1976 (3) TMI 223

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....ate the circumstances under which this rebate has been given, a sample of the correspondence between the assessee and its purchasers has been placed before us. For instance, in the letter dated 13th November, 1967, addressed to M/s. National Tobacco Co. of India Ltd., the assessee acknowledged an enquiry from the said company and quoted for the polythene liners 48" X 30" x 53" x 500G. These liners are used by the tobacco manufacturers for the purpose of packing tobacco so as to keep the tobacco free from the effects of humidity, etc. The price quoted is Rs. 7.25 per liner ex factory with sales tax at 3 per cent against C form or otherwise at 10 per cent. It is unnecessary to refer to the other terms except to the "remarks" in the said lette....

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....at it was allowable as deduction under section 2(h). The meaning of the word "discount" has been the subject-matter of consideration in cases decided by this and other High Courts. In Baidya Nath Ayruved Bhawan (P.) Ltd. v. Commissioner of Sales Tax [1970] 26 S.T.C. 171., the assessee, a manufacturer of medicines, had announced in its price-list payment to its customers and agents purchasing its medicines of an "annuity" at a certain rate on the sale price. No "annuity" was allowed for purchases below a certain sum in a year, but subject to a maximum, it gradually increased according to the total purchases in a year. The assessee claimed that the "annuity" paid was a cash discount and was, therefore, an allowable deduction in computing the....

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....excluded from the turnover is that it should be a payment in cash or kind, and that it must be allowed on the price of any sale. The term 'any sale' would not, in our opinion, mean an individual sale. It will include any aggregate of sales. If a particular purchaser buys half a dozen things, the dealer would normally make out a single cash memo and he would give the discount on the total value of the sales. If the argument for the department is taken to its logical conclusion, such a consolidated cash discount would not be deductible, simply because the dealer has given the discount not on the sale of each article separately, but had clubbed together the various sales and paid the discount on all of them." It was pointed out at page 175 w....

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....ion of the actual sale price agreed or paid for the goods purchased earlier by the distributors. It was also pointed out that the issue of credit notes with the condition that they could be utilised for the purchase of the goods in future could not be treated as cash payments. In this decision, the decision of the Allahabad High Court[1970] 26 S.T.C. 171. already noticed has been followed. In Orient Paper Mills Ltd. v. State of Orissa[1975] 35 S.T.C. 84., decided by the Orissa High Court, there is a discussion as to what is trade discount and what is cash discount. It was pointed out in that case that cash discount referred to in section 2(h) of the Central Sales Tax Act, 1956, was different from the trade discount allowed by the assessee ....