Indian Rayon

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. the Bar.

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

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/