Taxable turnover must reflect lawful deductions; stock transfer differences need proof of suppression before being taxed as turnover.

Sales tax under the KVAT regime is chargeable only on taxable turnover after admissible deductions, including discount, and the assessing authority must verify the invoices and related records before rejecting such claims. A higher stock transfer value, by itself, cannot be taxed as turnover unless suppression of sales or other unrecorded collections is established through factual verification of documents such as invoices, transport papers, costing details, and any collections under other heads. The assessment was set aside and the matter remitted for reconsideration after record verification and opportunity to explain the valuation basis.

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Issues: (i) Whether sales tax under the KVAT regime is chargeable only on taxable turnover after allowing admissible deductions including discount; (ii) Whether the difference between stock transfer value and sales turnover can be assessed as turnover in the absence of suppression.

Issue (i): Whether sales tax under the KVAT regime is chargeable only on taxable turnover after allowing admissible deductions including discount.

Analysis: Tax is leviable only on the taxable turnover, and eligible deductions such as discount must be excluded where they are admissible under the governing provision. The assessment authorities had not specifically examined the discount claim or verified the invoices to determine the correct taxable turnover.

Conclusion: The issue is answered in favour of the assessee.

Issue (ii): Whether the difference between stock transfer value and sales turnover can be assessed as turnover in the absence of suppression.

Analysis: A higher stock transfer value by itself does not justify assessment of the differential amount as turnover. Such a difference can be brought to tax only if it is established that there was suppression of sales turnover or any other unrecorded collection. The matter therefore required factual verification of invoices, transport documents, costing details, and any collections under other heads.

Conclusion: The issue is answered in favour of the assessee.

Final Conclusion: The assessment was set aside and the matter was sent back for reconsideration after verification of records and grant of opportunity to explain the valuation basis.

Ratio Decidendi: Sales tax is payable only on the taxable turnover after lawful deductions, and a difference between stock transfer value and sale price cannot be assessed as turnover unless suppression is established.

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