JAGANMOHAN REDDY, C. J.

( 1 ) THIS tax revision case and the other writ petitions involve the determination of the question whether the order of the majority of the sales Tax Appellate Tribunal, declaring that railway freight payable by the purchaser shall not be included in the turnover of the seller, is correct. Two members of the sales Tax Appellate Tribunal, on a reading of section 2 (s) of the Andhra Pradesh general Sales Tax Act, 1957 (here in after referred to as "the Act") and rule 6 of the Rules framed thereunder, have held that the railway freight paid by the purchaser cannot be included in the turnover of the sales made by the company. The Accounts member, on the other hand, thought that because the company was charging the list price which included the railway freight and as such the goods were to be f. o. r. destination as per clauses 4 and 16 of the agreement, the railway freight was properly included in the turnover.

( 2 ) MR. Srinivasamurthy, learned Advocate for the respondent-company, who are also the petitioners in the writ petitions, contends that under the terms of the agreement, the price at which the goods produced by the company were supplied to the stockists was the current general gross list price f. o. r. less such discount as may be be fixed by the company from time to time, that the railway freightrwas payable by the stockists and since the contract does not make it obligatory for the company to pay the railway freight, the railway freight paid by the stockists cannot be said to have been paid on behalf of the company to justify the Sales Tax authorities to include the railway freight in the turnover of the company. The company, according to the learned Advocate, followed this procedure because they wanted to have a uniform price throughout India for the sale of their products and in order to enable the stockists to do so, it allowed, apart from the stockists discount a further deduction of railway freight and charged only the net amount after such deductions as the price of the goods sold to the stockists. The price so charged, he submits, constitutes the turnover and there is no justification for adding to it the freight paid by the stockists. Mr. Ramachandra Reddy, learned Government Pleader, on the other hand avers that the argument on behalf of the company itself admits that the gross list price includes the freight, and what is in fact to be paid by the dealer is asked to be paid by the stokist on their behalf in which case the railway freight was properly included in the turnover of the dealer.

( 3 ) THE validity of these rival contentions depends upon the terms of the contract entered into between the parties. But before examining them, it is necessary to set out the provisions, so far as they are relevant for our purposes, dealing with turnover and how it is computed for purposes of assessment under the Act. "section 2 (s)- turnover means, the total amount set out in the bill of sale (or if there is no bill of sale, the total amount charged) as the consideration for the sale or purchase of goods (whether such consideration be cash, deferred payment or any other thing or value) including any sums charged by the dealer for anything done in respect of goods sold at the time of or before the delivery of the goods and any other sums charged by the dealer ,whatever, be that description, the name or object thereof; provided. . . . . . . . . . . . . . . . . . . . . . "rule 6 (1 ).-"the tax or taxes under sections 5, 6 or notified under section 9 (1) shall be levied on the net turnover of a dealer. In determining the r,et turnover,. the amounts, specified in clauses (a) to (f) shall, subject to the considerations specified therein, be deducted from the total turnover of a dealer- (a) to (f ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (g) all amounts falling under the following two heads, when specified and charged for by the dealer separately, without including them in the price of the goods sold ; (i) freight; (ii) charges for packing and delivery and other such like services;"

( 4 ) ON reading of these two provisions it is clear that total turnover is to be computed not only on the amount set out in the bill of sale or on the total amount charged as consideration for the sale or purchase of goods, but also by including sums charged by the dealer for anything done in respect of the goods sold at or before the time of delivery of the goods, but does not include freight charges, or charges for packing and delivery ,if these are specified and charged lor a separately by the dealer without including them in the price of the goods sold. The question is what is the price or the total amount charged for the goods. We are however not concerned in this case by the necessity to include any sums charged by the dealer in respect of anything done at the time of or before the delivery. It is strenously contended by Mr. Ramachandra Reddy by reference to, the invoices that the price or the total amount charged is not only the list price minus the discount but the freight charges which were included in the list price and that therefore the freight charged has been properly included by the Sales Tax authorities in the total turnover of the respondent-company.

( 5 ) WE may now examine the relevant clauses of the agreement, which are clauses 4 and 16. Clause 4 is in the following terms:"the price of the said productions supplied to the stockists shall be the current general gross list price charged by the company, free on rail, less such discount as may be fixed by the company from time to time; but the terms and the times of delivery and the payments therefore shall be in the absolute direction of the company who may vary the same from time to time. "

