You are on page 1of 4

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR.

JUDGMENT

1. Commercial Taxes Officer, Vs. M/s Indian Rayon & Industries


Jodhpur Ltd., Jodhpur.
S.B. CIVIL SALES TAX REVISION PETITION NO.998/99

2. Commercial Taxes Officer, Vs. M/s Indian Rayon & Industries


Jodhpur Ltd., Jodhpur.
S.B. CIVIL SALES TAX REVISION PETITION NO.1017/99

Date of order : 2nd July, 2008

PRESENT

HON'BLE DR. JUSTICE VINEET KOTHARI

Mr. Rishab Sancheti for Mr. V.K. Mathur for the petitioner-Revenue.
Mr.Ramit Mehta & Mr.Avinash Acharya for the respondent-Assessee.
---------
REPORTABLE

BY THE COURT:-

1. These two revision petitions filed by the Revenue involve the question of law
as to levy of sales tax on the amount of freight charged by the respondent-assessee from its
purchasers by raising debit notes for the amount of freight on the purchasers of cement.

2. The assessing authority imposed tax on such amount of freight holding it to be


a contract 'F.0.R. Destination' and, therefore, held that mere raising of a Debit Note was a
device to avoid the payment of tax on such amount of freight and, therefore, such additional
tax was imposed by the Assessing Authority. The first appeal filed by the assessee also came
to be rejected by the learned Dy. Commissioner (Appeals) by orders dated 28.2.1994 and
6.9.1995 for the two assessment period 1988-89 and 1989-90.

3. The assessee being aggrieved of these orders filed second appeal before the
Rajasthan Tax Board which allowed the appeals of the assessee by the impugned order dated
27.1.1997 and held that no tax could be imposed under the provision of Section 2(h) defining
sale price under the provisions of CST Act, 1956. The said definition of Section 2(h) of the
CST Act defines the term as under:-

“2(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 in respect of the
goods at the time of or before the delivery thereof other than the cost of frieght or delivery or
the cost of installation in cases where such cost is separately charged.”
4. The learned Tax Board relied upon the decision of the Hon'ble Supreme Court
in the case of Hindustan Sugar Mils Ltd. Vs. State of Rajasthan – [1979] 43 S.T.C. 13 while
allowing the appeal of the assessee.

5. Being aggrieved by the decision of the said appeal, the Revenue has filed the
present revision petitions before this Court.

6. Mr. Rishab Sancheti for Mr. V.K. Mathur, Standing Counsel for the Revenue
tried to take this Court through the findings of the Assessing Authority and submitted that
since the company respondent assessee charged different prices from the purchasers in the
same destination place and also failed to produce the agreement with the transport company
M/s Choudhary Transporter and the prices charged per cement bag from different purchasers
as reproduced in the impugned assessment order shows that the price of per cement bag was
inclusive of freight charge, therefore, the learned Assessing Authority was justified in
drawing the inference that the contract in question was F.O.R. Destination and, therefore,
amount of freight formed part of 'sale price' and the learned Tax Board has erred in allowing
the appeals of the respondent-assessee.

7. Mr. Ramit Mehta, learned counsel for the respondent assessee on the side
opposite vehemently submitted that while dealing with the revision petitions filed by the
Revenue, this Court cannot go into the questions of facts and the findings of facts arrived at
by the final fact body i.e. Tax Board are binding on this Court and cannot be upset in
revisional jurisdiction. He further submits that the controversy is fully covered by the
decision of the Hon'ble Supreme Court in case of Hindustan Sugar Mils case (Supra) as well
as a decision of this Court in case of M/s Mewar Khaniz Udyog, Udaipur Vs. CTO, Udaipur
– (1994) 2 STO 384. He has also contended the invoices raised by the respondent company
and delivery challans clearly stipulates that the delivery of goods was ex-works and,
therefore, the contract in question could not be construed to be a contract “F.O.R.
Destination”. He, therefore, submitted that merely on the basis of the fact that the assessee
company might have charged different price per cement bag subject to the maximum price
limit set by the cement control order in force during the relevant period, it could not have led
to the conclusion that the freight was part of the sale price.

