G.P. Singh, C.J.
1. This is a reference made by the Sales Tax Appellate Tribunal referring for our answer the following question of law :
Whether, on the facts and in the circumstances of the case, the railway freight deducted by the assessee in the bill and actually paid by the purchaser at the destination is part of the sale price and as such exigible to sales tax under the Central Sales Tax Act, 1956 and the M.P. General Sales Tax Act, 1958 ?
2. The assessee is a paper mill situated at Amlai, district Shahdol. The assessee is engaged in the business of manufacture and sale of different varieties of paper. The relevant period for this case is 1st April, 1966, to 31st March, 1967. The assessee is a registered dealer both under the Central Sales Tax Act, 1956 and the M.P. General Sales Tax Act, 1958. In the assessment proceedings under the Central Act, the assessee claimed that a sum of Rs. 33,96,452 which was paid as freight by the purchasers, should not be included in the sale price and consequently in the turnover. Similarly, in the assessment proceedings under the State Act, the assessee claimed that the amount of Rs. 46,625 paid as freight by the purchasers should not be included in the sale price. The sales tax authorities did not accept this contention of the assessee. The Tribunal also did not accept the assessee's contention, relying upon the case of Birla Jute . v. Commissioner of Sales Tax, M.P.  29 STC 639.
3. The price charged by the assessee from the purchasers is f.o.r. destination. The manner in which the assessee prepares the bills is to record in the printed bill form first the number of gunny packages, then the number of reams or reels, as the case may be, then the description of the quality of the paper sold, its size and weight per ream, packet or substance, its weight in kilograms, the rate per kilogram f.o.r. destination and lastly the amount payable. From the amount recorded as payable, the assessee deducts discount at the agreed rate and adds to the amount remaining after deduction of the discount the Central excise duty and the sales tax payable and from the total of these items deducts the railway freight payable. The railway receipts were obtained in all cases 'freight to pay' and the freight in all cases was paid by the purchasers at the destination. The terms of contract used to be entered in a sale note, a sample of which has been annexed as part of the statement of case. Conditions (6) and (7) of the sale note contained on the reverse of the note are material which read as follows :
(6) All goods ordered shall be despatched by goods train. All additional costs for despatch of goods by any other means shall be borne by the buyer. All risks including damages, loss, pilferage, theft, fire accident, etc., shall pass on to the buyer with the delivery of goods to carrier or his agent and the company shall in no way be responsible for any or all loss or damage notwithstanding that the goods were not despatched on carrier's risk.
(7) Demurrage incurred on the consignment due to non-payment, late payment or late delivery of the documents are to be borne by the buyer. In case the documents are not retired, the company shall hold the buyer responsible for all other consequences arising thereof.
4. The definition of 'sale price' in both the Acts is nearly the same. We may, therefore, only quote the definition as contained in the Central Act, which is as follows :
sale price' means the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed as cash discount according to the practice normally prevailing in the trade, but inclusive of any sum charged for any-thing done by the dealer in respect of the goods at the time of or before the delivery thereof other than the cost of freight or delivery or the cost of installation in cases where such cost is separately charged.
5. The law applicable on the point has recently been clarified by the Supreme Court in Hindustan Sugar Mills v. State of Rajasthan AIR 1978 SC 1496. In a case of a contract of the description f.o.r. destination railway station, the freight is part of the consideration payable to the seller and forms part of the price. In this class of contracts, the delivery is complete at the destination railway station and the risk till then continues to remain with the selling dealer. The freight is also paid by the selling dealer as he has to arrange for the delivery at the destination railway station. The other class of cases is where the price is only f.o.r. destination railway station but the contract of sale is really not f.o.r. destination railway station. In this class of contracts although the price stipulated is f.o.r. destination railway station, the delivery is complete when the goods are put on rail and the risk also passes to the purchaser thereafter, making the railway the agent of the purchaser. The freight in this class of cases is payable by the purchaser though the price agreed upon is f.o.r. destination railway station. The price of the goods receivable in such cases is thus the f.o.r. destination price less the amount of freight payable by the purchaser. Both these types of cases have been discussed in paragraphs 9 and 10 of the judgment in Hindustan Sugar Mills v. State of Rajasthan AIR 1978 SC 1496. The question before us, therefore, is whether the case before us falls in the first or the second category. Having considered the terms of the contract contained in the sale note, we are of the opinion that although the price charged was f.o.r. destination railway station, the contract was not f.o.r. destination railway station. A reading of Clauses (6) and (7) of the sale note which are reproduced above go to show that all risks including damages, loss, pilferage, theft, fire accident, etc passed on to the buyer with the delivery of goods to the carrier and the assessee was thereafter in no way responsible for any loss or damage. Similarly, demurrage incurred on the consignment due to non-payment, late payment or late delivery of the documents was to be borne by the buyer. The aforesaid terms make it clear that the delivery of the goods was complete at the loading station when the goods were delivered to the carrier. We have earlier stated that the freight was invariably deducted from the price in the bills and was paid by the buyer as the railway receipts were obtained 'freight to pay'. Thus, on a correct appraisal of the contract, freight included in the f.o.r. destination price was payable by the buyer as the goods were carried by the carrier from the loading station to the destination station as the agent of the buyer. In these circumstances, as held by the Supreme Court in Hindustan Sugar Mills v. State of Rajasthan AIR 1978 SC 1496 and in the case of Hyderabad Asbestos Cement Products Ltd. v. State of A.P.  24 STC 487 (SC), the freight paid by the purchasers cannot be said to form part of the sale price. The conclusion reached by us is further supported by the decision of the Orissa High Court in Orient Paper Mills Ltd. v. State of Orissa  35 STC 84. It is true that the sales tax in the bills was charged on the price which included the freight, but that was also the case in Hyderabad Asbestos Cement Product Ltd.'s case  24 STC 487 (SC) and this circumstance by itself cannot lead to the inference that freight formed part of the sale price.
6. The learned counsel for the department relied upon the case of Birla Jute . v. Commissioner of Sales Tax, M.P.  29 STC 639. This was a case relating to sale of cement governed by the Cement Control Order. The decision in this case has to be understood in the light of the decision of the Supreme Court in Hindustan Sugar Mills v. State of Rajasthan AIR 1978 SC 1496 which was also a case relating to sale of cement under the Control Order. The Supreme Court in that case held that in view of the special provisions contained in the Control Order, the freight formed part of the sale price. The case before us is not governed by any Control Order and hence the case of Birla Jute . v. Commissioner of Sales Tax, M.P.  29 STC 639 is distinguishable.
7. For the reasons given above, our answer to the question referred is that freight deducted by the assessee in the bill and actually paid by the purchaser at the destination does not form part of the sale price. There shall be no order as to costs.