JUDGMENT
R.K. Nair, Technical Member
1. This application for revision filed under Section 15 of the Rajasthan Sales Tax Act, 1954 (“RST Act”, for short) before the Rajasthan High Court which stood transferred to this Tribunal with the coming into force of the Rajasthan Taxation Tribunal Act, 1995 is directed against the judgment dated April 12, 1993 in Appeal No. 96/92/ST/Jaipur of the Rajasthan Sales Tax Tribunal (as the Rajasthan Tax Board was then known and hereinafter referred to as “the Board”) by which the judgment dated March 31, 1992 in Appeal No. 620/RST/JPA/DC-3/91-92 of the Deputy Commissioner (Appeals)-III partially accepting the appeal of the present respondent against assessment order dated October 29, 1991 by which the petitioner had ordered for the forfeiture of the amount of tax collected by the respondent on the component of discount and ordering instead for its realisation with interest and thereafter for its refund was set aside.
2. The relevant facts are that the respondent (assessee-firm) gives to its customers (dealers) an annual turnover discount (ATOD). At the time of sale to them the assessee recovers the full amount of tax on the undiscounted, i.e., full, price of the goods. Thereafter, at the end of the year depending on the performance of its dealers, the assessee gives them ATOD and the sales tax on the discount component is also reduced in the bills but the latter pending final assessment was refunded provisionally by the assessee on the basis of a credit note which reads :
“Refund of sales tax on ATOD allowed provisionally and if charged later on by the Sales Tax Department will be debited to your account.”
3. The assessment with respect to the assessee’s assessment year 1988-89 (April 1, 1988 to March 31, 1989) was made by the petitioner-assessing authority (AA) under Section 10, RST Act, i.e., final assessment, by assessment order dated October 29, 1991. In the period in question the assessee recovered sales tax amounting to Rs. 64,386.65 on the full undiscounted value of sales and deposited an amount of Rs. 48,333.65 being the total of the tax collected and deposited with the Government on a monthly basis in the period April 1, 1988 to February 28, 1989. The balance amount of Rs. 16,053 was refunded provisionally being the quantum of tax relatable to the ATOD allowed by the assessee to its dealers at the close of the year, i.e., in March, 1989 for their performance over the whole year.
4. With respect to the ATOD, the AA first considered whether it should be added to the sale price and, thereby, to the taxable turnover. This point was decided in favour of the assessee, i.e., that the discount was not exigible to tax relying on Deputy Commissioner of Sales Tax (Law) v. Motor Industries Co. [1983] 53 STC 48 (SC). This point is not in controversy before us.
5. However, thereafter, the AA held that Rs. 16,053 provisionally refunded by the assessee to its dealers had therefore been unlawfully collected in the first place and ordered for its forfeiture and imposed a penalty of Rs. 2,000 under Section 16(1)(j), RST Act. It is this aspect of the matter which is in controversy before us.
6. The Deputy Commissioner (Appeals) by his order of March 31, 1992 set aside the AA’s orders of forfeiture and of imposition of penalty and instead declared that the amount of Rs. 16,053 was liable to be recovered as tax due from the assessee with interest for the month of March, 1989 and that this amount was refundable to the assessee under Section 23-B, RST Act.
7. The Board by its impugned order set aside the orders of the AA and the Deputy Commissioner (Appeals) and held that the assessee could disburse the Rs. 16,053 to its dealers as additional trade discount and that the depositing of tax was a condition precedent for Section 23-B, RST Act to come into play ; and that Section 23-B, RST Act was not an impediment for the disbursement of this amount ; and, that the credit notes distributed by the assessee did not contravene any of the provisions of the RST Act or of the Rules made thereunder.
8. The application for revision seeks to raise the following questions of law :
(i) Whether the Board was correct in law in holding that Section 23-B, RST Act is not applicable to the facts of the case ?
(ii) Whether the Board was correct in law in holding that the dealer can disburse the amount of tax collected as additional trade discount ?
