REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 2516-2517 OF 2012 (Arising out of S.L.P. (Civil) Nos. 26102-26103 of 2010)

M/s IFB Industries Ltd.              …..Appellant

Versus

State of Kerala            …..Respondent

AND

CIVIL APPEAL NOS. 2521-2522 OF 2012 (Arising out of S.L.P. (Civil) Nos. 6861-6862 of 2011)

The India Cements Ltd.      …Appellant

Versus

The Assistant Commissioner  & Ors.                                      …Respondents  

JUDGMENT

Aftab Alam,J.

1. Leave granted in both the Special Leave Petitions.

2. How  far  deductions  are  allowable  under  rule  9(a)  of  the  Kerala  

General Sales Tax Rules, 1963 (“the Rules” hereinafter) for trade discounts?  

3. A division bench of the Kerala High Court has held that unless the  

discount was shown in the invoice itself, it would not qualify for deduction  

and further that any discount that was given by means of credit note issued  

subsequent to the sale of the article was in reality an incentive and not trade  

discount eligible for exemption under rule 9(a) of the Rules. The decision  

was rendered somewhat gratuitously in the case of M/s IFB Industries Ltd.,  

(the  appellant  in  the  appeals  arising  from SLP (Civil)  Nos.  26102-03 of  

2010)  but  it  is  the  India  Cements  Ltd.,  the  appellant  in  the  other  set  of  

appeals (arising from SLP (Civil)  Nos. 6861-62 of 2011), that got badly hit  

by the decision and its claim for deduction of many kinds of trade discounts  

was rejected summarily and even without an opportunity of any effective  

hearing to it right from the stage of assessment up to the High Court. But to  

put  the  matter  in  order,  we  must  see  how  the  issue  developed  before  

reaching this Court and for that we need to first advert to the case of M/s  

IFB Industries Ltd.

4. M/s IFB Industries Ltd. is a manufacturer of home appliances. It has a  

scheme of trade discount for its dealers under which the dealer, on achieving  

a pre-set sale target gets certain discount on the price for which it purchased  

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the articles from the manufacturer, the appellant. As the discount is subject  

to achieving the sale target the dealer would naturally qualify for it in the  

later part of the financial year/assessment period, that is to say, long after the  

sales took place between the appellant and its dealer. For the sales taking  

place between the appellant and its dealer after the sale target is achieved,  

the dealer would of course get the articles on the discounted price but for the  

sales that took place before the sale target was achieved, the appellant would  

issue  credit  notes  in  favour  of  the  dealer.  The  Assessing  Authority,  in  

principle,  accepted  the  appellant’s  claim for  deduction  of  the  amount  of  

discount given by it to its dealers through credit notes under rule 9(a) of the  

Rules and it was only a dispute over computation that took the matter to the  

High Court and the High Court held that the discount in question was not  

trade discount at all and it was not eligible for deduction in terms of rule  

9(a).              

5. The  case  of  the  appellant  (M/s  IFB  Industries  Ltd.)  relates  to  

assessment  periods  2001-02  and  2002-03.  Dealing  with  the  assessment  

periods  2001-02,  the  Assistant  Commissioner  (Assessment),  Commercial  

Taxes,  (the  Assessing  Authority)  in  its  order  dated  January  27,  2006  

observed that the dealer had given discount to the tune of Rs.58,15,485/- and  

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as the discount was allowable in ordinary course of business, that turnover  

was allowed as exempted.

6. In making the computation, however, the Assessing Authority started  

with the figure of ‘Taxable turnover as per account (Home appliances) Vth  

Schedule  Items’  that  was  Rs.11,62,36,424.23.  He  then  added  to  it  the  

amounts of (i) Turnover under AMC, (ii) Sales return, (iii) Stock transfer,  

(iv) Second sale, (v) Tax collected and (vi) Scheme Discount amounting to  

Rs.58,15,485/-  and arrived at  the  figure  of  ‘total  turnover  proposed’  that  

came to Rs.14,27,69,607/-.  From the total  turnover,  he then deducted the  

amounts of (i) AMC, (ii) Sales return, (iii) Second sales, (iv) Tax Collected  

and (v) Scheme Discount being the sum of Rs.58,15,485/- and, thus, finally  

arrived at the figure of Rs.11,95,56,460/- as the ‘taxable turnover proposed’.

