Trade discount through post-sale credit notes was not deductible from taxable turnover when absent from the sale invoice.

Trade discount claimed through post-sale credit notes was not deductible from taxable turnover under the KVAT regime where the discount was not reflected in the sale invoice. The Court applied the principle that a deduction is permissible only when the discount forms part of the invoice and is established as a deductible component under the relevant rules. A credit note issued after completion of the sale does not, by itself, take the amount outside taxable turnover, even if issued before return filing. The disallowance was therefore upheld in favour of the Revenue.

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Issues: Whether trade discount issued by credit notes after the sale, but not reflected in the tax invoice, could be deducted from taxable turnover under the KVAT regime.

Analysis: The deduction of discount from turnover is permissible only when the discount forms part of the sale invoice and is established as a deductible component under the relevant rules. A credit note issued after completion of the sale, without the discount being shown in the invoice, does not take the amount outside the taxable turnover. The prior decision relied on by the Court applied the same principle and held that post-sale credit notes, even if issued before filing of returns, do not by themselves justify exclusion of the discount from turnover.

Conclusion: The trade discount claimed on the basis of credit notes was not deductible, and the disallowance was upheld in favour of the Revenue.

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