Transport charges separately charged by the assessee are not assessable to sales tax under the Orissa Sales Tax Act, 1947.

JUDGMENT

MISRA, C.J. - Challenge in these applications is to the orders of assessment made by the Sales Tax Officer, Rourkela Circle, Uditnagar, opposite party No. 1 in respect of periods 1976-77 and 1977-78.

2. The petitioner is a registered dealer under the Orissa Sales Tax Act (hereinafter referred to as the "Act") bearing registration No. RL-2394 and deals in dolomite and limestone after raising them from its mines. It furnished returns as required under the Act for the two periods. The Sales Tax Officer on a verification of its accounts found that the assessee had sold minerals to M/s. Hindustan Steel Ltd., but omitted to pay sales tax on that part of the turnover which represented transport changes from the pit-head to the work site. Though the Sales Tax Officer found that the assessee had separately charged the freight, he did not agree to exclude the same by holding :

"But the contention of the dealer is not acceptable in view of the facts that transport charges incurred by him were prior to delivery of goods to the purchaser. Thus transport charges would form part of sale price in the instant case. In this connection, decision of the Honourable Supreme Court in Dyer Meakin Breweries Ltd. v. State of Kerala [1970] 26 STC 248 (SC) and D. C. Johar & Sons (P.) Ltd. v. Sales Tax Officer, Ernakulam [1971] 27 STC 120 (SC) may be cited to arrive at a definite conclusion. It is held by the Honourable Supreme Court in the case of Dyer Meakin Breweries Ltd. v. State of Kerala [1970] 26 STC 248 (SC) that all the expenditure incurred by the appellant towards freight and handling charges was incurred prior to the sale and was a component of the price for which the goods were sold and the appellant was not entitled in the deduction claimed. It is further observed by the Honourable Supreme Court keeping in view the provisions under rule 9(f) of the Kerala General Sales Tax Rules, 1963, that -

'It is not intended to exclude from the taxable turnover any component of the price, expenditure incurred by the dealer which he had to incur before sale and to make the goods available to the intending customer at the place of sale.'

In view of this, transport charges incurred before delivery at work site inside the plant would be included in the sale price of the goods."

The petitioner has contended that the transport charges charged separately were not assessable to tax and the Sales Tax Officer clearly went wrong in including the same in the assessable turnover of the petitioner.

3. No counter has been filed on behalf of the State or the Sales Tax Officer but the Steel Authority of India, opposite party No. 3, the purchaser, has filed a counter-affidavit. The main plea in the counter-affidavit is that the Steel Authority of India was not a necessary party and should not have been impleaded.

4. Section 4 of the Act makes provision for incidence of taxation. Gross turnover is the basis of liability and that term has been defined in section 2(dd) as "the total of turnover of sales and turnover of purchases". "Turnover of sales" has been defined in section 2(i) to mean :

"The aggregate of the amounts of sale prices and tax, if any, received and receivable by a dealer in respect of sale or supply of goods other than those declared under section 3-B effected or made during a given period."

"Sale price" was defined in section 2(b) of the Act as :

"The amount payable to a dealer as valuable consideration for the sale or supply of any goods, less any sum allowed as cash discount according to ordinary trade practice, but including any sum charged for anything done by the dealer in respect of the goods at the time of, or before delivery thereof, other than the cost of freight or delivery or the cost of installation when such cost is separately charged."

The words "other than the cost of freight or delivery or the cost of installation when such cost is separately charged" were omitted by the Orissa Sales Tax (Amendment) Act (3 of 1976). The same Amendme