ORIENT PAPER MILLS LTD Vs. COMMISSIONER OF SALES TAX

JUDGEMENT

(1.) THIS is a reference made by the Sales Tax Appellate Tribunal referring for our answer the following question of law :

(2.) THE assessee is a paper mill situated at Amlai, district Shahdol. The assessee is engaged in the business of manufacture and sale of different varieties of paper. The relevant period for this case is 1st April, 1966, to 31st March, 1967. The assessee is a registered dealer both under the Central Sales Tax Act, 1956 and the M. P. General Sales Tax Act, 1958. In the assessment proceedings under the Central Act, the assessee claimed that a sum of Rs. 33,96,452 which was paid as freight by the purchasers, should not be included in the sale price and consequently in the turnover. Similarly, in the assessment proceedings under the State Act, the assessee claimed that the amount of Rs. 46,625 paid as freight by the purchasers should not be included in the sale price. The sales tax authorities did not accept this contention of the assessee. The Tribunal also did not accept the assessee's contention, relying upon the case of Birla Jute Manufacturing Co. Ltd. v. Commissioner of Sales Tax, M. P. [1972] 29 STC 639.

(3.) THE price charged by the assessee from the purchasers is f. o. r. destination. The manner in which the assessee prepares the bills is to record in the printed bill form first the number of gunny packages, then the number of reams or reels, as the case may be, then the description of the quality of the paper sold, its size and weight per ream, packet or substance, its weight in kilograms, the rate per kilogram f. o. r. destination and lastly the amount payable. From the amount recorded as payable, the assessee deducts discount at the agreed rate and adds to the amount remaining after deduction of the discount the Central excise duty and the sales tax payable and from the total of these items deducts the railway freight payable. The railway receipts were obtained in all cases "freight to pay" and the freight in all cases was paid by the purchasers at the destination. The terms of contract used to be entered in a sale note, a sample of which has been annexed as part of the statement of case. Conditions (6) and (7) of the sale note contained on the reverse of the note are material which read as follows :