INDIA METERS LIMITED Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THE assessee sold the electric meters manufactured by it to the State Electricity Board. In the contract it was provided that, "the ownership of the goods will remain with the supplier till they are delivered at the destination station in good and acceptable condition as per the despatch instructions".

(2.) THE clause in the contract dealing with payment, provided that" payment for 100 per cent value of each consignment together with full excise duty and sales tax will be made in Central payment, Madras, immediately on receipt of certified copies of acknowledgment of delivery challans from the chief store keepers of the systems concerned, subject to purchase order terms".

(3.) LEARNED counsel in this context relied upon a decision of the apex Court in the case of Hyderabad Asbestos Cement Products Ltd. v. State of Andhra Pradesh. In that decision, rendered by a Bench of three learned Judges of the apex Court, it was held that the assessee therein had only received as price the amount of the catalogue price less the freight charges, which the buyer had paid and, therefore, what was taxable was only the price actually received. That decision was rendered in the background of the facts found which showed that the assessee had despatched goods to the stockist with the stipulation "date of delivery" shall mean the date of railway receipt. The court having found that the agreement on the part of the buyer/stockist to pay the freight charges and such freight charges having been deducted from the catalogue price, the freight charge did not form part of the price of the goods sold. That is the way in which that judgment was explained by a later two-Judge Bench of the Supreme Court in the case of Hindustan Sugar Mills Ltd. v. State of Rajasthan. The court in the later judgment extracted the following statement in the case of Hyderabad Asbestos Cement Products Ltd. "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...."