Full Judgment Text
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PETITIONER:
HINDUSTAN SUGAR MILLS ETC.
Vs.
RESPONDENT:
STATE OF RAJASTHAN AND ORS.
DATE OF JUDGMENT22/08/1978
BENCH:
BHAGWATI, P.N.
BENCH:
BHAGWATI, P.N.
TULZAPURKAR, V.D.
CITATION:
1978 AIR 1496 1978 SCC (4) 271
CITATOR INFO :
F 1980 SC 346 (3,4)
F 1980 SC 952 (2,3)
C 1981 SC1681 (1)
RF 1981 SC1887 (2,5,16,17)
RF 1986 SC 649 (34)
RF 1986 SC1556 (16)
ACT:
Sale Price, under section 2(p) of the Rajasthan Sales
Tax Act, 1954 and Section 2(h) of Central Sales Tax Act,
1956-whether, in sales of cement effected under the Cement
Control Act and Control Act-Distinction between contract of
sale for f.o.r. destination railway station’ and a ’contract
where price alone is so’.
HEADNOTE:
The appellant assessee owned a cement factory known as
Udaipur Cement Works at Udaipur. During the assessment year
1971-72 and 1972-73, the sale of cement was controlled under
the Cement Control order, 1967, issued by the Central
Government, in exercise of the powers conferred by Sections
18 and 25 of the Industries (Development and Regulation)
Act. 1951. Clause 7 of the Control Order specified a
retention price of Rs. 161.40 per metric tonne for cement
manufactured by all producers, other than those Mentioned in
items 1 to 5 of the schedule, which included the assessee.
Tho maximum price at which a producer could sell cement was
prescribed in clause (8) which said that no producer shall
sell "any other variety of cement at a price exceeding Rs.
214.65 per metric tonne free on rail destination railway
station plus the excise duty paid thereon", plus "such
charges as may be fixed by the Central Government in respect
of packing in jute bags or in any other containers". The
Explanation to clause 8 clarified that for the purpose of
the Control order, the expression ’free on rail destination
railway station’ means "the price including the cost of
transport by the cheapest mode except where any other mode
of transport has been specified by the Central Government
under clauses (4) at the destination point".
During the relevant assessment years, the assesses
entered into diverse contracts of sale of cement with
purchasers at the price of Rs. 214.65 per metric tonne,
"free on rail destination railway station" plus packing
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charges plus excise duty. These contracts were on the terms
and conditions set out in the form of "General terms and
conditions of supply" adopted by the assessee. The assessee,
in fulfilment of these contracts, despatched cement to the
purchasers at various destinations by rail and the railway
receipts were made out on the basis of ’freight to pay’. The
invoices sent by the assessee showed the ’free on rail
destination railway station’ price of the cement despatched
at the rate of Rs. 214.65 per metric tonne and added the
amounts representing excise duty and packing charges and
deducted the amount of railway freight, since it was to be
paid by the purchasers. The assessee did not charge in the
invoices sales tax on the railway freight, since in its view
it did not form part of the ’sale price’; but in order to
provide against a possible claim which might be made by the
Sales Tax Authorities, the assessee claimed by way of
deposit an amount ’towards contingent liability to sales tax
on railway freight to be paid by you’ that is, the
purchasers.
277
In the assessment of the assessee to sales tax under
the Rajasthan Sales A Tax Act, 1954 and the Central Sales
Tax Act, 1956, the Sales Tax Authorities took the view that
the amount of freight formed part of the "sale price" and
was, therefore, liable to be included in the turnover of the
assessee for the purposes of assessment of sales tax. The
assessee challenged the correctness of the view by filing a
Writ petition in the High Court of Rajasthan, but the High
Court agreed with the view taken by the Sales Tax
Authorities and held that since under clause 8 of the
Control order, the price payable by the purr- chasers was
f.o.. destination price, the amount of freight included in
it formed part of ’sale price
Dismissing the appeals, the Court
^
HELD: 1. By reason of the provisions of the Cement
Control order 1967, which governed the transactions of sale
of cement entered into by the assessee with the purchasers,
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. [296 D-
E]
2. (a) The Control order is paramount; it has over-
riding effect and if it stipulates that the freight shall be
payable by the producer, such stipulation must prevail,
notwithstanding any term or condition of the contract to the
contrary and any such term or conditions to the extent to
which it is in conflict with the provisions of the control
order would stand excluded. It is a statutory order having
binding force and effect and it must govern the transactions
of sale of cement entered into by the assessee with the
purchasers.
[292 C, 293 B-C, 295 A]
(b) The Control order is designed to ensure
availability of cement at a uniform prise throughout India
irrespective of the distance from the place of manufacture
and clause 8 of the order provides a maximum price of Rs.
214.65 per metric tonne f.o.r. destination railway station
at which a producer may sell cement manufactured by him. It
was at this maximum price of Rs. 214.65 per metric tonne
f.o.r. destination railway station that, in pursuance of
this clause, the assessee sold cement to various purchasers.
The price was clearly inclusive of freight. [292 D-E] li’
(c) Under the scheme of the Control order the freight
is paid by the producer who then recovers it from the
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purchaser. Clause 9 clearly contemplates that the f.o.r.
