ivil Appeal Nos 2684 90 of 1982 etc
From the Judgment and order dated 23121981 of the Madras High court in Tax Cases Revision Nos206 210 586 and 825 of 1979
ML Verma GL Sanghi SK Verma Manoj Prasad Ms Minoti Mukherji AK Srivastava R Mohan T Raja R Nedumaran and K Ram Kumar for the appearing parties
The Judgment of the court was delivered by RANGANATHAN J
By its judgment dated 23121981 report as Ramco cement Distribution Cop Ltd vs The State of Tamil Nadu 1982 51 STC 171 The Madras High Court disposed of a batch of 48 sales tax revision cases arising out of the assessments to local sales TaxTNST as well as Central sales Tax CST of Ramco Cement Distribution Co p Ltd 16 cases
Madras Cements Ltd 8 cases Dalmia Cement Bharat Ltd 21 cases and India cement Ltd 3 cases
The question at issue were answered partly in favour of Revenue and partly in favour of the assessees
CA Nos 5306 53361985 preferred by the state of Tamil Nadu arise out of 31 of these cases 9 relating to Ramco Cements 16 relating to Dalmia cements and 6 relating to Madras Cements
CA No 2684 to 269082 are appeals by Ramco Cements and CA No 4043 40441982 are by Madras cements from the same judgment
CA Nos 315 3191983 arise out of the other 5 cases relating to Dalmia Cements
CA Nos 280 2811989 arise out of a judgment of the High Court dated 1711985 which dismissed two revision tax cases pertaining to Dalmia Cements
One of the question involved in these cases was decided in favour in of the assessee by following the decision in 51 STC 171
As the question involved are common all these appeals are being disposed of by a common judgment
In doing so we shall refer to the fact in the appeals pertaining to Ramco Cements
It is common ground that the facts in other cases are similar and that the decision reached in the case of Ramco Cements will govern the other appeals as well
Ramco Cement Distribution Co Ltd hereinafter referred to as the assessee  are the selling agents of Ms Madras Cements Ltd Rajapalayam For the assessment year 1969 70  they were assessed to sales tax on a taxable turn over of Rs 23766245 which included an amount of Rs 2971527 representing freight charges
The assessee claimed exclusion of freight charges in computing the taxable turnover on the ground that freight had been independently charged in the invoice
It relied on the decision of the supreme court in the case of Hyderabad Asbestos Cements products Ltd vs state of Andhra Pradesh 1969 24 STC 487
This contention was rejected by the assessing authority the appellate authority as well as the Tribunal
Aggrieved by the above orders the assessee preferred revisions to the High court were enunciated as follows at the commencement of its judgment i Whether the freight charges incurred by a dealer in the despatch of cement to the place of the customer could be deducted from the total turnover of the dealer under the Central sales Tax Act ii Whether the packing charges being the cost of the packing materials used by the dealer in packing cements for being delivered to his customers could be properly excluded from his turnover for the assessment of sales tax iii Whether the excise duty paid on packing materials used by a dealer for packing cement to be sold to his customers can be excluded in his total turnover
These questions were answered by the High Court as follows In tax revision cases arising under the Central sales Tax act we hold that the freight packing charges and excise duty on packing materials have to be included in the sale price for the computation of sales tax
In cases arising under the Tamil Nadu General Sales Tax Act and Tamil Nadu Additional Sales Tax Act we hold that freight packing changes and excise duty on packing materials are not liable to be included in the sale price for the computation of the sale price
The assessees are not liable to pay additional sales tax on freight packing materials and excise duty on packing materials in those cases arising under the Tamil Nadu Additional sales Tax Act
 The High court certified the case to be one fit for appeal the Supreme Court and hence these appeals
Both the asseesses as well as the state urges that the High court having held that the amounts in question were liable to be included in the turnover for purpose of Central sales Tax ought to have also held that these amounts were liable to be included in the taxable turnover for purposes of Tamil Nadu Additional sales Tax Act
On the other hand on behalf of the assessees it is contended that even for the purposes of CST the freight charges the cost of packing materials and excise duty on the packing materials should have been excluded in the computation of the taxable turnover
It is thus there are cross appeals before us
We have heard learned counsel on both sides
In our opinion so far as CST is concerned the issue in the present case is July and directly covered by the decision of this court in Hindustan Sugar mills Limited vs State of Rajasthan 1979 43 STC13
AS stated earlier the assessee relied strongly on the decision of this court in Hyderabad Asbestos cement Products Ltd vs state of Andhra Pradesh 1969 24 STC 487 but this decision has been considered and explained in the Hindustan sugar Mills case
