judgement:
: Criminal Appeal No. 25 of 1976.
From the Judgment and order dated the 17th September 1975 ' of the Allahabad High Court in Government Appeal No. 163 of 1971.
330 S.K. Mehta and M.K. Dua for the Appellant.
Dalveer Bhandari, H.M. Singh and Ranbir Singh Yadav for the Respondent.
The Judgment of the Court was delivered by MISRA, J.
The present appeal under section 2 of the Supreme Court (Enlargement of Criminal Appellate Jurisdiction) Act is directed against the judgment of the High Court of Allahabad dated 17th September, 1975 setting aside the order of acquittal passed by the Sessions Judge and convicting the appellants under section 302 read with section 34 IPC and sentencing therm to undergo imprisonment for life.
It appears that wife of Babu, appellant No. 1 had been enticed away.
He, therefore, filed a complaint on 17th of July, 1969 against Dhani Ram, the deceased, his brother Ghurka, their maternal uncle Halka and one Ram Charan under section 498 IPC.
The prosecution n case as unfolded in the first information report and the evidence is that Dhani Ram, deceased, used to live at the house of his father in law in village Kuretha.
On 7th of October, 1969 he came to the house of his father Ajudhya in village Therro for getting his lands ploughed.
Next day at about 9 A.M. he along with his father left village Therro for village Kuretha.
His father was going there for getting seeds from one of Dhani Ram 's friends.
When the two reached the field of Malkhan, which is said to be near the temple of Ram Kund, the three accused came out from inside the jhunri field of Malkhan and started beating Dhani Ram with lathis.
Tulaiyan, appellant No. 3 caught hold of Ajudhya, the father of Dhani Ram and prevented him from having his son rescued.
The other two continued beating Dhani Ram to death.
The first information report was lodged at the police station at a distance of about 12 miles at 5 30 P.M. by Ajudhya.
Sub Inspector Prem Narain reached the spot at 3 A.M.
On 9th October.
He found the dead body of Dhani Ram lying on the way between the fields of Halka and Malkhan.
He prepared the challan of the dead body and a letter for postmortem and sent the dead body for postmortem.
Thereafter he investigated the case and submitted the chargesheet against the three appellants.
The accused denied the charge.
Babu said that the case was start ed against him as he had filed a complaint under section 498 IPC against Halka and three others.
Tulaiyan in his defence said that he had 331 been implicated as he was a witness for Babu in the criminal case A under section 498 IPC.
According to the doctor, who conducted the postmortem, the death had taken.
place at about 48 hours before postmortem.
He, however, admitted that there could be a difference of two to four hours either way in the duration given by him.
Postmortem report showed the stomach and bladder of Dhani Ram empty.
There was faecal matter at places in the large intestine.
There was also faecal matter stuck to the addah dhoti which Dhani Ram was wearing.
The prosecution produced three witnesses to prove its case.
On appraisal of evidence the Sessions Judge came to the conclusion that the evidence produced by the prosecution was too feeble to base any conviction on that.
In his opinion the witnesses could not be said to be independent and they were mere chance witnesses.
He further found that the probability that Dhani Ram was attacked while it was dark, before he had evacuated or taken his breakfast could not be weeded out and in all probability the occurrence had . y taken place not at the place alleged by the prosecution.
On these findings he acquitted all the accused.
On appeal, however, the High Court set aside the order of acquittal and convicted the appellants under section 302 read with section 34 IPC and sentenced each of them to undergo imprisonment for life.
E The circumstances which weighed with the Sessions Court for disbelieving the evidence of the prosecution, in our opinion, appear to be weighty.
According to prosecution, Dhani Ram had come to help his father in ploughing his fields on 7th October, 1969, but from the evidence on record it is clear that he came in the evening of 7th October to village Therro and left the same for village Kuretha the next day at 9 A.M.
It does not stand to reason that Dhani Ram would leave for a different village at a distance of about S or 6 miles without easing himself or without taking his breakfast.
But, as the doctor in postmortem examination had found the stomach and bladder of the deceased Dhani Ram to be empty, this gave a handle to Ajudhya to depose in the evidence that Dhani Ram had not taken breakfast while leaving village Therro for village Kuretha.
The presence of the faecal matter in the large intestine does indicate that Dhani Ram had not evacuated.
There fore, the possibility that Dhani Ram was done to death early in the morning before he had evacuated is Dot weeded out.
Ajudhya, 332 P.W.1, in his deposition has clearly stated that Dhani Ram used to ease himself just after getting up from the bed but he was not in a position to say whether on that fateful day Dhani Ram had gone to ease himself just after getting up from sleep.
If Dhani Ram was in the habit of going out to ease himself early in the morning just after getting up, there seems to be no reason why he would not go to ease himself on that day if he was to go to his father in law 's house.