destination railway station price would be realised by the
producer, four the excess of such price over the retention
price and selling agency commission is required to be paid
over by the producer to the controller in the Cement
Regulation Account. The amount of freight has, there- fore,
to be realised by the producer from the purchaser and that
postulates that it is the producer who pays the freight to
the railway authorities. The proviso to clause. (9) makes
this doubly clear by providing that "the expenditure
incurred by the producer on freight.... shall be reimbursed
to the producer and again clause (II) uses the expression"
....paying or equalising the expenditure incurred by the
producer on freight". [294 A-C]
(d) When the producer pays the freight, he does so
because, as between him and the purchaser, he is liable to
pay the freight and he then recovers it as part of the
price. [294 D-E]
278
(e)If the obligation to pay the freight were on the
purchaser, the amount of freight would obviously be deducted
from the f.o.r. destination railway station price in the
invoice and only the balance would be realised by the
assessee. There would be no question of the assessee
realising the amount of freight from the purchaser because
the purchaser would have paid the freight in discharge of
the his own liability and the assessee would have no claim
to recover it from the purchaser. Then, the terms of clause
9 proviso to that clause and claue 11 of the Control order
would not be satisfied. It would not be possibie to give
effect to clause 9, if what is realised by the assessee is
not the f.o.r. destination railway price but that price less
the amount of freight. The assessee also would not be able
to claim to be entitled to be reimbursed under. the proviso
to clause 9, if he has not incurred any expenditure on the
freight. The entire statutory scheme would become
unworkable. [294 E-G]
(f ) The scheme of the Control order clearly proceeds
on the basis that the freight is payable by the producer and
he recovers it from the purchaser as part of the f.o.r.
destination railway station price. The provision in the
contract that the delivery to the purchaser shall be
complete as soon as the goods are put on rail and payment of
the freight shall be the responsibility of the purchaser. is
wholly inconsistent with the scheme of the Control order and
must be deemed to be excluded by. it. [294 H, 295 A]
3. (a) The definition of Sale Price in section 2(p) of
the Rajasthan Sales Tax Act, 1954 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 and
therefore, the concept of real price or actual price
retainable by the dealer would be irrelevant. The test would
be. what was the consideration that passed from the
purchaser to the dealer for the sale of the goods. The only
relevant question to ask being what was the amount paid by
the purchaser to the dealer as consideration for the sale
and not as to what was the net consideration retainable by
the dealer, it would be immaterial to enquire as to how the
amount of consideration was made up, whether it included
excise duty or sales tax or freight. [286 D, F-G]
The amount of sales tax payable by a dealer, whether
included in the price or added to it as a separate item as
is usually the case, forms part of the "sale Price". It is
payable by the purchaser to the dealer is part of the
consideration for the sale of the goods and hence falls
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within the first part of the definition. And so would be the
case regarding the amount of freight and handling charges.
It would be payable by the Purchaser not under any statutory
or other liability but as part of the consideration for sale
of the goods and it would therefore form part of "sale
price" within the meaning of the first part of the
definition. [287 A-D, 288 D-F]
M/s. George oakes (P) Ltd. v. The State of Madras, XII
S.T.C. (S.C.) 476; Dyer Meakin Breweries Ltd. v. Sales Tax
Officer., Ernakulam, XXVII S.T.C. (S.C.) 120 applied.
Sri Sundararajan & Co. Ltd. v. The State of Madras
(VIII S.T.C. Mad. 105); Paorika Ltd. and Anr. v. Board of
Trade (1944) 1 All. E.R. 372; Love v. Norman Wright
(Builders) Ltd. [1944] 1 All. E.R. 618; referred to.
279
(b) In a contract of sale f.o.r. destination railway
station, the delivery of At goods to the purchaser would be
complete at the destination railway station and till then
the risk would continue to remain with the dealer. The
agreed price being inclusive of the freight, it would be a
matter of indifference to the purchaser as to what was the
amount of freight paid by the dealer. The dealer may, in
such a case, pay the freight and charge the agreed price to
the purchaser or he may obtain a railway receipt on the
basis of ’freight to pay’ and request the purchaser to pay
the freight at the time of taking delivery of the goods
from the railway at the destination railway station and give
the purchaser credit for the amount of the freight against
the agreed price. The latter would merely be a convenient
mode of paying the agreed price. Though the purchaser can
very well refuse to accept the railway receipt which is not
’freight prepaid’, but freight to pay’, he ordinarily, as a
reasonable businessman would, accept such a railway receipt
and pay the amount of freight o l behalf of the dealer. When
the purchaser, pays the amount of freight, in such a case.
it would be as part of the agreed price and not as freight
vis-a-vis the dealer. The amount of freight paid by the
purhaser and shown in the bill as deducted from the agreed
price would, therefore, clearly form part of ’sale price’
and fall within the first part of the definition. [288 G-H,
289 A-E]
(c) In a case, where the contract of sale is not f.o.r.
destination railway station, but the price alone is so, the
contract would not have all the incidents of f.o.r.
destination railway station ’contract’, but merely the price
would be stipulated on that basis 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 tailing delivery of the
goods. The freight in such a case would be payable by the
purchaser though the price agreed upon is f.o.r. destination
railway station. The price of the goods receivable by the
dealer would. in that even, be the f.o.r. 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
reeeipt "freight pre-paid" and claims the full f.o.r.
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
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reimbursement of the freight which was payable by the
Purchaser but in fact disburse(l by the dealer and hence it
would not form part of the ’sale price’. [289; G-H, 290 A-C]
Hyderabad Asbestos Central Products Ltd. v. State of
Andhra Pradesh XXIV S.T.C. (S.C.) 487; Tungabhadra
Industries Ltd. Kurnool v. Commercial Tax Officer Kurnool
(XI STC 827); explained.
4. The second part of the definition enacts an
inclusive clause and says that ’sale price’ includes "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 cost is separately charged".
Therefore, ’any sum charged for anything done by the dealer
in respect or the goods at the time of or before the
delivery thereof’. is to be regarded as part of the ’sale
price’, even if it does not fall within the first part of
the definition. But there is an exception carved out of this
inclusion Not
280
all sums charged for something done by the dealer in respect
of the goods at the time of or before the delivery thereof
are covered by the inclusive clause. The cost of freight or
delivery or the cost of installation certainly represents an
amount charged for transportation or installation of the
goods at the time of or before the delivery thereof and
would, therefor, fall within the inclusive clause on its
plain terms but it is taken out by the exclusion clause,
"other than the cost of frieght or delivery or the cost of
installation in case where such cost is separately charged".
