Case: Dyer Meakin Breweries Limited Vs. State of Kerala

The appellant-company 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 in Ernakulam, in the State of Kerala. Liquor sold by the company is manufactured or produced in distilleries or breweries at different places in the States 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 uniform "ex-factory price" in respect of each brand of liquor and liquor is sold at different centres after adding to the ex-factory price the appropriate amount attributable to freight and others charges. The company transports its goods from its factory to the warehouses maintained by it at Ernakulam and when selling liquor to the customers the company makes out separate bills for the ex-factory price and for "freight and handling charges."

Court's reasoning:
But, in our judgment, the Tribunal was right in holding that the exemption under clause (f) of rule 9 applies 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 incurred 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 9(f). Rule 9(f) seeks to exclude only those charges which are incurred by the dealer either expressly or by necessary implication for and on 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 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