The Sessions Judge also came to the conclusion that the place of occurrence was not the one as alleged by the prosecution in the first information report.
In the FIR it has been stated that assault on Dhani Ram had been made at the field of Malkhan near Ram Kund Temple.
According to the Sub Inspector the dead body and the blood were found near the field of Malkhan which is at a distance of more than a furlong from Ram Kund Temple.
Ajudhya, P.W. 1, stated before the court of Sessions that attack on Dhani Ram was made when he and Dhani Ram reached the field of Malkhan.
He further added that Ram Kund Temple is also at that very place.
From this statement it is apparent that the assault on Dhani Ram was made just near the temple.
Kashi Ram, P.W. 3, also deposed before the committing Magistrate that he heard noise near Ram Kund Temple.
He did not say before the committing Magistrate that when he reached the field of Malkhan he saw the occurrence.
But, in the court of Sessions he denied that he had made the aforesaid statement before the committing Magistrate.
However, it was proved from Exrt.
Kha. 5 that he did depose before the committing Magistrate that when he reached near the temple he heard the noise.
The prosecution case in the initial stage was that the assault had been made near Ram Kund Temple.
Of course, it was also mentioned in the FIR that the field of Malkhan was nearby.
The Sub Inspector did not take care to find out if any of the fields of Malkhan was near the temple.
There might be some other field of Malkhan near the temple and the reference to that field might have been made in the first information report.
The injuries on Dhani Ram also indicated that practically all the injuries were on his face and there were hardly any injuries on any other part of his body.
This also suggests that the injuries had been caused while Dhani Ram was lying on the ground.
The other two witnesses, Arjun and Kashi Ram deposed that they saw the occurence from near the nallah.
This nallah is far away 333 from the temple.
A person standing at that place could not see the.
A marpeet going on near the temple, as will be clear from a reference to the site plan attached to the paper book.
The learned Sessions Judge observed that the place of occurrence was perhaps shifted to make it appear that the witnesses standing near the nallah could see the marpeet.
Even assuming that the assault had taken place near the field of Malkhan, the learned Sessions Judge was of the view that the witnesses had not seen the assault and that Arjun and Kashi were mere chance witnesses on their own showing.
They were alleged to be going to village Dhanora for purchasing seeds and on the way they happened to see the occurrence.
Arjun and Kashi were Gadarias to which caste Ajudhya also belonged and were next door neighbours of Ajudhya.
They were on friendly terms, meeting everyday.
They came into the witness box only to help Ram Charan, one of the accused in the case under section 498 IPC, who also belonged to the same caste of Gadarias as the two witnesses.
In the opinion of the learned Session Judge the fact that the other two.
witnesses, namely, Arjun and Kashi were also going to another village Dhanora for seeds and they happened to see the occurrence was too much of a coincidence.
No owner of any of the fields in the vicinity has been produced as a witness on behalf of the prosecution.
The blood stained earth said to have been taken from near the field of Malkhan was sent to the chemical analyst and the serologist but the report of the serologist has not been produced before the court, and, therefore, it cannot be said that the blood recovered from the site was human blood.
The learned Sessions Judge was also of the view that the accused had no motive to murder Dhani Ram inasmuch as in the complaint under section 498 IPC it was said that Ra n Charan and Ghurka had enticed away the wife of Babu but they kept her at the house of Dhani Ram.
Ajudhya, the father of the deceased, stated before the investigating officer that Babu etc.
accused in the present case were under the impression that Dhani Ram had kept the woman at his house and had enticed her for his Mama Halka.
But before the Sessions Court in cross examination he admitted that the wife of Babu had been enticed away by Ghurka and Ram Charan and then they did not keep the girl with them but sent her to her Maika Next day he, however, deposed that Dhani Ram himself had told him that the woman had come to his house.
He kept her for some time 334 and then sent her to her Maika.
The woman had returned to Babu before the murder had taken place.
However, the case under section 498 IPC was pending at the time of the murder of Dhani Ram and Ajudhya and his family members might have availed of the opportunity to implicate Babu who was complainant in that case, and his brother Munna and Tulaiyan who were witnesses in that case.
Ajudhya might have got them behind the bars so that there might not be any body left to do pairwi in that case.
The cumulative effect of the various circumstances enumerated above, in the opinion of the Sessions Judge, did throw doubt on the prosecution case and if the learned Sessions Judge in the circumstance did not think it safe to rely upon the evidence produced on behalf of the prosecution, he committed no error.
The High Court, however, negativated the suggestion that Ajudhya was interested in falsely implicating the three accused in this case so as to prevent them from doing pairwi in the criminal case under section 498 IPC instituted by Babu.