[295 C, F]
(b) This exclusion clause does not operate as an
exception to the first part of the definition. lt 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 it 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 exclusion clause
cannot avail the assessee to take the amount in question out
of the definition of ’sale. price’. In the instant case,
since the amount of the freight forms part of the ’sale
price’ within the meaning of the first part of the
definition, it is not necessary for the State to invoke the
inclusive clause and in fact the State has not done so. The
exclusion clause is, therefore, irrelevant and cannot be
called in aid by the assessee. [295 F-H, 296 A]
(c) Even if the exclusion clause were read as an
exception to the first pal-t of the definition which, cannot
be done, it cannot avail the assessee. It is only there the
cost of fl-eight is separately charged that it would fall
within the exclusion clause and in the context of the
definition as a whole, it is
obvious that the expression ". .. cost of freight . .. is
separately charged" is used in contradistinction to a case
where the cost of freight is not separately charged but is
included in the price. It is not intended to apply to a case
where the cost of fright is part of the price but the dealer
chooses to split up the price and claim the amount of
freight as a separate item in the invoice. Where the cost of
freight is part of the price, it would fall within the first
part of the definition. and to such a case, the exclusion
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clause in the second part have no application. [296 A-C]
Observation:
(a) In respect of the assessee’s several transactions
of cement with the Central Government through the Director
General of Supplies and Disposals, the opinion given by the
law Department of the Government of India viz., "that
freight was not part of ’sale price’ within the meaning of
the definition of that term and hence no sales tax would be
payable by the assessee on the amount of frieght‘’ was not.
correct and was unjustified. [296 E-H]
(b) As this statement misled the assessee into not
claiming the amount of sales tax on the freight component on
the price from the Central Government in the circumstances
fairness and justice demand that the Central Government,
should pay to the assessee the amount of sales tax on the
freight component of the price in respect of transactions of
sale of cement entered into by the assessee with them under
the provisions of the control order. [297 A-C]
281
JUDGMENT:
CIVIL APPELLATE JUDRISDICTION: Civil Appeal No. 1122 of
1976.
From the Judgment and order dated 10-9-1976 of the
Rajasthan High Court in D. B. Civil Writ Petition No. 1080
of 1976.
V. M. Tarkunde, V. K. Shinghal, N. N. Goswamy and
Arvind Minocha for the appellant in C.A. No. 1122 of 1976.
F. S. Nariman, Y. S. Chitale A. K. Srivastava, V.
Bhasin, C. V. Francis and Vineet Kumar for the appellant in
C.A. No. 1122 of 1976
S. J. Sorabjee, L. N. Sinha, S. M. Jain, S. C. Bhandari
and B. B. Singh for the respondents in both the appeals.
Anantha Babu and A. Subba Rao for the intervener in
C.A. No. 1122 of 1976
The Judgment of the Court was delivered by
BHAGWATI, J. These appeals by special leave raise an
interesting question of law relating to the applicability of
the definition of "sale price" in section 2(p) of the
Rajasthan Sales Tax Act, 1954 and 2(h) of Central Sales Tax
Act, 1956. The question is whether in sales of cement
effected under the Cement Control order 1967, the amount of
freight forms part of the "sale price" so as to be exigible
to Sales Tax under these Acts. The facts giving rise to
these appeals are in material respects identical and hence
it would be sufficient if we state the facts of Civil Appeal
No. 1122 of 1976 which was argued as the main appeal before
us
The appellant in this appeal is Hindustan Sugar Mills
Ltd. (hereinafter referred to as the assessee). The assessee
owns a cement factory known as Udaipur Cement Works at
Udaipur in Rajasthan and it manufactures and sells cement to
purchasers both inside and outside Rajasthan. The appeal
relates to assessment of the assessee to sales tax under the
Rajasthan Sales Tax Act, 1954 and the Central Sales Tax Act"
1956 for the assessment years 1971-72 and 1972-73. During
these assessment years the sale of cement was controlled
under the Cement Control order, l 967 (hereinafter referred
to as the Control order). The Control order was issued by
the Central Government in exercise of the powers conferred
by sections 18G and 25 of the Industries (Development and
Regulation) Act, 1951. Clause (7) of the Control order
provided that the ex-factory prices admissible to the
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producer for the different varieties of cement shall be as
specified in the Schedule and the Schedule, as it stood at
the material time, specified a retention price of Rs. 161.40
per metric tonne for cement manufactured by all producers
other than
282
those mentioned at Items 1 to 5, which included the
assessee. The maximum price at which a producer could sell
cement was prescribed in clause (8) which said that no
producer shall sell "any other variety of cement at a price
exceeding Rs. 214.65 per metric tonne free on rail
destination railway station plus the excise duty paid
thereon". The proviso to Clause (8) provided that in the
case of packed cement, there shall be added to this price
such charges as may be fixed by the Central Government in
respect of packing in jute bags or in any other containers
The Explanation to this clause clarified that for the
purpose of the Control order, the expression ’free on rail
destination railway station’ means "the price (including the
cost of transport by the cheapest mode except where any
other mode of transport has been specified by the Central
Government under Clause (4) at the destination point".
Clause (9) and (11) provided for the creation of a Cement
Regulation Account in the following terms :.
9. Payments to Cement Regulation Account:
Every producer shall, in respect of such
transaction by way of sale of cement effected by him,
pay within one month of the close of the month in which
sales take place, to the Controller, an amount
equivalent to the amount, if any, by which the free on
rail destination price of such cement realised by him
exceeds the aggregate of the following amounts, namely.
(i) the ex-factory price of such cement
calculated in accordance with the rates specified
in the Schedule;
(ii) a selling agency commission calculated at the
rate of Rs. 3.00 per tonne;
(iii) the excise duty paid thereon; and
(iv) in the case of packed cement, the charges
fixed by the Central Government in respect of the
packing or the containers under the first proviso to
clause 8: r
Provided that the expenditure incurred by the producer
on freight by the cheapest mode of transport or where
any other mode of transport has been specified by the
Central Government under clause 4, by such mode of
transport in respect of such transactions shall be
reimbursed to the producer by the Controller from out
of the Cement Regulation Account referred to in clause
11.
