TMI Blog2015 (5) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... Pistons Limited (1973 (7) TMI 95 - MADRAS HIGH COURT). That the provision contained in Section 2(m) of Delhi Sales Tax Act does not conceive of any deduction other than “cash discount” from the sale price on which the turnover is to be computed is of no consequence, inasmuch as, as explained by Supreme Court in Advani Oerlikon (1979 (10) TMI 194 - SUPREME COURT), the effect of turnover discount, which is in the nature of a trade discount in accord with the prevailing practices of the trade, enters the calculation anterior to the computation of the sale price collected or collectible from the purchasers. Tribunal having failed to comprehend the law laid down in Advani Oerlikon (supra), fell into error, because it proceeded on the wrong premise that the assessee had been in receipt of the sale price equivalent to the catalogue price from which it would subsequently allow reimbursement on the basis of turnover. Since the said assumption is factually incorrect and the turnover discount occurred “apart from and outside” the calculation of the sale price, rather “prior to it”, as in the case of Advani Oerlikon (supra), no question arises for deduction of any trade discount from the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y tax on such account has been collected from the appellant, it is for him to seek appropriate remedies there against such orders. - Decided partly in favour of assessee. - ST.APPL.1/2015, ST.APPL.2/2015 - - - Dated:- 14-5-2015 - S. Ravindra Bhat And R. K. Gauba,JJ. For the Appellant : Sh. Tarun Gulati, Sh. Sparsh Bhargava, Sh. Anupam Mishra, Ms. Rachana Yadav, Sh. Shashi Mathews and Sh. Kishore Kunal, Advocates. For the Respondent : Ms. Ruchi Sindhwani, Addl. Standing Counsel, GNCTD with Ms. Megha Bharara with Ms. Bandana Shukla, Advocates, for GNCTD. ORDER Mr. Justice R. K. Gauba 1. These two appeals filed under Section 81 of Delhi Value Added Tax Act, 2004 ( DVAT Act , for short) seek to assail similar orders passed on 30.07.2014 and 04.08.2014 by Appellate Tribunal: Value Added Tax, Delhi ( the Tribunal , for short) in the matter of assessment of the appellant company (hereinafter referred to as the assessee ) respecting the levy of sales tax for different Assessment Years (AY), starting with 1992-93 and ending with 2004-05. In addition to the Central Sales Tax Act, 1956, reference has also been made to the law contained in the Delhi Sales Tax Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... once in a quarter, through credit notes . 6. The assessee is a registered dealer under Delhi Sales Tax Act, 1975 and regularly files returns. Its claim for deduction of the turnover discount from the taxable turnover for AY 1992-93 was rejected by the assessing authority by order dated 31.03.1997 primarily on the ground that revised returns had not been filed. Similarly, claim for deduction for AY 1993-94 was rejected by the assessing authority by order dated 21.11.1997 on the ground that the tax had already been collected and deposited and no revised returns had been filed in such regard. Both the said orders, for AY 1992-93 and AY 1993-94, became subject matter of appeals before Addl. Commissioner, Sales Tax who, however, rejected the claim by orders dated 29.04.2004 and 30.04.2004 respectively on the ground that the amount of discount was not known at the time of giving invoice, also observing that the discount allowed by the assessee did not result in the sale price being reduced and that such discount was similar to bonus discount . The said first appellate authority remanded the matter for the said two years to the assessing authority for re-consideration in light of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncession shown in the price of the goods for any commercial reasons would be a trade discount, which can legitimately be claimed as a deduction from the turnover . ... that the discount was not allowed at the time of sale but at a later stage does not make any difference. ... it was wrong ... to hold that the entitlement is linked with some turnover and shall come into play only after achieving some target. This is contrary to the facts and documents placed on record in support of the contention of the appellant that irrespective of any sale target, each and every turnover of the appellant s sale to its dealer is entitled for 1% turnover discount. ... 11. The Revenue, on the other hand, resisted the claim through submissions noted by the Tribunal in para 7 of its said order as under:- 7. ...the very nature of endorsement on the invoices shows that entitlement of 1% discount is linked with some turnover and shall come into play only after achieving certain target and as such, the said entitlement is not admissible for cash discount. Referring to Section 2(m) of the DST Act, it was submitted that this section envisages deduction only in respect of cash discount and not any ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt according to the practice normally prevailing in the trade as per definition of sale price u/s 2(m) r/w turnover definition u/s 2(o) of the DST Act. It is so because deduction from the turnover on the basis of credit note issued by the appellant of 1% discount amount and claiming deduction of the same from the turnover does not come within the meaning of turnover which as per definition of turnover means the aggregate of the amount of sale price receivable or actually received by the dealer in respect of the sale of the goods after deduction of the amount of the sale price as sale price allowed only cash discount and no other discount to such like dealers under definition of sale price. ... (emphasis supplied) 13. Similar reasons were set out for rejecting similar claim of the assessee for the other AYs by order dated 04.08.2014 which is impugned in the second appeal. 