TaxTMI 
TaxTMI 
1994 (11) TMI 418
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....that the assessee-dealer carries on business in asbestos and cement products, like sheets. At the time of examination of the accounts, the assessing officer found that the dealer had deducted from the sale price a sum of Rs. 3,84,929.36 during the year 1979-80 towards transport rebate. The assessing officer having raised a question as to whether such a reduction of the sale price was permissible under the provisions of law, the Deputy Chief Accounts Officer appearing on behalf of the company relied on a decision of the Supreme Court in the case of the dealer himself reported in [1969] 24 STC 487 (Hyderabad Asbestos Cement Products Ltd. v. State of Andhra Pradesh). A copy of the stockistship agreement was also produced before the assessing officer. The learned assessing officer, however, found that the facts of the above case law were different from the facts relating to the year under appeal. He also noticed some additions and alterations in the clause of the agreement relating to that year, that is, 1959-60 and the present year. In the case law relied upon by the dealer, the dealer-company sent goods to outside customers by rail under railway receipts with freight to pay. It ma....
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....tockist placed orders for supply of goods and made payment in advance. They also arranged transport at their own expenses and took delivery of the goods from the godown of the dealer-company. The dealercompany did not make any arrangement to despatch the goods to outside customers. Such being the position, the assessing officer found that the question of payment of freight charges or claiming deduction thereof did not at all arise. It was further found by the learned assessing officer that the transport rebate allowed was not the cost of freight actually incurred by the customers. According to the learned assessing officer, such deduction was not permissible under the provision of the Orissa Sales Tax Act and, therefore, he added the amount claimed as transport rebate to the dealer's taxable turnover for this year and completed assessment raising extra tax demand. 4.. The dealer preferred first appeal against such order of assessment and raised the same contentions that were raised before the learned assessing officer. After due consideration of the facts of the case, different clauses of the stockistship agreement and the case law relied upon the learned Assistant Commission....
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....icant-company to the stockist can be held as 'sale price' and 'turnover of sales' under section 2(h) and 2(i) of the Act respectively for levy of tax under the Orissa Sales Tax Act?" 8.. In this case, it is an admitted fact that the cost of outward freight known as transport charge is not separately charged. The transportation charges are paid by the purchaser from the dealer but the submission of the dealer is that as per the agreement between the dealer and the purchaser, a photo-copy of which has been filed by the assessee before this Court, the dealer is charging transport rebate not actually paid by the purchaser but as rebate to lessen the burden of transport charge paid by the purchaser. Such rebate was calculated from the distance and the quantum of the stock sold. The rebate allowed thus varied depending upon the distance and the quantity of goods sold. According to the learned counsel such rebate is covered by the item "any other sum actually agreed upon" of clause 19 of the agreement. According to the learned counsel for the assessee, as per clause 11 of the agreement, he was at liberty to sell the company's products at a lower rate than the listed price. Thus, he act....
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....ied on the rulings reported in (1986) 24 ELT 269 (Mad.) (Union of India v. S.S.M. Bros. Pvt. Ltd.), (1986) 23 ELT 8 (SC) (Moped India Limited v. Assistant Collector of Central Excise, Nellore), (1984) 17 ELT 329 (SC) (Union of India v. Bombay Tyres International Pvt. Ltd.), [1990] 79 STC 337 (Orissa) (State of Orissa v. Iqbal Bros.), [1980] 46 STC 220 (Mad.) (State of Tamil Nadu v. Ultramarine and Pigments Ltd.) and also the definition of "trade discount" as shown in Law Lexicon with Legal Maxims and Black's Law Dictionary with Pronunciations. 10.. "Trade discount" described in Law Lexicon with Legal Maxims is as under: "Trade discount: Wholesale traders sometimes issue price catalogues in which goods are listed at standard prices. From such prices a deduction is made called 'trade' discount and the net figure represents the real selling price for the time being which may be subject to 'cash' discount. The advantage of the system is seen where wholesale prices are subject to frequent movements. Such movements are adjusted by an advice to customers of an altered rate of 'trade discount', otherwise the laborious and expensive method of issuing a fresh catalogue would result,....
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.... 15.. In [1980] 46 STC 220 (Mad.) (State of Tamil Nadu v. Ultramarine and Pigments Ltd.), it has been held that the allowance of the discount formed an integral part of the agreement or contract between the parties affecting the price and would qualify for deduction. Accordingly, the sale price realised for sale of the articles would only be the net amount after adjustment of the discount, and the Tribunal was right in allowing the deduction. Even if a discount allowed does not fall strictly within the concept of "cash discount" as contemplated under section 2(h) of the Act, still the amount is capable of adjustment in the sales tax assessment provided it goes to vary the price payable in respect of the goods. 16.. The learned counsel appearing for the department has relied on the decisions reported in [1978] 42 STC 294 (Ker) (Kutty & Co. v. State of Kerala), [1979] 43 STC 13 (SC) (Hindustan Sugar Mills Ltd. v. State of Rajasthan), [1992] 87 STC 526 (Orissa) (Pranakrishna Satpathy v. State of Orissa), [1975] 35 STC 84 (Orissa) (Orient Paper Mills Ltd. v. State of Orissa), [1976] 37 STC 1 (Ker) [Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Adva....
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....les Tax Act, 1956, was different from the trade discount allowed by the assessee to the purchasers. As the trade discount was to be deducted from the catalogue price in accordance with the terms of the agreement and it was only thereafter that the consideration was to be fixed, the trade discount was not part of the sale price within the meaning of section 2(h). 21.. In [1976] 37 STC 1 [Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Advani Oerlikon (Private) Limited], it has been held that where a trade discount had been bona fide granted by a dealer, the actual consideration paid for the sale is only the amount paid after deducting the trade discount from the quoted sale price. Therefore, a sum allowed as trade commission by a dealer is not part of the sale price within the meaning of section 2(h) of the Central Sales Tax Act, 1956, and should not be included in the turnover of the dealer. 22.. In [1980] 45 STC 32 (SC) [Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Advani Oerlikon (P.) Ltd.], it has been held that having regard to the nature of a trade discount, there is only one sale price between the wholesal....