GOPALAN NAMBIYAR, C. J. -
(1.) THESE tax revision cases have been preferred by the State against the assessment orders to sales tax for the years 1970-71 and 1971-72. The assessee had contracted to supply debarked timber for the period 9th November, 1970, to 13th November, 1970, and thereafter, up to 1st July, 1971. The period of the contract fell within the two assessment years, 1970-71 and 1971-72. The relevant term in the contract regarding the supply of the forest timber has been extracted in the order of the Sales Tax Appellate Tribunal. It reads : " Rate : You will be paid the following rates, all inclusive, on per ton basis, for supply of the aforesaid firewood species from the above coupe to our factory site at Mavoor, on the basis of weight recorded at our factory; Mavoor : Cost of material inclusive of sales tax Rs. 10 (Rs. Ten per M. Ton ). Extraction, leading conversion, debarking, Rs. 24 (Rs. Twenty-four per splitting and dragging up to motorable M. Ton ). roadside charges Loading, transport charges and delivery Rs. 35 (Rs. Thirty-five per of firewood from motorable roadside to M. Ton ). our factory sit at Mavoor Total Rs. 69 (Rs. Sixty-nine per M. Ton ). " The assessee claimed deduction of the transport charges to the factory site under rule 9 (f) of the Kerala General Sales Tax Rules, 1963, which reads : " 9. Determination of taxable turnover.- In determining the taxable turnover, the amounts specified in the following clauses shall, subject to the conditions specified therein, be deducted form the total turnover of the dealer :. . . . . . . . . . . (f) all amounts falling under the following two heads, when specified and charged for by the dealer separately, without including them in the price of goods sold; (i) freight; (ii) charges for delivery;. . . . . . . " The claim was disallowed by the Sales Tax Officer and the Appellate Assistant Commissioner; but the decision was reversed, on further appeal by the assessee, by the Sales Tax Appellate Tribunal. Aggrieved by the said decision, the State has preferred these revisions.
(2.) THE position seems to be covered in the assessee's favour by a recent pronouncement of a Divisional Bench of this Court, of which one of us (myself) was a member, in Kutty & Co. v. State of Kerala ( 42 S. T. C. 294) (T. R. C. Nos. 64, 65 and 66 of 1976 ). It was there observed that "all that is needed to claim exemption is that freight must have been specified and charged for separately without including it in the price of the goods sold". For the revenue, reliance was placed on the decision of the Supreme Court in Dyer Meakin Breweries Ltd. v. State of Kerala ( 26 S. T. C. 248 (S. C. ). ). Referring to that decision the earlier Division Bench observed that the facts showed clearly that the transporting in that case was prior to the sale. It referred to the decision in Agricultural Farms Ltd. v. State of Tamil Nadu ( 34 S. T. C. 143.), which considered the decision of the Supreme Court in Dyer Meaking Breweries Ltd. v. State of Kerala ( 26 S. T. C. 248 (S. C. ). ). In the Madras case ( 34 S. T. C. 143.), the Madras High Court pointed out that the assessee had extracted limestones and transported the same to the buyer's place of business in pursuance of the agreement of sale entered into by it, which specifically provided for the price of the limestone to be paid at the place of extraction, and also for the supply and delivery charges payable to the buyer. It was in such circumstances that the Madras High Court upheld the claim for deduction in respect of the supply and delivery charges. In Kutty & Co. v. State of Kerala ( 42 S. T. C. 294) (T. R. C. Nos. 64, 65 and 66 of 1976), we held that this decision was quite appropriate to the facts on hand.
