HYDERABAD ASBESTOS CEMENT PRODUCT LIMITED Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) THE appellant, a public limited company carrying on the business of manufacturing and selling asbestos cement sheets and other products, has its factory at Sanatnagar, Hyderabad, in the State of Andhra Pradesh, and is registered as a "dealer" under the Andhra Pradesh General Sales Tax Act (6 of 1957). For the year 1959-60 the Commercial Tax Officer, in assessing the turnover of the company, allowed a deduction of Rs. 57,970.37 in respect of railway freight on articles supplied to outstation customers. THE Deputy Commissioner of Commercial Taxes later revised the assessment, and directed that the railway freight paid in respect of the goods sold be included in the turnover. In appeal the Appellate Tribunal set aside the order passed by the Deputy Commissioner of Commercial Taxes. But the order passed by the Tribunal was set aside by the High Court of Andhra Pradesh and the order passed by the Deputy Commissioner was restored. A writ petition moved by the company challenging the assessment was also dismissed.

(2.) TO meet competition from other manufacturers, the company maintained a uniform catalogue rate all over the country in respect of its manufactures. The company sent goods to outstation customers by railway under railway receipts with freight to pay. The company made out an invoice at the catalogue rate, and the customer paid the amount of the invoice less the freight for releasing the railway receipt and took delivery of the goods on payment of the railway freight. The result was that the net price received by the company was the catalogue rate less the railway freight charged in respect of the goods transported to the destination.

(3.) IF clause (4) stood alone the price charged by the company may be deemed to be the catalogue rate less the discount payable to the purchasers. But by clause (16) the purchasers clearly undertook to pay railway freight which was deducted from the invoice made out by the company. By clause (16) the company received the catalogue rate less the railway freight as price of the goods sold. We are unable to agree with the High Court that "the term relating to the price in the contract between the company and the stockist envisaged by this clause [clause (16)] implies an obligation on the part of the company to pay the railway freight". In our judgment, under the terms of the contract there is no obligation on the company to pay the freight, and under the terms of the contract the price received by the company for sale of goods is the invoice amount less the freight.