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TMI Blog2021 (4) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... is a company engaged in manufacturing of tyres, tubes, flaps, tread rubber etc. and sell its products across the county through various sale depots including one at Jammu. In the course of selling its products, the assessee allows 1% discount to its dealers as per pre-determined agreement and the entitlement of such discount to the dealer is duly indicated on each invoice. The discount so allowed uniformly to all dealers without any condition of achieving a particular target, is credited to the accounts of the respective dealers at the end of each quarter. 5. In respect to the relevant accounting years, the assessing authority passed assessment orders disallowing exclusion of discount from the turnover of sales of the assessee on the ground that the discount was not deducted from the invoice amount and since it is being adjusted later on, it was in the nature of bonus or incentive to the dealers. 6. The assessee preferred appeals against the assessment orders before the Deputy Commissioner of Sale Tax (Appeals), Jammu. The appeals were dismissed by a common order again on the ground that the discount was not deducted from the invoices and, as such, it is not liable to be exclude ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s below have not committed any mistake in disallowing the deduction of the discount from the turnover of the assessee. The assessee does not fulfil the conditions of Rule 19 of the Rules and, therefore, in the facts and circumstances of the case, the case law relied upon by the assessee is of no value. 13. In connection with the above dispute, few provisions such as Section 2 (ll) of the Act which defines 'sale price', Section 2 (n) of the Act which defines 'turnover' and Rule 19 of the Rules are very relevant and material for our purpose. The relevant portions of the above provisions are reproduced herein below for the sake of convenience:- "........................ Sec. 2(ll) sale price" means the amount of valuable consideration paid or payable to a dealer for any sale including any sum paid or payable for anything done by the dealer in respect of the goods at the time of or before delivery thereof other than the actual cost of outward freight or delivery or the cost of installation when such cost is separately charged; .................. Sec. 2(n) "turnover" includes the aggregate of the amounts of sale and purchase and parts of sale and purchase made by any dealer whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t purpose credit notes were issued and were adjusted or reimbursed on quarterly basis. 19. The invoice/sale vouchers apart from mentioning the value of the product sold plus octori, sales tax and surcharge, at the foot, clearly mentions that the dealer is entitled for 1% discount as aforesaid. The said invoice/sale vouchers are followed by the credit notes clearly mentioning about entitlement and payability of 1% discount. 20. In view of the above documents, it is apparent that the assessee with the dealers had a clear understanding of allowing them 1% discount on the value of the product and to reimburse the same on the basis of credit notes. The grant of such discount is clearly depicted in the sale bill/voucher/invoices. 21. In Union of India and Others v. Bombay Tyres International (P) Ltd., (2005) 3 SCC 787, it has been observed by the Supreme Court that discounts allowed in the trade, by whatever name such discount is described, should be allowed to be deducted from the sale price if provided under agreements or under the terms of sale or by established practice, the allowance and the nature of the discount is known at or prior to the removal of the goods. It is held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neral Sales Tax Act, 1963 whose phraseology is in pari materia with Section 2 (n) of the Act and Rule 19 of the Rules under consideration where it was held that it permits exclusion of any cash or other discount on the price allowed in respect of any sale provided it is established that the purchaser had paid a sum lesser than the original price by way of discount. The Delhi High Court vide its judgment and order dated 14.05.2015 in ST Appeal Nos. 1 & 2 of 2015, MRF Limited v. Commissioner of Trade and Taxes thus held that the turnover for the assessment years in question was to be computed after deducting the turnover discount granted to the dealers as claimed in the returns by the assessee and that the assessing authorities have erred in unjustly denying the said benefit of deduction to the assessee. 30. It is pertinent to mention here that the aforesaid judgment of the Division Bench of the Delhi High Court is final and conclusive as the SLP filed against it stood dismissed on 28.11.2016 by the Apex Court. 31. In the light of the above legal position and the decision of the Delhi High Court on an identical point in respect of the same assessee, though in context with different ..... X X X X Extracts X X X X X X X X Extracts X X X X
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