TMI Blog2015 (9) TMI 1610X X X X Extracts X X X X X X X X Extracts X X X X ..... jay Kumar Rastogi and Parijat Saurav for the petitioner Purnendu Singh, Government Pleader and Praveen Kumar, A.C. to Government Pleader, for the respondents JUDGMENT This writ application under Article 226 of the Constitution of India has been filed, seeking quashing of the assessment order and the demand notice, dated 27.06.2002, whereby, quantitative discount given by the petitioner as trade discount to its customers to the tune of ₹ 20,68,257/ for the assessment year 2000-2001 has been included to the taxable turn over, for the purposes of imposition of tax, under the Bihar Finance Act, 1981 (hereinafter referred to as the Act ). 2. The sole question, which has emerged to be decided, based on rival pleadings and submissions made on behalf of the parties in the present proceeding is as to whether quantitative discount, which the petitioner has claimed as trade discount, could be included in the taxable turn over to the petitioning Company or not, for the purpose of assessment under the Act. 3. Before we deal with the legal issue involved in the present proceeding, as taken note of in the preceding paragraph, it would be apt to encapsulate facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roducts, given to the wholesalers and retailers, free, under the said trade discount offer, no tax is shown to have been charged, but at the time of its sale to the consumer, price is realised along with all taxes. 6. It is specific plea on behalf of the respondent-State of Bihar that the petitioning Company had issued Form-IX C to its purchasers certifying that the goods sold to the wholesalers and retailers were tax paid at the first point, which included the products given free, such transactions also get covered as tax paid. It is their case that Form IX-C is issued only when the commodity is tax paid, but in cases of discount given to the wholesalers and retailers of the present nature, the Company does not show collection of tax on transactions covered by the trade discount but issue Form IX-C, which covers the said free transactions. Levy of tax by assessment done after including the trade discount given by the petitioner for the assessment year, in question, is sought to be justified by the State- respondents, accordingly. 7. From the assessment order under challenge, in the present writ petition, it is evident that the petitioner has been assessed on the gross turn o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt granted by the petitioner to its customers, rather suppressed sale. 10. In order to arrive at a conclusion whether the discount given by the petitioner to its customers could be added legally by the assessing officer to the taxable turn over for the period in question, it would be apt to take note of the definitions of sale and sale price under Sections 2(t) and 2 (u) of the Act, which read thus:- 2(t) 'Sale' means any transfer of property in goods for cash or deferred payment or other valuable consideration but does not include a mortgage or hypothecation of or a change or pledge on goods, and includes.- (i) transfer of property in any goods, otherwise than in pursuance of a contract; (ii) transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (iii) delivery of goods on hire purchase or any system of payment by instalments; (iv) transfer of the right to use any goods for any purpose (whether or not for a specified period); (v) supply of goods made by a society, trust, club or association, whether incorporated or not, to its members or otherwise; (vi) supply by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided such cost is separately charged to the buyer. 11. The two definitions, as mentioned above, make it clear that in order to constitute sale , there must be transfer of property in goods for cash or deferred payment or other valuable consideration and unless transfer is made for consideration of money, it cannot be treated to be sale for the purpose of levy of tax under the provisions of the Act. Law is well settled that there must be following four elements to constitute a valid sale:- (i) parties are competent to enter into a contract; (ii) there is mutual assent between/among the parties; (iii) the property must pass from the seller to the buyer; and (iv) price in money is paid or promised to be paid. In the absence of any one of the ingredients, as noted above, the transaction would not constitute a valid sale within the meaning of the Sales of Goods Act, 1930. It is trite that the definition of sale as given in the Sales Tax Law is to be interpreted as having the same meaning as in the Sales of Goods Act, 1930. 12. The Supreme Court in case of Advani Oerlikon (P) Pltd. (supra), relied upon by the learned State Counsel, is of no help to support the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard to the circumstance that the sale price is arrived at after deducting the trade discount, no question arises of deducting from the sale price any sum by way of trade discount. (Emphasis supplied). 13. The case before the Supreme Court in case of Advani Oerlikon (P). Ltd. (supra), was under Central Sales Tax Act which contained the definition of sale price under Section 2(h) of the Act which is similar to Section 2(u) of the Bihar Finance Act defining sale price . Dealing with the said provision, the Supreme Court laid down that though the said definition under Section 2(h) of the Central Sales Tax Act provided for cash discount only, a trade discount is also required to be deducted from the sale price. 14. Learned Counsel for the State has also placed reliance on another Supreme Court decision in case of Anant Raj Industries Ltd. Vs. Commissioner of Central Excise, New Delhi, reported in (2001) 9 SCC 724, in support of his submission that the trade discount could be allowed only if its effect travelled up to the end consumer. The said submission cannot be accepted. The Supreme Court held in paragraph 4 of the said decision as follows: 4. In our vie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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