DEB KUMAR CHAKRABORTI, J. -
(1.) THIS is an application under section 8 of the West Bengal Taxation Tribunal Act, 1987 wherein the petitioner has assailed the assessment order dated June 28, 2005 passed by the Assistant Commissioner of Commercial Taxes, Corporate Division, for the period for four quarter ending on March 31, 2003 under the West Bengal Sales Tax Act, 1994 and the appellate order dated May 23, 2006 passed by the Deputy Commissioner of Commercial Taxes, Corporate Division and the revisional order dated June 15, 2007 passed by the Additional Commissioner of Commercial Taxes, West Bengal, for disallowance of claim for cash discount, quantity rebate and special rebate. The petitioner, M/s. Nagarjuna Fertilizers & Chemicals Limited, is an incorporated company within the definition under the Companies Act, 1956 having its registered office at Hyderabad in Andhra Pradesh and one of its branch office at Vaibhab Building, third floor, 4, Lee Road, Kolkata 700 020. The petitioner is a manufacturer of chemical fertilizer and manure and is registered under the State and Central Sales Tax Acts of different States in India including West Bengal. The assessment for four quarter ending on March 31, 2003 was completed by the Assistant Commissioner of Commercial Taxes, Corporate Division (in short, "the ACCT, CD"), respondent No. 1, on June 28, 2005. In assessment the books of accounts were rejected, gross turnover was estimated, claims were disallowed and penalty was imposed. Specifically, the assessing officer rejected the claims of cash discount of Rs. 1,46,06,739, quantity rebate for Rs. 6,11,11,285 and special rebate of Rs. 1,82,19,044. The petitioner -company filed appeal against such disallowances before the Deputy Commissioner, Commercial Taxes, Corporate Division (in short, "the DCCT, CD"), respondent No. 2. The DCCT, CD settled all other claims except cash discount, quantity rebate and special rebate and passed the appellate order on May 23, 2006. In pursuance of the appellate order passed by the DCCT, CD, the assessing officer, i.e., ACCT, CD issued revised demand notice in form 33. Since cash discount, quantity rebate and special rebate were not allowed by the DCCT/CD, the petitioner -company filed revision application before the Additional Commissioner, Commercial Taxes, West Bengal (in short, "the ADDL. CCT, WB"). By an order dated June 15, 2007, the Additional CCT, WB confirmed the order of the authority below. Being aggrieved, the petitioner -company has filed this revision application before this Tribunal.
(2.) Mr. J.A. Khan, learned advocate of the petitioner, has submitted that the petitioner -company has to carry on business in a competitive market and has to match the prices and incentives offered by other players in the field. To enable the distributors to compete, to take into account the local factors like shortfall of rain in particular State adversely affecting sales and above all to leave a margin of profit for its distributors, the applicant offers various trade discounts in the nature of volume linked rebate and cash discount. The trade discounts in the nature of quantity rebate and special rebate are prevalent in the line of the applicant business and allowed as usual trade practice. Such rebates substantially carry the essential/vital features of trade discount as commonly understood. Such discounts are allowed on catalogue or listed price to enable the purchasers/distributors to make some profit in the competitive market. It is a common feature of the business of the applicant to allow credit to its purchasers/distributors for certain number of days previously announced. To induce them to make early payment, the cash discount is allowed to them whenever the payment is made before expiry of the credit period. Such cash discount is allowed according to the ordinary trade practice. The terms, conditions and extent of such rebate/discount are determined beforehand. The scheme is formulated by the management of the applicant, communicated to the purchasers/distributors and rebate/discount is allowed to them if targets fixed are achieved/early payment is made. The purchasers/distributors beforehand know the scheme and make effort to maximize their benefit by achieving higher target/making early payment. It is beforehand known to them that purchase of larger quantity/early payment would result in lower cost of purchase for them and that the gain for them would be higher. The scheme of rebate/discount is open to all purchasers/distributors and anyone who achieves the target reaps the benefit. The rebate/discount forms part of the agreement for sale and has the inevitable effect of reducing the sale price of the applicant/purchase price of the purchaser/distributor. Upon achievement of target and/or receiving of early payment, credit notes are issued to the purchasers/distributors and the amount to which they are entitled is credited to their account. Being a continuous relationship, the amount credited to the account of the purchaser/distributor is generally adjusted against future purchases of the particular purchaser/distributor. If at any point of time the purchaser/distributor decides to stop doing business, or otherwise asks for refund of the amount standing to his credit in the books of the applicant, the applicant is obliged to refund such amount.
(3.) MR . Khan, learned advocate, has further submitted that since the rebate/discount as aforesaid, by its very nature, is allowable post -sale and post raising of invoice, it is never to be found in the invoice. It is only if the purchaser/distributor achieves the target and/or makes early payment that he becomes entitled to such rebate/discount. Therefore, it cannot be expected that such discount would appear in the invoice. The law does not require that such rebate/discount should appear in the invoice. The respondent -authorities are wrong in rejecting the claim for deduction of such rebate/discount on the purported reason that it does not appear in the original in voice. Once a purchaser/distributor becomes eligible for any of the rebates/discounts, credit notes are issued in favour of such dealer and entries are made in his account. It is, thus, that the benefit of rebate/discount is passed on to the purchaser/distributor. There is no dispute that the rebates/discounts are allowed subsequent to sale and raising of invoice. In law, and even otherwise, there is no restriction on allowing of any rebate/discount post -sale. The rebate/discount of the nature in dispute, in fact, cannot be allowed at the time of sale.;