We do not wish to state the facts or discuss the issues at great length since in our opinion they are all facts and issue at great length sine in our opinion they are all facts and issues that were under consideration by this Court in Hindustan Sugar Mills Ltd Learned counsel for the assessee contended that the Cement Control order the terms of which sales of cement were effected during the relevant period by all cement manufactures had no relevance to the question presently at issue
According to them all that the Cement Control order laid down was that cement could not be sold at a price higher than a price fixed by the Cement Control order on terms described as free on rail FOR destination It did not stand in the way of cement manufacturers with various purchasers that the letter should bear the freight charges
In view of this it was submitted that the terms of the cement control order do not alter the principal enunciated by this court in the Hyderabad Asbestos Cement products case
It was then urged that in fact the assessees had entered into contracts with the purchasers which clearly stipulated that the freight will be payable by the letter
The following terms and conditions of sale were cited before us as an instance of the type of contracts entered into by the assessees  Condition 2  Once the consignment is handed over to the carriers and a receipt is obtained the responsibility of the company ceases
The company does not accept any liability for any delay shortage damage or loss of goods in transit
Claims should be lodged with the carriers by buyers directly
Condition 3  The consignees shall arrange to take delivery against indemnity bond should the railway receipt or bill of lading not reach them in time
The company is not liable in any manner whatsoever and is also not responsible for any demurrage or damages that may accrue due to non receipt or late receipt of railway receipt or bill of lading by the consignees
Condition 4  Prices shall be charged as ruling on the date of despatch of the goods and the company shall not be responsible for any variation in prices
The price of the cement supplied to the buyers shall be the current general gross list price charged by the company free on rail less such discount as may be fixed by the company from time to time
But the terms and the times of delivery and the payments therefore shall be in the absolute discretion of the company who may vary the same from time to time
Each despatch shall be a separate contract
Condition 10  The condition of any railway receipt shall be binding on the buyer and the date of delivery shall mean the date of the railway receipt and in the case of consignments sold free on rail destination the railway freight shall be nevertheless payable by the buyers at the destinations
Condition 11  The buyer shall further be responsible for any additional freight should transport by expensive route be undertaken or should the quantity despatched be less than a wagon load
Condition 12  In the case of road deliveries freight will be allowed upto the nearest rail head to the destination or actual transport charges whichever is less or according to the instruction of the control authorities from time to time
Condition 13  The buyer shall put up his claim with the Railways direct whenever amounts are collected in excess of the freight indicated in the Railway receipt
The company will allow freight only at the scheduled wagon load rate basing themselves on these terms and conditions learned counsel for the assessee contended that this was a case where despite the terms of the control order the assessees chose to sell the goods free on rail and that the liability to pay point where the goods were loaded on rail and that the liability to pay freight was entirely that of the purchasers
It was contended that these contracts were not inconsistent with or repugnant to the terms of the Cement Control Order and that on the same basis as the decision of this court in the Hyderabad Asbestos Cement products Ltd case the assesses are entitled to exclude the amounts of freight as not forming the part of the turn over at all
Interesting as these arguments are we find that they are merely a repetition of what was urged in the case of Hindustan Sugar Mills Ltd In that case also the point urged was that the Cement Control order only fixes the maximum price and that there was nothing to prevent the producer opted to sell his cement at price lower than the control price and allow credit to the purchaser where the smaller amount by deducting the freight the sale price can only be the smaller amount of the bill
The second argument based in the terms of the contract between the parties was also addressed in the Hindustan Sugar Mills case
There also clauses 58 and 11 of the general terms and condition of supply were strongly relied upon on behalf of the assessee
Under those terms and conditions it was specifically mentioned that although the price of cement was on the basis of FOR destination railway station consignments would nevertheless be despatched freight to pay  and credit afforded in the bill for the amount of freight payable and that the purchaser should accordingly arrange to pay railway freight or road transport charges at the destination at the time of taking delivery
This Court after referring to the above contention pointed out that if the terms and conditions of the contract had stood alone the assessee might have been entitled to succeed in excluding the freight charges on the principle of Hyderabad asbestos cement Products Ltd case but that relief could not be given to the assessee in view of the scheme and provisions of the cements control order and their implications
