Decided on March 03,2009



Manoranjan Virk, Member (A) - (1.) ALL these 12 appeals are filed by M/s. Hindustan Unilever Limited (formerly known as Hindustan Lever Limited), against the orders of the Appellate Deputy Commissioner (CT), Hyderabad Rural Division, Hyderabad under APGST Act, 1957. T.A. No. 102/2001 relates to the assessment year 1996 -97, T.A. No. 1085/02 relates to the assessment year 1997 -98, T.A. No. 26/05 relates to the assessment year 1998 -99, T.A. No. 72/05 relates to the assessment year 1999 -2000, TA. No. 548/07 relates to the assessment year 2000 -01, T.A. No. 532/07 relates to the assessment year 2001 -02, T.A. No. 534/07 relates to the assessment year 2002 -03, T.A. Nos. 549/07 & 533/07 relate respectively to April, 03 to June, 03 and July, 03 to March, 04, T.A. Nos. 550/07, 551/07 & 552/07 relate respectively to April to August, September to November, and December to March periods of assessment year 2004 -05. Further, the appeals related to assessment years 2003 -04 and 2004 -05 are filed against provisional assessment orders.
(2.) THE main issue which is common in all the appeals relates to levy of sales tax on freight charges shown to have been collected separately in the invoices raised in favour of buyers. It is the contention of the appellant that this is a post sale arrangement and that the Department is wrong in rejecting the claim of the appellant and demanding tax on turnover related to freight charges. Besides the main issue, there are a few other issues related to T.A. No. 102/01, T.A. No. 72/05, T.A. No. 548/07, and T.A. No. 532/07. In T.A. No. 102/01, these issues are a) Levy of higher sales tax on the sales turnover relating to cattle/poultry feed. b) Denial of sales tax on set off in respect of goods bought from JOCIL. c) Forfeiture of tax without notice (excess collection of tax on sales relating to (rock phosphate). So far as the T.A. No. 72/05, and T.A. No. 548/07 are concerned, the additional grounds for appeal are disallowance of the sales returns. In T.A. No. 532/07, in addition to the issue of freight the following three issues have been raised: - a) Alleged non -submission of Form -G in respect of sales of Laurie Acid, (raw material for the manufacture of soaps) to JOCIL, Guntur. b) Levy of turnover tax U/s. 5 -A on the sales turnover related to branded items on the basis that the appellant is the trademark holder of the said brands. c) It is the contention of the appellant that the turnover tax is not leviable on goods assessed U/s. 5AA. The appellant has filed written submissions and also argued on the same lines during the hearing before us. The common issue that arises for consideration by us in all these appeals is whether the freight charges collected by the appellant from the buyer form part of the taxable turnover or not. It is the appellants' contention that the turnover related to such freight charges collected by them is a post -sale arrangement and as such does not form part of the taxable turnover. The appellant has submitted that they dealt in several consumer products and have a marketing net work through out the length and breadth of India. For the purpose of a proper distribution of their products, they appoint clearing and forwarding agents (in short C & FAs) at Ideal locations. These CFAs in turn supply the goods to Redistribution Stockist (in short RS). The RSs are also appointed by the appellant to ensure supply of the appellant's products to reach the end consumers. The appellant enters into agreement with the CFAs and also enters into separate agreements with RSSs. The appellant has filed some specimen copies of both these type of agreements. The appellant has specifically invited out attention to clause 14 of the agreement with RSs which reads as follows: "Goods will be dispatched by rail, road or water according to the availability and suitability of the mode of transport at the seller's absolute discretion. Despatches by rail will be at railway risk. Despatches by water where goods are sold CIF will be insured by the sellers. WPA including risk of theft, pilferage and non -delivery. In every mode of transport and notwithstanding the rail dispatches being at railway's risk and the dispatches on CIF terms being insured by the sellers, the risk of any loss or damage to or deterioration of the goods from whatever cause arising, occurring after the time of the dispatch thereof from the Company's Factory, depot or C & F Agents premises, shall be borne by the buyers whether the order is FOB. FOR Factory, FOR Destination. CIF or Ex -go down: It is the appellant's contention that as per Clause 14 of their agreement with the RSs (re -produced above) the company's responsibility and risks in goods will cease on dispatch of goods on ex -business premises. The transit risk is that of the buyer and as such the incidence of freight is post -sale in nature. It is their contention that since the RSs cannot come to their premises each time to make purchases, they request the appellant to make transportation arrangement and these freight amounts so incurred, are then recovered by the appellant through the bills raised on the RSs. Hence, they contend these freight amounts are post -sale in nature. It is further stated by them that their selling terms are such that the delivery is complete once the goods leave the premises of their depots.
(3.) THE appellant has further submitted that the entrustment of the goods to the carrier is for and on behalf of and at the behest of the RSs and as such the transporter is the agent of the RSs for the purpose of delivery. They have pointed out that in clause 15 of the agreement it is provided that the appellant company will not make any claim on the transporter and it is only the stockists that have to make any claim for damage caused to the goods if any. The company renders services to the buyer to liaison with the transporter provided the buyers desire the company to do so. According to them, this clause clearly establishes that the sale and delivery are completed at their business premises and thereafter the goods are under ownership and risk of the RSs. Thus, according to them, the transport being an event subsequent to sale and delivery being completed at their business premises, the freight charged by them is only in the nature of reimbursement and outside the purview of sale consideration.;

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