JUDGMENT
Rajes Kumar, J.
Sales Tax Revision No. 1684 of 1990.
1. The present revision under Section 11 of U. P. Trade Tax Act (hereinafter referred to as ‘Act’) is directed against the order of Tribunal dated 16.8.1990 relating to the assessment year 1981-82 arising out from the proceeding under Section 21.
2. The brief facts of the case are that the dealer opp. party ((hereinafter referred to as ‘Dealer’) was the manufacturer of Cement having its Factory at Satna in the State of Madhya Pradesh. Dealer was having a Sale Depot at Allahabad and accordingly registered under the U. P. Trade Tax Act as well as under the Central Sales Tax Act with the Assessing Authority at Allahabad. Dealer had three Dumps in Uttar Pradesh (i) at Dandi, Allahabad (ii) at Kanpur (iii) at Sitapur. From the Dandi Dump, Allahabad delivery of goods were given to the customers at the Dump and no transportation charges were charged separately from the customers In respect of sale from Kanpur Dump and Sitapur Dump, freight charges were charged separately from the customers alleged to be relating to the transportation of goods from the Dump to the customers destination to provide extra facility. During the year under consideration, in the case of sale from Kanpur Dump, a sum of Rs. 12,73,238/- and in respect of sales from Sitapur Dump, a sum of Rs. 43,60,304/- were charged towards freight charges. It appears that in original proceedings freight charged from the customers in respect of sale made from Kanpur Dump and Sitapur Dump have not been considered, therefore, a proceeding under Section 21 was initiated. Assessing Authority held that the aforesaid amount of freight at Rs. 56,33,542/- would be part of the turnover in view of Cement Control Order, inasmuch as, supply was FOR customer destination and levied tax on the said amount. First appeal filed by the dealer was rejected. Dealer filed second appeal before the Tribunal which was allowed vide impugned order.
3. Heard Counsel for the parties.
4. First Appellate Authority observed that the Cement Control Order was applicable to the levy and non-levy of Cement up to February, 1982 and thereafter, with effect from 1.3.1982, it was applicable to the levy cement only. First Appellate Authority further observed that the dealer had only sold levy Cement and had not sold any non-levy cement from Kanpur and Sitapur Dump, therefore, provision of Cement Control Order was applicable to the cement sold by the dealer for the entire year from Kanpur and Sitapur Depot. It has also been observed that when Kanpur Depot was started, dealer vide letter No. SL-78-70-79 dated 12.3.1979 sought permission from the Cement Controllers and in response to the said letter, Cement Controller wrote a letter No. CC/CR/9(2)/75/2885-21/22.3.79 and has given permission on the following conditions:-
(i) Kanpur Depot would be used for movement with complete rack.
(ii) Load from Dump by road movement would only up to 250 Km.
(iii) For place where the goods sent by broad gauge, goods will not be permitted to move from Dump. The movement of goods up to its destination, should be in a logical forwarding transaction, payment of freight will be made accordingly in the case of disharmony in the movement of goods namely actual freight from Factory to Dump and from Dump to last destination, shall be settled as per the road freight reimbursement direction.
(iv) In the case of movement from Kanpur to Lucknow, there will be a further restriction namely (i) movement of cement from Kanpur will not exceed 3000 metric ton, freight shall be reimbursed from Cement Regulations Account in accordance to the movement, freight from Factory to movement directly.