*
283
11 . Cement Regulation Account A
(1) The Controller shall maintain an account
to be known as the Cement Regulation Account to
which shall be credited the amounts paid by the
producer under clause 9 and such other sums of
money as the Central Government may, after due
appropriation made by Parliament by law in this
behalf, grant from time to time.
(2) The amount credited under sub-clause (l) shall be
spent only for the following purposes, namely:
(i) paying or equalising the expenditure
incurred by the producer on freight in
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accordance with the provisions of this order;
(ii) equalising concession, if any, granted
in the matter of price for supplies to
Government or for purposes of export under
the third proviso to clause
(iii) expenses incurred by the Controller in
discharging the functions under this order
subject to such limits, if any, as may be
laid down by the Central Government in this
behalf."
Clause (14) which is the last clause laid down the
procedure for making claims for payment from the Cement
Regulation Account. It provided that "every producer shall
make an application regarding his claim for any
reimbursement towards equalising freight or equalising
concession in the matter of export price to the Controller
who may, in settling the claim, require the producer to
furnish all details, relating thereto, including the cost of
freight incurred, excise duty, if any, paid‘ etc." The
underlying object behind these provisions was that cement
should be available at uniform price throughout the country
and that is why it was provided that no producer shall sell
cement at a price exceeding Rs. 214.65 per metric tonne
"free on rail destination railway station" plus packing
charges and excise duty. This was the maximum price at which
the Central Government intended that cement should be.-
available any where in India, irrespective of the distance
from the place of manufacture. Now this price was worked out
on the basis of average freight and since the actual freight
would necessarily be more or less than the average freight
depending on the distance of the place of destination from
the manufacturing site, clauses 9 and 11 of the Control,
order provided a machinery by which the producer could be
ensured the retention price specified in the Schedule
alongwith selling agency commission the rate of Rs. 3.00 per
metric tonne, packing charges and excise 2-526SCI/78
284
duty. This result was achieved by providing that the
producer should hand over to the Controller the excess of
the "free on rail destination railway station" price
including packing charges and excise duty realised by him
over the retention price, selling agency commission, packing
charges and excise duty and he should then be re-imbursed
the amount of expenditure actually incurred by him on
freight by the cheapest mode of transport. This would leave,
with the producer the retention price together with the
selling agency commission, packing charges and excise duty
and also reimburse him the actual freight paid by him.
During The relevant assessment years, the assessee
entered into diverse contracts of sale of cement with
purchasers at the price of Rs. 214.65 per metric tonne ’free
on rail destination railway station" plus packing charges
and excise duty. These contracts were on the terms and
conditions set out in the form of ’General terms and
conditions of supply" adopted by the assessee. A copy of the
"General terms and conditions of supply’‘ was handed over to
us by the learned counsel appearing on behalf of the
assessee at the hearing of the appeals and it was not
disputed on behalf of the State that these were the general
terms and conditions on which contracts were entered into by
the assessee with the purchasers. Clauses 5, 8 and l l of
the "General terms and conditions of supply" were Strongly
relied upon on behalf of the assessee and we shall,
therefore, set them out in extenso:
5. Although the price of cement is on the basis of
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F.O.R. destination railway station consignments will
nevertheless be despatched "freight to pay" and credit
afforded in our Bill for the amount of freight payable.
The purchaser should accordingly arrange to pay Railway
freight/Road transport charges at the destination at
the time of taking delivery
8. Once the consignment is handed over to the Carrier
and a receipt is obtained, the responsibility of the
Company ceases. The Company does not accept any
liability for any delay. shortage, damage or loss of
goods in transit. Claim should be lodged with the
Carriers by the Buyers directly
11. In respect of any claim for over charge of
freight, the purchaser shall put up claim with the
concerned Railway authorities.
The assessee, in fulfilment of these contracts, despatched
cement to the purchasers at various destinations by rail and
the railway receipts were made out on the basis of "freight
to pay". The invoices sent by the assesse,- showed the
"free on rail destination railway station’ price of the
cement despatched at the rate of Rs. 214.65 per metric tonne
and added the amounts representing excise duty and packing
285
charges and deducted the amount of railway freight since it
was to be paid by the purchasers. The assessee did not
charge in the invoices sales tax on the amount of railway
freight. since in its view it did not form part of the "sale
price", but in order to provide against a possible claim
which might be made by the sales tax authorities, the
assessee claimed by way of deposit an Amount "towards
contingent liability to sales tax on railway freight to be
paid by you" that is, the purchasers. Each invoice also
contained a statement at the commencement that: "Every care
is taken in packing and despatching goods and our
responsibility for shortage, loss, delay or damage ceases
after delivery at Works Siding. All such claims should be
preferred with the railway or the carriers concerned". The
purchasers received the railways receipts from the banks
against payment of the amounts of the invoices and
thereafter took delivery of the cement despatched by the
assessee after making payment of the railway freight.
The question arose in the assessment of the assessee to
sales tax under the Rajasthan Sales Tax Act, 1954 and the
Central Sales Tax Act, 1956 as to whether the amount of
freight deducted from the free on rail destination railway
station price (hereinafter for the sake of brevity referred
to as F.O.R.. destination price) in the invoices made out by
the assessee and paid by the purchasers formed part of the
"sale price" within the meaning of the definition of that
term in section 2(p) of Rajasthan Sales Tax Act, 1954 and
section 2(h) of the Central Sales Tax Act, 1956. The Sales
Tax Authorities took the view that the amount of freight
formed part of the "sale price" and was, therefore, liable
to be included in the turnover of the assessee for the
purpose Of assessment of Sales Tax. The assessee challenged
the correctness of this view by filing a writ petition in
the High Court of Rajasthan but the High Court agreed with
the view taken by the Sales Tax Authorities and held that
since under clause 8 of the Control order, the price payable
by the purchasers was F.O.R. destination price, the amount
of freight included in it formed part of the "sale price".