7. The Assessing Authority  passed a  similar  order  for  the  assessment  

period 2002-03 as well.  

8. The appellant had objection to the computation made by the Assessing  

Authority. It contended that though in principle allowing deduction for the  

trade  discount  the  Assessing Authority  actually  denied any deduction  by  

subtracting the  amount  of  trade  discount  only after  first  adding it  to  the  

turnover. In the computation made by the Assessing Authority the amount of  

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trade discount, thus, got neutralized and the appellant did not actually get  

any deduction of the trade discount from its turnover.

9. Before  proceeding  further,  it  needs  to  be  understood  that  the  

appellant’s objection would have any basis only in case it is shown that the  

original figure of Rs.11,62,36,424.23 taken by the Assessing Authority as  

‘Taxable turnover’  was  inclusive of  the  amount  of  the  scheme discount  

being the sum of Rs.58,15,485/-. For, unless the amount of scheme discount  

was a factor of ‘Taxable turnover’ there would be no question of deducting  

it  from taxable  turnover.  Only in  case the  appellant  could show that  the  

figure of Rs.11,62,36,424.23 also included the amount of Rs.58,15,485/- as  

the trade discount,  there would be any question of deducting it  from the  

larger figure.

10. Be  that  as  it  may,  the  appellant  preferred  appeals  against  the  

Assessment Order (Sales Tax Appeal Nos. 219 & 220 of 2006) in which it  

also  took  the  objection  that  the  computation  made  by  the  Assessing  

Authority  by first  adding up the amount of  trade discount and only then  

deducting it  from the turnover  denied it  the  exemption of  trade discount  

which the Assessing Authority had himself allowed in the earlier part of his  

order. It is significant to note, however, that in the appeal also it was never  

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stated  that  the  figure  of  Rs.14,27,69,607/-  forming  the  basis  of  the  

computation included the amount of trade discount of Rs.58,15,485/-.

11. The Deputy Commissioner (Appeals) III Ernakulam, (the Appellate  

Authority)  seems  to  have  accepted  the  case  of  the  appellant  and  while  

disposing of its appeals by order dated April 28, 2006 observed that in effect  

the appellant’s claim was disallowed even though it was allowed in the order  

of  the  Assessing  Authority.  He,  accordingly,  directed  the  Assessing  

Authority to verify whether it was a computation mistake and to modify the  

order accordingly.  

12. Against  the  order  passed  by  the  Appellate  Authority,  the  Revenue  

preferred appeals (T.A. Nos. 429 & 430 of 2006/C.O. 67 & 68 of 2006)  

before the Kerala Sales Tax Appellate Tribunal and the Tribunal by its order  

dated February 28, 2007 allowed the Revenue’s appeals holding that since  

there was no assessment on trade discount, the direction of the Assessing  

Authority to verify whether there was a mistake in this computation was  

without any basis.

13. The appellant made a Rectification application but it was rejected by  

the Tribunal by order dated August 29, 2008.

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14. Against  the  order  passed by the  Sales  Tax Appellate  Tribunal,  the  

appellant went to the High Court in ST Revision Nos. 396 & 397/2008. The  

appellant,  safe in the belief  that the Assessing Authority had in principle  

accepted  its  claim  for  deduction  of  the  trade  discount  from  the  taxable  

turnover, confined its revision to the computation made by the Assessing  

Authority.  The  High  Court,  nevertheless,  went  into  the  basic  question  

whether the discount under the scheme of the appellant at all qualified for  

deduction under rule 9(a) of the Rules. In a brief order dated June 26, 2009  

that does not refer to any earlier  precedents of this  Court or even of the  

Kerala High Court, the High Court observed that from a plain reading of rule  

9(a) it  appeared that what is allowable as discount in the computation of  

taxable turnover is the trade discount given in the bills. According to the  

High Court, what is insisted in the rule is that the purchaser should have paid  

the  price  charged,  less  the  discount.  And  this  certainly  meant  that  the  

discount should be shown in the original invoice and tax should be charged  

only on the  net  amount exclusive  of  discount  so  that  the  buyer  gets  the  

deduction towards discount.

