In Brief
Southern Motors, a motor vehicle dealer, claimed deductions for post-sale discounts granted through credit notes from its total turnover under Karnataka's VAT law. The tax authority initially allowed the deduction but later reversed its position, disallowing it on the ground that discounts must be reflected in the original tax invoice. The Supreme Court held that while trade discounts need not be mentioned in the tax invoice at the time of sale to qualify for deduction, they must be supported by contemporaneous records and reflected in the dealer's accounts. The Court rejected the strict literal interpretation and held that the requirement relates to the final sale price after accounting for the discount, not just the original invoice.",
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