Packing charges and labour charges for packing are considered part of the sale price under the Central Sales Tax Act, 1956.

KANAKARAJ, J.

The assessee in all the tax cases is the same, but they relate to three assessment years, viz., 1973-74, 1974-75 and 1975-76. In all the assessment years, the assessee is seeking to exclude from the taxable turnover, packing charges, labour charges and excise duty. So far as excise duty is concerned it relates only to the year 1975-76, and the inclusion of the same is not seriously disputed by the learned counsel for the petitioner. Accordingly, we omit to consider the claim relating to excise duty.

2. The assessing authority held that packing charges and the labour charges for packing were eligible for exemption under a Notification G.O.Ms. No. 3291, Revenue, dated October 1, 1960 only up to January 30, 1974. Therefore in the assessment year 1973-74 he had included the turnover under these headings for the period from January 30, 1974 to March 31, 1974. The assessing authority held that packing charges and labour charges for packing would certainly attract liability because these charges are incurred by the dealers in respect of goods sold at the time or before the delivery thereof. He therefore held that these charges properly formed part of the sale price under section 2(h) of the Central Sales Tax Act, 1956. The Appellate Assistant Commissioner confirmed the said assessment and in doing so he recorded a finding that the magnesite are supplied in terms of numbers of bags because naked magnesite cannot be sold as such. It is common knowledge that dead burnt magnesite would get hardened and become unfit for use if it is exposed to moisture. Necessarily therefore magnesite has to be packed in some container and sold. The sale price therefore includes the value of the packing materials (gunny bags) in which magnesite is packed. The value of the gunny bags used in packing the magnesite goes into the price of the magnesite sold. On further appeal to the Tribunal it was held that the packing charges are pre-sale charges and they cannot be equated to delivery charges. The packing charges come within the definition of "sale price", they being incurred at the time or before the delivery thereof. The Tribunal also recorded a finding that the petitioners had not proved with records that packing charges were incurred after the sale was over. It is under these circumstances, the assessee has come up on revision, making the very same claim before this Court.

3. Mr. S. V. Subramaniam, learned counsel for the petitioner, refers to a sample copy of the order placed on the assessee for the supply of dead burnt magnesite. It is seen from the said copy of the order that the delivery by the assessee is at the despatching railway station which in this case happened to be Karuppur/Salem railway station. It is also seen from another order dated January 16, 1975, that the terms of delivery were f.o.r. Karuppur railway station, that the goods should be packed in single gunny bag and properly marked at no extra cost. If double gunny bags were to be used an extra cost of 50 paise per metric tonne was provided. There is one significant clause in all the despatch advices and invoices which reads as follows :

"Our responsibility ceases the moment consignment is handed over to the carrier and a R.R./L.R. is obtained for the goods. Claims for delay, shortage, damage to or loss of goods in transit should be made by the buyers against the carrier direct." *

These terms of the contract clearly show that the sale was at the boarding railway station and the delivery was at the railway station. Mr. Subramaniam sought to contend that the assessees had shown the packing charges and the labour charges separately in their invoices and therefore they are eligible for deduction under the second part of the definition "sale price" under section 2(h) of the Central Sales Tax Act. According to him, the goods are earmarked as soon as the supply order is received. The entire argument is based on certain observations made in Ramco Cement Distribution Co