S. Ananda Reddy, J.This special appeal by the assessee is directed against the order, dated January 3, 1994 passed by the Commissioner of Commercial Taxes u/s 2(1) of the Andhra Pradesh General Sales Tax Act, 1957 (herein after referred to " the"), exercising the powers of revision, revising the order of the Appellate Deputy Commissioner of Commercial Taxes, who allowed the appeal of the assessee.

2. The assessee-company was dealing in fertilisers during the assessment year 1986-87. The assessee-company has got a factory at Kakinada, East Godavari district for the manufacture of various fertilisers, which commenced its production in the year 1988. But, in order to establish the market to its products, the assessee-company imported certain fertilisers, such as Di-Ammonia Phosphate (DAP), Urea, etc., and sold through its distributors. For the assessment year in question, the assessee declared a gross-turnover of Rs. 38,48,09,511 and a net turnover of Rs. 31,76,66,874. In the assessment proceedings, the assessee claimed exemption of the turnover to the extent of Rs. 1,87,89,413, being the amount represented the discount allowed to various dealers by issuing credit notes. According to the assessee, the said amount of discount allowed to the customers was not realised by the dealer and therefore, the said amount did not form part of the turnover, as defined under clause (s) of Section 2 of the Act, read with Rule 6(1)(a) of the Andhra Pradesh General Sales Tax Rules, 1957. However, the assessing officer found that the said claim is not allowable as the said amount is not allowed as a discount in the bills and hence computed as part of the turnover. However, on appeal, the appellate Deputy Commissioner, accepted the claim of assessee, following the decision of the apex Court in the case of Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam Vs. Motor Industries Co., Ernakulam, and also a decision of this Court in the case of State of Andhra Pradesh v. T. V. Sundaram Iyengar & Sons Ltd [1987] 65 STC 41. While allowing the claim of the assessee, the Appellate Deputy Commissioner accepted the claim of the assessee/ dealer that the dealer had the practice of allowing certain quantity rebate at the end of the year on the basis of the quantity lifted by the respective customers and accordingly issued credit notes to this effect. The Commissioner of Commercial Taxes, however, on going through the proceedings of the Appellate Deputy Commissioner as well as the consequential proceedings issued by the Commercial Tax Officer initiated revisional proceedings, exercising the powers u/s 20(1) of the. Accordingly, a show cause notice dated November 18, 1993 was issued for which objections were filed by the dealer on December 30, 1993. The Commissioner of Commercial Taxes revised the order of the Appellate Deputy Commissioner, negativing the claim of the dealer that the quantity rebate allowed, as a discount through the credit notes, was not allowable, as the assessee could not produce any scheme then in existence or any contract entered into with the dealers, or could site any evidence to show that it was the regular practise of the assessee in allowing such quantity rebate. Aggrieved by that, the assessee has come up in the present special appeal.