The terms of the Cement control order have been fully analysed and discussed at pages 33 to 35 of the report
There is therefore no difference either on facts or in principal between this case and the Hindustan Sugar Mills Ltd case
on the other hand as pointed out by the learned Judges in that case the whole purpose of the cement control order was do not find any reason to doubt or dissent from the decision in the Hindustan Sugar Mills Ltd case
On the other hand as pointed out by the learned Judges in that case the whole purpose of the Cement Control order was cement should be available for sale at all places in the country at a controlled price
No doubt the price was described as a maximum beyond which the sale price could not go but the intention which was also carried out by all the suppliers was that cement was to be sold at what may be described as a controlled price on terms free on rail destination 
In other words the producer was entitled to the controlled price irrespective of the amount of freight which might have been incurred in respect of the transaction
Having regard to the fact that the freight on consignments to places near the factory and consignments to places to places far away from the factories could show a lot of variation the control order created a machinery by which all freight charges were credited to common account ad any particular cement manufacturer incurring more than a specified amount was entitled to be reimbursed for the excess freight incurred by him
As the learned Judges pointed out in the earlier decision the whole control order proceeds on the footing that the freight charges are to be met by the producer and that he was entitled to a cosolidated price irrespective of the freight he may have incurred
In this view of the matter the sale price on the terms of the Central sales Tax Act could only be the controlled price as fixed by the cement control Order
We find that the factual position in these cases is also not as described by the learned counsel for the assessee
The assessee s arguments in this regard were sought to be highlighted by the production of one of the invoices by which certain goods were despatched by Dalmia cements to Karaikal
It is interesting to see that this invoice mentions FOR cement price as the controlled price stipulated in the Cement Controlled Order and this is also what is contemplated by condition 4 set out earlier
To this is added a central Excise Duty
Thereafter the assessee purports to give credit for railway freight and a net price which is described as net price FOR with a liability on the purchasers to bear the railway freight the invoice need not have contained all the details which it purports to contain including all the above calculations starting with the FOR price at the controlled rate
In such an event all that the assessee need have done was to invoice the purchasers at the net price FOR Works Siding and despatch the goods under freight to pay  
It is also interesting to see that the invoice specifically includes a deposit to  cover any levy of sales tax on freight 
It is clear that the invoice has been drawn up in terms of the control order
The price charged by the assessee is FOR Central Excise Duty has been added on this footing
The invoice mentions the amount of railway freight and permits it to be deducted only because the freight will be paid to the Railways by the Purchasers on behalf of the assessee and credit is given therefor in the invoice
This process is necessary because the amounts of freight for which credit has been given have to be eventually adjusted while settling accounts between the manufacturer of cement and obtaining reimbursement if any  from the pool account
The producer will have to satisfy the concerned authorities that in certain instances the freight paid is in excess of the freight which a producer can be called upon to pay in terms of para 9 of the Cement Control order
In our opinion the invoice placed before us only reinforce the factual and legal position outlined by this Court in the Hindustan Sugar Mills Ltd case in regard to the purpose and effect of the terms of the Cement Control Order
For the reasons above mentioned we are of the opinion that the High court was fully justified in applying the decision in Hindustan Sugar Mills Ltd to the present case and denying the benefit of deduction of freight charges from the controlled price to arrive at the turnover of the assessee for the purpose of the Central sales Tax Act
Turning now to the appeals filed by the state the contention as earlier mentioned is that the High court should have arrived at the same conclusion on the provisions of the Tamil Nadu General Sales Tax Act and Additional sales Tax Act as it did under the Central Sales Tax Act and that in view of the decision of this Court in the Hindustan Sugar Mills case the relief granted for purpose of the local sales tax is erroneous
In coming to a different conclusion on the provisions of the local sales Tax Act from that reached in respect of the Central Act the High Court has relied upon the fact that the local sales tax is charged not on the turnover of the dealer but only on his taxable turnover
