Trade discount from manufacturer excluded from dealer's taxable turnover, and writ jurisdiction upheld despite alternate remedy.
A trade discount or incentive received by a motor car dealer from the manufacturer was held not to form part of the dealer's taxable turnover under the Tamil Nadu Value Added Tax Act, 2006, because it arose from an independent manufacturer-dealer transaction and did not enhance the consideration for the dealer's retail sales to customers. The Madras HC also held that the writ petition was maintainable despite an alternate appellate remedy, since no disputed questions of fact required relegation to the statutory forum. The assessment order was therefore quashed and relief granted.
Issues: Whether the trade discount received by a motor car dealer from the manufacturer could be treated as part of the dealer's taxable turnover under the Tamil Nadu Value Added Tax Act, 2006, and whether the writ petition was maintainable despite the alternate appellate remedy.
Analysis: The discount was held to be an incentive flowing from the transaction between the manufacturer and the dealer, distinct from the retail sale transactions between the dealer and its customers. On that reasoning, the discount did not enhance the value of the cars sold by the dealer in the retail market and could not be brought into the dealer's taxable turnover. The existence of an alternate remedy did not preclude writ jurisdiction in the absence of disputed questions of fact.
Conclusion: The trade discount was not includible in the petitioner's taxable turnover, and the writ petition was maintainable and entitled to relief.
Final Conclusion: The assessment order was quashed as the incentive received from the manufacturer could not be taxed in the hands of the dealer as part of its turnover.
Ratio Decidendi: A trade discount or incentive arising from an independent manufacturer-dealer transaction cannot be added to the dealer's taxable turnover for retail sales where it does not form part of the consideration for the dealer's sale to its customers.
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