JUDGMENT :

Mohammed Nias C.P., J.

The Kerala State Electricity Board Limited (for short “Board”) has filed this appeal challenging Annexure-C order of the authority for clarification under Section 94 of the Kerala Value Added Tax Act, 2003, that held the charges incurred for loading, unloading, stacking, and transportation formed part of the taxable turnover in the contract entered into between the appellant and M/s. Kothamangalam Aggregates, Ko thamang alam, for the manufacture and supply of electrical poles.

2. Board contends that it had invited tenderers for the purchase of Prestressed concrete poles (for short “PSC poles”), and Annexure-A purchase order contains the basic price, transportation charges, taxes, and duties, and in all the invoices they are separately shown as is evident from Annexure-B and therefore, except the sale price other components do not form part of the same price and therefore, determining the taxable turn including those charges other than the basic price was illegal going by the provisions of the KVAT Act. Initially, the manufacturers filed their monthly returns showing only the price of the poles while computing the taxable turnover, which the department accepted but later on, due to the audit objection, the department sought to levy tax on the freight charges also, which led to one of the manufacturers seeking a clarification. On the basis of the above contentions, the following substantial questions of law have been framed:-

1. Has not the authority for clarification committed an error in holding that the assessee is not entitled to deduct transportation charges, loading, unloading charges etc. From the total turnover while computing taxable turnover ?

2. Whether in the facts and circumstances of the case, the respondent went wrong in applying the dictum in India Meters Limited Vs. State of Tamil Nadu [(2010) 9 SCC 423 in the case of the assessee ?

3. Whether in the facts and circumstances of the case, the respondent ought to have held that the basic price as shown in Annexures A and B alone formed taxable turnover of the assessee in view of the provision contained in Rule 10 (e) of the Kerala Value Added Tax Rules ?

3. The learned Senior Counsel Sri. Raju Joseph appearing for the appellant, contended that going by the clauses in Annexure-A purchase order and Annexure B invoice, it is clear that the sale was complete at the factory gate and that the transportation, unloading stacking, etc., are not part of the sale consideration. Thus, going by 10 (e) of the Kerala Value Added Tax Rules, freight and charges for delivery are specifically excluded while determining taxable turnover, and as the invoice shows these items separately, freight and charges for delivery ought to have excluded from the taxable turnover. His further submission is that the decision of the Supreme Court in India Meters Limited v. State of Tamil Nadu [(2010) 9 SCC 423] is clearly distinguishable as the factual situation was different. It is also his argument that the terms of the agreement determine whether the sale consideration included the transportation, unloading, and other charges, and it cannot be said that in every case, transportation or freight charges will be included as the sale price.

4. On the other hand, the learned counsel for the Revenue, Smt. Jasmine submitted that the Clauses in the contract clearly show that the charges for freight was included in the sale price. It is also argued that the definition of turnover, sale, and sale price occurring in the KVAT Act read with Annexures A and B clearly shows that the same form part of the taxable turnover and the fact that the charges were shown separately would make no difference in the instant case.

5. We have heard the learned counsel on either side and perused the documents on record.

6. Annexure A, the purchase order specified the price details fixed, including taxes, excise duty, other levies, freight, insurance, loading, and unloading at the site. It also contained