The main legal point established in the judgment is that the separately charged freight in the sale bill is not part of the sale price and is therefore excluded while calculating the taxable turnover for the purposes of the OST Act.

JUDGMENT

S. Muralidhar, C.J. - By an order dated 22nd September 2015, this Court formulated the following substantial question of law for consideration in the present petition:

"The Petitioner having separately charged freight in the sale bill whether the Tribunal is legally correct in holding that it is part of sale price and the Petitioner is not entitled to claim deduction of freight?"

2. The background facts are that the Petitioner is a manufacturer of cast iron goods and is also engaged in the trading of iron and steel goods. The Petitioner is a registered dealer under the Orissa Sales Tax Act, 1947 (OST Act) and the Central Sales Tax Act, 1956 (CST Act).

3. The Department of Telecommunications (DoT), Maharashtra Telecom Circle, Mumbai floated a tender on 30th April 1998, for supply of "cast iron socket-Socket 'B'." Clause 9 of the Bid Document stipulated the bid price. Clause 9.1 required the bidder to quote a basic unit price and other component prices individually in terms of the Schedule given in Section (iii). Clause 9.2 (i) provided that the bidder should quote the excise duty, sales tax, insurance, freight and other taxes paid or payable item wise. Clause 9.2 (ii) stipulated that the bidder had to quote the price as per the price schedule given in Section (iii) Part 3 for all the items given in the schedule of requirements. Clause 9.3 provided that the price quoted by the bidder would remain fixed during the entire period of the contract and should not be subjected to variation of any account.

4. Section (iii) Part-3 specified the separate items which were to be quoted by the bidder as under:

(1) Basic Unit price

(2) Excise Duty

(3) Sales Tax

(4) Freight

(5) Any other levy

(6) Unit price inclusive of all levies and charges

(7) Discount

(8) Total dues accounted price

5. It is stated that in its bid, the Petitioner specifically gave the break up price quoted by it for supply of Socket-B in the following manner:

Basic Unit Price exclusive of all levies and charges but inclusive of packing, forwarding and insurance	: Rs.261.70/-
Excise @ 15 %	: Rs.39.26/-
Sales Tax @ 4 %	: Rs.12.04/-
Freight	: Rs.45.00/-
Unit Price inclusive of all levies and charges	: Rs.358.00/-

6. The above quote was per unit of the C.I. Socket-B. The total quotation was for 50,000 Nos. aggregating to Rs.1,79,00,000/-.

7. The Petitioner's bid was accepted. The DoT visited the Petitioner's factory, inspected the goods and earmarked them. In terms of the conditions attached to the bid, the sale was complete at that stage.

8. The Petitioner then raised its invoices by showing separately the freight, excise duty and C.S.T. components in accordance with Section (iii) Part-3 of the tender conditions.

9. On 24th April 1999, an inspection report was submitted by the STO, Investigation Unit, Rourkela alleging that the Petitioner had evaded tax during 1999-2000 on freight charges of Rs.1,49,576/- on the total freight collection of Rs.37,39,393/-. On this basis, the assessment proceedings were initiated under Rule 12 (5) of the CST (Orissa) Rules. The Petitioner offered an explanation that the goods had been delivered ex factory to the common carriers. The claim of deduction on account of outward freight, separately charged in the sales bills, was allowable as a deduction in view of the definition of sale price contained under Section 2 (h) of the CST Act.

10. However, the STO rejected the Petitioner's explanation and raised an additional demand of Rs.1,36,956/- by the impugned assessment order (Annexure 4). Aggrieved by the said order, the Petitioner filed an appeal which came to be dismissed by the Assistant Commissioner of Commercial Taxes, Sundargarh Range, Rourkela by an order dated 11th April, 2002. It was held in the said order that the contract in question clearly mentioned that the prices were inclusive of excise duty, sales ta