5. Deputy Commissioner (Appeal) had also observed that with regard to the sale from Sitapur, letter of Controller was not filed, but it is believed that similar condition would be there in respect of sale from Sitapur Dump. First Appellate authority observed that under the Cement Control Order, delivery of goods had to be given at buyers destination and in that sense rate of cement FOR destination, Railway Station was fixed. It has been further observed that in case where the goods was supplied from Factory to Railway Station and from there sales were made, no freight charges was charged, but in case where, it was not possible to send directly by Railway, in that cases, goods were brought up to the Dump by Railway Station and thereafter, it was sent by road at the destination of purchaser. First Appellate Authority further held that under the Cement Regulation Account, freight charges were reimbursed was apart from the place of manufacturing to a particular destination, freight relating to the movement of goods from Dump to the customers destination was also to be born by the present dealer and even that freight would be charged at its own desire, but the rate fixed by the State Government vide letter No. 2303/29-8-68/Cement/70 dated 27.3.1980 which is reproduced in the order by which, rate per Km. was fixed. It is further observed that by Clause-10 of the Cement Control Order, whole sale and retail rate was to be fixed by the Government, keeping in view cost of cement, handling charges and Godown charges, Stockiest profit, local tax approved road transportation charges, rate of which, was fixed time to time and since there is a provision of reimbursement of freight from Cement Regulation Account, hence, freight charged for movement of goods from Dump to the purchaser account, would be a part of the turnover. Tribunal held that the sale from Kanpur Dump and Sitapur Dump was the sale by Stockiest and not by the manufacturer. Tribunal further observed that up to movement of cement from Factory to Dump, freight was born by the dealer and for subsequent movement from Dump to customer, freight was born by the customer and to provide extra facility of transportation from Dump to the customer destination, freight price was separately charged from the customers and it would not be part of the turnover in view of explanation-11 to Section 2 (i) of the Act. Tribunal further observed that in the case of Hindustan Sugar Mills v. State of Rajasthan reported in 43 STC page 37 sale was by manufacturer to the customer while in the present case, sale was by the Stockiest to the customer from Sitapur and Kanpur Deport and not by the manufacturer.
6. Learned Standing Counsel submitted that the observations of Tribunal is patently wrong that the present is the case of sale by the Stockiest to the customers. He submitted that the present is also the case of a sale by the manufacturer to the customers. M/S Satna Cement Works is the manufacturer of cement having its factory at Satna and Dumps at Allahabad, Kanpur and Sitapur, therefore, it was a case of sales by the manufacturer to the customer and not by the Stockiest and thus, the view of Tribunal is erroneous. He further submitted that the First Appellate Authority has considered the letter of Cement Controller while giving permission for sale of cement from Kanpur Depot which also provided reimbursement of freight from Cement Regulations Account up to the customer destination for the movement of goods from road to the destination and therefore, price fixed FOR Railway Destination means price FOR customer destination, inasmuch as up to the stage of customer destination, and such freight price had been considered reimbursable from Cement Regulations Account. He submitted that since the movement and price of cement was controlled by the Cement Control Order and price fixed by the FOR Railway Destination, keeping in view cost of price, packing charges, average freight charge etc. thus, freight up to the destination of customer was reimbursable from the Cement Regulations Account and therefore, any amount charged from the customer up to the delivery, would be part of the turnover in view of the decision of Apex Court in the case of Hindustan Sugar Mills v. State of Rajasthan (supra).
7. Learned Counsel for the opp. party submitted that for movement of cement from factory to Kanpur Depot and factory to Sitapur Depot, freight was born by the dealer and there is no dispute in this regard. According to him, under the Control Order, dealer was entitled for reimbursement of freight amount only from factory to Depot. He submitted that the sale was made at the Depot itself and for further movement of cement from Depot to the customer place extra services for transportation of the good were provided and freight charges were charged from customers towards transportation charges separately in the bill and therefore, the said amount is out of purview of the Cement Control Order and in view of the explanation to Section 2 (i), since freight being charged separately, would not be a part of the turnover and the Tribunal has rightly held that the freight charged from the customers separately for transportation of cement from Kanpur and Sitapur Dumps, could not be part of the turnover.
