submit that since a separate agreement for freight charges has been entered with the BSP, the said freight charges is not a part of the sale price. He would also contend that escapement proceeding under Section 28 of the Act, 1994 can be initiated only on satisfaction of the conditions prescribed therein, which is not satisfied in the present case. Referring to Rule 48 (1)(g) of the Vanijyik Kar Niyam, 1995 (for short 'the Rules, 1995') read with Form-47 thereof, he would further submit that the AO has to state reasons in the notice as to why escapement proceedings are to be initiated. But in the present case the proceedings have been initiated on the basis of audit objection and not on the basis of satisfaction of the AO. It is further argued that the department having not preferred any appeal or revision, the original asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are as follows:- 6. Consignee : AGM I/C (RAW MATERIALS), SAIL, BHILAI STEEL PLANT, BHILAI 7. Delivery Schedule : To be supplied minimum @ 1600 tonnes per month. This will constitute the basis for assessing the delivery performance of the seller. In case the seller fails to supply the quantity as per monthly schedule indicated above in any month, the backlog quantity is to be completed in the next month alongwith the scheduled quantity for that month. If the seller still fails to complete the quantity in the 2nd month, the unsupplied quantity shall be reduced from the overall A/T quantity. Repeatition of such failures shall result in shortclosure of the A/T and diversion of the balance quantity. 8. WEIGHMENT : Weighment done at BSP weigh bridge shall be final for the purpose of payment. However in case of despatch by Rail if wagons escape weighment at BSP or at both ends, RR weight shall be final for payment. 13. Price : The break-up of landed cost per tonne is as under:- a) Ex-mines rate per tonne inclusive of : ₹ 149.04 royalty LWC. b) Sales/Commercial Tax @ 4% : ₹ 5.96 c) Freight by road on pre-paid door delivery basis: ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the buyer as per actuals against documentary evidence/Govt. Notification. However, for supply by Rail, the freight would be payable as per actuals against RR's. 9. More importantly clause-17 dealing with Freight emphatically provides that transportation of the materials by truck from the supplier's mines to Bhilai Steel Plant on door delivery basis is to be arranged by the seller including loading, unloading into bunkers and proper stacking of the material in the bed. The transportation charges shall be paid to the seller along with the bills and will not be paid to the transporter directly in any case. 10. Thus, the freight charges has been made and included as part of sale price or landed cost in express terms. The landed cost is also arrived at on door delivery basis to mean ex-destination and not exmines. 11. The issue as to when freight charges would be a part of sale price has been dealt with by the Supreme Court in catena of decisions. 12. Referring to the definition of sale price under Section 2(u) of the Act, 1994, it has been urged by the petitioners that the definition of sale price in the West Bengal Sales Tax Act with which the Supreme Court was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of certain categories of sales and turnover , according to Section 2(t), means the aggregate of the amount of sale prices received or receivable by a dealer in respect of the sale or supply of goods... The definition of 'sale price' is given in Section 2(p) and according to that definition, it means: ....the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed as cash discount according to the practice normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof other than the cost of freight or delivery or the cost of installation in case where such costs is separately charged. This definition is in two parts. The first part says that 'sale price' means the amount payable to a dealer as consideration for the sale of any goods. Here the concept of real price or actual price retainable by the dealer is irrelevant. The test is, what is the consideration passing from the purchaser to the dealer for the sale of the goods. It is immaterial to enquire as to how the amount of consideration is made up, whether it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount of freight forms part of the 'sale price' within the meaning of the first part of the definition. 17. We must, therefore, hold that, by reason of the provisions of the Control Order which governed the transaction of sale of cement entered into by the assessee with the purchasers in both the appeals before us, the amount of freight formed part of the 'sale price' within the meaning of the first part of the definition of that term and was includible in the turnover of the assessee. (Emphasis supplied) 17. The principles laid down in the matter of Hindustan Sugar Mills (Supra) have been approved and relied by the Supreme Court in its later decision in the matter of Black Diamond (Supra), E.I.D. Parry (I) Ltd. Vs. Asstt. Commr. Of Commercial Taxes and Another (2000) 2 SCC 321, State of A.P. Vs. A.P. Paper Mills Ltd. (2005) 1 SCC 719, Neyveli Lignite Corporation Ltd. Vs. Commercial Tax Officer, Cuddalore and Another (2001) 9 SCC 648, Commissioner of Central Excise Lucknow, U.P. Vs. Chhata Sugar Co. Ltd. (2004) 3 SCC 466, Commissioner of Central Excise, Delhi Vs. Maruti Udyog Ltd. (2002) 3 SCC 547 and Tata Iron and Steel Co. Ltd. Vs. Collector ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ums charged for something done by the dealer in respect of the goods at the time of or before the delivery thereof are covered by inclusive clause. The cost of freight or delivery or the cost or installation certainly represents an amount charged for transportation or installation of the goods at the time of or before the delivery thereof and would, therefore, fall within the inclusive clause on its plain terms but it is taken out by the exclusion clause, other than the cost of freight or delivery or the cost of installation in case where such cost is separately charged . This exclusion clause does not operate as an exception to the first part of the definition. It merely enacts an exclusion out of the inclusive clause and takes out something which would otherwise be within the inclusive clause. Obviously, therefore, this exclusion clause can be availed of by the assessee only if the State seeks to rely on the inclusive clause for the purpose of bringing a particular amount within the definition of 'sale price'. But if the State is able to show that the particular amount falls within the first part of the definition and is, therefore, part of the 'sale price', the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs have prepared separate bills to claim freight charges which have been excluded from the purview of assessment and thus, it is not a case where they have escaped assessment but it is a case of conscious deletion by the Assessing Officer. 24. I am not convinced with this argument because the assessment order has only referred to separate billing of freight charges by the petitioners but it has not dealt with the issue as to whether the freight charges are part of 'sale price' or not so as to conclude that it cannot be included in the taxable turn over. There being no finding to this effect by Assessing Officer, it is a case where there is omission or escape to deal with the issue by the Assessing Officer and Section 28 has rightly been invoked for initiating escapement proceeding. 25. Further argument of the petitioners that the assessment order having attained finality, escapement proceeding would amount to review of the earlier assessment order deserves to be dismissed for the same reason as discussed in the preceding paragraph. 26. Submission has been made to the effect that the AO has not stated reasons in the notice as to why escapement proceedings are requir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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