( 1. ) THIS is a petition by M/s. Birla Jute Manufacturing Co. Ltd. challenging the order of assessment of the Assistant Commissioner of Sales Tax, Satna, dated 23rd December, 1970, including the amounts of railway freight in their taxable turnover for purposes of the Central Sales Tax Act, 1956, for the assessment year 1965-66.

( 2. ) THE petitioner owns the Satna Cement Works at Satna, which is engaged in the business of manufacture and sale of cement. Cement is a controlled commodity. Under the Cement Control Order, 1961, made by the Central Government for purposes of securing the equitable distribution and availability at fair price of cement throughout the country, in exercise of their powers under Section 18-C of the Industries (Development and Regulation) Act, 1951, the entire quantity of cement produced by the petitioner has to be sold to the State Trading Corporation at the price fixed under clause 6 (1 ) (a ). That price is ex works price. The petitioner then acts as an agent of the State Trading Corporation in effecting sales to the consumers. The sales are of two different types : (a) to Government departments, through the Director-General of Supplies and Disposals, New Delhi, and (b) sales to non-Government consumers. The price at which the State Trading Corporation may sell cement to such persons is fixed under clause 6 (2) (a), and that price is F. O. R. destination.

( 3. ) DURING the period from 1st April, 1965, to 31st March, 1966, the gross turnover of inter-State sales effected by the petitioner amounted to Rs. 7,81,58,770. 03. Out of this, the amount of Rs. 1,54,69,579. 77 represented the freight on despatches of cement sold to consumers. These figures are taken from the quarterly returns (annexures E-l to E-4) and the statement of railway freight (annexure E-6 ). The petitioner had in its quarterly returns claimed a deduction of the freight amounting to Rs. 1,54,69,579. 77 as a "rebate" from its taxable turnover and pressed that claim during the assessment proceedings. The Assistant Commissioner of Sales Tax has, however, disallowed the claim for deduction on the ground that the freight is not separately charged. Against that decision the petitioner has straightaway filed this writ petition alleging that the impugned order of assessment is illegal and in excess of jurisdiction.

( 4. ) THE short question for consideration is whether the amounts of freight incurred in the inter-State sales were liable to be excluded from the taxable turnover of the petitioner. The petitioner contends that in the case of all sales, i. e. , both to Government and non-Government buyers, the terms and conditions under which, the sales were effected, the freight was payable by the buyers alone and that, in no case, there was any liability or obligation upon the petitioner to pay the freight. Nor has the petitioner paid any amount as freight in respect of any of the sale transactions. It is, therefore, urged that the amounts of freight cannot be, in law, treated as part of the sale price, and consequently of the taxable turnover. To substantiate this contention, the petitioner has placed on record the relevant documents governing the sales.

( 5. ) IN respect of supplies to Government departments, the contracts of sale were all governed by the Rate Contract No. SM-I/rc-4116/cement/ STC/2986 dated 11th August, 1956, Sub-clause (vi) of clause 16 whereof reads as follows :

Cement shall be dispatched freight to pay at public tarrif rate, unless otherwise instructed by the indentor. The consignee shall pay the freight and all other charges at destination. Selling agents will afford credit for freight in their bills. Except in the case of public siding, wherever any destination siding charges are charged by the railways in the railway receipts the same will have to be borne by the consignee and no credit for the same will be allowed by the selling agents in their bills. In the case of public siding charges, credit will be afforded