DEPUTY COMMISSIONER OF SALES TAX(LAW) BOARD OF REVENUE(TAXES), ERNAKULAM versus ADVANI OORLIKON(P) LTD. TRIVANDRUM

Citation: [1980] 1 S.C.R. 931 · Decided: 12-10-1979 · Supreme Court of India · Bench: N.L. UNTWALIA · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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931 
oE.PUTY COMMISSIONER OF SALES TAX (LAW) BOARD OF 
. 
REVENUE (TAXES). ERNAKULAM 
v. 
ADVAN£ OORLIKON (P) LTD. TRIVANDRUM 
October 12, 1979 
[N. L. UNTWALTA AND R. S. PATHAK, JJ.] 
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J.. 11, ~o!" selling agents for a- certain brand of Wclu.ng Ekctro<l.:s. It ch~r;;~d the 
l -catllogu9 price less tmuc discount from r<!tnil~rs for the g<><XJ.. suppli.'\1. The 
• e~taloguo price is the price which the retailer is cnlillcd to charge the con,umcr . 
. 1 The returns fiicd under the Central Sales Tax Act, 1956, showed a ta:\able turn-
<lVtr of inter-~tatc !des amounting to R~. 8,71,624/- for the r.;>co.sm.:nt \car 
1971-72. 
This figure was derived by th:ducting Rs. 1,06,708/- from tho! ~ata­
losue price paid as trnde discount by the assessee to the retailers. The S::t!o!S Ta:t 
()fficcr, refused to allow the deduction nnd computed toe ta.~abl¢ tu:noYcr 
at Rs. 9,78,332/-. On appeal, the Appellate As.sbtant Commi:;sioner uphdd the 
au~~ce's claim that trauc di,count did not form part of the 
turn-owr and 
coijJd not, therefor .... ultruct sales tax. A. second appeal \\-:IS dismi,...:<J by the 
.Aprclbtc Tribunal. 
A. revision npplication by the Revenue to tho: High Court 
"'lS also d ismi.s.sed. 
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It was contend.:d (i) that the High Court errcJ in ufiirming that an amount 
paid by \\\1}' of tr:ide discount, could not be incluu<d in the taxable turno\·cr E 
;, !or the purpos.: of as.~essment, (ii) that in effect the o.s.~e:;sec entered into two 
di,tinct contrncb with the ~tailer, the first contr~ct rcl~tc-d to the sale of goods 
~t the l'.at:..logue price and the bCCond contract stipulated that the retailer could 
aelually P'IY the sale price less trnde discount and that since the sale was ef!'<!cted 
-:l'ld.:c the fint contract the entire umount treated as consideration for the s:Jc 
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Wider that contract IJad to be inclwkd in the ta.~nble tum-o1·er. 
-:y 
Dis~ine the otppeal, 
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HELD: It is true that a deuuction on account of cu.sh 
"'count IS won~ 
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t~ci1icully conten1platcd from the &ale coruidcr~tion in the definition .of ">ale 
PI~~ by section 2(b) und that ca-b dhcount cannot be confused 
~nth trnd_e 
. 
~'IICOu.1t. Titey me two bcpara~ und di>tinct concepts. Casb uc;count 1s 
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11~ed \\hen the pun.:h:~r make$ payment rromptly or withi~ ~he p<rio<l of 
1 I 
~tl.'CJt allo10.ed. It ill 11 di5count grnnta.l io con>idcrution of e.~p.:dtUous paym~nt. 
.... 
-~ trll(le di>.:ount is a deduction from the catalogue price of goods allowed .'~>Y 
toiu!l.~cr, to retailers engaged in the traOI). Tho allowance enables the re~cr 
"-ll the good, at the catalogue price emf yet malic a ~asonabl~ ru~rgm of 
l>flll'Jt ~her l:tlin .. lnt 
t h' b,,.1•0 ·:.s exn.·nsc. The outward mvotee sent 
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show~ tbo catuluguo pncc nn 
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c. t r o n re a tr 
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. ~on o{ the tmdo discount is ~h.own. Tbe net amount IS t e ~a c pn~, 
"' It .. that net nmount wb.kh is entered in the booh of the respective parttes 
tbo tiJJIOUnt re~li:sable. !'~] G-H, ,34.\.CI 
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932 
SUPREME COURT REPORTS 
[1980] 1 S.C.Lt 
Orient Ptlper Mills Ltd. v. State of Orissa (1975) 35 S.T.C. 34 referred to 
· Under the Sales Tax Act, the s:tle price which enters into the comptt . • 
. 
• ' f 
hi h th 
od 
I attO(l-
Of the turnover is the c?nssdcratton• or w c 
c go 
~ arQ ~old by the as~cs~ee 
Where trade d~scount ts allowe~ on the catal.oguc pncc, .th~ sale price · is th~ 
amount detcrrnmcd after dcductr~g· the trade diScount. It IS 1mmateria·l that the 
definition of "Sale Price" in sectson 2(h) of the Act .docs not expressly provid 
for the deduction of trade d~co~nt f~om the sale pnce .. Havin;; regard to th: 
circumstance t~at the sale pr.tcc IS arnvcd at aftc~ dcductmg the trade discount, 
no question ariSes of deductmg from the sale pnce any sum by way of trade 
discount. Nor is there any question here of two successive agreements between 
the parties, one proviuing for sale of the gO<XI$ at the cat:tlosue pr?cc and the 
other providing for an allownnce by way of trade discount. Having regard te> 
the nature of t.r.:de discount, there is only one- snlc price between the dealer 
and the retailer and thnt is the price payable by the retailer calculated at the 
differen

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