INDIA PISTONS LIMITED Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THESE two cases relate to the same assessee in relation to two different assessment years, 1964-65 and 1965-66. The assessee, in the course of the assessment under the Central Sales Tax Act, 1956

(2.) THE learned counsel for the assessee contends that the assessee is maintaining its books of account on a mercantile basis, that the amount allowed as discount to each of the distributors is credited to their accounts at the end of the year and that such crediting is as good as cash payment. It is urged that the amount given as discount actually goes to reduce the sale price payable by the distributors, that it never forms part of the consideration of the sale and that, therefore, it is only the net amount after deducting the said discounts that can be taken to be the taxable turnover. THE learned counsel placed before us the details of the discount scheme that was effective during the assessment years in question. THE scheme itself is called "bonus discount scheme" and the benefit of the scheme is not extended to all the customers but only to the distributors whose net purchases of all the finished products from the assessee exceeds the target figure agreed to between the parties. THE bonus discount given under that scheme is called "rebate" and the rebate to be given is subject to certain terms and conditions. THE following conditions, namely, conditions 3 to 5, appear to be relevant here :

(3.) UNLIKE explanation 2 to section 2(r) of the Madras General Sales Tax Act which provides that any cash or other discount on the price allowed in respect of any sale shall not be included in the turnover, section 2(h) of the Central Sales Tax Act merely restricts the allowance to cash discount alone, and even the cash discount which is allowable should be in accordance with the practice normally prevailing in the trade. We are not, therefore, in a position to accept the contention of the learned counsel for the assessee that the amounts in this case are to be treated as cash discounts.