The assessee thereupon preferred Civil Appeal No. 1122 of
1976 after obtaining special leave from this Court.
It will thus be seen that Civil Appeal No. 1122 of 1976
is directed against the judgment of the Rajasthan High Court
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which has taken a view against the assessee. The other
appeal, namely, Civil Appeal No. 1310 of 1976 which has been
heard alongwith Civil Appeal No. 1122 of 1976 has been filed
by the assessee directly against an adverse order made by
the assessing authorities but the question in that appeal is
the same as in Civil Appeal No. 1122 of 1976. It must be
conceded straightaway that the question is not free from
difficulty
286
and there is a sharp divergence of opinion amongst different
High Courts, with an almost equal number of High Courts
ranging on either side. But fortunately there are two
decisions of this Court which throw some light on this
question. We shall refer to them in due course.
Though we are concerned in these appeals with
assessments made under both Rajasthan Sales Tax Act, 1954
and Central Sales Tax Act, 1956, it would be sufficient to
refer only to the provisions of the Rajasthan Sales Tax Act,
1954, since the material provisions of both the Acts are
identical. Section 3 of the Rajasthan Sales Tax Act, 1954
provides that every dealer whose turnover in the previous
year exceeds a certain limit shall be liable to pay tax on
his taxable turn over, subject to the provisions of that
Act. "Taxable turnover" is defined in section 2(s) to mean
that part of the "turnover" which remain after deducting the
aggregate amount of proceeds 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 cost 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 includes excise duty or
sales tax or freight The only relevant question to ask is as
to what is the amount payable by the purchaser to the dealer
as consideration for the sale and not as to what is the net
consideration retainable by the dealer.
Take for example, excise duty payable by a dealer who
is a manufacturer. When he sells goods manufactured by him,
he always passes on the excise duty to the purchaser.
Ordinarily it is not shown
287
as a separate item in the bill, but it is included in the
price charged by him. The sale price’ in such a case could
be the entire price inclusive of excise duty because that
would be the consideration payable by the purchaser for the
sale of the goods. True, the excise duty component of the
price would not be an addition to the coffers of the dealer,
as it would go to reimburse him in respect of the excise
duty already paid by him on the manufacture of the goods.
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But even so, it would be part of the ’sale price’ because it
forms a component of the consideration payable by the
purchaser to the dealer. It is only as part of the
consideration for the sale of the goods that the amount
representing excise duty would be payable by the purchaser.
There is no other manner of liability, statutory or
otherwise, under which the purchases would be liable to pay
the amount of excise duty to the dealer. And, on this
reasoning, it would make no difference whether the amount of
excise duty is included in the price charged by the dealer
or is shown as a separate item in the bill. In either case,
it would be part of the ’sale price’. So also, the amount of
sales tax payable by a dealer, whether included in the price
or added to it as a separate item as is usually in case,
forms part of the ’sale price’. It is payable by the
purchaser to the dealer as part of the consideration for the
sale of the goods and hence falls within the first part of
the definition. This position is now well settled as a
result of the decision of this Court in M/s George Oakes
(Pvt.) Ltd. Versus The State of Madras & ors. (XII STC 476)
whether the view taken by Madras High Court in Sri
Sundararajan & Co. Ltd. Versus The State of Madras (VIII STC
105) was approved. There S. K. Das, J., speaking on behalf
of the Court, approved of the following observations of
Lawrence, J., in Paprika Ltd. & Anr. Versus Board of Trade
(1944) All E.R. 372):
"Whenever a sale attracts purchase tax, that tax
presumably affects the price which the seller who is
liable to pay the tax demands but it does not cease to
be the price which the buyer has to pay even the price
is expressed as ’x’ plus purchase tax."
The learned Judge also quoted with approval what Goddard,
L.J., said in Love. Norman Wright (Builders) Ltd. [(1944) 1
All E.R. 6181:
"Where an article is taxed, whether by purchase
tax. customs duty, or excise duty, the tax becomes part
of the price which ordinarily the buyer will have to
pay. The price of an ounce of tobacco is what it is
because of the rate of tax, but on a sale there is only
one consideration though made up of cost plus profit
plus tax. So if a seller
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offers goods for sale, it is for him to quote a price
which includes the tax if he desires to pass it on to
the buyer. If the buyer agrees to the price, it is not
for him to consider how it is made up or whether the
seller has included tax or not.’‘
and summed up the position in the following words:
"So far as the purchaser is concerned, he pays for
the goods what the seller demands, namely, the price
eve though it may include tax. That is the whole
consideration for the sale and there is no reason why
the whole amount paid to the seller by the purchaser
should not be treated as the consideration for the sale
and included in the turnover."
We may then take a case where a dealer transports goods from
his. factory to his place of business and sells them at a
price which is. arrived at after taking into account
’freight and handling charges’ incurred by him in
transporting the goods. The amount of ’freight and handling
charges’ included in the price would obviously be the part
of the ’sale price’, because it would be payable by the
purchaser to the dealer as part of the consideration for the
sale of the goods. The same would be the legal position even
if the ’freight and handling charges’ are shown separately
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in the bill and added to the price of the goods, for the
character of the payment would remain the same. Since
’freight and handling charges’ represent expenditure
incurred by the. dealer in making the goods available to the
purchaser at the place of sale, they would constitute an
addition to the cost of the goods to the dealer and would
clearly be a component of the price charged to the
purchaser. The amount of ’freight and handling charges’
would he. payable by the purchaser not under any statutory
or other liability ’out as part of the consideration for the
sale of the goods and it would, therefore, Form part of
’sale price’ within the meaning of the first part of the
definition. This position is also well settled having regard
to the decisions of this Court in Dyer Meakin Breweries Ltd.
v. sales Tax officer, Ernakulam (XXVII STC 120).
