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Judgment
N. Kumar, J.—Learned Government Advocate is directed to take notice for respondents in STRP No. 132 of 2012. The Revenue has preferred STRP Nos. 3, 244 and 245 of 2012 and the assessee has filed STRP No. 132 of 2012 challenging the order dated 15-7-2011 passed by the Karnataka Appellate Tribunal, Bangalore (hereinafter referred to as ''the Tribunal'' for short) made in STA Nos. 982 to 984 of 2008, whereby the Tribunal has partly allowed the appeals and set aside the order passed by the authorities below insofar as disallowing discount for the tax period from April 2006 to 31-3-2007 and also directing the Assessing Authority to allow exemption towards discount allowed as per the credit note issued subsequent to the date of invoice and to issue revised demand notice.
The assessee is a registered dealer under the provisions of Karnataka Value Added Tax Act, 2003 (hereinafter referred to as ''the KVAT Act'' for short) engaged in the supply of LPG. The assessments for the tax period April 2006 to March 2007 were concluded u/s 39(1) of the KVAT Act disallowing the discount against which the assessee preferred appeals before the First Appellate Authority who dismissed the appeals confirming the order passed by the Assessing Authority. Being aggrieved by the said order, the assessee preferred second appeals before the Karnataka Appellate Tribunal (hereinafter referred to as ''the Tribunal'' for short). The Tribunal has allowed the appeals of the assessee in part and set aside the assessment order passed by the Assessing Authority which was confirmed by the First Appellate Authority to the extent of disallowing discount for the tax period from April 2006 to March 2007. However, the Tribunal declined to grant benefit of exclusion of transportation charges. That is how both State as well as the assessee have preferred these revision petitions.
This Court had an occasion to consider the question whether the discount falls outside the turnover in the case of Southern Motors, Bangalore v. State of Karnataka and Others 2014 (79) Kar. L.J. 533 (HC) (DB) in W.A. Nos. 5769 to 5785 of 2012 (T-RES), decided on 3-4-2013, wherein it was held that:
"Once the sale invoice is issued and the sale price is collected along with tax, the aggregate of such sale constitutes the total turnover and the tax is payable on taxable turnover. To arrive at the taxable turnover what are the deductions that are legitimately be made is provided under Rule 3(2) of the Karnataka Value Added Tax Rules, 2005. One such permissible deduction is that the amount paid by way of discount provided that the discount is reflected in the sale invoice. Accordingly by issuing a credit note after receiving the amounts, of course, before filing the returns it cannot be said that the amount of discounts goes outside the purview of the turnover".
In the instant case also, discount do not find a place in the tax invoice. So-called discount is given after completion of the sale which is not acceptable and therefore, the order passed by the Tribunal excluding discount from taxable income is erroneous. Accordingly, the said order is hereby set aside and the order passed by the Assessing Authority which was confirmed by the First Appellate Authority is restored.
The second issue involved in this case is regarding transportation charges, whether it is to be included in the sale invoice or to be excluded? The Tribunal has held that the transportation charges incurred by the assessee for the transportation of LPG is a presale expenditure and therefore, invariably forms a part of sale price of LPG and therefore, liable to tax in the hands of the assessee. This Court also had an occasion to consider the similar question and as held that the transportation charges incurred by the assessee for transportation is a presale expenditure and it forms part of the sale price and therefore liable for tax. Therefore, we do not see any infirmity in the impugned order passed by the Tribunal. For the aforesaid reasons, we pass the following:
ORDER
STRP Nos. 3, 244 and 245 of 2012 filed by the Revenue are allowed. The impugned order is hereby set aside.
STRP No. 132 of 2012 filed by the assessee is dismissed.
The judgment of this Court in Southern Motors case is under challenge before the Hon''ble Supreme Court in SLP Nos. 28309 to 28325 of 2013. In the event of judgment of the Apex Court being in favour of the assessee, the assessee would be entitled to the benefit, otherwise the consequences of this order follows.