R.K. Deshpande, J.

1. The Maharashtra Sales Tax Tribunal at Mumbai has by its order dated 04.09.1998 referred the following questions for the decision of this Court under Section 61(1) of the Bombay Sales Tax Act, 1959.

(i) Whether on the facts and in the circumstances of the case and on a true and correct interpretation of clause (29) of section 2 of the Bombay Sales Tax Act, 1959 and clause (h) of Section 2 of the Central Sales Tax Act, 1956, the Tribunal was justified in law in holding that the insurance charges and carrying charges do not form part of the sale price?

(ii) Whether on the facts and in the circumstances of the case and on a true and correct interpretation of clause (c) of subsection (2) of section 36 read with Explanation (I) to the Bombay Sales Tax Act, 1959, the Tribunal was justified in law in deleting the penalty by placing reliance on the ratio of the decision of the Bombay High Court in case of Indoswe Engineers (P) Ltd. Vrs. State of Maharashtra (101 STC 177)?

2. If the question at Sr.No.1 is answered in affirmative, then it may not be necessary for us to decide the question of law at Sr.No.2. But, if we decide the first question in negative, then second question will have to be decided on its own merits.

3. Before considering the question No.1, the decision of the Apex Court in the case of Hindustan Sugar Mills vrs. State of Rajasthan and others, reported in (1978) 4 SCC 271 will have to be considered being the landmark judgment throwing light on the controversy involved and considered by the Tribunal also. In the said decision, the Apex Court considered the question as to 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 provisions of the Rajasthan Sales Tax Act, 1954 and the Central Sales Tax Act, 1956. The Apex Court considered the provisions of Section 3 of the Rajasthan Sales Tax Act which provided that every dealer whose turnover in the previous year exceeds a certain limit shall be liable to pay tax on his taxable turnover, subject to the provisions of that Act. It considers the definition of "Taxable turnover" under Section 2(s) to mean that part of the "turnover", which remains after deducting the aggregate amount of proceeds of certain categories of sales and "turnover" according to Section 2(t), mean "the aggregate of the amount of sale prices received or receivable by a dealer in respect of the sale or supply of goods......".

4. The Court considers the definition of "sale price" given in Section 2(p). The relevant portion of it is reproduced below;

"…. the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed as cash discount according to the practice normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof other than the cost of freight or delivery or the cost of installation in case where such costs is separately charged."

The Apex Court considers that the aforesaid definition is in two parts. The first part says that 'sale price' means the amount payable to a dealer as consideration for the sale of any goods. It holds that the only relevant question to ask is, what is the amount payable by the purchaser to the dealer as consideration for the sale and not as to what is the net consideration retainable by the dealer.

5. The Court in para 8, takes into consideration a case where a dealer transports goods from his factory to his place of business and sells them at a price which is arrived at after taking into account 'freight and handling charges' incurred by him in transporting the goods. The Court holds that the amount of 'freight and handling charges' included in the price would obviously be the part of the 'sale price', because it would be payable by the purchaser to the dealer as part of the consideration for the sale