3. The learned counsel for the appellant contended that the appellant has started business of importing and effecting the sales during the relevant year and in order to be competitive to sell its products, the assessee agreed with its customers, who are the distributors of the products, and accordingly granted the quantity rebate or discount, and the grant of such discount is also evidenced by the issue of the credit notes to the respective customers of the dealer. When once the evidence shows that the assessee had agreed for the grant of discount and the grant itself is evidenced by the credit notes issued by the dealer, there is no justification for the Commissioner to revise the orders of the Appellate Deputy Commissioner. According to the learned counsel, the Appellate Deputy Commissioner accepted the claim of the dealer and granted the relief. In order to revise the said order, the Commissioner or the Department has to bring on record any material to give any adverse finding against the assessee. There is absolutely no such material brought on record. The learned counsel also contended that in the revisional proceedings the burden is on the department to prove its case that there was no such practice of paying quantity rebate by the dealer to its customers. In fact, the learned counsel for the appellant placed a proceedings of the Regional Manager held in December 1986, where it was decided and even recommended to the Managing Director to give rebate, in view of the low existing prices of other competitive products in the market, and in order to compete with such products, according to the learned counsel the said decision taken at the Regional Managers conference. Accordingly the claims or demands made by the customers (distributors), was accepted by the dealer and therefore, the quantity rebate allowed must be in terms of the agreement between the parties, i.e., between the dealer and its customers. The learned counsel also contended that the credit notes register placed before the assessing officer during the assessment proceedings was verified and found that the credit notes issued in favour of the customers was in order. When such evidence was available on record, it is not for the Commissioner to revise the order of the Appellate Deputy Commissioner, reversing the relief granted by him. The learned counsel also referred to the provisions of Section 2{l)(s) as well as Rule 6(1)(a) and contended that the turnover as contemplated under the provision is only the net receipts after allowing all the discounts to the customers by the dealer and if so construed there is no ground warranting revision by the Commissioner, reversing the order of the Appellate Deputy Commissioner. The learned counsel also relied upon the decision of the apex Court in the case of Motor Industries (supra) and the decision of this Court in the case of T.V. Sundaram Iyengar & Sons Ltd. [1987] 65 STC 41 , apart from relying upon other decisions such as in the case of State of A.P. v. Gujarat Steel Tubes Limited, Vijayawada [1989] 8 APSTJ 152, Cynamid India Limited v. Commissioner of Commercial Taxes [2002] 128 STC 289 (AP) ; (2002) 34 APSTJ 125 , State of A.P. v. A.P. Paper Mills Ltd., Rajahmundry (1989) 9 APSTJ 235; State of Tamil Nadu v Ultramarine and Pigments Ltd [1980] 46 STC 220 (Mad.) ; Fertiliser Corporation of India Ltd. v. Commercial Tax Officer [1991] 83 STC 129 (AP) and Commissioner of Taxes v. Bongaigaon Refinery & Petrochemicals Ltd. [1999] 114 STC 26 (Gauhati).

4. The learned Special Government Pleader for Taxes, on the other hand, supported the impugned order. According to the learned counsel, the trade discount or quantity discount is allowable only in terms of the provisions of the and the Rules made thereunder. Further, it is also contended that the dealer has to prove not only the factum of allowance of trade discount but also the existence of such a scheme or any agreement between the dealer and its customers. According to the learned counsel, as no such evidence was brought on record, the Commissioner of Commercial Taxes was justified in revising the order of the Appellate Deputy Commissioner. Therefore, the impugned order under appeal does not call for any interference.

5. From the above, the issue to be considered is whether the order passed by the Commissioner of Commercial Taxes, exercising the revisional powers u/s 20(1) of the, revising the order of the Appellate Deputy Commissioner, is just and proper

6. The facts as stated are not in dispute. The Commercial Tax Officer, who framed the assessment, disallowed the claim of the assessee for exemption of the turnover, representing the issue of credit notes to the customers, viz., distributors of the assessee, towards the quantity discount, on the ground that the said discount was not allowed at the time when the bills are made out. But, when the matter was brought before the Appellate Deputy Commissioner, the Appellate Deputy Commissioner allowed the claim of the assessee, accepting the claim that there was a practice in the appellant-company, allowing such quantity rebate at the end of the year, based on the quantity of the stock lifted by the respective customers/distributors and accordingly issued credit notes to that effect, thereby reducing the liabilities of the respective customers. To the extent of allowing the credit notes towards the quantity rebate is not in dispute. But the Commissioner of Commercial Taxes initiated revisional proceedings on the premise that there was no scheme, which was being followed regularly by the dealer or any agreement between the dealer and its customers. Therefore, the Commissioner of Commercial Taxes held that the decisions of the apex Court as well as the decision of this Court referred to before him are not of any assistance to the dealer and hence revised the order of assessment.

7. At this stage, it would be appropriate to refer to the relevant provisions of the and the Rules.

Clause (s) of Section 2(1) of the A.P.G.S.T. Act, 1957 defines "turnover" as follows :

"Turnover, means,

(i) the total amount set out in the bill of sale ;

(ii) the total amount of consideration for the sale or purchase of goods as may be determined by the assessing authority, if the bill of sale does not set out correctly the amount for which the goods are sold ;

or

(iii) if there is no bill sale, the total amount charged as the consideration for the sale or purchase of goods by a dealer, either directly or through another, on his own account or on account of others, whether such consideration be cash, deferred payment or any other thing of value and shall include,-

(a) .......