( 6 ) UNDER this clause, generally, unless the terms and times of delivery are varied, the price charged by the company to the stockist is the list price minus the discount. The stipulation that the goods will be delivered free on rail, we think, is being misunderstood as free at the destination after payment of freight or something similar to c. i. f. contracts, where carriage insurance and freight is paid. In mercantile parlance, there are three common forms of contract; viz. f. o. b. , c. i. f. , i. e. , at a price to cover cost, insurance and freight, and ex-ship contracts, f. o. b. contracts are similar to what for inland purposes are termed f. o. r. ; that means, that the seller must deliver the goods on board the ship at his own expense or to load the goods on railway authority s collecting vehicle or at any rate to the railway authorities. The seller under an f. o. r. contract undertakes to deliver the goods into railway wagons or at the station, depending on the practice of the particular railway, at his own expense. These contracts differ from the ordinary inland contract of sale only in respect of the place at which delivery is to be made which puts on the seller an item of cost over and above that of the goods themselves and also prima facie fixes the point at which the property passes. It may be stated that loading into railway wagons is not one of the indispensable conditions of f. o. r. contracts, whatever may be the variations in this contract in lespect of delivery, it will be seen that payment of freight upto the destination is not at all involved. What then is the price at which the company agrees, under clause (4) to supply to the stockists of goods produced by them. On a reading of that clause it is clear that the price charged by the company is the list price minus the discount allowed. to the stockist as also the expenses incurred for the delivery of the goods to the railhead. Under this clause the company does not undertake to pay the freight. But it is said that under clause (16), which we give below, the freight is payable by the company, and therefore it should be included in the turnover of the company. "clause 16.-The conditions of any railway receipt shall be binding on the stockists and the date of delivery shall mean the date of the railway receipt and in the case of consignments sold fiee on rail destination the railway freight shall be nevertheless payable by the stockists at the destinations and the amount of freight shown on the railway receipt shall be deducted from the invoice of the company. (a ). . . . . . . . . . . . . . . . . . . . . (b) Where the materials for despatch to any destination falls below the minimum load for a wagon prescribed by the Railway, the company will be able at discretion, to increase or decrease the quantities upto the required tonnage or their to suit the size wagons allotted. "

( 7 ) THIS clause shows that sales are made by the company in variation of the terms under clause (4), at a price which is free on rail destination, implying that the company will pay the railway freight, as otherwise, there is no meaning in saying that railway freight shall nevertheless be payable by the stockist at the destination and that the amount of freight shown in the railway receipt shall be deducted from the invoice of the company. The term relating to the price in the contract between the company and the stockist envisaged by this clause implies an obligation on the part of the company to pay the railway freight. In contracts where the company undertakes to pay the freight and the purchaser is asked to pay the freight at the destination after goods are received, it will be deemed that the purchaser has paid it on behalf of the dealer. In other words, in such contracts r. s are referred to above, where freight is included in the price, the purchaser pays the freight on behalf of the company, because otherwise there is no meaning in the company deducting the freight from the price of the goods. That this is so is also evident from an examination of an invoice issued by the company to its stockist, Sirpur Paper Mills Ltd. It is as follows : "invoice No. 3, datednd 2nd January, 1960. M/s. Asbestos Cement Products Limited, Hyderabad (Dn.) M/s. Sirpur paper Mills Limited, Sirpur, Kagajnagar. Order No. LD/b. LBG/377 of 28th December, 1959. Freight to pay/paid Rs. 274-40 R. R. 21543 of 3rd January, 1960, through the Central Bank of India Limited, Hyderabad.

( 8 ) IT will be seen from the above invoice that if the price or the amount charged by the company is the list price minus a deduction of 10 per cent and, the railway freight, then sales tax would have been payable only on the list price after these two deductions. But on the contrary, the invoice shows that sales-tax is calculated only after deduction of 10 per cent and not after a further deduction of the railway freight of rs. 274-40. Mr. Srinivasamurthy says that this is a mistake. We do not think it is, because this invoice fully complies with the terms of clause 16 of the contract under which, as we have said, that though the railway freight on the consignment sold free on rail destination, the railway freight shall revertheless be payable by the stockist at the destination and the amount of freight shown on the railway receipt has to be deducted from the invoice of the company. This is an instance of a contract, the terms of which envisage the sale of goods free on rail destination i. e. the price is inclusive of the freight, though it is paid by the purchaser on behalf of the seller. This instance is similar to what was considered by then Lordshirs of the Supreme Court in Tungabhadra Industries Ltd. v. Commercial Tex Officer, 1960 11 S. T. C. 827 : 1961 2 S. C. R. 14 : (1961) 1 M. L. J. (S. C.)45 : (1961) 1 S. C. J, 272: (1961) 1 Anwr (S. C.)45,

