TMI Blog2021 (4) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... urnover of the assessee. The Tribunal is not justified in disallowing 1% discount from the taxable turnover of the assessee and the findings that the assessee does not fulfil the conditions of Rule 19 of the Rules are perverse and not tenable - Reference allowed. - Sales Tax Reference ( STR) Nos. 1, 2, 3, 4, 5-7 of 2010 - - - Dated:- 26-3-2021 - HON BLE THE CHIEF JUSTICE HON BLE MRS. JUSTICE SINDHU SHARMA, JUDGE Petitioner(s) Through: Sh. Pranav Kohli, Sr. Advocate with Sh. Arun Dev Singh, Advocate. Respondent(s) Through: Sh. D. C. Raina, Advocate General with Sh. KDS Kotwal, Dy. AG. JUDGEMENT PANKAJ MITHAL, CJ: 1. All the above Sales Tax References are concerning the same parties, M/s. MRF Limited but for different accounting years, i.e., 1995-1996, 1996-97, 1998-1999, 1999-2000, 2000-2001, 2001-2002 respectively. 2. Since in all of them, the facts are identical and they give rise to the same legal proposition, we with the consent of the parties considered it convenient to take them up together. 3. We have heard Sh. Pranav Kohli, senior counsel assisted by Sh. Arun Dev Singh, learned counsel for the assessee and Sh. D.C.Raina, Advocate Gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re satisfied that these references do involve the following substantial question of law :- Whether the Tribunal is justified in disallowing the discount from the taxable turnover of the assessee on the ground that it was not actually deducted from the sale bill/voucher and, as such, does not fulfil the conditions of Rule 19 (a) (i) of the Rules. 10. We have made known the above question of law to the parties and as they agreed to address us on the aforesaid question with their consent, we had proceeded to hear them on its merits. 11. The submission of Sh. Kohli is that in view of the definition of turnover contained in Section 2 (n) of the Act read with Rule 19 of the J K General Sales Tax Rules, 1962 (hereinafter referred to as the Rules ), the taxable turnover of an assessee is liable to be determined after allowing certain deductions which include discount on the sales/purchases. 12. Sh. Raina in defence submits that the assessee does not qualify for any deduction of discount on the sales as the discount allowed was not deducted in the price of the goods indicated in the Sale bill/voucher and that there is no proof that the purchaser had paid lesser amount than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness or in accordance with the agreement with the purchaser; provided that such discount has been deducted from the price in the sale bill/voucher and the purchaser, has paid the price less by that discount. .................... 14. Section 4 of the Act which is the charging section provides for payment of tax at a rate prescribed on the taxable turnover of the sale of goods. 15. A reading of the definition of turnover simpliciter denotes that it includes aggregate amount of sale and purchase made by any dealer and that any cash or other discount on the price allowed shall not be included in it. In other words, turnover would be assessed after excluding the discount allowed on the price of the goods sold or purchased. 16. In view of the above definition, the assessee would be liable to pay tax on its taxable turnover determined after excluding the discount, if any, allowed on the price of the goods. 17. Rule 19 of the Rules further supports the proposition that for the purposes of determining the taxable turnover, the discount allowed from the price of the sale/purchase shall be deducted. 18. In the case at hand, there is no dispute that the assessee has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uctable from the turnover. 25. In the said cases before the High Court, the Tribunal refused to allow deduction of discount on the sales and, therefore, the question arose whether the Tribunal was in error. 26. There also, the dispute was with regard to entitlement for 1% discount as mentioned in the vouchers and sale bills which was commonly described as turnover discount. 27. In the said case also, the assessee contended that the discount is allowable to be excluded from the turnover irrespective of whether it is a trade discount or any other formal discount and whether the same was allowed at the time of sale or at a later stage makes no difference. 28. The Delhi High Court in considering and answering the above question, referred to the decision in the case of M/s. Indian Pistons Limited v. State of Tamil Nadu, (1974) 33 STC 472 (Mad), where it was held that such deduction is allowable only in respect of cash discount and relying upon few other decisions, held that in computing the taxable turnover, the sale price received or receivable by the assessee is to be reduced to the extent of discount allowed. 29. In answering the above question, the Delhi High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucted as a credit note in respect thereof is issued simultaneously to be adjusted later on or by re-imbursement. It is not the case of anyone that the dealer has paid the actual price of the goods mentioned in the voucher and not the lesser amount by way of discount. In fact, upon re-imbursement as per credit note, the actual price paid by the dealer stand reduced. There is no evidence that the dealer paid to the assessee the original value of the goods and not the discounted price. 34. Accordingly, we are of the opinion that the authorities below have adopted a too technical an approach in disallowing the deduction of discount from the taxable turnover of the assessee. 35. In State of Orissa v. Mahabir Prasad Agrawalla, (1990) 79 STC 163 (Ori), the Apex Court observed as under: In our opinion, the administration of justice has to keep pace with the march of the times. The nature of procedure prescribed by a statute whether it is mandatory or directory merely has to be judged by reference to the purpose sought to be achieved. We are very clear in our mind that when the facts of the case are either not disputed or cannot be disputed and as contained in the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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