9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (8) TMI 1828 - HC - VAT and Sales TaxValidity of suo motu orders of revision - revision of trade discount given by the petitioner - validity of credit notes issued by the petitioner to its dealer - fresh demand of tax - HELD THAT - Reliance placed in the Hon ble Supreme Court in the case of Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes) Ernakulum v. Motors Industries Company, 1983 (2) TMI 251 - SUPREME COURT held that all amounts allowed as discount either in accordance with regular practice or in accordance with agreement would be deductible from the total turnover provided they are duly supported by the entries in the accounts of the assessee. There are sufficient force in the contentions raised by the learned counsel for the petitioner and it is opined that the issue involved in these two writ petitions are squarely covered by the decisions relied upon by the learned counsel. In that view of the matter, since the matter is covered, it is deemed appropriate to allow the writ petitions by quashing the impugned orders. The amounts paid by the petitioner and the amounts paid by virtue of the interim orders of this Court dated 11.07.2006 in both the writ petitions are directed to be refunded - petition disposed off.
Issues Involved:
1. Challenge to the suo motu orders of revision for the years 1999-2000 and 2000-2001. 2. Challenge to the appellate orders upholding the revision orders. 3. Legitimacy of trade discounts and credit notes issued by the petitioner to its dealer. Detailed Analysis: Challenge to the Suo Motu Orders of Revision for the Years 1999-2000 and 2000-2001: The petitioner contested the suo motu orders of revision dated 20.9.2005, which were passed by the Assistant Commissioner of Sales Tax, Puri Range, Bhubaneswar under Rule 80 of the Orissa Sales Tax Rules, 1947. These orders revised the assessment for the years 1999-2000 and 2000-2001, disallowing the trade discounts considered in the revised returns and raising fresh tax demands. Challenge to the Appellate Orders Upholding the Revision Orders: The petitioner also challenged the appellate orders dated 13.01.2006, which upheld the aforementioned revision orders. The petitioner argued that the appellate orders were erroneous as they did not consider the legitimacy of the trade discounts and credit notes. Legitimacy of Trade Discounts and Credit Notes: The primary contention of the petitioner was that trade discounts and credit notes were allowable deductions and there was no irregularity in filing revised returns. The petitioner cited several judicial precedents to support this claim: 1. Supreme Court Rulings: - Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes) Ernakulum v. Motors Industries Company: Held that trade discounts, whether regular or agreed upon, are deductible from the total turnover if supported by entries in the accounts. - Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulum v. Advani Oerlikon(P) Ltd.: Clarified that trade discounts do not form part of the sale price and are deductible from the turnover. 2. High Court Decisions: - Orissa High Court in Hyderabad Asbestos Cement Products Ltd v. State of Orissa: Confirmed that deductions agreed upon between parties are allowable and the net price after such deductions is taxable. - Orissa High Court in Orient Paper Mills Ltd v. State of Orissa: Reiterated that trade discounts are not part of the sale price and should be deducted from the catalogue price. - Andhra Pradesh High Court in The State of Andhra Pradesh v. T.V. Sundaram Iyengar & Sons Ltd: Allowed deductions for discounts given at the end of the year as per normal trade practice. - Madras High Court in Bharat Steel Tubes Ltd v. State of Tamil Nadu: Upheld the deduction of incentive discounts given as credit notes. - Allahabad High Court in Dey’s Medical Stores Limited v. Commissioner, Trade Tax, U.P.: Affirmed the entitlement to quantity discounts as per trade practices. 3. Additional Precedents: - Southern Motors v. State of Karnataka: Supreme Court ruled that post-sale discounts through credit notes are deductible. - Maya Appliances (P) Ltd v. Addl. Commissioner of Commercial Taxes: Confirmed that discounts must be in accord with regular trade practice or specific agreements. - Eicher Goods Earth Ltd v Commissioner of Sales Tax (UP): Allowed deductions for incentives paid to dealers. - C.T.O. v. Radiant Industries India: Held that price reductions as per contract stipulations are valid deductions. Court's Conclusion: The court found merit in the petitioner’s arguments and held that the issues in the writ petitions were covered by the cited judicial decisions. Consequently, the court quashed the impugned orders (Annexures-1 and 4) and directed the refund of amounts paid by the petitioner, including those paid under interim orders dated 11.07.2006. The refunds were to be processed within four weeks. Final Orders: Both writ petitions were allowed, and the impugned orders were quashed. The court directed the refund of amounts paid by the petitioner within four weeks. The stay orders on the balance tax demands were also noted. Urgent certified copies of the order were granted on proper application.
|
