- (1.) M. C. AGARWAL, J. These revision petitions under section 11 of the U. P. Sales Tax Act, 1948 have been preferred by the dealer against a common order dated April 4, 1990 passed by the Sales Tax Tribunal, Ghaziabad on the dealer's Second Appeal Nos. 356 and 357 of 1989 for the assessment years 1984-85 and 1985-86.
(2.) I have heard Sri Rajesh Kumar, learned counsel for the revisionist, and Sri B. K. Pandey, learned Standing Counsel. The controversy raised in these two revision petitions is whether the, insurance charges for the transport of goods to the destination of the buyer form part of the turnover of the dealer. The revisionist is a manufacturer of asbestos sheets and has a depot at Ghaziabad wherefrom the sales are effected. The goods are sold to the customers and transported to them at their costs. The revisionist has taken an insurance policy and those customers who wish their goods to be insured are charged a certain amount as, a portion of the insurance premium. The dealer claimed that the amount of the insurance charges which are billed separately cannot be treated as its turnover. This contention was not accepted and has been rejected throughout. The Tribunal has held that the insurance charges have been realised as a percentage of the value of the goods and this is not the cost of the delivery of the goods but is inseparable part of the value of the goods and forms part of the turnover as defined in the U. P. Sales Tax Act. The "turnover" has been defined in section 2 (i) of the U. P. Sales Tax Act, 1948. The relevant portion is as under : " (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 livery thereof, other than cost of freight or delivery or cost of installation or the amount realised as sales tax or purchase tax, when such cost or amount is separately charged. "
(3.) IN Hyderabad INdustries Ltd. v. Commissioner of Sales Tax 1996 UPTC 993 it has been held that the insurance charges realised from the customers do not form part of the turnover. Another learned honourable Judge of this Court in the case of Eicher Goodearth Ltd. v. Commissioner, Sales Tax, U. P. [1995] 99 STC 130; 1996 UPTC 17 has also taken a similar view. The learned Standing Counsel, however, placed reliance on the assessee's own case Hyderabad Asbestos Cement Products Ltd. v. State of Andhra Pradesh [1987] 65 STC 172 (SC); (1987) 2 All Tax J 693; 1987 UPTC 662 in which the insurance charges were held to be the part of the turnover. This was, however, because of the definition of "turnover" under the Andhra Pradesh General Sales Tax Act, 1957 and this judgment is not of generally applicable. Reliance is also placed on a judgment of another honourable single Judge of this Court in Modi INdustries Limited v. Commissioner of Sales Tax [1999] 113 STC 117; 1998 UPTC 1069, this judgment is in respect of freight, loading, unloading, insurance charges relating to maintenance of a depot. IN the present case the insurance charges are not in respect of the bringing of the goods to the dealer's depot but are in respect of the transport of the goods to its buyer within the State of U. P. The revisionist has annexed to the revision petitions, a copy of the bill which shows that after arriving at the total dues in respect of the price of the goods and the sales tax payable thereon, the insurance charges have been separately added. Therefore, in terms of the two judgments referred to above, the insurance charges will not form part of the turnover. Sub-clause (1) of Explanation II excluded from the turnover the cost of freight or delivery. The insurance charges paid for covering the risk of damage during transport is nothing but an expenditure related to the transport of the goods to safeguard against loss/damage during transit. IN Modi INdustries Ltd. [1999] 113 STC 117 (All.); 1998 UPTC 1069 also it has been held that the freight or cost of delivery do not form part of the turnover. IN my view, therefore, the Tribunal was not right in holding that the insurance charges realised from the customers before or after payment to the insurance company form part of the turnover. The revision petitions are, therefore, allowed and setting aside the Tribunal's order dated April 4, 1990. It is ordered that the Tribunal will dispose of the aforesaid appeals as required by section 11 (8) of the U. P. Sales Tax Act (now U. P. Trade Tax Act) in accordance with this judgment. Petitions allowed. .;