8. Having heard learned Counsel for the parties. I have perused the order of Tribunal and the authorities below
9. Before dealing with the facts of the present case, it would be necessary to examine the decision of Apex Court in the case of Hindustan Sugar Mills v. State of Rajasthan (supra), in which, Cement Control Order was under consideration and the dispute was whether the freight charged from the customer in pursuance of agreement which was contrary to the Cement Control Order, was part of the turnover or not. Taxable turnover was defined by Section 2 (s) of Rajasthan Sales Tax Act to mean that part of the “turnover” which remains 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 cost of installation in case where such cost is separately charged.” Apex Court considered the Cement Control Order as follows:-
“Control Order was issued by the Central government in exercise of the powers conferred by Section 18-G 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 producer for the different varieties of cement shall he as specified in the Schedule and the Schedule, as it stood lat the material time, specified a retention price of Rs. 161.40 per metric tone for cement manufactured by all producer other than those mentioned in 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 tone 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 a 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) Payment 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 equivalence 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 tone;
(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:
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;
11. Cement Regulation Account:
(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 (1) shall be spent only for the following purposes, namely;
(i) paying or equalizing the expenditure incurred by the producer on freight in accordance with the provisions of this order;
(ii) equalizing concession, if any, granted in the mater of price for supplies to Government or for purposes of export under the third proviso to clause 8;
(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 equalizing freight or equalizing concession in the matter of export price to the controller who may, in setting 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 tone “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. Clause 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 at the rate of Rs. 3.00 per metric tone, packing charges and excise duty. This respite 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 reimbursed 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.”
10. Apex Court further held as follows:-
“12- Now in the light of this discussion, let us turn to examine the facts of the present appeals. The Control Order here becomes very material. It is a statutory order having binding force and effect and it must govern the transactions or 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 tone 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 tone 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 onlytoO the terms land 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 overcharged 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 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 maybe 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, 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 could 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. Let us, therefore, examine the impact of the relevant provisions of the Control Order on the terms and conditions of the contract.”
“13- It 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 tone F. O. R. destination railway station. This of course is the maximum price at which a producer may sell cement and theoretically, of 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 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 tin-workable 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 tone 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 tone 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 set 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 tone 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 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, excludes 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 or equalizing 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 of the obligation on behalf of the purchaser and then recovers it by way of reimbursement.”
“14- We are of the views 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 happened 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 e 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 to that clause and Clause (11) of the Control Order he satisfied ? How would if be possible effect to Clause (g) 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 the 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 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 fright 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; if has overriding effect and if it stipulates that the freight, shall be payable by the producer, such stipulation must prevail, notwithstanding any terms or conditions of the cont5ract 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.”
“15- 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 enact 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 there of other than the cost of installation in case where such costs 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 dealer in respect of the goods at the lime of or before the delivery thereof recovered by the inclusive clause. The cost of freight or delivery or (he cost of 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 of 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 Slate 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 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 forms part of the ‘sale price’ within the meaning of the first part of the definition and it is not necessary for the Stale to invoke the inclusive clause and in fact the State has not done so. The exclusion 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 “…..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 costs of freight is part of the price, but the dealer chooses to split up the price and claim the amount of freight as 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 has no application. ”
“16- We must, therefore, hold that, by reason of the provision 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.”
11. From the aforesaid, in my opinion in brief, the following has been held by Hon’ble Supreme Court:-
(i) The Control Order has statutory binding force and effect and it must govern the transactions or sale of cement entered into by the seller with the purchasers;
(ii) 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 per metric tone F.O.R. destination railway station at which a producer may sell cement manufactured by him. The price was clearly inclusive of freight. 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 or equalizing 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 of the obligation on behalf of the purchaser and then recovers it by way of reimbursement.
12. If the obligation to pay the freight were on the purchaser and in fact the purchaser paid the freight, as happened 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.
13. 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 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 prevail, notwithstanding any terms or conditions of 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.