(iii) Whether the Board was correct in law in holding that deposit of tax is a condition precedent for attracting Section 23-B, RST Act ?
9. We have heard the learned counsel for the parties and have considered the facts on record with reference to the relevant provisions of law.
10. As already noted the question whether the discount should be added to the sale price for the purposes of calculation of tax, is settled and not in dispute that it could not. As a matter of fact Section 2(p), RST Act which defines “sale price” makes it abundantly clear that “any sum allowed as cash discount according, to the practice normally prevailing in the trade” is to be deducted from the sale price.
10.1. In the facts and circumstances of this case the modalities of the working out of the discount were such so as to necessitate an ex post facto adjustment as the discount was not extended in the first eleven months of the year when the full price and tax payable was recovered and deposited. It was only in the twelfth month that the discount became available and as the discount was not exigible to tax a refund of tax by the assessee to its dealers became inevitable.
10.2. The provisions of Section 16(1)(j) and (n), RST Act reproduced below were not attracted as at the time the tax was collected it was due.
“16. Offences, penalties and prosecutions, etc.–(1) If any person,–
…………..
(j)(i) not being a dealer liable to pay tax under this Act, collects any sum by way of tax, or
(ii) being a registered dealer, collects any amount by way of tax in excess of the tax payable by him, or
(iii) otherwise collects tax in contravention of the provisions of Section 5G ; or
…………….
(n)(vii) in cases referred to in,–
(a) Sub-clauses (i) and (ii) of Clause (j), in addition to the amount collected by way of tax which shall be liable to forfeiture to the State Government, a sum not exceeding rupees two thousand ; and
(b) Sub-clause (iii) of Clause (j), in addition to the amount collected in contravention of the provisions of Section 5G which amount shall be liable to forfeiture to the State Government, a sum not exceeding rupees two thousand.”
10.3 In any case the issue of the setting aside of the orders of forfeiture and of penalty is not in issue before us. (c.f. para 8 supra)
11. As for the applicability of Section 23-B, RST Act the section reads :
“23-B. Refund of tax in special cases.–Notwithstanding anything contained in this Act or in any other law for the time being in force, where any amount is either deposited by any person under the provisions of this Act or paid as tax by a dealer but such amount or any part thereof is subsequently found to be not payable by such person or dealer, a refund of such amount or any part thereof can be claimed only by the person from whom such person or dealer had actually realised such amount whether by way of tax or otherwise and the period of limitation provided in the proviso to Sub-section (1) of Section 23, shall apply to the aforesaid claims :
Provided that if the first purchaser of goods has passed on the incidence of tax to the next dealer or person or he has utilised the goods in the manufacture of other goods for sale or in the execution of works contract and has passed on the incidence of tax to the next dealer or person in any form then a refund of such amount or any part thereof can be claimed only by the person or dealer who has actually suffered the incidence of tax :
Provided further that the burden of proving the incidence of tax so suffered will be on the dealer or person claiming such a refund.”
11.1. Obviously, Section 23-B, RST Act, comes into play only when the amount sought to be refunded has been deposited with the Government. If the amount is held to be refundable, i.e., as not due, even before it is deposited as held by the Deputy Commissioner (Appeals) why go through the rigmarole of depositing only to refund ? The finding of the Deputy Commissioner (Appeals) is perverse.
11.2. The other aspect of the matter in the instant case is that the entitlement to refund as part of the discount scheme is not that of the assessee but that of the assessee’s dealers, as a necessary concomitant of the discount. The assessee’s dealers can invoke Section 23-B, RST Act in terms of the section’s first proviso, if at all, only after the amount is deposited with the Government, i.e., after the credit notes are invoked and the amount deposited. That however would do violence to the definition of “sale price” already referred to inasmuch as it would tax the element of discount which the. AA rightly held was not permissible.
12. As such the Board determined the matter correctly and the application for revision has no force and is hereby dismissed. No order as to costs.