Utkal Moulders Vs State of Orissa (Orissa High Court)
In the considered view of the Court, the legal position, as explained in Hindustan Sugar Mills and others v. State of Rajasthan and others (supra) and the State of Karnataka and another v. Bangalore Soft Drinks Pvt. Ltd. (supra) supports the case of the Petitioner is that in the instant case the freight charges are not includable in the sale price, which is amenable and therefore, has to be excluded while calculating the taxable turn over for the purposes of the OST Act.
For the aforementioned reasons, the question framed is answered in negative that is in favour of the Petitioner-assessee and against the Department by holding that the Tribunal was incorrect in holding that the freight shown in the sale bill separately is part of the sale price. It is held that the Petitioner is entitled to claim deduction of the freight charges from the taxable sales turnover.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
1. By an order dated 22ndSeptember 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 30thApril 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:
