SESHASAYEE INDUSTRIES LIMITED Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) DR. A. S. ANAND, C. J. The assessees, M/s. Seshasayee Industries Limited, vadalur, have filed this appeal against an order of the Joint Commissioner of commercial Taxes, dated February 22, 1982, passed in exercise of the suo motu powers of revision.

(2.) FOR the assessment year 1976-77, the assessees reported a total and taxable turnover of Rs. 4, 82, 50, 889. 47 and Rs. 4, 49, 75, 338. 50 respectively, under the Central Sales Tax Act, 1956 (hereinafter called "the Act" ). The assessees claimed exemption of Rs. 32, 75, 550. 97. The accounts of the assessees were called for by the assessing authority and on checking the same, various defects were noticed. After noticing the defects, the assessing authority determined the total and taxable turnover at Rs. 4, 82, 70, 134. 54 and Rs. 4, 51, 39, 090. 48 respectively. This included a sum of Rs. 1, 49, 295. 02 relating to "transit insurance charges" collected by the assessees. Aggrieved, the assessees preferred an appeal before the Appellate Assistant Commissioner disputing the inclusion of rs. 1, 49, 295. 02, representing the "transit insurance charges", in the taxable turnover. The Appellate Assistant Commissioner agreed with the assessees and found that insurance charges had been collected separately in accordance with the terms of the contract and agreement between the buyer and the seller and that the said amount did not form part of the taxable turnover. The Appellate Assistant Commissioner accordingly deleted this amount from the taxable turnover and allowed the appeal. The Joint Commissioner was not satisfied and proposed to revise, in exercise of the suo motu powers of revision, the order of the Appellate Assistant Commissioner. Notice was issued to the assessees and their objections were invited. After considering the objections and hearing the parties, the Joint Commissioner confirmed the proposal. It was found by the Joint Commissioner that the "transit insurance charges" had been taken into consideration by the assessees while arriving at the sale price and, therefore, they formed part of a consideration of the sales. The assessees have questioned that order through this appeal.

(3.) THIS judgment was cited before the Joint Commissioner also. The Joint Commissioner, however, did not follow the law laid down therein, observing that in the case in the Kerala High Court, the question whether insurance charges in respect of the goods during transit have to be excluded from determination of the sale price or the taxable turnover "was not an issue before them". We fail to understand as to how the Joint commissioner arrived at this finding. The specific issue in a group of tax revision cases also related to the exclusion of the cost of insurance of the goods for determining the turnover and, therefore, the Bench had applied its mind to that specific issue. Indeed, it was while considering the definition of "turnover" and not the definition of "sale price" that the kerala High Court rendered the finding, but that would not make any difference for determination of the question before us. The Kerala High Court was influenced by the fact that general insurance had become so much of a part of commercial activity in the country that the freight charges should be deemed to include the transit insurance charges. We are in agreement with that view subject, of course, to a rider that the transit insurance charges would be deemed to be included in the freight charges unless there was a contract or agreement to the contrary. Transit insurance charges, therefore, form a part of the freight charges unless the same are treated, under the terms of the contract or agreement, as part of the price of the goods.