( 9 ) IN that case rule 5 (1) (g) of the Rules made under the Madras Ceneral Sales Tax act, which corresponds to rule 6 (1) (g) of the Andhra Pradesh Rules, was Considered, under which freight charges were not to be included in the total turnsover when they are specified and charged for by the dealer separately without including them in the price of the goods sold. It appears that in the specimen bill which thelearned counsel for the appellants placed before their Lordships, after setting out the quantity sold by weight, the price was specified as 15 annas 9 pies per Ib. and the total amount of the price was determined at Rs. 23,388-12-0. From this the railway freight of Rs. 1,439-12-0 was deducted and the balance was shown as the sum on which sales tax had been computed. Notwithstanding that sales tax was computed after deduction of the railway freight from the price, Rajagopala ayyangar, J. , speaking for the Court observed at page 836:"from the contents of this invoice it would be seen that the appellant has charged a price inclusive of the railway freight and would therefore te outsice the terms of rule 5 (1) (g) which requires that in order to enable a dealer to claim the deduction it should be charged for separately and not included in the price of goods sold. The conditions of the rule not having been complied with, the appellant was not entitled to the deduction in respect of freight. "

( 10 ) IN the same case in the High Court, viz. Tungabhadra Industries Ltd. v. Commercial Tax Officer, 1955 6 STC 259 chandra Reddy, J. (as he then was) and Umamaheswaram, J. , had taken similar view, which was confumed by the Supreme Court. It is upon a passage contained therein that Mr. Srinivasamurthy tries to contend that in the case before them the price included freight and therefore that case does not apply to the facts of this case. No doubt Chandra Reddy, J. , observed on pages 261-262:"in this case, undeniably, the petitioners have charged a price inclusive of the railway freight and then gave a deduction in respect of the railway Freight. The effect of this rule (rule 6 (1) (g) )is that if railway freight which is payable by the buyer separately, i. e. , independent of the sale consideration, is paid by him into the hands of the seller who has undertaken to transport goods, it will not be regarded as part of the turnover, though it is included in the bill, and would, be permissible deduction. If, on the other hand, the price stipulated for a commodity is inclusive of the freight on the understanding that the gcods would be delivered at the place of the buyer free of freight, as seems to be the case here, it will form an integral part of the turnover. "

( 11 ) WE do not find that this passage throws any special light on the interpretation of rule 6 (1) (g) of the Rules made under the Madras General Sales Tax Act corresponding to rule 6 (1) (g) of the Andhra Pradesh Rules. It is an essential condi tion for the exclusion of railway freight from the turnover that it should be separately charged and not included in the price for which the commodity is sold. There is nothing incongruous in the interpretation placed upon the definition of turnover read with rule 6 (1) (g) in holding that railway freight which is included in the price, which though pr. yable by the purchaser, is none the less agreed to be paid by the seller, has to be included in the turnover of the company. It may be mentioned here "that even tax payable by a dealer has been under the Sales Tax Act, held to be part of the turnover,and in M/s. George Oakei (P.), Ltd. v. State of Madras, 1961 12 S. T. C 476, 1962 1 SCJ. 300 : 1962 1 MLJ (S. C) 142 : (1962) 1 Anwr. (S. C.) 142: (1963) 2 S. C. R. 570. their Lordships of the Supreme Court have held it to have been validly included. S. K. Das, J. , observed at page 488. "under the definition of turnover the aggregate amount for which goods are bought or sold is taxable. This aggregate amount includes the tax as part of the price paid by the buyer. The amount goes into the common till of the dealer till he pays, the tax. It is money which he keeps using for his business till he pays it over to Government. Indeed, he may turn it over again and again till he finally hands it to Government. There is thus nothing anomalous in the law, treating it part of the amount on which Tax must be paid by him. "it is no doubt true that it is not the invoice that determines the price, but the contract-vide Arun Electrics v. Commissioner of Sales Tax, 1966 17 STC 576.

( 12 ) BUT inasmuch as we have construed clauses 4 and 16 and having regard to the admitted course of conduct between the parties, the contract was to charge a price inclusive of railway freight, the railway freight has to be included in the turnover. In this view, we agree with the Sales Tax authorities and the dissenting opinion of the Accounts Member of the tribunal in holding that the railway freight must be included in the turnover of the assessee.

( 13 ) IN so far as the writ petitions are concerned, the main reason for their being filed was that notwithstanding the decision of the majority of the Tribunal which was binding upon the Sales Tax authorities, the Deputy Commissioner of Sales Tax seems to have taken a perverse view in ignoring this decision and applying only the minority opinion of the Accounts Member. Accordingly appeals were filed before the Tribunal, but it was represented that since a tax revision case is pending in the high Court, the hearing and disposal of the appeal should be stayed pending the disposal of the tax revision case. While in the result we are in agreement with the minority opinion, we consider it necessary to point out that it is not open to the sales Tax authorities to ignore a decision of the Tribunal even if it be only by a majority, and proceed as if the minority opinion is binding upon them. This practice cannot but be strongly deprecated.

( 14 ) THE result is that the tax revision case is allowed with costs. The writ petitions are dismissed without costs, with a direction, however, that the validity of the Deputy commissioner s order rejecting the C-forms given by dealers in other States and in respect of which, amounts have already been deposited, may be considered by the tribunal before disposing of the appeals. Advocate s fee Rs. 100. T. R. C. allowed; W. Ps. dismissed; directions given.