We may now take another example which is very much near
to the one which we have already discussed. The dealer may,
instead of transporting the goods from his factory or his
place of business and selling them there, enter into a
contract of sale F.O.R.. destination railway station. Where
such a contract is made, the seller undertakes an obligation
to put the goods on rail and arrange to have them carried to
the destination railway station at his expense. The delivery
of the goods to the purchaser in such a case is complete at
the distination railway- station and till then the risk
continues to remain with
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the dealer. The freight is payable by the dealer since he
has to arrange for the goods to be carried by rail to the
destination railway station at his expense and there is no
obligation on the purchaser to pay the freight The purchaser
is concerned only to pay the agreed price for the delivery
of the goods at the destination railway station. The agreed
price being inclusive of the freight, it would be a matter
of indifference to the purchaser as to what is the amount of
freight. Even if there is any fluctuation in the amount of
freight, since the making of the contract, the purchaser
would have no concern, because he is liable to pay only the
agreed price which includes the freight, whatever it be. The
dealer may, in such a case, pay the freight and charge the
agreed price to the purchaser, or he may obtain a railway
receipt on the basis of freight to pay" and request the
purchaser to pay the freight at the time of taking delivery
of the goods from the railway at the destination railway
station and give the purchaser credit for the amount of the
freight against the agreed price. I‘he latter would merely
be a convenient mode of paying the agreed price. Since it is
the obligation of the dealer to deliver the goods free on
rail destination railway station, the dealer is liable to
pay the freight s between him and the purchaser and the
purchaser can very well refuse to accept the railway receipt
which is not "freight pre-paid" but "freight to pay". But he
may, ordinarily as a reasonable businessman he would, accept
such railway receipt and pay the amount of freight on behalf
of the dealer. When the purchasers pay the amount of freight
in such a case, it would be; as part of the agreed price and
not as freight vis-a-vis the dealer. The amount of freight
paid by the purchaser and shown in the bill as deducted from
the agreed price would, therefore, clearly form part of
"sale price" and fall within the first part of the
definition.
This would plainly and indubitably be the position
where the con- tract of sale entered into by the dealer is
F.O.R.. destination railway station. But here it is
necessary to bear in mind a rather important distinction.
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There may be a case where the contract of sale may not be
F.O.R.. destination railway station, but the price alone may
be so. Where such is the case, the contract does not have
all the incidents of a F.O.R. destination railway station
contract, but merely the price is stipulated on that basis.
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 F.O.R.. destination railway station. The price of
the goods receivable by the dealer would, in
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that event, he the F.O.R.. 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 F.O.R.. 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 purchaser but in fact
disbursed by the dealer and hence it would not form part of
the sale price’.
This was precisely the basis on which the decision in
Hyerabad Asbestos Cement Products Ltd. v. State of Andhra
Pradesh (XXIV STC 487) was given by this Court. There the
appellant maintained a uniform catalogue rate all over the
country in respect of its manufactures and the catalogue
rate obviously included freight in transporting goods to the
customers. The appellant despatched goods lo the customers
by rail under railway receipts with "freight to pay" and
made out invoices at the catalogue rate, deducted discount
from it and charged sales tax on the balance and then gave
credit for the amount of freight to be paid by the
customers. The question arose in the 1.. assessment of the
appellant to sales tax whether the amount of freight formed
part of the ’sale price’ and was, therefore, includible in
the turnover of the appellant. The terms of the contracts
with the customers were in a printed form and clauses (4)
and (16) thereof provided as follows: (4) The prices of the
said productions supplied to the stockists shall be the
current general gross list price charged by the company Free
on rail, less such discount as may be fixed by the company
from time to time (16) " the date of delivery shall mean the
date of the railway receipt and in the case of consignment
sold free on rail destination, the railway freight shall be
nevertheless payable by the stockists at the destinations
and the amount of freight should on the railway receipt
shall be deducted from the invoice of the company‘’. It will
be seen that under clause (4) the price of the goods was
stipulated to be "the current general gross list price
charged by the company free on rail", but clause (16) made
it clear that "the date of delivery shall mean the date of
the railway receipt" and though the goods may be sold free
on rail destination, "the railway freight shall nevertheless
be payable by the stockists at the destinations and the
amount of freight shall be deducted from the invoice of the
company" The combined reading of clauses (4) and (16)
clearly
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291
showed that it was only the price which was F.O.R.
destination and the delivery to the customers was complete
as soon as the. goods were put on rail and payment of
freight was the obligation of the customers as between them
and the appellant. That is why Shah, J., speaking on behalf
of the Court said: "If clause (4) stood alone the price
charged by the company may be deemed to be the catalogue
rate less the discount payable to the purchasers. But by
clause (16) the purchasers clearly undertook to pay railway
freight which was deducted from the invoice made out by the
company. By clause (16) the company received the catalogue
rate less the railway freight as price of the goods sold. We
are unable to agree with the High Court that "the term
relating to the price in the contract between the company
and the stockists envisaged by this clause [clause (16)]
implies a obligation on the part of the company to pay the
railway freight". In our judgment, under the terms of the
contract, there is no obligation on the company to pay the
freight, and under the terms of the contract the price
received by the company for sale of goods is the invoice
amount less the freight" and held that the amount of freight
was not part of the ’sale price’. It was, to quote again the
words of Shah, J.. "not made a part of the price".
We may also at this stage refer to another decision of
this court earlier in point of time. That is the decision in
Tungabhadra Industries Ltd. Kurnool Versus Commercial Tax
officer Kurnool (XI STC 827). What happened in this case was
that the appellant sold and despatched hydrogenated
groundnut oil to the purchasers at an agreed price which was
inclusive of freight. It is not very clear from the record
but it does appear that the railway receipts obtained by the
appellant were on the basis of ’freight to pay’ and the
amount of freight was paid by the purchasers and in the
invoices made out by the appellant, the agreed price
inclusive of freight was shown and from this the amount of
freight was deducted and on the balance the amount of sales
tax was computed. The appellant claimed to deduct the amount
of freight from the turnover on the strength of Rule 5(1)
(g) of the turnover and Assessment Rules which provided that
in determining the net turnover of a dealer, he shall be
entitled to a deduction of "all amounts falling under the
following two heads, when specified and charged for by the
dealer separately, without including them in the price of
the goods sold: (i) freight;(ii) This Court held that the
deduction claimed was not permissible since the conditions
for the applicability of Rule 5(1) (g) were not satisfied.
