TMI Blog2003 (3) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... lared a gross-turnover of Rs. 38,48,09,511 and a net turnover of Rs. 31,76,66,874. In the assessment proceedings, the assessee claimed exemption of the turnover to the extent of Rs. 1,87,89,413, being the amount represented the discount allowed to various dealers by issuing credit notes. According to the assessee, the said amount of discount allowed to the customers was not realised by the dealer and therefore, the said amount did not form part of the turnover, as defined under clause (s) of section 2 of the Act, read with rule 6(1)(a) of the Andhra Pradesh General Sales Tax Rules, 1957. However, the assessing officer found that the said claim is not allowable as the said amount is not allowed as a discount in the bills and hence computed as part of the turnover. However, on appeal, the appellate Deputy Commissioner, accepted the claim of assessee, following the decision of the apex Court in the case of Deputy Commissioner of Sales Tax (Law) v. Motor Industries Co. [1983] 53 STC 48 and also a decision of this Court in the case of State of Andhra Pradesh v. T.V. Sundaram Iyengar Sons Ltd. [1987] 65 STC 41. While allowing the claim of the assessee, the Appellate Deputy Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was no such practice of paying quantity rebate by the dealer to its customers. In fact, the learned counsel for the appellant placed a proceedings of the Regional Manager held in December 1986, where it was decided and even recommended to the Managing Director to give rebate, in view of the low existing prices of other competitive products in the market, and in order to compete with such products, according to the learned counsel the said decision taken at the Regional Managers conference. Accordingly the claims or demands made by the customers (distributors), was accepted by the dealer and therefore, the quantity rebate allowed must be in terms of the agreement between the parties, i.e., between the dealer and its customers. The learned counsel also contended that the credit notes register placed before the assessing officer during the assessment proceedings was verified and found that the credit notes issued in favour of the customers was in order. When such evidence was available on record, it is not for the Commissioner to revise the order of the Appellate Deputy Commissioner, reversing the relief granted by him. The learned counsel also referred to the provisions of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e quantity discount, on the ground that the said discount was not allowed at the time when the bills are made out. But, when the matter was brought before the Appellate Deputy Commissioner, the Appellate Deputy Commissioner allowed the claim of the assessee, accepting the claim that there was a practice in the appellant-company, allowing such quantity rebate at the end of the year, based on the quantity of the stock lifted by the respective customers/distributors and accordingly issued credit notes to that effect, thereby reducing the liabilities of the respective customers. To the extent of allowing the credit notes towards the quantity rebate is not in dispute. But the Commissioner of Commercial Taxes initiated revisional proceedings on the premise that there was no scheme, which was being followed regularly by the dealer or any agreement between the dealer and its customers. Therefore, the Commissioner of Commercial Taxes held that the decisions of the apex Court as well as the decision of this Court referred to before him are not of any assistance to the dealer and hence revised the order of assessment. 7.. At this stage, it would be appropriate to refer to the relevant provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in order to arrive at the turnover of a dealer, the total receipts must be taken into account after allowing any cash or other discount on price allowed in respect of any sale and all amounts allowed as discount should be deducted from the turnover. In the present case, according to the appellant, a sum of Rs. 1,87,89,430 was allowed as a deduction towards the quantity rebate and accordingly credit notes were issued. The fact of issuance of such credit notes is not in dispute. Even the assessing officer was satisfied after perusal of the credit notes register, but, however, the assessing officer negatived the claim on the ground that the said discounts were not allowed at the time when the bills are made out. That is the only ground on which the benefit was denied. But while revising the order of the Appellate Deputy Commissioner, the Commissioner of Commercial Taxes felt that the Rules contemplated the existence of any scheme that is being followed by the dealer or any contract entered into by the dealer with the customers and such evidence was not brought on record. In fact, a perusal of the order of the Appellate Deputy Commissioner shows that such a claim was made that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apex Court, on further appeal, the apex Court negatived the contention of the Department and the relevant observations are as under: "What is however urged by the department is that the said additional discount allowed by the assessee could not strictly be termed as discount as it was in lieu of services rendered by its main distributors by way of popularisation of the sales and consumption of the products sold by the assessee. We find it difficult to accept the submission made on behalf of the department. Rule 9(a) says 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. Ordinarily any concession shown in the price of goods for any commercial reason would be a trade discount which can legitimately be claimed as a deduction under clause (a) of rule 9 of the Rule. Such a concession is usually allowed by a manufacturer or a wholesale dealer in favour of another dealer with the object of improving prospects of his own business. It is common experience that when goods are marketed though reputed compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Motor Industries Ltd. [1983] 53 STC 48, as well as earlier Division Bench decision of this Court in T.V. Sundaram Iyengar and Sons Ltd. [1984] 65 STC 41. 12.. In the case of Cynamid India Ltd. [2002] 128 STC 289; (2002) 34 APSTJ 125, another division Bench of this Court considered the issue as to the liability of "target discount" allowed by the dealer to its distributors and held in favour of the assessee/dealer. 13.. In the case of A.P. Paper Mills Ltd. [1989] 9 APSTJ 235 Division Bench of this Court had an occasion to consider the liability of turnover representing the credit notes issued by the assessee towards "quantity discount" and accepted the claim of the assessee/ dealer. 14.. In the case of Ultramarine and Pigments Ltd. [1980] 46 STC 220, the Madras High Court had an occasion to consider the liability of the "quantity discount" under a scheme subject to the periodical variations on the basis of customer's off-take in a specified period, with an idea to see that a customer got an incentive to place orders and increase the volume of purchases. It was held that such allowance of discount formed an integral part of the agreement or a contract between the parties and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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