- (1.) Heard Sri Piyush Agrawal, learned counsel for the revisionist and the learned standing counsel.
(2.) The short question which arises for determination in this revision is as to whether the freight charges which are stated to have been levied and recovered by the revisionist from the purchaser of goods was liable to be included in its taxable turnover.
(3.) The answer to this question itself would turn upon the expression 'turnover' as defined under the U.P. Trade Tax 1948 which reads as under: - "2. (i) 'Turnover' means the aggregate amount for which goods are supplied or distributed by way of sale or are sold, by a dealer, either directly or through another, on his account or on account of others, whether for cash or deferred payment or other valuable consideration: Explanation I. - Omitted Explanation-II. - Subject to such conditions and restrictions, if any, as may be prescribed in this behalf: - (i) the amount for which goods are sold or purchased shall include the price of the packing material in which they are packed, and any sums charged for anything done by the dealer in respect of the goods sold, at the time of or before the delivery thereof, other than, cost of freight or delivery or cost of installation or the amount realized as trade tax on sale or purchase of goods, when such cost or amount is separately charged; (ii) any cash or other discount on the price allowed in respect of any sale and any amount refunded in respect of articles returned by customers shall not be included in the turnover; and (iii) where for accommodating a particular customer, a dealer obtains goods from another dealer and immediately disposes of the same without profit to the customer, the sales in respect of such goods shall be included in the turnover of the latter dealer alone; The rival submissions have primarily centered on clause (i) to Explanation II appended to the definition and which seeks to amplify and explain what items would stand included while determining the taxable turnover of an assessee. According to Sri Piyush Agarwal, learned counsel for the revisionist, the charge of freight in this case was levied separately and is therefore not liable to be included in the taxable turnover of the assessee. He lays stress uponthe express language employed by clause (i) to the effect that the cost of freight "when separately charged" is to be excluded from the taxable turnover. On the other hand, Sri B.K. Pandey, learned standing counsel has submitted that all costs which are incurred by the dealer prior to the sale achieving completion would be liable to be included in the taxable turnover of the assessee. He submits that the expression "when separately charged" would not be determinative and that the terms of the sale would have to be looked into in order to answer the issue whether freight charges are liable to be included in the taxable turnover of the assessee. Both the learned counsels to buttress their rival submissions have placed reliance upon the judgment rendered by the Supreme Court in India Meters Limited Vs. State of Tamil Nadu, 2010 9 SCC 423. Their submissions have centered around what the Supreme Court observed in paragraphs 16, 17, 18 & 19 of the report and which for the sake of appreciation of the controversy is extracted hereinbelow: - 16. It is no doubt true that Rule 6(c) of the Rules permits deduction of the cost on freight while determining the taxable turnover. However, that provision must be read in the context of definition of "turnover" as also the definition of "sale" in Sections 2(r) and 2(n) respectively of the Act. "Turnover" is defined in the Act, inter alia, to mean "the aggregate amount for which goods are bought or sold or delivered or supplied or otherwise disposed of in any of the ways referred to in clause (n)". 17. "Sale" is defined in Section 2(n), inter alia, as meaning "every transfer of the property in goods (other than by way of a mortgage, hypothecation, charge or pledge) by one person to another in the course of business for cash, deferred payment or other valuable consideration". The definition goes on to include a number of other transactions also within that definition of "sale". The turnover of an assessee/dealer would include the aggregate amount for which goods are bought or sold. It is, therefore, the amount for which the goods are bought or sold, which form part of the turnover, and a thing can be said to be sold only when the transaction falls within the scope of the definition of "sale". 18. When the transfer of the property or the goods is to be at the place of the buyer to which the seller is under an obligation to transport the goods, the expenditure incurred by the seller on freight in order to carry the goods from his place of manufacture to the place at which he is required under the contract to deliver, would thus become part of the amount for which the goods are sold by the seller to the buyer and would fall within the scope of "turnover". 19. The learned counsel for the State of Tamil Nadu submitted that freight and insurance charges are included in the sale price of the goods. Even if freight and insurance charges are shown separately in the Bill and added to the price of the goods, the character of payment would remain the same. Since freight and insurance charges represent expenditure incurred by the dealer in making the goods available to the purchaser at the place of sale, they would constitute an addition to the cost of the goods to the dealer and would clearly be a component of the price to the purchaser. The amount of freight and insurance charges would be payable by the purchaser not under any statutory or other liability but as part of the consideration for the sale of the goods and would therefore, form part of the sale price.";