Case: Deputy Commissioner Of Sales Tax (Law) Board Of A Revenue(T Vs. Advani Oorlikon (P) Ltd. Trivandrum

2. The assessee is a private limited company carrying on business as sole selling agent for a certain brand of welding electrodes. For the goods supplied to retailers, it charged them the catalogue price less trade discount. The catalogue price is the price which the retailer is entitled to charge the consumer. For the assessment year 1971-72, the returns filed under the Central Sales Tax Act, 1956 showed a taxable turnover of inter-State sales amounting to Rs. 8, 71, 624/-. This figure was derived by deducting from the catalogue price the amount of Rs. 1, 06, 708/- paid as trade discount by the assessee to retailers. The Sales Tax Officer refused to allow the deduction and computed the taxable turnover at Rs. 9, 78, 332/-. The Sales Tax Officer was of the view that the amount paid by way of trade discount could not be excluded from the catalogue price. The assessee appealed, and the Appellate, Assistant Commissioner upheld its claim that trade discount did not form part of the turnover, and it could not therefore attract sales tax. A second appeal filed by the Revenue was dismissed by the Appellate Tribunal. The Revenue applied in revision to the High Court of Kerala and the revision application has been dismissed. The Revenue appeals.

Reasoning:
4. We have considered the matter carefully and in our judgment the appeal must failIt is immaterial that the definition of "sale price" in Section 2(h) of the Act does not expressly provided for the deduction of trade discount from the sale price. Indeed, having regard to the circumstance that the sale price is arrived at after deducting the trade discount, no question arises of deducting from the sale price any sum by way of trade discount.Nor is there any question here of two successive agreements between the parties, one providing for sale of goods at the catalogue price and the other providing for an allowance by way of trade discount. Having regard to the nature of a trade discount, there is only one sale price between the dealer and the retailer, and that is the price payable by the retailer calculated as the difference between the catalogue price and the trade discount. There is only one contract between the parties, the contract being that the goods will be sold by the dealer to the retailer at the aforesaid sale price8. In our judgment, the sale price which enters into the computation of the assessees turnover for the purpose of assessment under the Central Sales Tax Act is obtained after deducting the trade discount from the catalogue price. The trade discount allowed by the assesee cannot be included in the turnover.