(b) .......

(c) .......

(d) .......

Provided that in the case of a sale by a person whether by himself or through an agent of agricultural or horticultural produce grown by himself or grown on any land in which he has an interest whether as owner, usufructuary mortgage, tenant or otherwise the amount of consideration relating to such sale shall be excluded from his turnover when such produce is sold in the form in which it was produced, without being subjected to any physical, chemical or other process for being made fit for consumption, save mere cleaning, grading or sorting.

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

(i) 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.

(ii) ............."

"Rule 6(1) : The tax or taxes and surcharge under sections 5, 5-A, 5-B, 5-C, 5-E, 6, 6-A and 6-C or notified u/s 9(1) shall be levied on the net turnover of a dealer. In determining the net turnover, the amount specified in clauses (a) to (1) shall, subject to the conditions specified therein, be deducted from the turnover of a dealer-

(a) all amounts allowed as discount, provided that such discount is allowed in accordance with the regular practice of the dealer or is in accordance with the terms of a contract or agreement entered into in a particular case and provided also that the accounts show that the purchaser has paid only the sum originally charged less the discount."

8. A perusal of the above provisions clearly shows that in order to arrive at the turnover of a dealer, the total receipts must be taken into account after allowing any cash or other discount on price allowed in respect of any sale and all amounts allowed as discount should be deducted from the turnover. In the present case, according to the appellant, a sum of Rs. 1,87,89,430 was allowed as a deduction towards the quantity rebate and accordingly credit notes were issued. The fact of issuance of such credit notes is not in dispute. Even the assessing officer was satisfied after perusal of the credit notes register, but, however, the assessing officer negatived the claim on the ground that the said discounts were not allowed at the time when the bills are made out. That is the only ground on which the benefit was denied. But while revising the order of the Appellate Deputy Commissioner, the Commissioner of Commercial Taxes felt that the Rules contemplated the existence of any scheme that is being followed by the dealer or any contract entered into by the dealer with the customers and such evidence was not brought on record. In fact, a perusal of the order of the Appellate Deputy Commissioner shows that such a claim was made that the dealer was having practice of allowing certain quantity rebate at the time of the settlement of the accounts. In fact, the dealer filed a copy of the note prepared on December 22, 1986, where the issue as to the allowance to quantity rebate was considered and decided to allow to its customers and in view of the higher price of the products fixed by the dealer in comparison with the similar products of other companies. A reference to the said note clearly shows that there was a representation on behalf of the customers, viz., distributor of the dealer, which was considered favourably. The said decision of the company clearly shows that it is an agreement between the dealer and its distributors, through whom the dealers products were sold in the market. But, however, the Commissioner of Commercial Taxes proceeded on the ground that the dealer failed to produce any such evidence and therefore, negatived the claim. In fact, when the Commissioner has initiated revisional proceedings, it is for the Department to place the relevant material to decide against the dealer. No such material was brought on record, except holding that the petitioner failed to produce any material as to the existence of a scheme or an agreement between the dealer and its customers. Therefore, the view taken by the Commissioner of Commercial Taxes is not in accordance with law.

9. The learned counsel for the Appellant relied upon the decision of the apex Court in the case of Motor Industries Co.(supra) where similar issue was considered by the apex Court in terms of the provisions of Kerala General Sales Tax Act and Rules. The issue in that case was whether service discount allowed by the assessee in accordance with trade agreement to its main distributors could be allowed as an additional trade discount and deductible from the turnover of the assessee. The claim of the dealer for deduction of a sum of Rs. 69,707.68 paise towards service discount was negatived by the Assistant Commissioner of Sales Tax on the ground that the amount in respect of deduction claimed had not been allowed as a discount in accordance with the terms of sale but had been allowed as an overriding commission and "incentive" to promote trade. On appeal, the Deputy Commissioner allowed the claim, which was confirmed by the Appellate Tribunal as well as the High Court. When it was brought before the apex Court, on further appeal, the apex Court negatived the contention of the Department and the relevant observations are as under :

"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 Rule. 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 though 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 price shown in such circumstances by way of an additional incentive with a view to promote ones 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."

