MADRAS CEMENTS LTD Vs. STATE OF KERALA

JUDGEMENT

(1.) Heard senior counsel Dr. Muhamed Kutty appearing for the petitioner and the Government Pleader for the respondent.

(2.) The question raised is whether the addition of freight of the taxable turnover is justified or not. The petitioner has relied on annexure C to the Tribunal's order, which is an invoice raised by the assessee on one of their dealers. What is seen from the same is that the assessee has charged value added tax on sale price reduced by discount. In fact, after collecting the tax, the assessee has shown rebate of freight, which is around an amount of Rs. 300 in one invoice. The contention of the assessee is that the addition of freight to the turnover is a duplicity because, freight forms part of price on which tax is collected and remitted. The Government Pleader submitted that the contention cannot be accepted on the face of it because, unless freight is to be claimed as a deduction from the taxable turnover, there is no need for the assessee to show it separately. He also contended that one invoice produced cannot be the sole basis for deciding the issue.

(3.) If the facts stated by the assessee's counsel are correct, then there is no justification for making addition of freight, which is given as a rebate by the assessee, no matter, it may not be the actual freight for the goods. This is because the invoice annexed to the Tribunal's order clearly shows that the sale price reduced by discount was subjected to tax and assessee had collected tax on the net amount. Therefore, the assessee's taxable turnover should be the sale price, which is reduced by the discount. If the assessee has not claimed freight as a further deduction from turnover, then there is no scope for addition. So far as tax is recovered and collected by the assessee in accordance with the provisions of the Act, the Department has no authority to question the incentives given by the assessee to the dealers, whether it be by way of freight or not. If the assessing officer has any doubt as to whether turnover disclosed is actual sale price reduced by the discount, it is for him to call for the entire invoices and verify with the dealer's accounts which could be called for. We make it clear that if the petitioner has not reduced freight from the sale price reduced by discount while offering taxable turnover, there is no scope for addition of freight again, which will be a duplicity.