Case: M/s India Meters Limited Vs. State of Tamil Nadu

goods manufactured by him, he always passes on the excise duty to the purchaser. Ordinarily it is not shown as a separate item in the bill, but it is included in the price charged by him. The sale price in such a case could be the entire price inclusive of excise duty because that would be the consideration payable by the purchaser for the sale of the goods. True, the excise duty component of the price would not be an addition to the coffers of the dealer, as it would go to reimburse him in respect of the excise duty already paid by him on the manufacture of the goods. But even so, it would be part of the sale price because it forms a component of the consideration payable by the purchaser to the dealer. It is only as part of the consideration for the sale of the goods that the amount representing excise duty would be payable by the purchaser. There is no other manner of liability, statutory or otherwise, under which the purchases would be liable to pay the amount of excise duty to the dealer. And, on this reasoning, it would make no difference whether the amount of excise duty is included in the price charged by the dealer or is shown as a separate item in the bill. In either case, it would be part of the sale price. So also, the amount of sales tax payable by a dealer, whether included in the price or added to it as a separate item as is usually the case, forms part of the sale price. It is payable by the purchaser to the dealer as part of the consideration for the sale of the goods and hence falls within the first part of the definition." 33. This judgment has been followed in a large number of subsequent judgments in other cases by this Court. 34. In Cement Marketing Co. of India Ltd. v. Assistant Commissioner of Sales Tax, Indore & Others (1980) 1 SCC 71 similar question arose for consideration. In this case, while following the case of Hindustan Sugar Mills (supra) this court came to the clear conclusion that the amount of freight formed part of the sale price within the meaning of the first part of the definition of the term contained in Section 2 (p) of the Rajasthan Sales Tax Act, 1954. 35. In Cement Marketing Co. of India Ltd. v. Commissioner of Commercial Taxes, Karnataka 1980 (Supp) SCC 373 this court observed as under: "This question is no longer res integra and it stands concluded by a recent decision given by this Court in Hindustan Sugar Mills v. State of Rajasthan (1978) 4 SCC 271. It has been held by this Court in that case that by reason of the provisions of the Cement Control Order which governed the transactions of sale of cement entered into by the assessee with the purchasers, the amount of freight formed part of the "sale price" within the meaning of the first part of the definition of that term in Section 2(h) of the Central Sales Tax Act, 1956 and was includible in the turnover of the assessee. This decision completely covers the present case and hence we must hold that the High Court was right in taking the view that the amount of freight formed part of the sale price and was rightly included in the taxable turnover of the appellant." 36. In TVL Ramco Cement Distribution Co. (P) Ltd. etc. etc. v. State of Tamil Nadu etc. etc. (1993) 1 SCC 192 this court while following the ratio in the case of Hindustan Sugar Mills (supra) observed as under: "(i) that the freight charges should be included in arriving at the taxable turnover for purposes of Central Sales Tax and Tamil Nadu Sales Tax; and (ii) that packing charges and excise duty thereon should also be included in arriving at the taxable turnover for purposes of both Central Sales Tax and Tamil Nadu Sales Tax." 37. In Bihar State Electricity Board & Another v. Usha Martin Industries & Another (1997) 5 SCC 289 this court relied on the judgment of this Court in the case of Hindustan Sugar Mills (supra) and reiterated legal position that sale price would be the entire price inclusive of excise duty because that would be the consideration payable by the purchaser for the sale of goods. 38. In the case of Black Diamond Beverages and Anr. v. Commercial Tax Officer, Central Section, Assessment Wingh, Calcutta & Others (1998) 1 SCC 458 this court observed that freight and handling charges would be included in the sale price. 39. In Commissioner of Central Excise, Delhi v. Maruti Udyog Ltd. (2002) 3 SCC 547 this court observed as under: "... ... ...The sale price realised by the respondent has to be regarded as the entire price inclusive of excise duty because it is the respondent who has, by necessary implication, taken on the liability to pay all taxes on the goods sold and has not sought to realise any sum in addition to the price obtained by it from the purchaser. The purchaser was under no obligation to pay any amount in excess of what had already been paid as the price of the scrap." 40. In State of A.P. v. A.P. Paper Mills Ltd. (2005) 1 SCC 719 the short question arose for consideration was whether the transportation charges and agents commission paid by the respondent - M/s. A.P. Paper Mills Ltd. to the agent together with the cost of raw material constitute "turnover" under Section 2(s) and is liable to sales tax under Section 6-A of the Andhra Pradesh General Sales Tax Act, 1957. This court relied on Hindustan Sugar Mills (supra) and came to the conclusion that the transportation charges and agents commission would be inclusive in "turnover" under Section 2(s) and is liable to Sales Tax under Section 6(a) of the Andhra Pradesh General Sales Tax Act, 1957.

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

Explanation:
0[ds]26. According to the facts of this case, Dyer Meakin Breweries Ltd. is registered as a dealer in "Indian made foreign liquor" under the Kerala General Sales Tax Act, 1963. The company has a place of business at Ernakulam, Kerala. The liquor sold by the company is manufactured or produced in distilleries or breweries at different places in the State of U.P. and Haryana. Liquor is transported for sale by the company from its breweries and distilleries to its place of business at Ernakulam. It is the practice of the company to maintain a uniformprice" in respect of each brand of liquor sold at different centers after adding to theprice the appropriate amount attributable to freight and other charges.27. In proceedings for assessment of sales tax forthe company claimed under Rule 9(f) of the Kerala General Sales Tax Rules, 1963, Rs.59,188.99 as an admissible deduction in respect of charges for "freight and handling charges" collected from the customers, in the computation of the taxable turnover. The Sales Tax Officer rejected the claim, and the order was confirmed by the Appellate Assistant Commissioner and by the Sales Tax Tribunal. A revision application filed before the High Court of Kerala was summarily dismissed. The company has appealed to this Court with special leave.The company claims that the amount spent by it for freight and for "handling charges" of goods from the factories to the warehouse at Ernakulam is liable to be excluded from the taxable turnover and the taxing authorities and the High Court were in error in refusing to allow the deduction.30. This court while interpreting Rule 9 (f) of the Kerala General Sales Tax Rules, 1963 observed that it is not intended to exclude from 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.31. This court had an occasion to deal with identical issues in the case of Hindustan Sugar Mills (supra). P.N. Bhagwati, J. (as His Lordship then was), clearly held that by reason of the provisions of the Control Order which governed the transactions of sale of cement entered into by the assessee with the purchasers in both the appeals before us, the amount of freight formed part of the `sale price.In State of A.P. v. A.P. Paper Mills Ltd. (2005) 1 SCC 719  the short question arose for consideration was whether the transportation charges and agents commission paid by the respondentM/s. A.P. Paper Mills Ltd. to the agent together with the cost of raw material constitute "turnover" under Section 2(s) and is liable to sales tax under Sectionof the Andhra Pradesh General Sales Tax Act, 1957. This court relied on Hindustan Sugar Mills (supra) and came to the conclusion that the transportation charges and agents commission would be inclusive in "turnover" under Section 2(s) and is liable to Sales Tax under Section 6(a) of the Andhra Pradesh General Sales Tax Act, 1957.41. When we apply the ratio of the judgments of the English Courts and of our Courts, the conclusion becomes obvious that the amount of freight and insurance charges incurred by the dealer forms part of the sale price.