2019 (8) TMI 1828

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....n which the orders have been assailed is relating to trade discounts and credit notes issued by the petitioner to its dealer. Mr. T.K. Satapathy, learned counsel for the petitioner contends that trade discounts and credit notes were allowable and there is no infirmity in filing of revised returns by the petitioner. Accordingly, he submits that the orders of suo motu revision and the appellate orders vide Annexures-1 and 4 deserve to be quashed. Further, Shri Satapathy contends that the issue involved in these writ petitions is covered by series of decision of various Courts including Hon'ble Supreme Court which has been referred to in paragraph-7 of his rejoinder affidavit filed to the writ petitions. For ready reference, paragraph-7 of the rejoinder affidavit is reproduced hereunder: "7. The petitioner is trying to justify their stand by referring the settled principle of law on the issue of the Trade Discount of the Hon'ble Supreme Court and Hon'ble High Courts keeping in mind the definition of sale price and modus operandi and usual trade practice. (i) The Hon'ble Supreme Court in the case of Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes) Ernakulum v.....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... to the retailer at the aforesaid sale price. Therefore, the trade discount cannot be included in the taxable turnover of the wholesale dealer for the purpose of assessment under the Central Sales Tax Act. (iii) The Hon'ble Orissa High Court in case of Hyderabad Asbestos Cement Products Ltd v. State of Orissa reported in 108 STC 431 held that "the reduction in the price will come within the term "mutually agreed" upon between the parties shall be deducted from the invoice of the company Even though such amount was not deducted at the first instance but the net price received was the catalogue price less the deductions permitted and the assessee will be liable only to pay the tax on the net amount received. Such deductions are also covered within the definition of clause (h) of Section 2 of the Orissa Sales Act 1947. (iv) The Hon'ble High court of Orissa in the case of Orient Paper Mills Ltd v. State of Orissa reported in 35 STC 84 held in paragraph-8 of the judgment that the trade discount is to be deducted from the catalogue price in accordance with the terms of the agreement and it is only thereafter that the consideration is to be fixed which is the sale price within the m....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....Pradesh, 24 STC 487 does not exist, it must be assumed that the discount is a consequence of an implied agreement. The same principle ultimately applies in both the cases and, therefore, there is no scope to take a different view. The Sales Tax Department accepted the decision of the Hon'ble Supreme Court in case of Deputy Commissioners v. Advani Oerlikon (P) Ltd. and the learned Standing Counsel submitted before the Hon'bl Court that the Orient Paper Mill case the Hon'ble Supreme Court dismissed the Special Leave Petition filed by the State, therefore, the state has accepted the ratio decided in the Orient Paper Mill case reported in 35 STC, Page-84. Hence, the department cannot take a different stand by disallowing the trade discounts on the flimsy ground. (viii) The High Court of Madras in the case of Bharat Steel Tubes Ltd v. State of Tamil Nadu reported in 1194 STC 292 held that a claim to deduction in terms of explanation (2) (iii) to clause (r) of Section 2 of the Tamil Nadu General Sales Tax Act,1959 of an incentive discount given by the appellant-dealer to its purchasers in the form of credit notes to be utilized against future purchases, the Board of Revenue did not di....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ales with reference to which it is allowed. (xii) The Hon'ble Allahabad High Court in case of Eicher Goods Earth Ltd v Commissioner of Sales Tax (UP) reported in 99 STC Page 130 held that discount can be given by way of deduction in the price as expressed in terms of percentage or it may be given per unit or per ton. It may be given immediately at the time of sale or may be given thereafter if the incentive relates to the total sales made per months, per quarter or per year. Therefore, the petitioner was entitled to get deduction in respect of incentive paid by it to its dealers. (xiii) The Hon'ble Rajasthan High Court in case of C.T.O. v. Radiant Industries India reported in (1994) 95 STC Page-463 held that "if at the time of entering into the contract for sale of any goods it is stipulated that the price which has been charged or mentioned in the catalogue shall stand reduced it a particular purchase is made within a particular month or even a year, then it would be abatement of the said price and in accordance with the contract the price shall stand reduced as contemplated in the contract." We have heard the learned counsel for the petitioner and the contentions raised. ....