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TMI Blog1993 (11) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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." The definition of "turnover" of section 2(j) of the Central Sales Tax Act is as under: "'turnover' used in relation to any dealer liable to tax under this Act means the aggregate of the sale prices received and receivable by him in respect of sales of any goods in the course of inter-State trade or commerce made during any prescribed period and determined in accordance with the provisions of this Act and the rules made thereunder." According to the submission of the learned counsel for Revenue, if any deduction is made subsequent to the sale of goods by way of issue of credit note, it is not allowable as deduction. The decision of the Andhra Pradesh High Court in the case of Sirpur Paper Mills Limited v. State of Andhra Pradesh [1979] 43 STC 126 has been relied. In this case, the amount of the bill was split into sale price of the goods and balance as discount payable to the distributor. The customer paid total amount of the bills. The amount of discount was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 is made of the net amount, because the actual amount realisable by him is the catalogue price less the trade discount. Similarly, in the books of the retailer, the entry in the purchase book is made of the net amount, i.e., the amount for which he is liable. Thus, trade discount as a rule does not appear in the books either of the seller or of the purchaser. Cash discount is an allowance in addition to the trade discount made by the seller to the purchaser, provided the latter settles his account promptly or within a specified time, known as the 'period of credit'. This allowance for the prompt payment of accounts may be either receivable or p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral sales tax. In Deputy Commissioner (C.T.) v. South India Viscose Ltd. [1977] 40 STC 442 (Mad.) where the assessee claimed the deduction from the turnover, rebate on sales of rayon yarn and the Tribunal found that the rebate formed an integral part of the agreement or contract between the assessee and its buyers and had been allowed by the assessee in accordance with regular practice, it was held that the rebate was an allowable deduction under the Central Sales Tax Act. In Deputy Commissioner of Sales Tax v. Advani Oerlikon (P.) Ltd. [1980] 45 STC 32 it was held by the apex Court that the cash discount and the trade discount are two separate and distinct concepts and under the Central Sales Tax Act cash discount is allowed when the purchaser makes the payment promptly or within the period of credit allowed and it is granted in consideration of expeditious payment. A trade discount is a deduction from the catalogue price of goods allowed by wholesalers to retailers engaged in the trade. The trade discount does not enter into the composition of the sale price, but exists apart from and outside it and prior to it. It was also observed that it is immaterial that the definitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents Ltd. [1980] 46 STC 220 the Madras High Court had held that quantity discount under a scheme, subject to periodical variations, on the basis of customer's off-take in a specified period, with an idea to see that a customer got an incentive to place orders and increase the volume of purchases is allowable. As soon as the period was over the purchases of each customer were totalled and credit notes were passed. It was held that the allowance of the discount formed an integral part of the agreement or contract between the parties affecting the price and would qualify for deduction. It was further observed that even if a discount allowed does not fall strictly within the concept of cash discount as contemplated under section 2(h) of the Act, still the amount is capable of adjustment in the sales tax assessment provided it goes to vary the price payable in respect of the goods. In Deputy Commissioner of Sales Tax v. Motor Industries Co. [1983] 53 STC 48 (SC) it was held that the additional trade discount called "service discount", allowed by the assessee in accordance with the trade agreement to its main distributors (purchasers), viz., the T.V.S. Group of Companies, which constit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discount has to be allowed, thereafter from the total sale price, the trade discount may be given on account of quantity based purchases in the bill itself or such discount may be having reference to a particular period and may be given subsequently by way of credit note or otherwise. It is the initial agreement under which the sale is effected that has to be seen. If while effecting the sale, it is agreed upon that, if the total purchases by such buyer exceeds a particular limit in a particular time then the trade discount at a particular percentage would be given, then, in that case inspite of the fact that the initial bill was for the higher sale price, the entire purchases of the said period will be taken into consideration and the discount will have to be allowed, that discount will not form part of the sale price. In respect of cash discount, if a particular seller frames the scheme that the payment of the bill is to be made within three months, but, if the payment is made within two months, then the discount will be "X", if the payment is made within a month, then the discount will be "Y" and if the payment is made in cash, then the discount will be "Z". In all these cases ..... X X X X Extracts X X X X X X X X Extracts X X X X
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