M/s Associated Cement Companies Ltd. v. State of Karnataka, (SC)
BS196733
SUPREME COURT OF INDIA
Before:- B.N. Kirpal and K.G. Balakrishnan, JJ.
CA Nos. 14092-94 of 1996. D/d.
06.12.2001.
M/s Associated Cement Companies Ltd. - Petitioner
Versus
State of Karnataka - Respondent
Constitution of India, 1950 Article 133 Assessment - Sale of cement - Sale tax payable on freight and packing charges - Whether taxable turnover - Terms of contract the freight was to be borne by buyers and the delivery was to be regarded as completed when the consignment was handed over to railways - Railway receipts showed the appellant itself as consignee and it is only subsequently that railway receipts were endorsed, therefore, sale took place at time of endorsement and not earlier and the freight and the carrying and packing charges would be regarded as part of the taxable turnover of the appellant - Therefore, both the freight and the packing charges would form part of the taxable turnover. JT 1997 (8) SC 128, Relied on.
[Paras 3 to 5]
Cases Referred :-
Black Diamond Beverages v. Commercial Tax Officer, Central Section, Assessment Wing, Calcutta, JT 1997 (8) SC 128.
TVL Ramco Cement Distribution Co. Ltd v. State of Tamil Nadu, JT 1992 (Suppl.) SC 729.
ORDER
Civil appeal nos. 14092-14094 & 14088-14091/1996. A short question which arises for consideration in these appeals is whether in the sale of cement effected by the appellant in respect of the assessment years 1982-83, 1983-84 and 1984-85, sales tax is payable on the freight and packing charges relating thereto.
2. As per the High Court the manner of transaction by which the cement is sold is as follows:
"According to petitioner, its Bangalore sales office collects orders from the intending purchasers in the form of indents, containing the specifications, quantity and despatch instructions in regard to the cement required by the buyer. On the basis of these indents, the petitioner's Bangalore office issues forms showing the name of the purchaser and the particulars of the goods agreed to be sold. These order forms clearly show that the delivery will be ex-works of the petitioner at Wadi/Shahabad and that the purchaser will be liable to bear and pay the railway freight or the lorry freight to the carrier. After getting the indents from several buyers, they were consolidated and sent by the petitioner's Bangalore office to its manufacturing unit for effecting the supplies. According to the petitioner, the movement of cement being a large scale movement from the petitioner's manufacturing units and as there was a great demand for railway rakes, the petitioner had to place indents for the rakes well in time. Having regard to the difficulties in obtaining the railway rakes/wagons, the petitioner would collect sizeable number of contracts, each in terms of wagon loads, minimum being a wagon load, and as and when the rakes arrived, the cement bags were loaded in the rakes. The goods of each buyer was appropriated towards respective contracts by being separately loaded into wagons and separate railway receipt was obtained in respect of the goods of each buyer. Thereafter, the petitioner's factory issued despatch advices to the buyer with copy to Bangalore office indicating the quantity despatched and the corresponding railway receipt number. The railway receipts were however not made out in the names of the buyers, but taken in the name of the petitioner itself, that is the consignee was shown as 'self' and not the purchaser. The copies of the despatch advices and railway receipts with a consolidated statement were sent by the factory to the Bangalore office. On receipt, the Bangalore office used to prepare sales invoices in the name of each buyer in respect of the respective consignment and on payment of the price, the respective railway receipts were endorsed by the Bangalore office in favour of the buyers. The buyer thereafter paid the railway freight and took delivery of the consignment from the Railway."
3. It is the case of the appellants that going by the terms of the contract the freight was to be borne by the buyers and the delivery was to be regarded as completed when the consignment was handed over to the railways.
4. The High Court came to the conclusion that in view of the fact that the railway receipts showed the appellant itself as the consignee and it is only subsequently that the railway receipts were endorsed, therefore, the sale took place at the time of endorsement and not earlier and the freight and the carrying and packing charges would be regarded as part of the taxable turnover of the appellant.
5. We have heard the counsel for the parties at length and, in our opinion, in view of the decisions referred to by the High Court and decisions of this Court in TVL Ramco Cement Distribution Co. Ltd v. State of Tamil Nadu, JT 1992 (Suppl.) SC 729 and Black Diamond Beverages & Anr. v. Commercial Tax Officer, Central Section, Assessment Wing, Calcutta & Ors., JT 1997(8) SC 128 and the cases referred to therein, the decision of the High Court calls for no interference. Both the freight and the packing charges would form part of the taxable turnover.
6. For the reasons stated herein above, the appeals are dismissed. No order as to costs.
Civil Appeal No. 7436/1997
7. In view of the above decision, the appeal is dismissed.
.