The explanation taxable turnover  has been defined in section 2p as follows 2p taxable turnover  means the turnover of which a dealer shall be liable to pay tax as determined after making such deduction from his total turnover and in such manner as may be prescribed 
 The Tamil Nadu General sales Tax Rules 1959 have prescribed rules for the determination of the taxable turnover
Rules 6 reads thus  Rules 6 The tax or taxes under section 34 or 5 shall be levied on the taxable turnover of the dealer 
In determining the taxable turnover the amount specified in the following clause shall subject to the conditions specified in the following clauses shall subject to the conditions specified therein be deducted from the total turnover of a dealer a all amounts for goods specified in the Third Schedule to the Act are sold b all amounts for which goos exempted by a Notification under Section 17 are sold or purchased as the case may be provided that the terms and conditions if any for the exemption in the notification are complied with c all amounts falling under the following three heads when specified and charged for by the dealer separately with out including him in the price of the goods sold i freight iiomitted iii charges for delivery cc all amounts falling under the head charged for packing that is to say cost of packing materials and cost of labour
i when charged for by the dealer separately without including such amounts in the price of the goods sold in respect of the goods liable to tax at the hands of the assessee and ii whether or not such amounts are specified and charged for by the dealer separately in respect of the goods not liable to tax the hands of the assessee
The High Court has held that since freight is one of the items specified in clause i of rule 6c and since the assessee have specified and charged for freight separately in their invoices they ar entitled to the deduction of the freight in the computation of the taxable turnover
This is the short ground on which the High court has reached in respect of the local Act a conclusion different from that reached in respect of the central Act
We agree with the learned counsel for the state of Tamil Nadu that in coming to the above conclusion the High court has over looked the significance of the inclusion of the words without including them in the price of the goods sold in clause c
These words make it clear it clear that the freight charges are not to be deducted in the computation of the taxable turnover merely because they are specified and charged for separately by the dealer
A further pre requisite for their deduction is that these charges should not have been included in the price of the goods sold
This takes us back to the consideration as to whether the price charged for by the assessee includes freight or not which we have discussed elaborately in respect of the levy of Central sales tax
once we comp to the conclusion as we have that freight has been included as part of the price sold and that the liability to pay the freight remains with the dealer though permitted to be set off against the sale price by the purchaser or consumer it follows that the deduction of the freight as a separate items in the computation of taxable turnover is not permissible
Rule 6c will apply only in cases where the sale price charged does not include the freight charges and the dealer separately collects freight from the consumer without including the same in the sale price
IN fact this aspect has been made clear in three decisions of this court dealing with similar rules
In Tungabhadra Industries Ltd vs Commercial Tax officer Kurnool 1960 11 STC 827 the dealer claimed deduction of railway freight form the amount of price of the goods sold as stated in the bill on the strength of rule 51 g of the madras General sales Tax Turnover and Assessment  Rules 1939 which is in precisely the same terms as rules 6 which is now being considered by us
The claim was negative by this court
It observed  The appellant claimed exemption on a sum of Rs 388 377 13 3 on the ground that it represented the freight in respect of the ground that it represented the freight in respect of the goods sold by the appellant asserting that they had been charged for separately
The assessing officer rejected the claim and this rejection was upheld by the departmental authorities and by the High Court in revision
It would be seen that in order to claim the benefit of this exemption the freight should i have been specified and charged for by the dealer separately and ii the same should not have been included in the price of the goods sold
The learned Judges of the High Court held that neither of these conditions was satisfied by the bills produced by the appellant
We consider the decision of the High Court on this point was correct
In the specimen bill which the learned counsel for the appellants has placed before us after setting out the quality sold by weight 23 760 lb the price is specified as 15 annas 9 pies per lb
and the total amount of the price is determined at Rs 23388 12 0
From this the railway freight of Rs 1439 12 0 is deduced and the balance is shown as the sum on which sales tax has been computed
From the contents of this invoice it would be seen that the appellant has charged a price inclusive of the railway freight and would therefore be outside the terms of rule 51 g which requires that in order to enable a dealer to claim the deduction it should be charged for separately and not included in the price of goods sold
