M.H Kania, J.:— This is a reference under section 34(1) of the Bombay Sales Tax Act, 1953 (hereinafter referred to as “the said Act”).
2. The facts giving rise to the question raised in this reference are as follows: The respondent-assessee is a dealer dealing in the sale of aerated waters.
3. The respondent sold aerated waters among others to some shipping companies in the Bombay docks, and as the goods, namely, the said aerated waters, had to be taken or transported into the dock area, the respondent had to pay charges according to a certain scale of rates to the Bombay Port Trust. These charges have been referred to before the sales tax authorities and the Tribunal as dock charges and we also propose to refer to them as such. No contract regarding the sale of these aerated waters was produced before any of the sales tax authorities nor was there produced any correspondence which Would indicate the terms on which the aerated waters were agreed to be sold to the shipping companies in the dock area. However, in the bills, which the respondent presented to the shipping companies for the aerated waters sold to them, such dock charges were charged separately. In the assessment for the assessment periods from 1st April, 1956, to 31st March, 1957, 1st April, 1957, to 31st March, 1958, 1st April, 1958, to 31st March, 1959, and 1st April, 1959, to 31st December, 1959, respectively, it was contended by the respondent before the Sales Tax Officer that the said dock charges amounting to Rs. 5,857-13-0 were liable to be deducted from the taxable turnover of the respondent. The Sales Tax Officer observed in his order that there was no contract as such for the supply of aerated waters by the respondent to its clients and that the clients merely purchased from the respondent any quantity of aerated waters required by them when the trucks of the respondent called at the places of the clients and the only agreement was at that stage. The Sales Tax Officer by his assessment orders rejected the claim of the respondent that the respondent was entitled to a deduction in respect of the said dock charges on the ground that there was no agreement for separate payment of these dock charges. The respondent appealed against the orders of the Sales Tax Officer to the Assistant Commissioner of Sales Tax, who dismissed the said appeals. Thereafter, the respondent preferred revisional applications against the orders of the Assistant Commissioner of Sales Tax, but these revisional applications were dismissed by the Deputy Commissioner of Sales Tax. The respondent then filed four revisional applications before the Sales Tax Tribunal at Bombay against the orders of the Deputy Commissioner of Sales Tax. The Tribunal came to the conclusion that the respondent supplied goods to the shipping companies for a consideration which included dock charges, because without the dock charges being paid the goods could not have been taken to the shipping companies. On this ground the Tribunal rejected the contention of the respondent that the said dock charges were not a part of the sale price. The Tribunal also rejected the contention of the respondent that the said dock charges have been paid by the respondent on behalf of the purchasers. The Tribunal, however, further held that as the respondent had to pay these dock charges in order to reach the destination for delivering the goods they constituted the cost of delivery; and, as these dock charges had been charged separately in the bills furnished by the respondent to the purchasers, these charges should be excluded from the turnover of the respondent under the provisions of section 2(14) of the said Act. On the basis of these conclusions, the Tribunal allowed the revisional applications preferred by the respondent. This reference is a consolidated reference arising out of the decisions of the Tribunal in the said revisional applications, and has been made at the instance of the Commissioner of Sales Tax.
4. The question referred to us for our consideration is as follows:
“Whether, on the facts and circumstances of the case, the Tribunal erred in holding that the dock charges constitute cost of delivery for the purpose of section 2(14) of the Bombay Sales Tax Act, 1953, and that the dock charges should be excluded while levying tax on the taxable turnover?”
5. As the arguments turn to a large extent on the construction of subsection (14) of section 2 of the said Act, it will not be out of place to set it out at this stage. Section 2(14) of the said Act at the material time read thus:
“‘Sale price’ means the amount of valuable consideration payable to a dealer for the sale of any goods, less any sum allowed as cash discount according to trade practice, but including any sum charged for anything done by the dealer in respect of goods at the time of or before delivery thereof, other than the cost of freight or delivery or the cost of installation when such cost is separately charged.”
6. We may make it clear that it has already been held by the Tribunal that the said dock charges form part of the sale price. This finding of the Tribunal has not been disputed before us. No question has been raised in this connection and, therefore, we must proceed on the footing of this finding. The first submission of Mr. Sanghvi, the learned counsel for the applicant, was that these dock charges were really in the nature of expenses which had to be incurred by the respondent for the purpose of carrying on the business of selling aerated waters in the dock area and they could not be said to constitute the cost of delivery or delivery charges as such. On the other hand, it was contended by Mr. Munim, the learned counsel for the respondent, that these charges had to be incurred for the purpose of effecting delivery of aerated waters to the shipping companies concerned in the dock area, because had such charges not been paid the goods would not have been allowed to enter the dock area at all and the delivery could not have been effected. We do not propose to go into the merits of these rival contentions, because, in our opinion, the reference must be decided against the respondent even on the assumption that the contention of Mr. Munim that the said dock charges did constitute the cost of delivery.
