Trade and cash discounts excluded from taxable turnover when not part of sale consideration under sales tax law.

Trade discount and cash discount are not includible in taxable turnover for turnover tax under the Karnataka Sales Tax Act, 1957, because turnover covers only the consideration actually received or payable for the sale. The statutory scheme treats taxable turnover as the sale price after permissible deductions, and discounts granted by the dealer do not form part of that consideration. As amounts never received by the dealer, they cannot be added back into turnover under Rule 6(1)(b) of the Karnataka Sales Tax Rules, 1957. The revisional authority was therefore not justified in enhancing the turnover by the discount amounts, and the revision of assessment was held unsustainable.

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Issues: Whether trade discount and cash discount allowed by a dealer are includible in taxable turnover for levy of turnover tax under the Karnataka Sales Tax Act, 1957.

Analysis: The statutory definitions of sale, turnover, and taxable turnover show that turnover is the aggregate amount for which goods are actually sold, and taxable turnover is what remains after permissible deductions. Trade discount and cash discount do not form part of the consideration received by the dealer; they are deductions from the catalogue price and exist outside the sale price. Read with Rule 6(1)(b) of the Karnataka Sales Tax Rules, 1957, only the amount paid or payable as consideration for the sale can be brought to tax. Amounts never received by the dealer by way of discount cannot be treated as part of total turnover. The revisional authority was therefore not justified in adding the discount amount back into turnover.

Conclusion: Trade discount and cash discount are not includible in taxable turnover; the order revising the assessment was unsustainable and the assessee succeeded.

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