Freight charges, despite being billed separately, are integral to the sale price and taxable under law because the seller retains responsibility until delivery.

C O M M O N O R D E R P.VELMURUGAN, J.

These Tax Case Revisions have been filed challenging the order of the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Madurai, in M.T.S.A.Nos.36 to 38 of 2006, dated 10.05.2006.

2. The petitioner manufactures sulfuric acid. Their place of business was inspected by the Enforcement Wing Officials on 17.12.2002. During the inspection, the officials found that the petitioner had charged freight separately in certain bills. The petitioner explained that they collected freight charges from the customers and paid the same to the transporters once every fortnight. The cost of freight paid on behalf of the customers was recovered by raising debit notes at a fixed rate per metric ton of acid sold. The assessing officer treated the turnover relating to the freight charges as part of the sale price and assessed them to tax.

3. Aggrieved by the orders of the Assessing Officer, the petitioner appealed to the Appellate Commissioner, who, after hearing both sides, allowed the appeal, stating that the freight charges incurred by the petitioner were post-sale and were not to be included in the sale price.

4. Against the order of the Appellate Assistant Commissioner, the Department filed an appeal before the Tribunal. The Tribunal, while setting aside the order passed by the Appellate Assistant Commissioner, held that although the basic price is ex-factory, the petitioner’s extended responsibility for the goods until the site of the buyer takes them beyond the place where the basic price is fixed. Thus, the petitioner cannot claim that their risk ends once the goods are delivered at their factory because the price is ex-factory. There is an extended responsibility of the respondents until it reaches the buyer’s site. The Tribunal also held that, as per Clause 4 of the agreement, which deals with freight charges, the respondents categorically spell out the charges for the transportation of goods to the site of the buyer and nowhere does the agreement say that the charges will be debited/collected as per the demand of the transportation contractors. The Tribunal also observed that, as per Clause 5 of the terms and conditions of the agreement, the transit insurance is borne by the manufacturer, and held that, in all respects, the sale gets concluded at the site of the buyer. Thus, the transportation charges relating to FACT forms are clearly liable to be taxed.

5. Aggrieved by the findings of the Tribunal, the petitioner has filed this Tax Case Revision.

6. The learned counsel for the petitioner submits that the Tribunal failed to appreciate that Section 20 of the Sale of Goods Act, 1930 , clearly states that when there is an unconditional contract for the sale of specified goods in a deliverable state, the property in the goods passes to the buyer when the contract is made and it is immaterial whether the time of payment or the time of delivery of the goods, or both, is postponed. This aspect has been completely overlooked by the Tribunal. The petitioner further states that the terms of the agreement/contract with FACT are clear, and it is also admitted that the price is ex-factory. In these circumstances, the Tribunal had no basis to state that the sale is concluded at the buyer’s site. The learned counsel further submits that the Tribunal should have considered the entire contract with FACT, rather than isolating certain clauses, to arrive at its conclusion. Additionally, he submits that although the Tribunal acknowledged that the freight charges were separately charged by a debit note, it was incorrect for the Tribunal to state that the sale is concluded at the buyer’s site. He also argues that the Tribunal