10. To the same effect is the decision of a Division Bench of our High Court in the case of T.V. Sundaram lyengar & Sons Ltd. [1987] 65 STC 41. In that case, the assessee was in the practice of allowing discount every year to its stockists on the total purchase made by them from the assessee. The discount was given not immediately on the making out of a bill, but at the end of the year when the accounts were settled. The contention of the Department was that inasmuch as the discount was not paid as and when the bill is made out or the goods sold, but at the end of the year, Rule 6(1)(a) of the Andhra Pradesh General Sales Tax Rules, 1957 has no application. Negativing the said contention, the Division Bench held that, "In our opinion, the principle is the same where the discount is paid at the end of the year as well. Following the said decision of the Supreme Court, we must hold that the Tribunal was right in holding that the amount paid to the stockists as discount at the end of the year, on making out of the accounts according to the normal trade practice, was a permissible deduction from the turnover of the assessee."

11. In the case of Gujarat Steel Tubes Ltd., Vijayawada [1989] 8 APSTJ 152, similar issue, i.e., whether the discount allowed by the dealer to its buyers is deductible from the turnover or not, was considered and a division Bench of that Court confirmed the order of the Tribunal allowing the deduction, following the decision of the apex Court in the case of Motor Industries Ltd. (supra) well as earlier Division Bench decision of this Court in T.V. Sundaram Iyengar and Sons Ltd. [1984] 65 STC 41.

12. In the case of Cynamid India Ltd. [2002] 128 STC 289 ; (2002) 34 APSTJ 125 , another division Bench of this Court considered the issue as to the liability of "target discount" allowed by the dealer to its distributors and held in favour of the assessee/dealer.

13. In the case of A.P. Paper Mills Ltd. [1989] 9 APSTJ 235 Division Bench of this Court had an occasion to consider the liability of turnover representing the credit notes issued by the assessee towards "quantity discount" and accepted the claim of the assessee/ dealer.

14. In the case of Ultramarine and Pigments Ltd. [1980] 46 STC 220 the Madras High Court had an occasion to consider the liability of the "quantity discount" under a scheme subject to the periodical variations on the basis of customers off-take in a specified period, with an idea to see that a customer got an incentive to place orders and increase the volume of purchases. It was held that such allowance of discount formed an integral part of the agreement or a contract between the parties and would qualify for deduction.

15. In the case of Fertiliser Corporation of India Ltd. [1991] 83 STC 129 a division Bench of this Court had an occasion to consider whether the subsidy received from the Central Government in respect of the fertilisers, would form part of the turnover in terms of the A.P.G.S.T. Act and the Rules and this Court negatived the claim of the department and held that the subsidy received cannot form part of the turnover, Similar is the view expressed by the Gauhati High Court in the case of Commissioner of Taxes v. Bongaigaon Refinery & Petrochemicals Ltd. [1999] 114 STC 29.

16. Though the last two decisions are not relevant for the purpose of the present dispute, insofar as the other decisions are concerned, it was held that if a trade discount, may be a quantity discount or under any other name, if allowed, the same is to be exempted or excluded from the turnover.

17. As already referred, from the material on record, the Appellate Deputy Commissioner allowed the claim of the dealer accepting the claim as to the existence of a scheme. When the Commissioner proposed to revise the said order of the Appellate Deputy Commissioner, the Commissioner did not bring on record any material to show adverse to the said findings, except recording that the dealer failed to bring on record any evidence. On the other hand, the material filed before this Court, in the paper book, shows that there was a decision on the part of the dealer, which reflects as to the demand made by its customers and the acceptance of the dealer in view of the existing market conditions for the sale of its products.

Under the above facts and circumstances of the case, there is absolutely no justification for the Commissioner to hold otherwise and to revise the order of the Appellate Deputy Commissioner.

18. Therefore, the impugned order the Commissioner of Commercial Taxes, passed exercising the revisional powers u/s 20(1) of the, is set aside and the order of the Appellate Deputy Commissioner, dated July 20, 1990 is restored.

19. The Special Appeal is accordingly allowed. No costs.