Trade discount under sales tax rules is deductible only when shown in the invoice; scheme discounts need factual verification.

Only trade discount shown in the invoice and reflected in the accounts as a net price is deductible from taxable turnover under Rule 9(a) of the Kerala General Sales Tax Rules, 1963; post-sale scheme or incentive discount paid through credit notes is not automatically deductible. The assessee was nevertheless entitled to establish before the assessing officer that any claimed discount satisfied the rule. The orders disallowing the deduction were set aside and the matter was remanded for factual verification and allowance only to the extent permissible in law.

---

---

Issues: Whether the assessee was entitled to deduction of discount while determining taxable turnover under Rule 9(a) of the Kerala General Sales Tax Rules, 1963, and whether the matter required factual verification regarding the nature of the discount claimed.

Analysis: Rule 9(a) permits deduction only of discount allowed in accordance with regular trade practice and where the accounts show that the purchaser has paid only the amount originally charged less such discount. The allowable deduction is thus a trade discount reflected in the invoice itself, so that tax is levied only on the net amount. On the materials before the authorities, the claim appeared to relate to scheme discount or incentive discount, commonly granted through credit notes at the end of a season or year, which would fall outside the scope of the rule. At the same time, the factual basis of the claim was not properly examined with reference to the monthly and annual returns, bills, and credit notes.

Conclusion: The claim for deduction could not be accepted as a matter of law to the extent it represented scheme discount, but the assessee was entitled to establish before the assessing officer that any discount claimed was the kind allowable under Rule 9(a).

Final Conclusion: The orders disallowing the discount were set aside and the matter was remanded for verification and for allowance of the claim only to the extent permissible in law.

Ratio Decidendi: Under Rule 9(a) of the Kerala General Sales Tax Rules, 1963, only trade discount shown in the invoice and reflected in the accounts as a net price received from the purchaser is deductible from taxable turnover; post-sale incentive or scheme discount through credit notes is not automatically deductible and requires factual verification.

---