15. On the appellant’s claim of deduction of their trade discount from the  

taxable turnover, the High Court made the following observation: –

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“Petitioner  is  a  manufacturer  engaged in  supply  of  goods  in  wholesale to distributors and dealers.  Sales are therefore first  sales  and discount  if  any given can only be trade margin  to  dealers. If tax is not to be charged on the dealer margin, then  discount should be given in the invoice itself. If the petitioner  has made sales in this way, then necessarily deduction should  have been claimed in the monthly return itself as the taxable  turnover  does  not  cover  discount/trade  margin  given  in  the  invoice.  On  the  other  hand,  in  the  Tribunals  order,  what  is  referred to as scheme discount which is nothing but incentives  given by manufacturers, and wholesalers to dealers, may be for  seasonal sales or may be for annual sales. Such incentives are  normally given by the credit note at the end of the season or at  the end of the year. These incentives given through credit notes  are outside the scope of discount covered by Rule 9(a) of the  KGST Rules.”

16. Observing thus, the High Court found and held that the assessment in  

the case of the appellant had not been properly made. It, accordingly, set  

aside the orders passed by the Revenue authorities and remitted the case to  

the Assessing Authority for passing fresh assessment orders in light of its  

order  and  after  examining  the  quarterly  returns  and  the  annual  returns  

submitted by the appellant.

17. The  appellant  has  brought  the  matter  to  this  Court  making  the  

grievance that though the order of the High Court is an order of remand, for  

all  intent  and purposes  it  puts  an  end to  its  claim of  deduction of  trade  

discount from its taxable turnover.

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18. Shortly after the case of M/s IFB Industries Ltd., came the case of  

Godrej  and  Boyce  Mfg.  Co.  Ltd.  and  in  an  equally  brief  order  dated  

November 4, 2009 a bench of the Kerala High Court took the same view on  

the question of deductibility of trade discounts as in the case of M/s IFB  

Industries  Ltd.  The  High Court  observed that  in  order  to  be  eligible  for  

deduction in terms of rule 9(a) of the Rules the discount must be granted in  

the invoices itself. According to the High Court, the rule stipulates that in  

order to qualify for deduction it should be proved that the purchaser had paid  

the sale price less amount of discount allowed. This presupposed that the  

deduction available is only trade discount allowed in invoices and not on  

credit notes given later.

19. By the time the case of the India Cement Ltd. (appellant in the appeals  

arising from SLP(C) Nos. 6861-6862 of 2011) came up for assessment for  

the assessment periods 2003-04 and 2004-05 the decision of the High Court  

in M/s IFB Industries Ltd. was firmly before the Revenue authorities. The  

Assessing Authority, therefore, turned down the claim of the appellant, the  

India Cement  Ltd.,  for exemption of different kinds of discount,  namely,  

special  discount,  annual  discount,  turnover  discount,  target  discount  etc.  

given  by  means  of  credit  notes  and  aggregating  to  the  large  sum  of  

Rs.25,55,83,751.82.  The  Assessing  Authority  referred  to  the  High  Court  

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decision in M/s IFB Industries Ltd. and rejected the appellant’s claim for  

deduction of the aforesaid amount from their taxable turnover holding that,  

discounts given through credit notes were nothing but incentives and did not  

come under rule 9(a) of the Rules.

20. The appellant challenged the assessment orders before the High Court  

in Writ Petitions (WP(C) Nos. 34989 & 38517 of 2010). A single judge of  

the High Court declined to entertain the writ petitions filed directly against  

the assessment orders and by order dated January 18, 2011 dismissed the  

writ petitions leaving it open to the appellant to seek their remedies before  

the statutory authorities.

21. Against  the order of the single judge the appellant filed intra-court  

appeals (W.A. Nos. 173 & 177 of 2011). The division bench agreed that  

since the appellant was confronted with an order of the division bench of the  

High Court, it would be pointless to relegate it to the statutory authorities. It  

referred to its  orders  passed in the  cases  of  M/s IFB Industries  Ltd.  and  

Godrej and Boyce Mfg. Co. It also noted that against its decision in M/s IFB  

Industries Ltd. a SLP was filed which was admitted by this Court. It also  

referred to the decisions of this Court and of the Kerala High Court relied  

upon by the appellant in support of the contentions that a discount in order to  

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qualify for deduction under rule 9(a) need not necessarily be shown in the  

invoice itself and may also be given by means of credit notes. It, however,  

declined to reconsider its order in M/s IFB Industries Ltd. and by order dated  

February 8, 2011 dismissed the appeals observing as follows: –  

“We feel that appellant’s remedy is to challenge the decision of  this  Court  relied  on by  the  Assessing  Officer  in  disallowing  claim  of  deduction  of  discount  before  the  Supreme  Court.  Consequently, following our above two decision, we uphold the  assessment  disallowing  discount  on  credit  notes.  These  Writ  Appeals are, accordingly, dismissed on merit leaving it open to  the appellant to approach the Supreme Court, if they have any  grievance against this judgment.”