14. Learned Counsel for the dealer submitted that under the Control Order in Clause (8), price fixed was free at railway destination then the excise duty and the Explanation-1 to this clause which defines 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.” According to him under the Control Order, price fixed was F. O. R. railway station means “price at the railway station from where goods was sold to the customers namely that in the present case up to the railway station Kanpur and up to the Railway Station Sitapur. According to him F. O. R. railway destination can not be read as F. 0. R. customer destination and therefore, from Kanpur Dump to customer place and Sitapur Dump to customer place, is not the part of the Cement Control Order and if the dealer hade made sales at Kanpur Dump and at Sitapur Dump which was completed in all respect and for the further delivery to the customer destination to provide extra services if transportation charges have been charged separately in the bill, it would not be governed by the Cement Control Order and would not be a part of the turnover in view of Explanation of Section 2 (i)
15. Prime facie there appears to be some substance in the argument of learned Counsel for the dealer, but before coming to the conclusion that F. O. R. railway destination does not mean customer destination under the Cement Control Order. It would be relevant to have a fact that while claiming reimbursement of freight amount from the Cement Regulations Fund, figure of average freight amount whether includes freight up to the Dump or up to the customer destination, if average freight submitted to the Cement Controller for reimbursement of freight from regulations account includes freight up to the customer destination then in my opinion, alleged amount charged for transportation of the goods from Kanpur and Sitapur Dumps to the customer destination would also be a part of the turnover, but if the reimbursement was made from the Cement Regulations Fund, only of freight from Factory to Dump and not for the subsequent transportation of the goods to the customer then freight charged for further transportation of the goods from Kanpur Dump to customer destination, would not be a part of the turnover. First Appellate Authority held that the price fixed was F. O. R. customer and letter issued by the Cement Controller in the case of Kanpur Dump also gives some indication that even further movement from Dump to destination by road, was also part of reimbursement from Cement Regulations Fund.
16. Perusal of order of Tribunal shows that the Tribunal has not adverted to the findings and reasons recorded by the First Appellate Authority. Tribunal proceeded at a wrong footing that the sale from Kanpur Dump and Sitapur Dumps were the sale by Stockiest to the customer and not by the manufacturer is contrary to the fact, therefore, in my opinion, matter requires reconsideration by the Tribunal in the light of the observations made above. In the result, revision is allowed. Order of the Tribunal is set aside and the matter is remanded back to the Tribunal to decide the appeal afresh.
Sales Tax Revision No. 482 of 1992:
Following questions have been raised in the Sales Tax Revision No.482 of 1992:
“Whether on the facts and in the circumstances of the case the Sales Tax Tribunal was legally justified:
(i)to hold that the freight in question did not form part of the turnover inspite of the legal position to contrary
(ii) to exempt the dealer from payment of interest on tax imposed despite the fact that such tax was due under the Act.
(iii) to hold that gunny bags in which cement was packed and sold were taxable as jute goods despite the fact that there were not separate contracts for the sale of cement and jute bags and what was sold was cement in gunny bags.”
17. Perusal of the order of the Tribunal shows that question nos. (i) and (ii) do not arise from the order of the Tribunal. Dispute before the Tribunal was relating to the interest. Assessing authority had added the amount of freight in the turn over and levied the tax thereon. Amount of tax levied has been treated as admitted tax and the interest under Section 8 (1) of the Act was demanded. First appellate authority set aside the demand of interest under Section 8(1) of the Act and the Tribunal has confirmed.
18. I have perused the order of Tribunal and the authorities below.
19. At no stage the dealer admitted the liability on the freight charges. It was highly disputed question whether the freight charges would form part of the turn over. Therefore, tax levied on the amount of freight charges can not be treated as admitted tax. First appellate authority and the Tribunal has rightly deleted the payment of interest under Section 8 (1) of the Act. However, it is stated that the issue whether the freight charges would form part of the turn over is still subjudice. In case, it would he held that the freight charges would form part of the turn over, the interest under Section 8 (1-B) of the Act would only be demanded and not under Section 8 (1) of the Act.
20. In the result, Sales Tax Revision No.482 of 1992 fails and is accordingly, dismissed.