NDLI: Hindustan Sugar Mills Etc. Vs. State of Rajasthan and Ors.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	section 2(p) of the Rajasthan Sales·Tax Act 1954
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Central Sales Tax Act, 1956 (74 of 1956) Rajasthan Sales Tax Act, 1994 (22 of 1995)
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Dismissed
Headnote	Sale Price, under section 2(p) of the Rajasthan Sales Tax Act, 1954 and Section 2(h) of Central Sales Tax Act, 1956 - Whether, in sales of cement effected under the Cement Control Order 1967, the amount of freight forms part of the "sale price" so as to be exigible to sales tax under the Rajasthan Act and Control Act - Distinction between contract of sale for f.o.r. destination railway 'station' and a 'contract where price alone is so'. The appellant assessee owned a cement factory known as Udaipur Cement: Works at Udaipur. During the assessment year -1971-72 and 1972-73, the sale of cement was controIIed under the Cement Control Order, 1967, issued by the Central Government., in exercise of the powers conferred by Sections 18 G and 25 of the Industries (Development and Regulation) Act, 1951. Clause 7 of the Control Order specified a retention Price of Rs. 161.40 per metric tonne for Cement manufactured by all producers, other than those mentioned in items 1 to 5 of the schedule, which included the assessee. The maximum price at which a producer could sell cement was prescribed in clause (8) which said that no producer shall sell "any other variety of cement at a price exceeding Rs. 214.65 per metric tonne free on rail destination railway station plus the excise duty paid thereon", plus "such charges as may be fixed by the Central Government in respect of packing in jute bags or in any other containers". The Explanation to clause 8 clarified that for the purpose· of the Control Order, the expression 'free on rail destination railway station means "the price including the cost of transport by the cheapest mode except where any other mode of transport has been specified by the Central Government under clause ( 4) at the destination point". During the relevant assessment years, the assessee entered into diverse contracts of sale of cement with purchasers at the price of Rs. 214.65 per metric tonne, "free on rail destination railway station" plus packing charges plus excise duty. These contracts were on the terms and conditions set out in the form of ''General terms and conditions of supply" adopted by the assessee. The assessee, in fulfilment of these contracts, despatched cement to the purchasers at various destinations by rail and the railway receipts were made out on the basis of 'freight to pay'. The invoices sent by the assessee showed the 'free on rail destination railway station price of the cement despatched, at the rate of Rs. 214.65 per metric tonne and added the amounts representing excise duty and packing charges and deducted the amount of railway freight, since it was to be paid by the purchasers. The assessee did not charge in the invoices sales tax on the railway freight, since in its view it did not form part of the 'sale price'; but in order to provide against a possible claim which might be made by the Sales Tax Authorities, the assessee claimed by way of deposit an amount 'towards contingent liability to sales tax on railway freight to be paid by you' that is, the purchasers. In the assessment of the assessee to sales tax under the Rajasthan Sales Tax Act, 1954 and the Central Sales Tax Act, 1956, the Sales Tax Authorities took the view that the amount of freight formed part of the "sale price" and was, therefore, liable to be included in the turnover of the assessee for the purposes of assessment of sales tax. The assessee challenged the correctness of the view by filing a writ petition in the High Court of Rajasthan, but the High Court agreed with the view taken by the Sales Tax Authorities and held that since under clause 8 of the Control Order, the price payable by the purchasers was f.o.r. destination price, the amount of freight included in it formed part of 'sale price'.
Judge	Honble Mr. Justice P.N. Bhagwati
Neutral Citation	1978 INSC 141
Petitioner	Hindustan Sugar Mills Etc.
Respondent	State Of Rajasthan And Ors.
SCR	[1979] 1 S.C.R. 276
Judgement Date	1978-08-22
Case Number	1122

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