The conditions of the rule not having been complied with the appellant was not entitled to the deduction in respect of freight
 The same conclusion was reached by this Court in Dyer Meakin Breweries Ltd vs State of Kerala 1970 26 STC 248
Here the appellant company which manufactured liquor at various places in UP and Haryana transported the goods from its breweries and distilleries to its place of business in Ernakulam and sold them there
When selling liquor to the customers the appellant made out separate bills for ex factory price and for freight and handling charges
The appellant claimed that the amount charged for freight and handling charges incurred by it in transporating the goods from the breweries and distilleries to the warehouse in Kerala were eligible for deduction under rule 9f of the Kerala General Sales Tax Rules 1963 a rule which is in the same terms as rule 6 with which we are now concerned in the present case
This claim was negatived by this Court
The Court obvserved It is common ground that the sale of the liquor took place in Ernakulam
The company arranges to transport liquor for sale from the factories to its warehouse t Ernakulam
It was not brought for any individual customer
All the expenditure incurred s prior to the sale and was evidently a component of the price for which the goods were sold
it is true that separate bills were made out for the price of the goods ex factory and for freight and handling charges
But in our judgment the Tribunal was right in holding that the exemption under clause f of rule 9 applied when the freight and charges for packing and delivery are found to be incidental to the sale and when they are specified and charged for by the dealer separately and expenditure in curred for freight and packing and delivery charges prior to the sale and for transporting the goods from the factories to the warehouse of the company is not admissible under rule 9f 
Rule 9f seeks to exclude only those charges which are incurred by the dealer either expressly or by necessary implication for and no behalf of the purchaser after the sale when the dealer undertakes to transport the goods and to deliver the same or where the expenditure is incurred as an incident of sale
It is not intended to exclude forms the taxable turnover any component of the price expenditure incurred by the dealer which he had to incur before sale and to make the goods available to the intending customer at the place of sale
 In Johar and sonsp Ltd vs Tax officer Ernakulam 1971 27 STC120 The same question arose again in the context of the Kerala General sales Tax Rules 1963
The court followed the decision in Dyer Meakin Breweries Ltd case
It was pointed out that the decision in Tungabhadra Industries Ltd had rested on the facts of the case without going into the interpretation of the relevant rule of the Madras General Sales Tax Turnover and Assessment  Rules 1939
It was held that the Dyer Meakin decision would apply to the case before the court
A number of subsequent decisions has also held to a like effect  CCT vs Ashoka Marketing Ltd1973 32 STC 411 State of Mysore vs Panyam Cements and Mineral Industries Ltd 1974 33 STC state of Tamil Nadu vs parry and company 1976 38 STC 122 state of Tamil Nadu vs Chettinad Cement Corporation Ltd1976 38 STC 519 and Premier Breweries Ltd vs state of Karnataka 1984 56 STC 14 we are therefore of the opinion that High court was in error in trying to distinguish the decision in the Hindustan Sugar Mills case and in excluding freight charges from the taxable turnover for the purpose of the Tamil Nadu Act
The position in regard to packing charges as well as the excise duty on packing charges is also no different
As pointed out by this court in the Hindustan Sugar Mills case and in Commissioner of sales Tax vs Rai Bharat Das  Bros 1988 71 STC 277 SC packing charges from part of sale price because the expression  any sum charged for anything done by the dealer in respect of the goods used in the definition in section 2h of the Central sales Tax Act 1956 squarely covers such charges as packing is an integral element of the transaction of sale and packing charges are an integral part of the sale price
Once this is so it follows that these charges and the excise duty thereon cannot be excluded from the turnover for purpose of the Central sales Tax Act
Nor will for the reasons earlier discussed in relation to freight charges the assessee be in a position to claim a deduction in respect of these charges by virtue of rule 6cc of the sales Tax Rules
In our view this position has been correctly set out applying the decision in the case of Rai Bharat Das and Bros in state of Tamil Nadu vs Vanniaperumal  co 1990 76 STC 203 Dalmia cement Bharat Ltd vs state of Tamil Nadu 1991 81 STC 327 and Dalmia Cement Bharat Ltd vs state of Tamil Nadu 1991 83 STC 442
we are therefore of the opinion that the packing charges and excise duty thereon cannot also be deducted in computing the taxable turnover for the purpose of the Tamil Nadu Acts
We therefore hold i That the freight charges could be included in arriving at the taxable turnover for purposes of CST and TNST and ii that packing charges and excise should be included in arriving at the taxable turnover for purposes of both CST and TNST
The appeals by the state of TAmil Nadu are accordingly allowed and the appeals filed by the assessee ar dismissed