8. He also relied upon the exclusion part of the definition of sale price defined in
Section 2(h) of the CST Act quoted above which clearly states that sale price will be “other
than the cost of freight or delivery or the cost of installation in case where such cost is
separately charged”. He submitted that even if the arrangement of the transportation is made
by the assessee respondent company, if such freight charges are separately charged from the
purchasers in ex-works contract of sale of goods, such freight charged by way of debit notes
is separately charged and the same cannot be taken as the part of sale price as consideration
for the transfer of property in goods i.e. cement bags sold by the respondent company. He
submitted that the findings of Tax Board cannot be said to be perverse in any manner. As far
as the question of law is concerned, the same is no longer open having been decided by this
Court as well as the Apex Court. He has relied upon the following portion of the decision of
the Hon'ble Supreme Court in case of Hindustan Sugar Mils case (Supra) :-

“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 the event, be the F.O.R. Destination railway station price less the amount of freight
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 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 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.”

9. I have heard learned counsel and perused the record and the judgments cited at
the Bar.

10. This Court is of the opinion that as far as the findings of facts are concerned,
in revisional jurisdiction this Court cannot go into the same unless such findings of fact of
Tax Board are shown to be ex-facie perverse or without any material on record. The
particular interpretation of the documents and evidence before the Assessing Authority taken
by the Assessing Authority is of no consequence at this stage once the final fact body i.e. Tax
Board on the basis of such material before it has concluded that the contract in question was
ex-works and not 'F.O.R. destination'. In the opinion of this Court, no revelling inquiry can
be held into the facts in revisional jurisdiction again at the instance of revenue at this stage.
The contention sought to be raised on behalf of the Revenue that the contract in question was
'F.O.R. destination' has no legs to stand upon. Merely because different price is charged from
the two purchasers of the same destination place during the contemporary period, it does not
result in any manner and the conclusion that the price is inclusive of freight. It would more
depend upon the bargaining between the parties and the nature of business etc. and volume of
goods sold for which purchaser and seller decide inter se, that such price is charged in
relevant invoices. The invoices and delivery challans in question clearly stipulated that the
contract is ex-works and not F.O.R. destination. In the list of purchasers quoted in the
assessment order even if the price is shown to be inclusive of freight in Branch, to Head
Office communications of the assessee respondent company, it cannot mean that such is the
contract between the respondent assessee company and the purchasing dealers. Therefore,
this Court is of the opinion that the Tax Board having decided on these materials and
evidence before it that contract in question was ex-works and not F.O.R. destination, these
findings of facts are not found to be perverse in any manner and are not required to be
disturbed in the revisional jurisdiction.

11. That as far as the question of law involved in the case is concerned, that where
such freight is charged by the respondent assessee company from the purchasing dealers
separately by way of raising of Debit Notes is concerned, this Court is of the clear opinion
that the issue is no longer open and does not require fresh determination. This Court in the
case of M/s Mewar Khaniz Udyog, Udaipur (supra) in the similar circumstances held that
such freight charges charged from the purchaser and dealers in contract of ex-works sale by
way of Debit Notes was not exigible to sales tax under the provisions of CST Act, 1956. The
afore quoted portion of the decision of the Hon'ble Supreme Court in Hindustan Sugar Mils
case (Supra) further fortifies the view taken by this Court in the case M/s Mewar Khaniz
Udyog, Udaipur (supra). This Court has no reason to take a different view of the matter in
the present case on the said question of law.
12. Accordingly, these revision petitions filed by the Revenue are liable to be
dismissed and the same are hereby dismissed. No order as to costs.

[ DR. VINEET KOTHARI ], J.

item No.2-3
babulal/

You might also like