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TMI Blog2023 (2) TMI 1384X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 2(h) of the CST Act, the cost of freight, when the same is separately charged in the invoice, would not form part of the sale price. The provisions of both related Acts, whose authorities are common, have to be interpreted in harmonious, peaceful and in the intended manner. Time and again, the Apex Court, in Baroda Electric Meters Ltd. Vs. Collector of Central Excise [ 1997 (7) TMI 126 - SC ORDER ], Escorts JDB Ltd. Vs. Commissioner o Central Excise, Delhi-II [ 2002 (10) TMI 96 - SUPREME COURT ] has held that the freight separately invoiced will not form part of the sale price as defined in Section 2(h) of the CST Act and Section 2(36) of the RVAT Act. The literal translation of the said provisions is unambiguous and specifically excludes freight from sale price if it is separately charged/invoiced. Even the Division Bench of this Court has categorically held, in COMMERCIAL TAXES OFFICER, ANTI-EVASION, CIRCLE-II, JAIPUR VERSUS M/S. ROCA BATHROOM PRODUCTS PVT. LIMITED [ 2022 (1) TMI 1479 - RAJASTHAN HIGH COURT] , that freight cannot be added in the assessable value if the same is separately reflected in the invoice. Conclusion - The freight charges being reflected sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Team on 22/05/2012 and there was a change in opinion of the said authorities, and it was determined that even though the freight and insurance charges are collected separately, but as the same are included in the price charged from the buyer and the delivery is F.O.R. destination, the same is required to be taxed. In the light of said observation, assessment order dated 01/03/2013 was passed and due amount of tax, interest and penalty was imposed under Section 25, 55, 61 of the RVAT Act read with Section 9 of the CST Act. 4. Upon appeal, the penalty was set side but levy of interest was confirmed by the Appellate Authority vide order dated 01/04/2015. 5. The learned Tax Board, against the appellate order dated 01/04/2015, confirmed the levy of VAT on freight and interest on the following analogy:- "वर्ष 2007-08 से 2011-12 की अवधि के प्रकरणों के तथ्यों से यह निर्विवादित रूप से ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2325;ारण Freight and Insurance राशि को विक्रय मूल्य का भाग माना जाना पूर्णतः न्यायोचित एवं विधिसम्मत है, अतः इस संबंध में अपीलीय आदेश पुष्टि किये जाने योग्य है।" 6. Being aggrieved, the present STRs have been filed by the petitioner-assessee. 7. Learned counsel for the petitioner-assessee submitted that as per provisions of Section 2(36) of the RVAT ACT and pari meteria provisions of Section 2(h) of the CST Act, which defines sale price, the cost of freight and other such expenses is specifically excluded from the definition of 'sale price', if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... freight and insurance charges were to be borne by the supplier/assessee. In transit, as the risk was on behalf of the supplier, the freight cannot be deducted from the 'sale price'. In support of his submissions, learned counsel for the respondent have reliance upon judgment of the Apex Court in Tungabhadra Industries Ltd, Kurnool Vs. Commercial Tax Officer, Kurnool: (1960) 11 STC 827 (SC); Hindustan Sugar Mills Ltd. Vs. State of Raj. & Ors.: (1979) 43 STC 13 (SC); and India Meters Ltd. vs State of Tamil Nadu: (2010) 9 SCC 423. 9. Heard the arguments advanced by respective sides, scanned the record of the STRs and considered the judgments cited at Bar. 10. Before adverting to the merits of the case, it is necessary to reproduce and analyze the definition of 'sale price'. Accordingly, Section 2(36) of the RVAT Act and Section 2(h) of the CST Act are reproduced as under:- "Section 2 - Definitions (of CST ACT) (h) "sale price" 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CST Act, the cost of freight, when the same is separately charged in the invoice, would not form part of the sale price. The provisions of both related Acts, whose authorities are common, have to be interpreted in harmonious, peaceful and in the intended manner. Hence, on bare perusal of the provisions of sale price, it can safely be concluded that:- (i) Sale price is the consideration for the sale of goods; (ii) The freight and insurance charges are deductible and would not come under the definition of 'sale price' even if borne by the dealer on behalf of buyer, if it is reflected/charged separately in the invoice. 12. Learned authorities below and learned Tax Board have drawn a conclusion that as the delivery of goods is at FOR destination, i.e. at the doorsteps of the buyer, and because transit risk is borne by the assessee/dealer/seller, the assessable price/sale price will included freight. However, such a conclusion is beyond the scope of the provisions of Section 2(36) of the RVAT Act and Section 2(h) of the CST Act and if affirmed, would frustrate the plain language as well as the intent of the legislation for the following reasons:- (i) Because freight is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis. The terms of such a contract may provide that the delivery shall be complete when the goods are put on rail and thereafter it shall be at the risk of the purchaser. Such a stipulation would make the railway agent of the purchaser for taking delivery of the goods. The freight in such a case would be payable by the purchaser though the price agreed upon is for destination railway station. The price of the goods receivable by the dealer would, in that event, be the for destination railway station price less the amount of freight payable by the purchaser. That would be the consideration payable by the purchaser to the dealer for the sale of the goods and the amount of freight being payable by the purchaser would not be included in the 'sale price' within the meaning of the first part of the definition. The position would be the same even if the dealer pays the freight and obtains railway receipt "freight prepaid" and claims the full for destination railway station price in the bill. The amount representing freight would not be payable as part of the consideration for the sale of the goods but by way of reimbursement of the freight which was payable by the purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e excess freight has been charged, the purchaser shall be entitled "to lodge claim with the railways". It would, thus, be seen that according to these provisions the delivery of the goods to the purchaser would be complete as soon as they are put on rail at the Work Siding and the risk then passes to the purchaser and payment of freight would be the responsibility of the purchaser. This would be the position apart from the provisions of the Control Order and on this position, there can be doubt, for reasons already discussed, that the amount of freight would not form part of the 'sale price'. But we have to consider the impact of the provisions of the Control Order, for these provisions having statutory force and authority have overriding effect and the terms and conditions of the contract to the extent to which they conflict with these provisions must be held to be excluded." In view of the above, the judgment of Hindustan Sugar Mills (supra) is distinguishable. 15. Time and again, the Apex Court, in Baroda Electric Meters Ltd. Vs. Collector of Central Excise: 1997 (94) E.L.T. 13 (SC); Escorts JDB Ltd. Vs. Commissioner o Central Excise, Delhi-II : 2002 (146) E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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