1991 (3) TMI 382 - HC - VAT and Sales Tax

Summary

Issues:
1. Dismissal of enhancement petition by Revenue for restoration of assessment.
2. Interpretation of rebate in relation to taxable turnover under Central Sales Tax Act, 1956.

Issue 1: Dismissal of enhancement petition by Revenue for restoration of assessment
The controversy in this case revolves around the dismissal of the enhancement petition filed by the Revenue for the restoration of assessment on a turnover of Rs. 93,249.41 allowed by the Appellate Assistant Commissioner as rebate eligible for exemption. The Tribunal, while dismissing the appeal by the assessee on a turnover of Rs. 6,340 assessed at 10 per cent, also dismissed the enhancement petition by the Revenue for restoration of the assessment on the turnover of Rs. 93,249.41. The Tribunal held that the rebate allowed in the course of business was not liable to be taxed as it did not form part of the sale price. The Tribunal's decision was influenced by previous judgments. The Court noted that a similar case had been dismissed by a Division Bench previously.

Issue 2: Interpretation of rebate in relation to taxable turnover under Central Sales Tax Act, 1956
The Court analyzed the definition of "sale price" under section 2(h) of the Central Sales Tax Act, 1956, which includes the amount payable to the dealer as consideration for the sale of goods, less any sum allowed as cash discount. The Court emphasized that the concept of "sale price" and "turnover" under section 2(j) are distinct. The Court clarified that any rebate forming an integral part of the agreement or contract and allowed in accordance with regular business practice must be adjusted in the sales tax assessment if it varies the price payable for the goods. The Court cited previous judgments to support this interpretation. Ultimately, the Court found that the Tribunal's decision to dismiss the enhancement petition based on the turnover of Rs. 93,249.41 being a rebate not liable to tax was proper and sound. Therefore, the tax revision case filed by the Revenue was dismissed.

In conclusion, the Court upheld the Tribunal's decision and dismissed the tax revision case, emphasizing the distinction between cash discount and other types of rebates in the context of taxable turnover under the Central Sales Tax Act, 1956.