9911796707
TMI Blog1975 (10) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... 1956, read with the definition of the term "sale price" in section 2(h) thereof. We shall extract these sections: "2. In this Act, unless the context otherwise requires,-- (h) 'sale price' means the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed as cash discount according to the practice normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof other than the cost of freight or delivery or the cost of installation in cases where such cost is separately charged; (j) 'turnover' used in relation to any dealer liable to tax under this Act means the aggregate of the sale prices receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration for the sale of any goods, less any sum allowed as cash discount according to the practice normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof other than the cost of freight or delivery or the cost of installation in cases where such cost is separately charged.' Essentially, 'sale price' means the amount payable to a dealer as consideration for the sale of any goods. In this case the mill rate is mentioned in the catalogue. Under the agreement itself the mill rate is reduced by the discount. The consideration actually payable by the purchaser to the petitioner is the mill rate less the discount. Consideration is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance is made between buyers and sellers engaged in the same class of trade. The object of the trade discount being allowed by the wholesale dealer to the retailer is to enable the latter to sell the goods at the price mentioned in the catalogue or price list issued by the wholesale trader. The trade discount is to enable the dealer to meet all the necessary business expenses and yet leave him a margin of profit on his selling the goods at the catalogue price. The amount of trade discount allowed varies considerably according to different trades and even on different articles in the same trade. In the books of the wholesale dealer, trade discount is deducted from the outward invoice sent to the retailer and the entry in the sales book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en usually employ. To take an instance, if you want to charge for an article Rs. 75 you may quote its price as Rs. 100 and allow a discount of 25 per cent, or you may quote Rs. 125 as its price with a discount of 40 per cent. In either case, the buyer pays and the seller receives only Rs. 75. So long as the buyer parts only with Rs. 75, it little signifies to him whether the price quoted is Rs. 100 or Rs. 125.'" With respect, the reasoning therein appears to us to be the correct approach to be made and this approach is what has been taken by the Judicial Committee of the Privy Council in the matter of determining income for the purpose of the Indian Income-tax Act, 1922, in Chitnavis's case[1932] 59 I.A. 290., which has been approved by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L.R. 2224. has not been referred to by the Madras High Court and the aspect that we have emphasised that in cases where a "trade discount" had been bona fide granted, the actual consideration paid for the sale is only the amount paid after deducting the trade discount from the quoted sale price has not been adverted to or considered by the Madras High Court. With respect we are unable to agree with the decision of the Madras High Court; 5.. We adopt the reasoning of the Orissa High Court in Orient Paper Mills Ltd. v. State of Orissa[1975] 35 S.T.C. 84; 1974 Tax. L.R. 2224. and on that basis this tax revision case has to be dismissed. We do so. We direct the parties to bear their respective costs. Petition dismissed. - - TaxTMI - ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