22. In  the  aforesaid  circumstances,  the  appellant  is  before  this  Court  

making the grievance that its claim stands rejected practically unheard and  

without any considerations of the earlier precedents on the point relied upon  

by it in support of its claim.

23. In order to clearly understand the kinds of discount that are exempted  

in terms of rule 9(a) we may usefully refer to the definition of ‘turnover’  

under Section 2(xxvii) of the Kerala General Sales Tax Act, 1963. The main  

body of the definition is as follows: –   

“(xxvii)  “turnover”  means  the  aggregate  amount  for  which  goods are either  bought or  sold,  supplied or  distributed by a  dealer, either directly or through another, on his own account or  on account of others, whether for cash or for deferred payment  or other valuable consideration.”

It is followed by several explanations. Explanation 2(ii) is as follows: –  

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“Explanation 2 – Subject to such conditions and restrictions, if  any, as may be prescribed in this behalf,-

(i) xxx

(ii) any  cash  or  other  discount on  the  price  allowed  in  respect of any sale and any amount refunded in respect of  articles returned by customers  shall not be included in  the turnover.”

(emphasis added)

24. It is, thus, to be seen that the very definition of “turnover” recognises  

discounts other than cash discount and provides that those other discounts  

too like the cash discount shall not be included in the turn over.

25. Rule 9(a) provides as follows –   

“9.  Determination  of  taxable  turnover  –  In  determining  the  taxable turnover, the amounts specified in the following clauses  shall  subject  to  the  conditions  specified  therein,  be deducted  from the total turnover of the dealer: -  

(a) All  amounts  allowed  as  discount,  provided  that  such  discount is allowed in accordance with the regular practice  in the trade and provided also that the accounts show that  the purchaser has paid only the sum originally charged less  the discount.”

(emphasis added)

26. It is significant to note that the rule does not speak of invoices but  

stipulates  that  the  discount  must  be  shown in  the  accounts.  On  a  plain  

reading of the provision it is clear that the exemption is allowable subject to  

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two conditions; first, the discount is given in accordance with the regular  

practice  in  the  trade  and  secondly,  the  accounts  should  show  that  the  

purchaser had paid only the sum originally charged less the discount. We  

find nothing in rule 9(a) to read it in the restrictive manner to mean that a  

discount in order to qualify for exemption under its provision must be shown  

in the invoice itself.

27. We, therefore, find it difficult to sustain the view taken by the Kerala  

High Court in the orders impugned before us.

28. We are fortified in our view on the basis of some earlier decisions of  

this Court and some High Courts, including the Kerala High Court.

29. In  Deputy  Commissioner  of  Sales  Tax  (Law)  Board  of  Revenue  

(Taxes)  v.  M/s  Advani  Oorlikon (P)  Ltd.,  (1980)  1  SCC 360,  this  Court  

pointed out that cash discounts and trade discounts are wholly distinct and  

separate  concepts  and  are  not  to  be  confused  with  one  another.  Advani  

Oorlikon was a case under the Central Sales Tax Act and section 2(h) of the  

Act defined the expression ‘sale price’ to mean ‘the amount payable to a  

dealer as consideration for the sale of any goods, less any sum allowed as  

cash discount…’. It is to be noted that though the Central Sales Tax Act  

mentioned only cash discount as being deductible from sale price, this Court  

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nevertheless held that any trade discount must also be similarly deducted for  

