AGRO PRIVATE LTD Vs. STATE OF MYSORE

JUDGEMENT

(1.) The petitioner herein is a Company dealing in Motor'Cycles, Spare Parts, Tractors, etc. In the course of its business to petitioner used to purchase Motor Cycles from the. manufacturers Eseorts Ltd. The factory in which the motor cycles are manufactured is situated in the State of Haryana, The petitioner has acquired the right exclusively to deal in the Motor Cycles manufactured by Escorts Ltd. within the State of Mysore (now State of Karnataka,) under an agreement entered into with Escorts Ltd. Under the terms of the said agreement, the petitioner would become the owner of the Motor Cycles before it sells the same to its customers within the State of Karnataka. The turn-aver in respect of Motor Cycles is liable to sales-tax under the Mysore Sales Tax Act, 1957 (hereinafter referred to as the Act). In its, return in respect of the assessment year 1965-66 (1-1-1965 to 31-12-1965), the petitioner claimed deduction in respect of the freight charges incurred by it in transporting the Motor Cycles from the site of the factory at Haryana to Bangalore where its place of business is situated. The Assistant Commissioner of Commercial Taxes who was the assessing authority, disallowed the said claim and levied sales tax on the freight charges incurred by the petitioner in transporting the Motor Cycles from the site of the factory to Bangalore also. The Deputy Commissioner of Commercial Taxes and the Sales Tax Appellate Tribunal, confirmed the said order passed by the assessing authority. Aggrieved by the order of the Sales Tax Appellate Tribunal, the petitioner has filed this revision petition.

(2.) Sri S. P. Bhat, the learned Counsel for the petitioner, contended that the freight charges incurred by the petitioner in transporting Motor Cycles from Haryana to Bangalore have to be exempted from payment of sales tax on two grounds, (i) that such freight charges are exempt from sales tax by Rule 6(4) (f) (i) of the Mysore-Sales Tax Rules, 1957; and (ii) that such charges did not form part of the consideration.

(3.) In support of his first contention, Sri Bhat relied upon a decision of a Division Bench of this Court reported in Webbs Sales and Service(P) Ltd. v. Commr. of Comml. Taxes, Bangalore, 24 STC. 84. In that case the facts were these: Under an agreement entered into with themManufacturers the assessee was purchasing trucks and thereafter used to sell it to its customers at Bangalore. The question which arose for consideration in that case was whether the freight charges paid by the assessee for transporting the trucks from the place where they were manfactured to its place of business were liable to sales tax or not. This Court took the view that such "inward freight charges" were exempted from sales tax under Rule 6(4)(f) (i) of the Rules. The above decision no doubt fully supports the contention of the petitioner in this case. But we are of the opinion that the view expressed by the Division Bench of this Court in the above case is no longer good law in view of the two decisions of the Supreme Courtt n Dyer Meakin Breweries Ltd. v. State of Kerala, 26 STC. 248, and D. C. Johar & Sons (P) Ltd. v. Sales Tax-Officer, Ernakulam, 27 STC 120 SC.