The High Court observed: ". that complaint was against Dhani Ram, Halka, 13 Ram Charan and Ghurka.
In that complaint neither Ajudhya nor any other eye witnesses produced on behalf of the prosecution had been arrayed as accused.
There is nothing on the record to show that Ajudhya was taking any interest in the criminal litigation instituted by Babu Ram.
It is difficult to believe that while promptly lodging the first information report Ajudhya was thinking in terms of implicating persons who could do pairwi against Dhani Ram and others.
If at all, Ajudhya would be interested in seeing that the real assailants of his son are brought to book.
" The observation made by the High Court would be correct if Ajudhya and the two witnesses had really seen the occurrence.
But if they were Dot on the scene of occurrence they might draw on their imagination and try to implicate persons on whom they had a sus picion.
In our opinion the High Court was not justified in coming to a different conclusion if the conclusion drawn by the Sessions Judge was a plausible and possible one.
335 Arjun, P.W. 2.
and Kashi Ram, P.W. 3 were Gadarias by caste.
Ajudhya was also Gadaria by caste.
Arjun and Kashi Ram were just next door neighbours of Ajudhya and they were on friendly and visiting terms.
Two of the persons accused in the complaint filed by Babu were also Gadarias by caste.
The learned Sessions Judge in the circumstances branded those witnesses as not independent.
As observed earlier, the High Court, however, held that they would not be interested in implicating false persons merely on the ground that they were next door neighbours.
The High Court further took the view that no question was put to the witnesses that Malkhan had two fields, one adjoining Ram Kund temple and the other at a short distance away from the other.
It was not for the accused to prove that there was another field of Malkhan but it was for the prosecution to prove by conclusive evidence that Malkhan had only one plot and no other plots.
About the time of occurrence also the High Court reversed the finding of the Sessions Court that the possibility was that Dhani Ram was done to death in the early hours of 8th October before he had gone to ease himself.
The reasons given by the Sessions Court appear to be more plausible on the materials on the record.
In any case, even if two views were possible, the High Court should not have interfered with the conclusions arrived at by the Sessions Court unless the conclusions were not possible.
If the finding reached by the trial Judge cannot be said to be unreasonable, the Appellate Court should not disturb it even if it were possible to reach a different conclusion on the basis of the material on the record because the trial Judge has the advantage of seeing and hearing the witnesses and the initial presumption of innocence in favour of the accused is not weakened by his acquittal.
The appellate Court, therefore, should be slow in disturbing the finding of fact of the trial court and if two view are reasonably possible of the evidence on the record, it is not 'expected to interfere simple because it feels that it would have taken a different view if the case had been tried by it.
This Court in U.P. State vs Samman Dass(1) dealing with a similar situation laid down the following postulates: "There are, however, certain cardinal rules which have always to be kept in view in appeals against acquittal.
Firstly, there is a presumption of innocence in favour of 336 the accused which has to be kept in mind, especially when the accused has been acquitted by the court below; secondly, if two views of the matter are possible, a view favourable to the accused should be taken; thirdly, in case of acquittal by the trial judge, the appellate court should take into account the fact that the trial judge had the advantage of looking at the demeanour of witnesses; and fourthly, the accused is entitled to the benefit of doubt.
T he doubt should, however, be reasonable and . should be such which rational thinking men will reasonably, honestly and conscientiously entertain and not the doubt of a timid mind which fights shy though unwittingly it may be or is afraid of the logical consequences, if that benefit was not given.
" We have closely perused the evidence produced in the case and also gone through the two judgment of the Sessions Court as well as the high Court, and after hearing the counsel for the parties at some length we are satisfied that the conclusions arrived at by the Sessions Court were fully justified and should not have been lightly set aside by the High Court.
For the reasons given above the appeal must succeed and it is accordingly allowed and the judgment of the High Court dated 17th September, 1975 is set aside and that of the Court of Sessions is restored S.R. Appeal allowed.

summary:
In the State appeal against acquittal, appellant Babu, his father Munna and Tulaiyan were convicted by the High Court of Allahabad and sentenced to life imprisonment.
The prosecution case as unfolded in the First Information Report and the evidence is that Dhani Ram, the deceased who was living with his father in law in village Euretha came on 7th of October 1969 to tho house of his father Ajudhya in village Therro for getting his lands ploughed.
On the 8th October 1969 at about 9 A.M., he along with his father left village Therro for village Kurotha for getting seeds from one of Dhani Ram 's friends.
When the two reached the field of Malkhan which is said to be near the temple of Ram Kund, the appellants came out from inside the Jhunri field of Malkhan and started beating Dhani Ram with lathis.