determining sale price of goods. In paragraphs 5 and 6 of the judgment the  

Court observed and held as follows: –  

“5.  At  the  outset,  it  is  appropriate  that  we set  forth  the  two  relevant  definitions  contained  in  the  Central  Sales  Tax  Act.  Section 2(j) defines  "turnover"  to  mean "the  aggregate  of  the  sale  prices  received  and  receivable  by  him  (the  dealer)  in  respect of sales of any goods in the course of inter-State trade  or  commerce...".  And  Section 2(h) of  the  Act  defines  the  expression "sale price" to mean "the amount payable to a dealer  as consideration for the sale of any goods, less any sum allowed  as cash discount according to the practice normally prevailing  in the trade...". It is true that a deduction on account of cash  discount  is  alone  specifically  contemplated  from  the  sale  consideration in the definition of "sale price" by Section 2(h),  and there  is  no doubt that  cash discount  cannot  be confused  with trade discount. The two concepts are wholly distinct and  separate. Cash discount is allowed when the purchaser makes  payment promptly or within the period of credit allowed. It is a  discount  granted  in  consideration  of  expeditious  payment.  A  trade discount is a deduction from the catalogue price of goods  allowed by wholesalers to retailers engaged in the trade. The  allowance enables the retailer to sell the goods at the catalogue  price and yet make a reasonable margin of profit after taking  into account his business expense. The outward invoice sent by  a wholesale dealer to a retailer shows the catalogue price and  against that a deduction of the trade discount is shown. The net  amount  is  the  sale  price,  and it  is  that  net  amount  which  is  entered in  the  books of  the  respective  parties  as  the  amount  reliable. Orient paper Mills Ltd. v. State of Orissa, (1975) 35  STC 84: 1974 Tax LR 2224 (Ori. HC)

6. Under the Central Sales Tax Act, the sale price which enters  into  the  computation of  the  turnover  is  the  consideration for  which the goods are sold by the assessee. In a case where trade  discount is allowed on the catalogue price, the sale price is the  amount determined after deducting the trade discount. The trade  

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discount does not enter into the composition of the sale price,  but  exists  apart  from  and  outside  it  and  prior  to  it.  It  is  immaterial that the definition of "sale price" in Section 2(h) of  the Act does not expressly provide 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.”

30. The decision of this Court in Deputy Commissioner of Sales Tax(Law)   

Board of Revenue (Taxes), Ernakulam v. Motor Industries Co, Ernakulam,  

(1983) 2 SCC 108, is on rule 9(a) of the Kerala General Sales Tax Rules and  

the discount admissible to exemption under that provision. It may, however,  

be clarified that in terms of the rule, as it stood at that time, exemption was  

allowable on trade discount given not only in accordance with the regular  

practice in the trade but also in accordance with the terms of the contract or  

agreement entered into a particular case.  In Motor Industries Co. the claim  

for exemption was on the basis of the agreement entered into between the  

dealer and its purchaser, the retailer. But that is of no significance as the  

issue  in  the  case  was  in  regard  to  the  nature  of  discount  admissible  to  

exemption under rule 9(a). This Court, upholding the decision of the Kerala  

High Court allowing exemption to the dealer, held and observed as follows:-  

“We shall first deal with the claim made in respect of “service  discount”. Under clause (a) of Rule 9 of the Rules all amounts  allowed  as  discount  where  such  discount  is  allowed  in  accordance  with  the  regular  practice  of  the  dealer  or  is  in  accordance with the terms of contract or agreement entered into  

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in a particular case have to be deducted from the total turnover  in determining the taxable turnover provided  the accounts  of  the  assessee  show that  the  purchaser  has  paid  only  the  sum  originally  charged  less  the  discount.  In  the  instant  case  the  “service  discount”  in  respect  of  which  the  deduction  was  claimed  by  the  assessee  was  the  additional  trade  discount  allowed by it to its main distributors (purchasers) namely the  T.V.S. group of companies which constitute a prestigious group  of  commercial  concerns  over  and  above  the  normal  trade  discount  in  consideration of  the  extra  benefit  derived  by the  assessee by reason of the marketing of its goods through them.  This additional trade discount is allowed in accordance with the  trade agreement subject to periodical variation depending upon  the cost structure and changes in market conditions. It  is not  disputed that there were such agreements between the assessee  and  the  purchasers  and  the  accounts  of  the  assessee  truly  reflected the actual discount allowed to the purchasers. What is  however  urged  by  the  department  is  that  the  said  additional  discount allowed by the assessee could not strictly be termed as  discount  as  it  was  in  lieu  of  services  rendered  by  its  main  distributors  by  way  of  popularisation  of  the  sales  and  consumption of the products sold by the assessee. We find it  difficult  to  accept  the  submission  made  on  behalf  of  the  department. Rule 9(a) says that all amounts allowed as discount  either in accordance with regular practice or in accordance with  agreement would be deductible from the total turnover provided  they are duly supported by the entries in the accounts of the  assessee. Ordinarily any concession shown in the price of goods  for any commercial reason would be a trade discount which can  legitimately be claimed as a deduction under clause (a) of Rule  9  of  the  Rules.  Such  a  concession  is  usually  allowed  by  a  manufacturer or a wholesale dealer in favour of another dealer  with the object of improving prospects of his own business. It is  common  experience  that  when  goods  are  marketed  through  reputed  companies,  firms  or  other  individual  dealers  the  demand  for  such  goods  increases  and  correspondingly  the  business of the manufacturer or the wholesaler would become  more  and  more  prosperous  and  its  capacity  to  withstand  competition from other manufacturers or other dealers dealing  in similar goods would also improve. Hence any concession in  