It was pointed out that it was clear from the contents of
the specimen invoice produced by the appellant that "the
appellant has charged a price inclusive of the railway
freight and would therefore be outside
292
the terms of Rule 5(1) (g) which requires that in order to
enable dealer to claim the deduction it should be charged
for separately and not included in the price of goods sold.
The conditions of the rule not having been complied with,
the appellant was not entitled to the deduction in respect
of freight." Here the freight was payable by the appellant
because the price was inclusive of the freight and there was
no stipulation in the contract, as in the Hyderabad Asbestos
Cement Company’s case, that the delivery to the purchaser
shall be complete when the goods are put on rail or that the
payment of freight shall be the obligation of the price. And
it did not make any difference to this position that the
freight was not initially paid by the appellant but was paid
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by the purchaser and given credit for against the agreed
’freight inclusive’ price in the invoice.
Now, in the light of this discussion, let us turn to
examine the facts of the present appeals. The Control order
here becomes very mate rial. It is a statutory order having
binding force and effect and it must govern the transactions
of sale of cement entered into by the assessee with the
purchasers. The Control order is designed to ensure
availability of cement at a uniform price throughout India
irrespective of the distance from the place of manufacture
and clause (8) provides a maximum price of Rs. 214.65 per
metric tonne F.O.R. destination railway station at which a
producer may sell cement manufactured by him. It was at this
maximum price of Rs. 214.65 permetric tonne F.O.R.
destination railway station that, in pursuance of this
clause, the assessee sold cement to various purchasers. The
price was clearly inclusive of freight. But the question is:
who, under the terms of the contract, was liable to pay the
freight, the assessee or the purchaser ? Was the contract
one for delivery at destination railway station or was it a
contract in which delivery to the purchaser would be
complete as soon as the goods are put on rail at the place
of despatch ? The answer to this question would clearly be
in favour of the assessee if we have regard only to the
terms and conditions of the contract without taking into
account the provisions of the Control order. Clause (8) of
the "General Terms and Conditions of Supply" incorporated in
the contract provided that once the goods are handed over to
the railway and a railway receipt is obtained, the
responsibility of the assessee shall cease and the risk
shall pass to the purchaser and, therefore, if there is non-
delivery or shortage or delay in. delivery, it is the
purchaser who, according to this clause, shall be entitled:
to make a claim against the railway. If there were over-
charge of freight then again under clause (11) it is not the
assessee but the purchaser who would be entitled to lodge a
claim with the railway authorities. The specimen invoice
produced by the assessee also made
293
it clear that the responsibility of the assessee for
shortage, loss, delay or damage shall cease as soon as the
goods are delivered at the Work Siding and all such claims
may be preferred by the purchaser against the railway and in
case 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 by 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 proivsions
of the Control order, for these provisions having statutory
force and authority have over.-. riding 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.
Let us, therefore, examine the impact of the relevant
provisions of the Control order on the terms and conditions
of the contract .
lt is clear from the scheme of the Control order that
the price chargeable by a producer is contemplated to be Rs.
214.65 per metric tonne F.O.R. destination railway station.
This of course is the maximum price at which a producer may
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sell cement and theoretically, or course, there is nothing
to prevent him from selling it at a lower price, but it is
assumed by the Central Government that in a seller’s market
where there is scarcity of supply, the producer will sell at
the maximum price permitted to him under the Control order
and that is the basis on which the machinery of Cement
Regulation Account is worked out in the Control order. This
machinery would become unworkable and at the least it would
require the Central Government to subsidies the Cement
Regulation Account in a large way, if every producer were to
sell cement at a price lower than Rs. 214.65 per metric
tonne F.O.R. destination railway station. It is, therefore,
obvious that though the Control order merely provides the
maximum price of Rs. 214.65 per metric tonne F.o.R.
destination railway station at which a producer may sell
cement, leaving it theoretically open to him to sell it at a
lower price, the basic assumption underlying the Control
order is that every producer will sell at the maximum price.
And in fact, in both the cases before us, every transaction
of sale of cement by the assessee was at the price of Rs.
214.65 per metric tonne F.o.R destination railway station.
This, however, by itself would not be determinative of the
controversy because the question would remain as to who,
between the assessee and the purchaser, is
294
liable to pay the freight and that requires us to consider
whether there is anything in the Control Order which
overrides the relevant provisions of the contract bearing on
this question and by necessary implication, exclude them.
Clause (9) clearly contemplates that the F.o.R. destination
railway station price would be realised by the producer, for
the excess of such price over the retention price and
selling agency commission is required to be paid over by the
producer to the controller in the Cement Regulation Account.
The amount of freight has, therefore, to be realised by the
producer from the purchaser and that postulates that it is
the producer who pays the freight to the railway
authorities. The proviso to clause (9) makes this doubly
clear by providing that "the expenditure incurred by the
producer on freight-shall be reimbursed to the producer" and
again clause (11) uses the expression" -paying of equalising
the expenditure incurred by the producer on freight". It is,
therefore, clear that under the scheme of the Control order
the freight is paid by the producer and he then recovers it
from the purchaser. But that does not conclude the
controversy. The question still remains: When the producer
pays the freight, does he do so because, as between him and
the purchaser, He is liable to pay the freight and he then
recovers it as part of the price or the obligation to pay
the freight is on the purchaser and the producer pays it on
behalf of the purchaser and then recovers it by way of
reimbursement.