7. The next submission of Mr. Sanghvi was that even assuming that the said dock charges did form part of the cost of delivery or delivery charges, there was nothing on the record to show that there was any contract between the respondent and the purchasers of the said goods under which the respondent was entitled to charge these dock charges separately. It was submitted by him that although in the bills these dock charges had been charged separately, this was of no consequence as the terms or the forms of the bills could not govern or indicate the nature of contract between the respondent and the purchasers. In our opinion, there is considerable substance in this contention. In Commissioner Of Sales Tax v. Ranabhai Bhanji [1975] 36 S.T.C 182. (S.T.R No. 14 of 1972 decided by us on 6th January, 1975) (the judgment having been delivered by Madon, J.), we have taken the view that under clause (14) of section 2 of the said Act, if a dealer has to do anything in respect of the goods at the time of or before delivery thereof, any sum charged by him in respect thereof is to be included in the sale price except in the one case provided for in the said clause, namely, the cost of freight or delivery or the cost of installation, when such cost is separately charged. Before, however, a dealer can separately charge his purchaser for any particular item there must be a right in the dealer to make such a charge and a liability on the part of the purchaser to be so charged. This right and corresponding liability can only be a matter of contract between the seller and the buyer. If it is not a matter of contract, then there is no right in a seller to raise a separate charge against the purchaser nor any corresponding obligation on the purchaser to make payment of the amount so separately charged. In that case although in the invoices the respondent had made a separate charge in respect of the amount of freight, yet as there was no right in the respondent under the terms of the said contract to charge separately for the freight, the respondent-firm was held not entitled under the contract to make such a separate charge and was not granted the advantage of that part of clause (14) of section 2 of the said Act, which excludes from the sale price the cost of freight or delivery, when such cost is separately charged. In Hyderabad Asbestos Cement Products Ltd. v. State of Andhra Pradesh, the Supreme Court has observed that the form in which the invoice was made out was not determinative of the contract between the company and its customers. In Arun Electrics v. Commissioner of Sales Tax [1966] 17 S.T.C 576 S.C., the question was whether the transaction represented by the bill produced by the assessees amounted to a sale. The Supreme Court has observed in that case that the invoice or the bill merely set out the amount chargeable to the customer for “supplying and affixing” certain electric fittings and equipment and it threw no light on the nature of the contract. The Supreme Court held that no answer should have been recorded by the High Court on the question framed, for the question whether in respect of a transaction sales tax is exigible may be determined only on the terms of the contract, and not from the invoice issued by the person entitled to receive money under the terms of the contract. The invoice did not represent any transaction, nor did it evidence a contract for work or for sale of goods. In view of these decisions, it appears to us that although the respondent had made a separate charge for the dock charges in the bills submitted by it to the purchasers, as the respondent has failed to prove that there was any contract under which it was entitled to make such a separate charge, the respondent is not entitled to get a deduction in respect of these dock charges on the ground that they constitute cost of delivery and were separately charged. Whether there was any such contract was a fact within the special knowledge of the respondent and it cannot be disputed that the burden clearly lay on the respondent to establish such a contract. If the respondent has failed to discharge that burden, the legal consequence must follow.
8. Mr. Munim, the learned counsel for the respondent, has placed strong reliance on the decision of the Supreme Court in Government of Madras v. Simpson and Co. Ltd., where, on the facts and circumstances of the case, the court took the view that the bill evidenced an agreement to sell a particular diesel engine, the price of which was separately mentioned in the bill, and an agreement to fit it in the customer's vehicle. In our view, this decision is not of much assistance in the present case. In the first place, the question as to whether the bill was indicative of the terms of the contract or not was never raised in that case. Moreover, what had happened was that some typical bills for certain years were produced, wherein the cost of labour and the cost of the engines were separately shown. On these bills the Tribunal concluded that there was a sale of the engines as such and that there was no works contract. On reference, the High Court felt that the fact that a consolidated bill was submitted helped the assessee. On appeal, the Supreme Court upheld the view taken by the Tribunal. The case, therefore, throughout proceeded on the assumption that the bills in question did evidence the terms of the contract between the assessee and the purchasers. It was next submitted by Mr. Munim that the decisions in Arun Electrics v. Commissioner of Sales Tax and Hyderabad Asbestos Cement Products Ltd. v. State of Andhra Pradesh [1969] 24 S.T.C 487 S.C., referred to earlier, were distinguishable on the ground that, in those cases, there appeared to be written contracts, whereas in the case before us there is no written contract but there must have been oral contracts between the respondent and the shipping companies purchasing the goods. In our view, this circumstance can make no difference. If there was an oral contract or contracts under which the respondent was entitled to charge dock charges separately, the respondent should have proved the same. In the absence of any such proof, it cannot be said that the bills submitted by the respondent to the purchasers evidenced what the terms of the contracts must have been.
9. In the result, the question referred to us must be answered as follows: Even on the assumption that the said dock charges constitute the cost of delivery for the purpose of section 2(14) of the said Act, the Tribunal erred in holding that the said dock charges should be excluded while levying tax on the taxable turnover of the respondent. The respondent to pay to the applicant the costs of this reference fixed at Rs. 250.
10. Reference answered accordingly.