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price  shown in  such  circumstances  by  way  of  an  additional  incentive with a view to promote one's own trade does qualify  for  deduction  as  a  trade  discount.  It  cannot  be  termed  as  a  service charge as is attempted to be termed in this case. In fact  in this case apart from buying the products of the assessee, no  other  service  is  being  rendered  by  the  T.V.S.  group  of  companies to the assessee. In the circumstances the additional  discount or “service discount” as it is called in this case is no  other than the discount referred to in Rule 9(a) of the Rules.”

31. In Union of India and Others v. Bombay Tyres International (P) Ltd.,  

(2005) 3 SCC 787, in a very brief order this Court very succinctly described  

‘trade discount’ and held it to be deductible from the sale price:  

“(1)  Trade  discounts –  Discounts  allowed  in  the  trade  (by  whatever name such discount is described) should be allowed to  be deducted from the sale price having regard to the nature of  the goods,  if established under agreements or under terms of  sale or by established practice,  the allowance and the nature  of the discount being known at or prior to the removal of  the goods. Such trade discounts shall not be disallowed only  because they are not payable at the time of each invoice or  deducted from the invoice price.”

                                         (emphasis added)  

32. A bench of the Andhra Pradesh High Court in  Godavari Fertilizers   

and Chemicals Ltd. v. Commissioner of Commercial Taxes, (2004) 138 STC  

133, examined a number of earlier decisions on this point and came to the  

conclusion that a discount given by means of credit notes issued subsequent  

to  the  sale  is  as  much  a  trade  discount  admissible  to  deduction  in  

determining the turnover of a dealer.

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33. A  bench  of  the  Kerala  High  Court  in  Kalpana  Lamps  and  

Components Ltd. v. State of Kerala, (2006) 143 STC 666, in paragraphs 4  

and 5 of the judgment observed and held as follows: –  

“4. According to us, in the present case, the Appellate Tribunal  dismissed  the  appeal  merely  on  the  ground  that  the  circumstances  under  which  the  special  discount  has  been  granted to the customer (sic). Learned counsel for the petitioner  submits  that  the  petitioner  was  not  able  to  convince  the  Tribunal  because  no  opportunity  was  given  by  both  the  authorities,  viz.,  the  assessing  authority  and  the  appellate  authority. They rejected the case of the petitioner merely on the  ground that the books of accounts were not produced. Hence,  the  petitioner  prayed  for  an  opportunity  to  explain  the  circumstances under which the special discount was granted.

5. Before parting with the case, we may state that so far as the  special  discount is  concerned, all  that the authorities have to  look into whether as a matter  of  fact,  the petitioner received  only the sum originally charged less the discount. It is the look  out of the traders to see that the trade increase and it is for that  purpose the trade discount is given. Hence, a person may not be  able to clearly prove as to why the special discount was given.  But  if  there  has  been a  consistent  practice  of  giving  special  discount, that has to be accepted by the assessing authority.”

34. On the basis of the discussions made above and in light of the earlier  

decisions of the Court, we are unable to sustain the orders of the Kerala High  

Court coming under appeal. The impugned orders in both the appeals are set  

aside. The cases of the appellants for the respective assessment periods are  

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remitted to the Assessing Authority with a direction to make assessments  

and pass fresh orders in accordance with law and in light of this judgment.  

The Assessing Authority shall not reject the appellants’ claim for exemption  

of  the  amounts  of  trade  discount  solely  on  the  ground that  the  discount  

amounts were not shown in the sale invoices.

35. In the result the appeals are allowed but with no orders as to cost.

          ……………………………J. (Aftab Alam)

……………………………J. (Anil R. Dave)

New Delhi; February 27, 2012.  

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