We are of the view that the former, and not the latter,
represents the correct legal position. If the obligation to
pay the freight were on the purchaser and in fact the
purchaser paid the freight, as happen ed in both the cases
before us in respect of every transaction of sale of cement,
the amount of freight would obviously be deducted from the
F.O.R. destination railway station price in the invoice and
only the balance would be realised by the assessee. There
would be no question of the assessee realising the amount of
freight from the purchaser because the purchaser would have
paid the freight in discharge of his own liability and the
assessee would have no claim to recover it from the
purchaser. Then how would the terms of clause ( 9 ), proviso
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to that clause and Clause (11) of the Control order be
satisfied ? How would it be possible to give effect to
clause (9) if what is realised by the assessee is not the
F.O.R. destination railway station price but that price less
the amount of freight? How would the assessee claim to be
entitled to be reimbursed under the proviso to clause (9) if
he has not incurred any expenditure on the freight’? The
entire statutory scheme would become unworkable. The scheme
of the Control order clearly proceeds on the basis that the
flight is payable by the producer and the recovers it from
the purchaser at part
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the F.O.R. destination railway station price. The provision
in the contract that the delivery to the purchaser shall be
complete as soon as the goods are put on rail and payment of
the freight shall be the responsibility of the purchaser is
wholly inconsistent with the scheme of the Control order and
must be held to be excluded by it. The Control order is
paramount: it has overriding effect and if it stipulates
that the freight shall be payable by the producer, such
stipulation must be prevail, notwithstanding any term or
condition the contract to the contrary. The conclusion is,
therefore, inevitable,- that the amount of freight forms
part of the ’sale price’ within the meaning of the first
part of the definition.
This renders it unnecessary to consider the second part
of the definition, but the latter clause of the second part
was strongly relied upon on behalf of the assessee to
support the exclusion of the amount of freight from ’sale
price’ and hence we must proceed to consider it. The second
part enacts an inclusive clause. It says that ’sale price’
includes "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 cost is separately
charged." Therefore, ’any sum charged for anything done by
the dealer in respect of the goods at the time of or before
the delivery thereof’ is to be regarded as part of ’sale
price’, even if it does not fall within the first part of
the definition. But there is an exception carved out of this
inclusion. Not all sums charged for something done by the
dealer in respect of the goods at the time of or therefore
the delivery thereof are covered by the inclusive clause.
The cost of freight or delivery or the cost of installation
certainly represents an amount charged for transportation or
installation of the goods at the time of or before the
delivery thereof and would, there- fore, 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 exclusion clause
cannot avail the assessee to take the amount in question out
of the definition of ’sale price’. Here on the view taken by
us, the amount of freight
296
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forms part of the ’sale price’ within the meaning of the
first part of the definition and it is not necessary for the
State to invoke the inclusive clause and in fact the State
has not done so. The exclusion clause is, therefore,
irrelevant and cannot be called in aid by the assessee. We
’may point out that even if the exclusion clause were read
as an exception to the first part of the definition which,
as we have pointed out, cannot be done, it cannot avail the
assessee. It is only where the cost of freight is separately
charged that it would fall within the exclusion clause and
in the context of the definition as a whole, it is obvious
that the expression "- cost of freight is separately charged
‘ is used in contradistinction to a case where the cost of
freight is not separately charged but is included in the
price. It is not intended to apply to a case where the cost
of freight is part of the price but the dealer chooses to
split up the price and claim the amount of freight as a
separate item. in the invoice. Where the cost of freight is
part of the price, it would fall within the first part of
the definition and to such a case, the exclusion clause in
the second part have no application.
We must, therefore, hold that, by reason of the
provisions of the Control order which governed the
transactions 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.
Before we part with these appeals we think it necessary
to advert to one rather unusual circumstance which has
caused some anxiety to us. We were told by the learned
counsel appearing on behalf of the assessee and that was not
disputed on behalf of the State that the assessee had
entered into a large number of transactions of sale of
cement with the Central Government through the Director
General of Supplies and Disposals and when the assessee
claimed to recover the amount of sales tax in respect of
these transactions from the Central Government on the basis
that freight was part of ’sale price‘, the Director General
of Supplies and Disposals pointed out to the assessee that
the Law Department of the Government of India had advised
them that freight was not part of ’sale price’ within the
meaning of the definition of that term and hence no sales
tax would be payable by the assessee on the amount of
freight and the assessee was, therefore, not justified in
claiming to recover the amount of sales tax from the Central
Government. The assessee, in view of this statement made on
behalf of the Central Government, did not press its claim to
recover the amount of sales tax on the freight component of
the price from the Central Government. Now, it appears
clearly from this judgment that the opinion given by the Law
Department of the Government of
297
India was not correct and the statement made on behalf of
the Government of India that no sales tax will be payable by
the assessee on the amount of freight was unjustified. There
can be no doubt that this statement misled the assessee into
not claiming the amount of sale-tax on the freight component
of the price from the Central Government. We think that, in
the circumstances, fairness and justice demand that the
Central Government should pay to the assessee the amount of
sales tax on the freight component of the price in respect
of transactions of sale of cement entered into by the
assessee with them under the provisions of the Control
order. It is true and we are aware that there is no legal
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liability on the Central Government to do so, but it must be
remembered that we are living in a democratic society
governed by the rule of ’law and every Government which
claims to be inspired by ethical and moral values must do
what is fair and just to thus citizen. regardless of legal
technicalities. We hope and trust that the Central
Government will not seek to defect the legitimate claim of
the assessee for reimbursement of sales tax on the amount of
freight by adopting a legislatic attitude but will do what
fairness and justice demand. After all, the motto of every
civilized State must be: "Let right be done’.
We accordingly confirm the judgment of the Rajasthan
High Court in Civil Appeal No. 1122 of 1976 and the order of
the Sales Tax authority in Civil Appeal 1310 of 1976 and
dismiss both the appeals with no order as to costs.
S.R. Appeals dismissed.
298