TYL, RAMCO CEMENT DISTRIBUTION CO. PVT. LTD., TAMIL NADU ETC. ETC. versus STATE OF TAMIL NADU

Citation: [1992] SUPP. 2 S.C.R. 78 · Decided: 20-10-1992 · Supreme Court of India · Bench: S. RANGANATHAN · Disposal: Dismissed

Judgment (excerpt)

A 
TYL, RAMCO CEMENT DISTRIBUTION CO. PVT. LTD., 
B 
c 
D 
E 
TAMIL NADU ETC. ETC. 
v. 
STATE OF TAMIL NADU 
OCTOBER 20, 1992 
[S. RANGAN;\THA:N AND B.P. JEEVAN REDDY, JJ.] 
Central Sales Tax Act, 1956/Tami/ Nadu General Sales Tax Act, 
1959/Tamil Nadu General Sales Tax Rules, 1959: 
Sections 2 (h) and (j)/Sections 2(p), (g) and 3(1)/Rule 6-Sales T~ 
Assessment of-Taxable tum over-Computation of-Freight charges, packing 
charges and excise duty on packing material.s-Whether inc/udible in sale 
price for purposes of both Central Sales Tax and Tamil Nadu Sales Tax. 
The appellants-assessees in the first set of appeals were selling 
agents of appellants in the second set of appeals. For the assessment year 
1969-70, they were assessed to sales tax on a taxable turn-over of Rs. 
2,37,66,245 which included an amount of Rs. 29,71,527 representing freight 
charges. The assessee claimed exclusion of freight charges in computing 
the taxable turnover on the ground that freight had been independently 
charged in the invoices. This was rejected by the assessing authority, the 
appellate authority as well as the Tribunal. Aggrieved, the assessee 
preferred revisions to the High Court. 
The High Court held that in cases arising under the Central Sales 
F 
Tax Act, the freight, packing charges and excise duty on packing materials 
had to be included in the sale price for the computation of sales tax, that 
in cases arising under the Tamil Nadu General Sales Tax Act and Tamil 
Nadu Additional Sales Tax Act, freight, packing charges and excise dnty 
on packing materials were not liable to be included in the sale price for 
G the computation of the sale price, and that the assessees were not liable to 
pay additional sales tax on freight, packing materials and excise duty on 
packing materials in the cases arising under the Tamil Nadu Additional 
Sales Tax Act. 
Aggrieved, both the assessees as well as the State GoVl!rnment filed 
H appeals before this Court. 
78 
lVL, RAMCO CEMENT CO. v. STATE OF TN. 
79 
On behalf of the State it was contended that the High Court, having A 
held that the amounts in question were liable to be included in the 
turnover for purposes of Central Sales Tax Act, ought to have also held 
that these amounts were liable to be included in the taxable turnover for 
purposes of Tamil Nadu General Sales Tax Act and the Tamil Nadu 
Additional Sales Tax Act also, and that the relief granted for purposes of B 
the local sales tax was erroneous. 
On behalf of the assessees, it was contended that, even for the 
purposes of C.S.T., the freight charges, the cost of packing materials and 
the excise duty on the packing materials should have been excluded in the 
computation of the taxable turnover, that the Cement Control Order, C 
under the terms of which sales of cement were effected during the relevant 
period by all cement manufacturers, had no relevance to the question at 
issue, that all that the Cement Control Order laid down was that Cement 
could not be sold at a price higher than a price fixed by the Cement 
Control Order on terms described "as free on rail (F.0.R.), destination', D 
that the Order did not stand in the way of cement manufacturers charging 
a price less than the ceiling fixed under the Order, nor did it preclude 
individual contracts by the cement manufacturers with various pur-
chasers that the latter should bear the freight charges that the assessees 
had and that the assessees had entered into contract with the purchasers 
which clearly stipulated that the freight would be payable by the latter, as E 
per the terms and c:onditions of sale, the instant case was one where, 
despite the terms oi the Control Order, the assessees chose to sell the 
goods free on rail at the point where the goods were loaded on rail and 
that the liability to pay freight was entirely that of the purchasers, and 
that these contracts were not inconsistent with or repugnant to the terms 
F 
of the Cement Control Order and therefore, the assessees were entitled to 
exclude the amounts of freight as not forming the part of the turnover at 
all. 
Allowing the appeals of the State and dismissing those of the appel-
lant-dealers, this Court, 
G 
HELD : 1. The freight charges should be included in arriving at the 
taxable turnover for pnrposes of Central Sales Tax and Tamil Nadu Sales 
Tax Act; and the packing charges and excise duty thereon should also be 
lnclnded in arriving at the taxable turnover for purposes of both

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