Case: State of Karnataka and Another Vs. Bangalore Soft Drinks Private Limited

as the assessing and the appellate authority having forgotten about dual role of the revision petitioner, one as that of a seller of the goods and the other as that of a carrier of the goods having collected the freight charges separately from the buyer, have fallen into a serious error in including the freight charges to the sales turnover of the assessee, which is patently incorrect in view of the nature of the contract entered into between the parties and in view of the fact that the petitioner had collected the freight charges separately. In fact, the Tribunal has also found on facts that these amounts, i.e., the transportation charges were collected not in the regular invoice, but by raising a separate debit note. If this is so, then the freight charges being collected separately, they do not form part of the sale price and therefore, the question of the freight charges being included in the turnover of the assessee will not arise. Even assuming that the buyer had no option but to transport the goods only through the vehicles belonging to the revision petitioner, that makes no difference because that is a matter between the buyer and the revision petitioner in his capacity as a carrier of the goods and it is nothing to do with his capacity as a seller of the goods. No doubt, it is true that the revision petitioner has charged freight charges uniformly irrespective of the distance. For this the revision petitioner contended that it has charged uniform rate of Rs. 4 per crate with a view to maintain a uniform price of their product throughout their territory of operation and charging of such equalised price is a common trade practice. The petitioner in support of his contention placed reliance on a decision of this Court in the case of Premier Breweries Ltd. v. State of Karnataka reported in. In this decision, this Court has approved the charging of uniform rate of freight charges irrespective of distance of transportation. Therefore, the revision petitioner with a view to see that his products should be available for sale at all places at a uniform price, has charged the freight charges at uniform rate.8A. Here, we have to remember that the price of the goods are not fixed by any statute and the revision petitioner was entitled to consolidate the price irrespective of the freight charges he may have incurred. In this view of the matter, the revision petitioner in order to maintain the uniform price for his goods at all places, might have charged uniform freight charges. Be that as it may, the real test to be applied is whether the goods have passed to buyer at the factory of the assessee or at the place of the buyer. For this, the Tribunal itself has clearly found that the revision petitioner has sold Fanta and Coca-cola at the factory itself and even otherwise, the materials available on record would clearly indicate that the goods have passed to the buyer at the site of the factory and the subsequent transportation of the goods by the revision petitioner was done in his capacity as a transporter of the goods. That being so, the observations made by the Tribunal that it was only on paper and not in reality does not appear to be correct, as the Tribunal as well as the appellate and assessing authority have totally forgotten the fact that the revision petitioner has another role to play which was that of the carrier of the goods to transport the goods for and on behalf of the buyer to the place of the buyer. 9. The facts here would clearly indicate that the revision petitioner in his capacity as a seller delivered the goods at the factory site and in his another capacity as a carrier of the goods, he took delivery of the same for and on behalf of the buyer as his transport agent and he transported the same in the vehicles belonging to him to the place of the buyer for its delivery to the buyer in his capacity as a carrier and not as a seller of the goods. This is the only inference that could be drawn from the facts and circumstances of this case, and having regard to the nature of the contract entered into between the parties. Therefore, the freight charges which were collected separately by the revision petitioner in his capacity as the carrier of the goods cannot be included in the sales turnover of the revision petitioner for the purpose of computation of the sales tax. So, they are liable to be excluded from the turnover of the assessee for computing the sales tax.10. In view of our finding that transport of the goods from the factory to the place of the buyer was done or undertaken by the revision petitioner in his capacity as a transporter or a carrier agent of the buyer and the said transportation having been made for and on behalf of the buyer, it has to be construed that the octroi charges were collected and paid by him in his capacity as a transport agent of the wholesaler, on whose behalf the goods were transported. Therefore, the octroi charges collected and paid by the revision petitioner cannot also be included in the sales turnover of the revision petitioner for computing the tax. They were subsequent to the sale and were paid by the revision petitioner at the octroi gate in his capacity as a carrier of the goods.11. Therefore, for the foregoing reasons, we hold that the freight charges and the octroi charges cannot be included in the sales tax turnover of the assessee for the purpose of computing the sales tax. In this view of the matter, the judgment passed by the Tribunal as well as the appellate and the assessing authority are liable to be set aside and the revision petition filed by the petitioner is liable to be allowed.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]10. In view of our finding that transport of the goods from the factory to the place of the buyer was done or undertaken by the revision petitioner in his capacity as a transporter or a carrier agent of the buyer and the said transportation having been made for and on behalf of the buyer, it has to be construed that the octroi charges were collected and paid by him in his capacity as a transport agent of the wholesaler, on whose behalf the goods were transported. Therefore, the octroi charges collected and paid by the revision petitioner cannot also be included in the sales turnover of the revision petitioner for computing the tax. They were subsequent to the sale and were paid by the revision petitioner at the octroi gate in his capacity as a carrier of the goods.11. Therefore, for the foregoing reasons, we hold that the freight charges and the octroi charges cannot be included in the sales tax turnover of the assessee for the purpose of computing the sales tax. In this view of the matter, the judgment passed by the Tribunal as well as the appellate and the assessing authority are liable to be set aside and the revision petition filed by the petitioner is liable to be allowed.