14. The assessee assails the adverse view taken by the Tribunal and argued that any concession shown in the price of goods for any commercial reasons would be a trade discount, which can legitimately be claimed as a deduction from the turnover. Such a concession is usually allowed by a manufacturer or w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... although the discount in the instant case is given subsequent to sale, yet it ultimately varies the invoice value and as a result turnover also gets varied. 17. The appellant also relies upon the Madras High Court decision in State of Tamil Nadu vs Ultramarine and Pigments Ltd. (1980) 46 STC 220 (Mad.) while interpreting the definition of sale price under Central Sales Tax Act, 1956 which is in pari-materia with Section 2(m) of the Delhi Sales Tax Act, 1975 has held that even if a discount allowed does not strictly fall within the concept of cash discount still the amount is capable of adjustment in the sale tax assessment provided it goes to vary the price payable in respect of the goods. In the instant case, the turnover discount goes to vary the price payable in respect of the goods as although the sales tax is remitted by the assessee to the Sales tax authorities yet the consideration which is received by assessee from purchasing dealers is after deducting the turnover discount from the invoice value. 18. By virtue of Section 3 of Delhi Sales Tax Act, 1975, every dealer whose turnover in a particular financial year exceeds the taxable quantum is liable to pay tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Sales Tax Act, 1956, by clauses (j) and (h) of Section 2 thereof is similar to the one of the local law (Delhi Sales Tax Act) quoted above. Contentions similar to those raised here had come up for consideration, in the context of the Central Sales Tax Act, in the case of M/s Advani Oerlikon (supra). The assessee in that case was 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 reduced by a trade discount. In the returns submitted, the assessee showed taxable turnover of inter-state sales, after deducting from the catalogue price the amount paid as trade discount to the retailers. The Sales Tax authority declined to allow such deduction. The statutory appellate authority and the High Court, in revision, however, upheld the assessee s claim. On appeal to the Supreme Court by the Revenue, it was argued that Section 2 (h) of the Central Sales Tax Act permits deduction only of cash discount and makes no reference to trade discount . It was also contended that the case involved two distinct contracts with the retailers, one concerning the sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to the nature of a trade discount, there is only one sale price which is the price payable by the retailer calculated as the difference between the catalogue price and the trade discount. 26. In Madras High Court decision of India Pistons Limited v. State of Tamil Nadu (supra), followed by the Tribunal, the assessee had claimed deduction to the extent of bonus paid by it to its distributors whose net purchase from the assessee exceeded the target specified in the bonus discount scheme, whereunder the amount of rebate allowed was creditable to the customers account and treated as a reserve from which the distributor could make future purchases. The High Court had declined the claim for deduction. Upholding the said view of the High Court, but distinguishing it from the claim on account of trade discount , Supreme Court explained the difference in the case of Advani Oerlikon (supra)as under:- 8. ...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 in the contract between the parties. 27. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sum originally charged less the discount . 29. The assessee in IFB Industries (supra) was engaged in the manufacture and sale of home appliances. It had floated a trade discount scheme for its dealers in terms of which they would get certain discount on achieving a pre-set sales target. Since the discount was subject to achieving the sales target, the dealer would qualify for it in the later part of the financial year/assessment period, i.e. long after some sales had taken place. Of course, for the sales taking place after the sales target had been achieved, the dealer would get the articles on the discounted price. In this scheme of things, the assessee would issue credit notes in favour of the dealers during the period preceding the date on which sales target was achieved. The assessee claimed discount of the amount paid towards credit notes or the discount after the sales target, which was disallowed. 