Trade discount through later credit notes must be excluded from taxable turnover when genuinely supported by accounts.

Genuine trade discounts reflected through credit notes issued after the tax invoice are deductible in computing taxable turnover under the Karnataka Value Added Tax regime. The Court read the provisions on total and taxable turnover harmoniously and held that a discount allowed by the dealer, when supported by accounts and related material, reduces the sale consideration even if recorded later through a credit note. It applied the principle that trade discount does not form part of sale price and rejected the revenue's attempt to treat post-invoice discounts as mere incentives. The assessing authority therefore cannot tax the unadjusted invoice value where the discount is substantiated.

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Issues: Whether discounts extended through credit notes issued after the tax invoice are deductible in computing taxable turnover under the Karnataka Value Added Tax regime.

Analysis: The governing provisions distinguish total turnover from taxable turnover and permit deductions for amounts allowed as discount. The Court relied on the principle that trade discount does not form part of sale price and that issuance of credit notes can reduce the amount realised on sales. It further treated the relevant rules harmoniously, holding that the rule governing credit and debit notes supports recognition of later adjustments where the dealer's accounts and supporting material show the actual discount allowed. The earlier Division Bench view and the Supreme Court principle on exclusion of trade discount from turnover were applied to reject the revenue's treatment of such post-invoice discounts as mere incentives.

Conclusion: Discounts extended through credit notes after the invoice are to be taken into account for computing taxable turnover, and the assessing authority cannot levy tax on the unadjusted invoice value.

Ratio Decidendi: A genuine trade discount, though reflected through a subsequent credit note, reduces the consideration for the sale and must be excluded from taxable turnover when computing sales tax liability.

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