TMI Blog1979 (10) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 of 1976 - - - Dated:- 12-10-1979 - Pathak, R. S. And Untwalia, N. L,JJ. Dr. V. A. Seyid Muhammed and K. R. Nambiar for the Appellant. Dr. Y. S. Chitale and Mrs. Sunanda Bhandare for the Respondent. JUDGMENT This appeal by special leave raises the question whether for the purpose of computing the turnover assessed to sales tax under the Central Sales Tax Act. 1956 the sale price of goods is determined by including the amount paid by way of trade discount. The assessee is a private limited company carrying on business as sole selling agent for a certain brand of welding electrodes. For the goods supplied to retailers, it charged them the catalogue price less trade discount. The catalogue price is the price which the reta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first contract relates to the sale of goods at the catalogue price and the second contract stipulates that notwithstanding the liability of the retailer under the first contract to pay the entire sale price, he may actually pay the sale price less trade discount. On that submission, it is sought to be urged that since the sale is effected under the first contract, the entire amount treated as consideration for the sale under that contract has to be included in the taxable turnover. We have considered the matter carefully and in our judgment the appeal must fail. At the outset, it is appropriate that we set forth the two relevant definitions contained in the Central Sales Tax Act. Section 2(j) defines "turnover" to mean "the aggregate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. v. State of Orissa. Under the Central Sales Tax Act, the sale price which enters into the computation of the turnover is the consideration for which the goods are sold by the assessee. In a case where trade discount is allowed on the catalogue price, the sale price is the amount determined after deducting the trade discount. The trade discount does not enter into the composition of the sale price, but exists apart from and outside it and prior to it. It is immaterial that the definition of "sale price" in section 2(h) of the Act does not expressly provide for the deduction of trade discount from the sale price. Indeed, having regard to the circumstance that the sale price is arrived at after deducting the trade discount, no question a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onus of which deduction was sought by the assessee from the turnover was paid under a bonus discount scheme, not to all customers but only to distributors whose net purchases from the assessee exceeded the target figure agreed to between the parties. The amount of rebate allowed was credited to the customer's account and treated as a reserve from which the distributors could make future purchases. The rebate of bonus discount was not allowed as a deduction by the Madras High Court and, in our opinion, rightly so. It was in the nature of an incentive bonus paid to distributors whose net purchases exceeded the target figure. It did not, and could not, affect the sale value of the goods sold by the assessee. The sale price remained undisturbed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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