30. Reiterating the law laid down in the case of Advani Oerlikon (supra), the Supreme Court upheld the claim of the assessee, rejecting the contention of the Revenue against such deduction on ground of the discount not being reflected in the invoice price at the time of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the understanding indicated in the sale invoices declaring upfront the entitlement of the purchaser for such trade discount, would get effectuated by suitable adjustment in the payment of the sales price collected in their wake. The net effect apparently has been of the price being correspondingly varied, the amount received or receivable, thus, not being inclusive of the discount allowed. 34. The Tribunal having failed to comprehend the law laid down in Advani Oerlikon (supra), fell into error, because it proceeded on the wrong premise that the assessee had been in receipt of the sale price equivalent to the catalogue price from which it would subsequently allow reimbursement on the basis of turnover. Since the said assumption is factually incorrect and the turnover discount occurred apart from and outside the calculation of the sale price, rather prior to it , as in the case of Advani Oerlikon (supra), no question arises for deduction of any trade discount from the sale price. 35. In our view, thus, the turnover for the assessment years in question was correctly computed by the appellant herein after deducting the turnover discount granted to its dealers and rightly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,63,005/- for respective years was excluded by it on the ground that these sales made to M/s Tyre Junction, Badarpur, Delhi and had been taxed by Excise Taxation Commissioner, Faridabad. It is submitted that stocks related to these sales were transferred from Faridabad, but delivery of such stock was made en-route to M/s Tyre Junction at its shop situated at Badarpur border. The transfer of stock was recorded in the stock register of Delhi office but sale of the entire stock was shown as made to the said dealer and further that there was complete tally of stock transfer from Faridabad and sold to M/s Tyre Junction. The assessee claims to have filed the prescribed returns within prescribed time and also deposited the tax payable under Section 21(3) of the Delhi Sales Tax Act. 41. It is contended by the assessee that the Excise Taxation Officer, Faridabad had examined in detail the Company s books of account, dispatch documents, etc. It is submitted that M/s Tyre Junction was also examined when it admitted that the goods were taken by them before reaching the Delhi godown. It is further submitted that this raises a strong presumption that there were prior orders and mutual un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and when offers are received by the manufacturer for their purchase. The contracts of sales were finalized and only thereafter specific goods were manufactured in pursuance of such contracts. The goods in question were, thus, future goods within the meaning of Section 2(6) of the Sale of Goods Act, 1930. After the goods were manufactured as per the agreed specifications, they were first dispatched to the head office at Delhi (as a matter of convenience on account to better godown and rail facilities) and then forwarded to the respective customers. 45. Upholding the contention of the assessee that the case involved inter-state sales, whilst noting that the contract of sales did not require or provide that the goods should be moved from Faridabad to Delhi, holding that the circumstances as to in which State the property in the goods passes was irrelevant, the Court held:- 17. ...If a contract of sale contains a stipulation for such movement, the sale would, of course, be an inter-State sale. But it can also be an inter-State sale, even if, the contract of sale does not itself provide for the movement of goods from one State to another but such movement is the result of a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice in Hyderabad took the goods to its branch office outside the State and arranged to deliver them to the buyer... 48. We, however, find in the case at hand that the assessee (appellant) herein itself did not treat the transactions in question in its record as inter-State sales. The provision contained in Section 6A(1) of the Central Sales Tax Act, 1956 places the burden of proving a transfer of goods claimed to have been effected otherwise than by way of sale upon the dealer. The clause stipulates that if a dealer claims that he is not liable to pay tax in respect of any goods on the ground that the movement thereof from one State to another was occasioned by reason of their transfer by him to any other place of his business or to his agent or principal, as the case may be not by reason of sale, he is obliged to submit a declaration to such effect in the prescribed format along with evidence, inter alia, of dispatch of such goods. In terms of the provision, a presumption arises that the movement of goods was as a result of sale in the event of the failure on the part of the dealer to furnish such declaration. The format for declaration in terms of Section 6A is prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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