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Deputy Commissioner of Sales Tax Vs. Motor Industries Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKerala High Court
Decided On
Case NumberT.R.C. No. 64 of 1977
Judge
Reported in[1978]42STC187(Ker)
AppellantDeputy Commissioner of Sales Tax
RespondentMotor Industries Co. Ltd.
Appellant AdvocateThe Government Pleader
Respondent Advocate M. Hyder Alikhan, Adv.
DispositionRevision dismissed
Cases ReferredHyderabad Chemicals and Fertilizers Ltd. v. State of Andhra Pradesh
Excerpt:
- - the tribunal found that the ingredients of the rule were satisfied......group of concerns to whom the discount was being granted. noticing these two special features, the tribunal referred to the definition of 'turnover' in section 2(xxvii) of the general sales tax act, 1963 and, in particular, the explanation (2)(ii) to the said definition which enacts that any cash or other discount on the price allowed in respect of any sale and any amount refunded in respect of articles returned by customers shall not be included in the turnover. the definition of 'taxable turnover' under section 2(xxv) was also referred to. this is to be made up of the turnover less the deductions in such manner as may be prescribed. rule 9 of the kerala general sales tax rules prescribes the deductions and clause (a) of the said rule allows as deduction all amounts as discount provided.....
Judgment:

V.P. Gopalan Nambiyar, C. J.

1. We see no ground to interfere with the decision of the Tribunal in this tax revision case. The assessee, M/s. Motor Industries Company Ltd., are-manufacturers and dealers in fuel injective. For the assessment year 1972-73, it returned a total turnover of Rs. 11,58,032.51 and a taxable turnover of Rs. 9,79,154.34. It claimed exemption in respect of a turnover of Rs. 1,78,778.13. The assessing officer found that all the claims for exemption except one were in order. The one excepted item in regard to which exemption was disallowed was a sum of Rs. 12,621.67 shown as 'service discount'. From this order of assessment, the assessee preferred an appeal to the Deputy Commissioner of Agricultural Income-tax and Sales Tax, which was dismissed. On further appeal, the Tribunal upheld the assessee's claim and allowed the exemption. It found that the discount was not being paid at the time of the sale but only at a later date by the end of the month when the bills were consolidated and settled. It also found that the discount was being given as a result of a special agreement between the assessee and the T. V. S. group of concerns to whom the discount was being granted. Noticing these two special features, the Tribunal referred to the definition of 'turnover' in Section 2(xxvii) of the General Sales Tax Act, 1963 and, in particular, the explanation (2)(ii) to the said definition which enacts that any cash or other discount on the price allowed in respect of any sale and any amount refunded in respect of articles returned by customers shall not be included in the turnover. The definition of 'taxable turnover' under Section 2(xxv) was also referred to. This is to be made up of the turnover less the deductions in such manner as may be prescribed. Rule 9 of the Kerala General Sales Tax Rules prescribes the deductions and Clause (a) of the said rule allows as deduction all amounts as discount provided the same is allowed in accordance with the regular practice of the dealer or in accordance with the terms of a contract or agreement entered into in a particular case and provided also that the accounts show that the purchaser had paid the sum originally charged less the discount. The Tribunal found that the ingredients of the rule were satisfied. On the facts found and on the statutory provisions and the rule, we think the Tribunal was right in its conclusion that the assessee was entitled to the deduction in respect of service discount. It seems to make no difference whether the discount was paid at the time of the sale or only later. Neither the statutory provision nor the rule requires that the payment should be contemporaneous.

2. The Tribunal referred to the decision of the Madras High Court in State of Madras v. Dunlop Rubber Co. (India) Ltd. [1973] 32 S.T.C. 648 and to Anr. decision of that court in State of Madras v. Jeewanlal (1929) Ltd.[1973] 32 S.T.C. 649 on analogous, if not practically identical, facts. It referred also to the decision of the Allahabad High Court in Baidya Nath Ayurved Bhawan (P.) Ltd. v. Commissioner of Sales Tax, U. P. [1970] 26 S.T.C. 171. We have examined these cases. We agree with the Tribunal that the principle of these decisions supports the case of the assessee. The learned Government Pleader has not been able to attack the principle of these decisions. He cited to us the decision of the Andhra High Court in Hyderabad Chemicals and Fertilizers Ltd. v. State of Andhra Pradesh [1968] 22 S.T.C. 298, which seems to have little application to the controversy raised here.

In the result, we see no ground to interfere with the order of the Sales Tax Appellate Tribunal. We confirm the decision of the Sales Tax Appellate Tribunal and dismiss the tax revision case. We make no order as to costs.


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