Post-invoice credit notes may support turnover reduction where discount is proved and statutory requirements are met.

A separate credit note issued after the sale invoice can support deduction for discount if the adjustment is made within the permissible period and the assessee proves that the discount was actually passed on to customers and meets the statutory requirements. The Karnataka HC read Southern Motors as not barring post-invoice credit notes, distinguished Kitchen Appliances as not deciding this specific question, and applied Reliance Industries to hold that subsequent credit notes may reduce turnover and sales tax liability. The revisional order was set aside and the matter was remanded to the assessing officer for fresh consideration with an opportunity to prove the discount.

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Issues: Whether the assessee is entitled to claim deduction for discount shown by a separate credit note issued after the sale invoice, even though the discount was not reflected in the tax invoice or sale bill.

Analysis: The Court held that the earlier decision in Southern Motors did not prohibit issuance of credit notes after the sale bill, provided the adjustment was within the permissible period. It further held that the decision in Kitchen Appliances did not decide the specific question whether a separate credit note issued after the sale bill could support deduction. The Court applied the ratio of Reliance Industries and accepted that subsequent credit notes can reduce the turnover and sales tax liability, subject to proof that the discount was actually passed on to customers and compliance with the statutory requirements.

Conclusion: The question was answered in favour of the assessee. The revisional order was set aside and the matter was remanded to the assessing officer for fresh consideration with an opportunity to prove the discount.

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