Allahabad High Court
Freight charges forms part of turnover of dealer even if it is charges and collected separaely
2008-16 VST 517
The respondent-dealer carrying business of coal and was registered under the UP Trade Tax act, 1948 and the Central Sales Tax act, 1956. For the assessment year 1985-86 and 1986-87 the dealer who claimed himself to be a coal agent under the coal contral order 1977, claimed that fregiht charges incurred for brining coal from colliery to the destination of the dealer was not liable to be included in the turnover but it was rejeced by the assessing authoirty. Dealer's first appeal before the appellate authoirty failed. However, the Tribunal on second appeal hedl that freight would not be part of turnover. In revisions the dealer contended inter, ala, that the freight charges incurred for bringing the coal from the colliery to the destinations of the dealer was not liable to be included in the turnover on the ground that it was separately mentioned in the bill and that the dealer was a coal agent and charged 2 per cent commission from its customers apart from the value of coal.
Held, allowing the revisions in part, (i) that section 2(i) of the UP Trade Tax Act, 1948, defined "turnover" as the aggregae amount for which the goods were supplied to the buyers. Exclusion provided by sub-section (i) of Explanation II was in respect of fregiht paid by the buyers for the transporation of the goods supplied to the buyers after thier purchase from sellers and the fregith incurred for bringing the coal from the colliery to the destination of the dealer was not a fegiht contemplated therein. Freight paid by the dealer for the goods purchased by him was his legal burden and was a pat of cost for acquiring the goods. Therefore, such fregiht charges was included in the "aggregate amount" within the meaning of section s(i) and formed part of the turnover of the dealer. That separte amount was charged in invoices for fregiht charges and that the charges were received from the buyers subsequently were of no consequences;
(ii) that merely because the dealer was treated as coal agent under the U.P. Cola Control Order, was holding B-licence in that regard and was charging 2 per cent commission, it could not be said that the dealer in fact acted as commission agent on behalf of the purchaser. There must be some material which showed that there was a contract of agency between the dealer and the buyers for making purchases on buyer's behalf. No such finding was recorded by the Tribunal and no such claim appeared to have been made by the dealer. therefore the order of the Tribunal was to be set aside and the matter remanded back to the Tribunal for fresh consideration.