- (1.) These appeals by special leave raise an interesting question of law relating to the applicability of the definition of ''sale price'' in S. 2 (p) of the Rajasthan Sales Tax Act, 1954 and 2 (h) of the Central Sales Act, 1956. The question is whether in sales of cement effected under the Cement Control Order 1967, the amount of freight forms part of the 'sale price" so as to be exigible to Sales Tax under these Acts. The facts giving rise to these appeals are in material respects identical and hence it would be sufficient if we state the facts of Civil Appeal No. 1122 of 1976 which was argued as the main appeal before us.
(2.) The appellant in this appeal is Hindustan Sugar Mills Ltd. (hereinafter referred to as the assessee). The assessee owns a cement factory known as Udaipur Cement Works at Udaipur in Rajasthan and it manufactures and sells cement to purchasers both inside and outside Rajasthan. The appeal relates to assessment of the assessee to sales tax under the Rajasthan Sales Tax Act, 1954 and the Central Sales Tax Act, 1956 for the assessment years 1971-72 and 1972-73. During these assessment years the sale of cement was controlled under the Cement Control Order, 1967 (hereinafter referred to as the Control Order). The Control Order was issued by the Central Government in exercise of the powers conferred by Ss. 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 be as specified in the Schedule and the Schedule, as it stood at the material time, specified a retention price of Rs. 161.40 per metric tonne for cement manufactured by all producers other than those mentioned at Items 1 to 5, which included the assessee. The maximum price at which a producer could sell cement was prescribed in cl. (8) which said that no producer shall sell "any other variety of cement at a price exceeding Rs. 214. 65 per metric tonne free on rail destination railway station plus the excise duty paid thereon". The proviso to Cl. (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 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 Cl. (4) at the destination point". Clauses (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 equivalent 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 tonne; (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 cl. 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 cl. 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 cl. 11. x x x x 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 cl. 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 subclause (1) shall be spent only for the following purposes, namely : (i) paying or equalising the expenditure incurred by the producer on freight in accordance with the provisions of this Order; (ii) equalising concession, if any, granted in the matter of price for supplies to Government or for purposes of export under the third proviso to cl. 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."
(3.) 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 equalising freight or equalising concession in the matter of export price to the controller who may, in settling 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 tonne "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 anywhere 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, clauses 9 and 11 of the Control Order provided a machinery by which the producer could be ensured the retention price specified in the Schedule along with selling agency commission the rate of Rs. 3.00 per metric tonne, packing charges and excise duty. This result 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 re-imburse him the actual freight paid by him.;