The learned Government Pleader urged certain aspects to distinguish our decision in Kutty & Co. v. State of Kerala ( 42 S. T. C. 294) (T. R. C. Nos. 64, 65 and 66 of 1976 ). It was contended that, under section 22 of the Sale of Goods Act, where there is a contract for the sale of specific goods under which the seller is bound to weigh, measure, test, or do some other act or thing for the purpose of ascertaining the price, the property does not pass until such act or thing is done and the buyer has notice thereof. In the light of this provision, the argument was that till the debarked timber is weighed at the site the property does not pass. If the revenue had a case to this effect, in regard to the importance of this particular term in the contract, that aspect should have been urged before the Sales Tax Appellate Tribunal. This was not done. That apart, going through the terms of the contract, which we have extracted earlier, we are of the opinion that there can be no case for applying the provisions of section 22 of the Sale of Goods Act. As is evident from sub-clause (3) of section 19 of the Act and, as pointed out by the Privy Council in Hoe Kim Seing v. Maung Ba Chit (A. I. R. 1935 P. C. 182.), the rules embodied in sections 20 to 24 of the Act are rules for ascertaining the intention of the parties as to time at which property in the goods is to pass to the buyer. On the express terms of section 19 (3) they apply only "unless a different intention appears". On the terms of the contract set out, we do not think, we would be justified in holding that there is a postponement of the passing of property till the weight is recorded at the factory site. This is only for the purpose of cross-checking the quantum of the timber supplied and for checking up the price payable, the freight having already been fixed at a certain amount. We see no case for the applicability of section 22 of the Sale of Goods Act.
Counsel for the revenue cited to us the decision in State of Tamil Nadu v. Parry & Co. ( 38 S. T. C. 122. ). The learned Judges of the Madras High Court observed, on the terms of the contract, if the bargain between the parties was for payment at a particular price, the mere fact that the dealer had bifurcated the price and shown the total amount under separate headings will not enable the dealer to get the deduction of the freight from the total taxable turnover. The endeavour of the learned Government Pleader was to bring the case within the principle so stated by the Madras High Court. We cannot agree. We do not think the case falls within the principle so stated. We have already endeavoured to explain the scope of the concerned term of the contract and also the nature of the contract between the parties.
(3.) COUNSEL for the assessee invited our attention to another decision of the Madras High Court in Mettur C. & I. Corporation Ltd. v. State of Tamil Nadu ( 38 S. T. C. 511. ). The learned Judges there observed that freight and charges for delivery would stand excluded from the taxable turnover though these are separately itemised. It was pointed out that where the contracts were for ex factory price, the same had to be treated as part of the freight itself and, therefore, the transport charges were liable to be excluded from the turnover. The decision appears appropriate. Still more so is the decision in Narayana Shenoy v. State of Mysore ( 23 S. T. C. 411.), where the Mysore High Court had construed an almost similar contract. It was observed : " It appears to us that the discussion made by the Commercial Tax Officer and the two appellate authorities concerned quite an irrelevant question as to the place where the contract was made. The Commercial Tax Officer appears to have taken the view that since it was not proved that the sale had been completed in the forest, and that delivery had been given to the purchaser inside the forest, the deduction claimed by the petitioner could not be allowed. The Assistant Commissioner and the Tribunal appear to have shared the same view although they did not express themselves in that way. But what is clear is that it was overlooked by every one that the place where the contract was entered into had no materiality to the claim made by the petitioner. If the freight in respect of which a deduction was claimed by him was specified and charged separately in the bills prepared by him and it had not been included in the price of the goods sold, rule 6 (4) (f) (i) created a right to its deduction from the total turnover determined under clauses (a) and (b) of rule 6 (1 ). Since the finding of fact recorded by the commercial Tax Officer, which was not disturbed by the Assistant Commissioner and the Tribunal, was that it had been so specified and charged separately in the bills prepared by the petitioner, its deduction could not have been refused on the irrelevant ground that the contract was not entered into inside the forest or that the delivery was not made at the spot where the fuel had been collected. Whatever be the place of the contract, so long as in the invoices prepared by the petitioner freight was shown as an independent item and charged as such and it did not form part of the sale price specified in the invoices, the deduction which was otherwise claimable under rule 6 (4) (f) (i) could not have been refused".
We are of the opinion that no grounds have been made out for distinguishing the principles of our decision in Kutty & Co. v. State of Kerala ( 42 S. T. C. 294.) (T. R. C. Nos. 64, 65 and 66 of 1976 ). On the terms of the contract and incidents of the transaction disclosed, we are of the opinion that the deduction in respect of the freight or transportation charges was rightly allowed by the Tribunal. We dismiss these tax revision cases, but without costs. Petitions dismissed. .;