STATE OF RAJASTHAN Vs. KAMAL AND CO JAIPUR

JUDGEMENT

(1.) THIS reference has been made to this larger Bench by a learned single Member of this Board under the following circumstances: M/s. Kamal & Co. , Mirza Ismail Road, Jaipur, is a registered dealer. THIS firm carries on the business of sale of automobiles and spare parts and also manufactures bodies and carries on repairs and service of vehicles. During the course of the assessments for the year 1957-58 by the Sales Tax Officer, Jaipur City, the respondent dealer claimed exemption for the amount separately charged on account of transhipment charges and octroi amounting to Rs 13,764/- and Rs. 560/- respectively on the ground that these amounts did not form part of the sale price and should therefore be excluded from the taxable turnover. The Sales Tax Officer disallowed this contention, but the Dy. Commissioner (Appeals) having scrutinised the bills, granted the required relief to the respondent by exempting these charges from the operation of sales tax. Having felt aggrieved by this order, the Sales Tax Officer filed a revision before the Board of Revenue.

(2.) THE learned counsel for the petitioner assailed the decision of the appellate authority on the ground that freight paid by the dealer before delivery should not be excluded from the operation of the sales tax. In support of his contention, he cited a Division Bench authority of this Board in M/s. Rajputana Automobiles, Katcheri Road, Ajmer vs. the State of Rajasthan (Revision No. 72 (Ajmer) Sales Tax 1962, decided on 22-3-1963 and the case of M/s. K. B. Kanda Swami Brothers vs. the State of Madras (Sic State of Madras A/s R. M. K. Vishwanatha Pillai) reported at Volume VIII Sales Tax cases 1057 Page 601 of the Madras High Court.

(3.) TO examine the relevance of this rule, it is necessary to set down the definition of taxable turnover as given in the Madras Act and to see if it is in pari materia with the Rajasthan definition-Rule 5 (l) (g) of the Madras General Sales Tax (Turnover and Assessment Rules, 1939 reads as under : Rule 5 (1) The tax or taxes under sec. 3 or 5 or the notification or notifications under sec. 6 (1) shall be levied on the net turnover of a dealer. In determining the net turnover, the amounts specified in clauses (a) to (k) shall, subject to the conditions specified therein, be deducted from the total turnover of a dealer - x x x x x x x x (g) All amounts falling under the following two heads, when specified and charged for by the dealer separately, without including them in the price of the goods sold: (i) freight; (ii) charges for packing and delivery and other such like services; x x. x x x x. x x According to sec. 2 (p) of the Madras Sales Tax Act taxable turnover means the turnover on which a dealer shall be liable to pay tax as determined after making such deductions from his total turnover and in such manner as may be prescribed. It will, therefore, be seen that according to the Madras Act and Rules also the following items when specified and charged for by the dealers separately, have to be deducted from the total turnover of a dealer while determining the taxable turnover - (i) freight; (ii) charges for packing and delivery and other such like services. We have quoted above the definition of sale price as given in the Rajasthan Sales Tax Act. In the final analysis the aggregate of the sale price collected by the dealer forms his taxable turnover. Now the Rajasthan Act also provides for the exclusion of the cost of freight or delivery or the cost of installation in cases where such cost is separately charged, while determining the sale price. In the Madras Act also the same items are excluded. TO all intents and purposes, therefore, the two definitions are in pari materia. The Madras High Court has interpreted cost of freight to be only such as was incurred after the sale, and not before it. No doubt, the Orissa case relates to motor cars and spares and should be deemed to be on all fours with the present case, but it is unfortunate that the Madras Ruling was not placed before the Orissa Judges and they had no occasion to examine the same. Nevertheless, the line of argument followed in the Madras Ruling is unassailable. In this connection, it would be pertinent to observe that the definition of sale price in the Central Sales Tax Act also is similar to the definition given in the Rajasthan Sales Tax Act. According to the Central Sales Tax Act, sale price means the amount payable as consideration for the same including any sum charged for any thing done at or before the delivery of the goods other than the cost of freight or delivery where such cost is separately charged. It will be seen that in this case too, the cost of freight or delivery when the same is separately charged has to be excluded before arriving at the sale price. Now freight charges may be inward or outward and may be included in the sale price or may be charged separately in addition to the sale price. As has been stated by Patel in his Central Sales Tax Act, inward freight charges are those that are incurred by a dealer for bringing or getting the goods delivered to the warehouse. It has relation to the purchase aspect of the transaction. Outward freight charges are those that are incurred while effecting sales. It has relation to the sales aspect of the transaction. It would be obvious that what is deductable is only the charges incurred at the sales point and not at the purchase point. We are further fortified in this conclusion by observing that the conjunctive words "other than" govern all the three items namely cost of freight or cost of delivery or cost of installation. There is no dispute with regard to the interpretation of the cost of delivery or the cost of installation which are clearly indicative of outward aspect starting at the sale point. The fact that these conjunctive words govern all these three items would show that the three items are not dissimilar in nature. If the costs of freight were interpreted so as to include the inward freight also it would be tantamount to including inward delivery and installation also under the same clause. Evidently, this could not be the intention of the Legislature, as there can be no inward delivery, or installation ; it starts only from the sale point. TO interpret cost of delivery and installation it the purchase point prior to sale would be illogical, and cost of freight cannot be interpreted in a different manner. It may be argued that the Legislature never wastes words and the fact that they have used cost of freight as distinct from the 'cost of delivery' would show that they intended to include the inward freight also. We, however, are not impressed by this argument. The fact that these phrases have been used separately would not lead us to the conclusion, that we should interpret cost of freight to include inward freight also; while we cannot interpret, ex-hypothesis, cost of delivery and cost of installation having been incurred prior to sale.