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TMI Blog2009 (11) TMI 832X X X X Extracts X X X X X X X X Extracts X X X X ..... el the penal provision should not be invoked against the appellants/petitioners, provided they accept the disallowance, clear the arrears if any, with interest due thereon. We therefore direct the respondents to recall the orders in the case of such of the appellants/petitioners who concede liability in terms of the judgment and who remit balance tax if any along with applicable rate of interest within three weeks from the date of receipt of a copy of this judgment. X X X X Extracts X X X X X X X X Extracts X X X X ..... r the VAT regime came into force in the State with effect from April 1, 2005. The charging section, namely, section 6(1) of the Act provides for levy of tax on the taxable turnover. "Taxable turnover" under section 2(l) means the turnover on which a dealer shall be liable to pay tax as determined after making such deductions from his total turnover and in such manner as may be prescribed. "Turnover" as defined under section 2(lii) and clause (ii) of Explanation III to section 2(lii) provides for exclusion of discount in the computation of turnover. The said clause of Explanation III providing for deduction of discount as originally contained in the statute is as follows: (ii) Any cash discount on the price allowed in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceed to consider one after another of the contentions raised on behalf of the assessees. Before proceeding to consider the case on the merits, we have to consider the distinction between the scheme of tax on sale of goods both under the VAT regime and under the Sales Tax Act existing prior to that. Under the Sales Tax Act except a few items, all other goods were taxable at the point of first sale in the State. Therefore tax was levied and collected only from the first seller. Contrary to this, the scheme under the VAT regime is that the tax collected by the first seller is given as input tax credit to the second seller, and the tax paid by the second seller is given as input tax credit to the third seller and ultimately the entire tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re different from the scheme available under the Sales Tax Act. We therefore proceed to consider the case with reference to the statutory provisions. The contention of the assessees that discount is allowable irrespective of the time and manner in which the seller gives it to the purchaser does not find a place in the statute. On the other hand, the provision of deduction of eligible discount is specifically covered by clause (ii) of Explanation III to the definition of "turnover". Going by the main clause in the definition, namely, turnover, it is clear that the tax is on the actual sale price. The Explanation specifically clarifies that any discount on the price allowed in respect of any sale if shown separately has to be exclud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eller's claim is only the sale price reduced by discount and no buyer can be called upon to pay the discount amount after the seller grants it as reduction in the tax invoice itself. The original provision did not contemplate the buyer paying the discount amount along with price or in other words, payment is always net of the discount. Therefore in our view the additions made to Explanation III(ii) to section 2(l) through amendment with retrospective effect does not convey any new meaning and content to the original provision to which only further clarification is made to avoid unnecessary controversy and litigation. Since we have already found that the amendment has not brought out about any new provision or condition for allowing disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in order to qualify any discount for deduction whether it be a trade discount, or cash discount, or any other form of discount, such discount should be shown in the tax invoice separately and the sale price along with tax thereon should be collected from the buyer without including the discount granted. Since the conditions for deduction of discount from taxable turnover are mandatory, the appellants/petitioners have no escape from liability to pay tax on the original sale price on which they have in fact collected sales tax and remitted the same. The present attempt to get refund of tax paid based on the discount allowed through credit notes in our view is not tenable and is not permissible under the Act. For the foregoing reasons, we c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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