P.D. Mulye, J.
1. This is a reference made by the Board of Revenue, Gwalior, at the instance of the department under Section 44(1) of the M.P. General Sales Tax Act, 1958, for the opinion of this Court regarding the following question of law :
Whether, in the facts and circumstances of the case, the Tribunal was justified in holding that the reimbursement of Rs. 33,263 received from the principals will not form part of the sale price as defined under Section 2(o) of the M.P. General Sales Tax Act, 1958 ?
2. The facts giving rise to this reference as per the statement of case received are as follows : The non-applicant, M/s. Rita Sales Corporation, Indore, are distributors for Rita sewing machines and electrical goods. The non-applicant was assessed to tax for the financial year 1975-76. Best judgment assessment was made and the gross turnover was determined as Rs. 8,40,000 against Rs. 8,03,809 shown in the books of account. Enhancement of Rs. 2,927 was made on account of certain discrepancies and the amount of Rs. 33,263 paid by the principals towards 50 per cent cost of timepieces sold by the non-applicant to the retail dealers at half price was also included in his turnover. The assessing authority observed that sale at 50 per cent cost price was to favoured buyers within the ambit of Section 18(7) of the Act. The assessment was maintained in first appeal before the Appellate Assistant Commissioner. Against this order second appeal was preferred before the Tribunal which allowed the appeal and the enhancement made in the dealer's turnover was set aside. Hence this reference at the instance of the department.
3. It was agitated before the Tribunal that there was no justification for including the amount of Rs. 33,263 which was received from his principals, in his gross and taxable turnover. It was argued that the principals introduced a gift scheme under which timepieces were made available to retail dealers at 50 per cent of the cost price, and these were to be supplied free of cost to each customer, who purchased a Rita sewing machine. Fifty per cent of the cost of these timepieces was paid to the respondent by the retailers and the balance 50 per cent which came to Rs. 33,263 was made available to him by the principals. Thus the amount received from the principals did not form part of the sale price received by the respondent from his principals. At best it could be considered as a sort of cash discount which will not form part of sale price.
4. On behalf of the department it was contended that part of the price received from the principals constituted consideration of the cost of timepieces as a part of sale price and therefore it should be included in the gross turnover and the taxable turnover. It cannot be called a cash discount because the respondent had received that money as consideration of the value of the goods.
5. It is in these circumstances that the Tribunal has made this reference.
6. The learned counsel for the department submitted that it is not disputed that the supply of these timepieces was part of the gift scheme introduced by the Rita sewing machine manufacturers. The actual purchase of timepieces was, however, made' by the respondent who acted as distributor and the timepieces were sold by him to retail dealers at half price. The retail dealers were required to supply them free to each customer buying a Rita sewing machine. On these facts, it was submitted, that thus there being an agreement between the manufacturer, the distributor and the retail dealer, the retail dealer was to supply the timepiece free and thus there was no sale in his case. The distributor, namely, the respondent, was required to purchase the timepieces and sell them to the retail dealers at half the price and the balance amount representing 50 per cent of the cost of timepiece was received from the manufacturer. It was, therefore, submitted that so far as the respondent-dealer is concerned on the sale of timepieces to the retail dealers he was getting full price thereof and, therefore, he was liable to pay sales tax on the entire price of the timepieces sold to the retail dealers.
7. The learned counsel for the department further contended that from the order of the Tribunal itself it would appear that there was an agreement between the manufacturer, the distributor and the retail dealer regarding the sale of these timepieces. He, therefore, submitted that the effect of the agreement is that the distributor who sold the timepieces to the retail dealers was realising the full price thereof and, therefore, the Tribunal was not right in deciding this point in favour of the respondent.
8. On the other hand the learned counsel for the respondent contended that the provisions of the Sale of Goods Act are clearly attracted and the same have to be applied while considering the provisions of the Sales Tax Act also in relation to the sales as has been held in the decision reported in  9 STC 353 (SC) [State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd.] by the Supreme Court. He further submitted that so far as the sale by the distributor to the retailer is concerned admittedly the retail dealer pays the same price which is agreed to between him and the dealer and, therefore, between the distributor and the retail dealer the sale of goods is complete at the price agreed between them and consequently in the present case the price at which the distributor has sold the timepieces to the retail dealer will be deemed to be the sale price irrespective of the fact whether it is sold by him at 60 per cent of its cost price. In that transaction the manufacturer himself does not come in. He further submitted that it is not the case of the department that the balance amount of 50 per cent was to be paid to the distributor by the manufacturer on behalf of the retail dealer who purchased the timepieces from the distributor. He, therefore, submitted that even though in order to promote the sale of Rita sewing machines the manufacturer had introduced this gift scheme, according to which, he had agreed to reimburse 60 per cent price of the timepieces to the distributor it would not be included as the sale price in the transaction of sale entered into between the distributor and the retailer. He further submitted that the question referred by the Tribunal itself presupposes that the amount in question was a reimbursement made by the manufacturer and consequently the question referred to has to be answered in favour of the assessee and against the department.
9. After hearing the learned counsel, we are of the opinion that the question referred to us for our opinion has to be answered in favour of the assessee and against the department for reasons stated hereinafter. It appears that the Tribunal in the order of reference has loosely used the word 'agreement' because there is no material on record to indicate that any such written agreement has been entered into between the manufacturer, the distributor and the retail dealer regarding the payment of price of the timepieces. But, in our opinion, as is clear there was an understanding between the manufacturer and the distributor to promote the sale of the machines, for which the manufacturer had introduced the gift scheme, according to which the distributor, i.e., the respondent, had to purchase the timepieces at its cost price and it is he who in turn while selling the machine was also selling the timepiece at half price to the retailer who used to purchase the same from the distributor. Therefore, vis-a-vis, the distributor and retailer, the sale was complete at the price to which they had agreed and consequently even though the manufacturer had promised to pay the 60 per cent price of the timepieces to the distributor, it would not mean that the distributor has sold the timepieces to the retailer at this full price because he receives the entire amount partly from the retail dealer and partly from the manufacturer and thus we are unable to agree with the submission of the learned counsel for the department that the respondent-distributor was liable for payment of sales tax on the full amount of timepieces sold by him, even though he sold the same at 60 per cent of its cost price.
10. The further submission of the learned counsel for the department that the question referred to by the Tribunal be suitably modified as according to the department they had proposed the following question of law to be referred to this Court for its opinion :
Whether, in the facts and circumstances of the case, 'sale price' as defined under Section 2(o) of the M.P. General Sales Tax Act, 1958, means only that amount which is payable to a dealer as valuable consideration for the sale of any goods from the purchaser of the goods or it would also include any amount payable or paid to the dealer by any person other than the purchaser of the goods ?
We see no valid ground to reframe the same because the Tribunal has found that the amount of Rs. 33,263 was by way of reimbursement to the distributor by the manufacturer.
11. In the result our answer to the question referred to is :
That, in the facts and circumstances of the case, the Tribunal was justified in holding that the reimbursement of Rs. 33,263 received from the principals will not form part of sale price as defined under Section 2(o) of the M.P. General Sales Tax Act, 1968.
Thus, the reference is answered in favour of the assessee and against the department with no order as to costs.