Transportation charges that are separately charged and are not part of a uniform price set by the government are not includible in the sale price for the purpose of Central sales tax.

( 1 ) THE facts relating to the present application may be briefly noted.

( 2 ) PETITIONER No. 1, Indian Explosives Limited (hereinafter referred to as IEL), manufactures fertilizers at its factory in Panki, Kanpur. The essential raw material required for such manufacture is naphtha. Naphtha during the relevant time was manufactured by the Indian Oil Corporation (hereinafter referred to as IOC) inter alia at its Barauni refinery in Bihar.

( 3 ) FROM September, 1969, naphtha was being supplied by IOC to IEL through a pipe-line connecting the Barauni refinery of IOC with the factory of IEL at Kanpur. The terms and conditions of such supply were recorded in an agreement between IEL and IOC dated 9th February, 1970. The agreement was effective from September, 1969, and was in force till 31st December, 1980.

( 4 ) CLAUSE 5 of the agreement is very material for the purpose of the present application. The relevant portions of that clause may be set out hereinbelow : price

( 5 ) THE price or prices of naphtha shall be determined in accordance with the pricing formula laid down by the Government of India or as allowed by the Government of India from time to time in respect of : (i) naphtha produced indigenously and (ii) imported naphtha.

( 6 ) THE price or prices so charged shall be exclusive of transfer charges [chargeable in accordance with clause 7 (ii) of this agreement] excise duty and all other taxes and levies, which shall be recovered by the seller from the buyer at actual rates prevailing and levied by concerned agencies from time to time. "

( 7 ) THE material portion of clause 7 (ii) referred to above is in the following terms : 7 (ii) The cost of transferring naphtha by pipe-line from the point of its manufacture to the fence of the fertilizer factory shall be assumed to be the same as the railway freight for the equivalent distance as applicable from time to time for naphtha and shall be borne by the buyer.

( 8 ) IN March, 1974, the State of Uttar Pradesh assessed IOC to sales tax for the assessment year 1969-70 under the State Act on total turnover of IOC including therein the sale of naphtha by IOC to IEL under the abovementioned agreement. This was challenged by IEL in an application under Article 226 of the Constitution of India filed in the High Court at Allahabad.

( 9 ) ON 27th August, 1975, the Allahabad High Court construed the agreement and held that the sale of naphtha as aforesaid was an inter-State sale attracting Central sales tax (Indian Explosives Ltd. v. Commissioner, Sales Tax [1978] 41 STC 315 ). The High Court quashed the order of assessment in so far as it related to the assessment under the State Act. An application filed by the Commissioner of Sales Tax, U. P. , under Article 133 of the Constitution of India in the Allahabad High Court was rejected. An application made by the Commissioner thereafter under Article 136 of the Constitution of India in the Supreme Court was also dismissed on contest.

( 10 ) IN August, 1977, IEL filed a suit in this Court being Suit No. 515 of 1977 for perpetual injunction restraining IOC from demanding or realising sales tax under the U. P. sales tax laws in respect of supplies made under the agreement. The suit is still pending. The State of Bihar is not a party to that suit.

( 11 ) ON 29th June, 1978, an assessment was made by the Bihar sales tax authorities assessing the sales made by the IOC to IEL under the Central Sales Tax Act including therein the transport and delivery charges.

( 12 ) SOMETIME in 1979 the IOC and its Managing Director filed a writ petition under Article 32 of the Constitution of India in the Supreme Court. In the petition both the State of Bihar and the IEL were made parties and the petitioner claimed an adjudication on the question as to which sales tax under the Central or State law was payable in view of the conflicting orders of the State of Bihar and of the State of U. P.

( 13 ) ON 10th September, 1979, the S