There will however be no order regarding costs
NPV CA Nos2684 904043 4482 315 1983 dismissed
CA Nos 5306 3685 and 280 8189 allowed


Summary:
In execution of decree for pre emption obtained by the respondent he was delivered actual possession as well as symbolic possession of lands
According to the decree the respondent was only entitle to actual possession and so far as the delivery of symbolic possession was concerned it was beyond the terms of the decree
The father of the appellants having come to know about the aforesaid mistake filed a suit for declaration and for permanent injunction in the year 1965 which was decreed in his favour and the said declaratory decree was affirmed in appeal by the Additional District Judge on 1251969 but the relief of injunction was denied as he was in actual possession of the portion over which symbolic possession was recorded in execution proceedings
This order became final
The respondent in the appeal filed a suit for partition in the year 1973 claiming not only the lands in which he had obtained actual physical possession but also the lands on which he was granted symbolic possession in the execution proceedings in 1963
After the filing of the suit for partition the appellants filed an objection petition under sections 47151 and 152 of the Code of Civil Procedure praying that necessary correction may be made in revenue record by restitution of excessive area wrongly delivered to the decree holder
The respondent decree holder contested the application and one of the ground raised was that the objection petition was barred by limitation as the same was that the objection petition was barred by limitation as the same was not filed within three years of the order dated 1361963 under which symbolic possession was given to the decree holder
The Sub Judge held that the limitation will only start to run when the respondent decree holder tried to interfere in the possession of the petitioners by filing the partition proceedings in the year 1973
It was also held that the decree holder had already obtained possession of the land to which he was entitled under the decree and he was not entitled to retain the possession of the excessive area of which only symbolic possession was given to him
Aggrieved by the aforesaid order the decree holder filed a revision before the High Court and a Single Judge allowed the revision on the ground that the limitation in case of such applications was three years and the symbolic possession having been delivered on June 131963 the application filed on July 221973 was barred by time
It was further held that actual possession of the land was never delivered by the Executing Court and it was only symbolical possession which was delivered and for the purpose of restitution if at all there was a necessity to move the application the same could be done within three years from the date of the delivery of the symbolical possession
The order of the Executing Court was accordingly set aside and the application filed by the judgment debtor was dismissed
In the appeal to this Court on the question regarding the date from which the period of limitation shall commence under Article 137 of the 
Allowing the appeal this Court HELD  The period of limitation under Article 137 is three years which commences from the date when the right to apply accrues
The question when such right to apply accrues will depend on the facts and circumstances of each case
17 E In the instant case in execution of the decree for pre emption on 1361963 the delivery of symbolic possession on an area measuring 62 canals 13 marlas was wrongly recorded
The father of the appellants continued to remain in possession over the aforesaid land and he also filed a declaratory suit challenging the recording of the delivery of symbolical possession in favour of the decree holder
The suit was decreed in his favour by the trial court and confirmed by the Additional District Judge by order dated 1251969
In 1973 the decree holder filed the suit for partition claiming the land on the basis of order dated 1361963
An objection petition was submitted by the appellants in the Executing Court on 2271973 of rectifying the mistake and for restitution of the land for which symbolical possession was wrongly recorded
The period of limitation under Article 137 would therefore commence when actual threat of dispossession commenced ie on taking the proceedings for partition in the year 1973
17 F H 18 A The High Court was not right in holding that the limitation would commence from 1361963 and not in 197318 B This is a case where by mistake excess land beyond the terms of the decree was recorded by way of symbolical possession in execution proceedings
This fact is not disputed by the decree holder
This error has been rightly corrected by the Executing Court on an objection petition filed under section 147 of the Code of Civil Procedure read with section 151
The judgment in the declaratory suit has also become final and binding on the decree holder
It is not considered proper in the interest of justice to prolong this litigation by remanding the matter to the High Court
The judgment of the High Court dated 2891978 is therefore set aside and the judgment of the Executing Court dated 1921977 is restored
18 C D F Merla Ramanna vs Nallaparaju and Others1995 2 SCR 938 relied on