RAM OXYGEN P LTD Vs. JOINT COMMISSIONER CT

JUDGEMENT

(1.) THIS tax appeal case is against the order of the Joint Commissioner (SMR) of Commercial Taxes, Chennai in Ref. No. N2/51709/89 dated September 19, 1991. The assessment relates to the year 1986 -87. The issue involved in this case is the inclusion of a turnover of Rs. 10,87,632 relating to freight charges along with the value of gas and assessed to tax in the suo motu revision order of the Joint Commissioner.

(2.) In the first appeal, the appellant contended before the appellate authority that gas filled in cylinders has been sold at ex -factory price, that for reasons of safety, caution and convenience, as per the request of the customers, the lorry hire charges, for despatch of gas cylinders and freight charges incurred for getting back the empty gas cylinders, are collected from the customers by billing for the expenses in a separate invoice. During hearing, it was contended by the authorised representative of the appellant that the commodity, namely, gas sold by the appellant is a highly inflammable material requiring utmost care and caution in its handling and therefore, the appellant undertook to deliver the cylinders at the premises of the buyer clients and for which, a separate invoice has been raised towards services rendered and the amount collected included services for getting back the empty cylinders. The Appellate Assistant Commissioner accepting this argument and also noting that the freight charges have been charged for separately without including with the ex -factory price in the invoices, allowed the claim of exemption.

(3.) THIS order was set aside in the suo motu revision order by the Joint Commissioner. In the suo motu revision notice, the Joint Commissioner observed that no orders or contract were produced at the time of appeal, in respect of collection of freight and handling charges. Further, in all these cases, the deliveries to the buyers were made free on rail factory basis. Further, as against the cost of gas for Rs. 10,08,401.89, the collection of freight, etc., amounted to Rs. 11,96,640.99. Further, the ownership of the cylinders rested with the appellant till the empty cylinders were got back from the" buyers. Thus, the Joint Commissioner observed that the sale price was inclusive of the freight and handling charges and therefore, the claim allowed by the Appellate Assistant Commissioner, was incorrect. In the objections to the show cause notice, the assessee contended that the freight charges were composite in nature to cover delivery of cylinders with gas to customers and also for transport of empty cylinders from customers to the factory. Further, the Central excise authorities have accepted the price of goods at Rs. 3 per cubic metre, as charged in the sale invoices. Therefore, the Joint Commissioner was not justified in proposing to revise the order of the Appellate Assistant Commissioner. In the written arguments, which is available at page 22 of the typed -set, it was stated that if there was any partial leakage of gas due to valve mistake, etc., and if it was noticed after delivery to the party, an allowance for gas portion alone is given and not on freight charges. Thus, the freight charges separately billed for are not to be included in the price of the gas sold. In the suo motu revision order, the Joint Commissioner observed that though two separate bills were raised on the same date, one for the cylinder and another for the freight and handling charges, only a consolidated sum was realised towards the actual reimbursement of freight, insurance and handling charges and the said charges are inclusive of empty cylinders received back by the assessee for onward transportation to the factory premises of the assessee. During inspection by the officers, it was found that the entire amount for value of gas and freight charges, have been debited against the parties account and the parties effected payment as per their convenience. The Joint Commissioner further observed that though the assessee undertook delivery of the gas cylinders at buyers' site, the freight charges have been recorded separately in the bills. A sample bill as given by the Joint Commissioner, reads as follows :