1984 (6) TMI 216 - HC - VAT and Sales Tax

Summary

Issues involved:
1. Deductibility of discount paid to stockists u/r 6(a) of Andhra Pradesh General Sales Tax Rules.
2. Classification of motor car bulbs under entry 1 or entry 37 of First Schedule to Andhra Pradesh General Sales Tax Act.

Deductibility of discount:
The first issue in this tax revision case was whether the discount paid by the assessee to its stockists is deductible from the turnover u/r 6(a) of the Andhra Pradesh General Sales Tax Rules. The department contended that since the discount was not paid immediately upon sale but at the end of the year, rule 6(a) did not apply. The definition of "turnover" and explanation (ii) to the said definition were crucial in this analysis. The Supreme Court precedent in Deputy Commissioner of Sales Tax v. Motor Industries Co. was cited, where it was held that any concession in the price of goods for commercial reasons could be claimed as a deduction under similar rules. Following this precedent, the Court held that the discount paid at the end of the year, according to normal trade practice, was a permissible deduction from the turnover of the assessee.

Classification of motor car bulbs:
The second issue revolved around whether motor car bulbs should be classified under entry 1 or entry 37 of the First Schedule to the Andhra Pradesh General Sales Tax Act. The Court analyzed the nature of motor car bulbs, noting that they were specific to motor vehicles and not used for other purposes. They were primarily sold in shops dealing with motor parts, indicating they were parts or accessories of motor vehicles. The Court emphasized the importance of common understanding and commercial sense in proper allocation of goods. Ultimately, it was held that motor car bulbs fell under entry 1 as they were component parts of motor vehicles, not ordinary electrical goods. The Tribunal's decision placing them under entry 37 was set aside.

In conclusion, the tax revision case was allowed in part, with the Court directing consequential orders to be passed. No costs were awarded, and the advocate's fee was set at Rs. 250.