While Tulaiyan, appellant No. 3 caught hold of Ajudhya and prevented him from having his son Dhani Ram rescued, the other two continued to beat him to death pursuant to the F.I.R. filed at S.30 p.m. at the police station which was about 12 miles away, Sub Inspector Prem Narain reached the spot at 3 A.M. on 9th October, found the dead body of Dhani Ram Iying between the fields of Halkha and Malkhan, sent it for postmortem and after investigation filed the chargesheet.
The prosecution produced three witnesses Ajudhya, father of deceased as PW 1, Arjun PW 2 and Kashi Ram PW 3, both PW 2 and PW 3 being neighbours of PW I and of the same caste.
to prove the case along with the post mortem report which showed the stomach and bladder of the deceased empty and the large intestine with faceal matter All the appellants entered a plea of non guilty.
Babu 's defence was that the case was foisted against him as he had earlier on 17th of July 1969 329 filed a complaint under section 498 I.P.C. against Dhani Ram, his brother Ghurka, their maternal uncle Halka and one Ram Charan for enticing Babu 's wife away.
Tulaiyan took tho plea that he was being implicated as he was one of the witnesses in the earlier case under section 498 I.P.C. On appraisal of evidence the Sessions Judge came to the conclusion that the evidence produced by the prosecution was too feeble to base any conviction on that.
In his opinion there was no motive on the part of the appellants, and the witnesses could not be said to be independent and they were mere chance witnesses.
Ho further found that tho probability of Dhani Ram being attacked while it was dark before he had evacuated or takeon his breakfast could not be weeded out and in all probability the occurrence had taken place not at tho place alleged by the Prosecution.
On those findings he acquitted all the accused.
On appeal, however, the High Court set aside the order of acquittal and convicted the appellants under section 302 road with section 34 I.P.C. and sentenced each of them to undergo imprisonment for life.
Hence tho appeal under section 2 of the Supreme Court (Enlargomont of Criminal Appellate Jurisdiction) Act 1971.
Allowing tho appeal, the Court D ^ HELD: 1:1 The appellate court should be slow in disturbing the finding of fact of the trial court and if two views are reasonably pos4sible of the evidence on the record, it should not interfere simply because it feels that it would have taken a different view if the case bad been tried by it, because the trial judge has the advantage of seeing and hearing the witnesses and the initial presumption of innocence in favour of the accused is not weakened by his acquittal.
[335 P G] State of U.P. vs Samman Dass, ; , followed.
1:2 In the instant cases a perusal of tho evidence produced and the two judgments of the courts below make it clear that tho conclusions arrived at by the Sessions court were fully justified and should not have been lightly set aside by the High Court.
The cumulative effect of the various circumstances in the opinion of the Sessions Judge did throw doubt on the prosecution case and if the learned Sessions Judge in the circumstances did not think it safe to rely upon the evidence produced on behalf of the Prosecution, he committed no error either as to the time of occurrence or the venue of the occurrence, or the motive for murder, or the motive of PW 1 to implicate tho appellants by treating the witnesses as interested and/or chance witnesses.
[336 D E, 334 B C]


judgement:
Civil Appeal No. 2291 of 1980.
Appeal by Special Leave from the Judgment and order dated the 21st November, 1978 of the Kerala High Court in TRC No. 31 of 1978.
P.K. Pillai for the Appellant.
C. Agarwala for the Respondent.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
This appeal is filed against the judgment dated November 21, 1978 of the High Court of Kerala in The Jay Engineering Works Ltd. vs State of Kerala(1).
In Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam vs M/s. Motor Industries Co., Ernakulam(2), we 362 have held that any claim for deduction in respect of goods returned by the purchasers under Rule 9 (b) (i) of the Kerala General Sales Tax Rules, 1963 should be made in the assessment proceedings relating to the year in which the said goods were sold and not in the assessment proceedings relating to the assessment year in which they were actually returned.
following the above decision we set aside the judgment of the High Court in this case and direct that the assessment order for the year 1972 73 shall be accordingly modified.
As a consequence of this order, the Department is directed to modify the assessment order for the assessment year 1971 72 by allowing deduction under Rule 9 (b) (i) of the Kerala General Sales Tax Rules, 1963 and to make refund of any excess tax paid during that year.
The appeal is accordingly allowed.
No costs.
S.R. Appeal allowed.

dataset_name: IN-Abs

summary:
Allowing the appeal, the Court ^ HELD: Any claim for deduction in respect of goods returned by the purchasers under Rule 9(b) (i) of the Kerala General Sales Tax Rules, 1963 should be made in the assessment proceedings relating to the year in which the said goods were sold and not in the assessing proceedings relating to the assessment year in which they were returned.
[362 A B] Deputy Commissioner of Sales Tax (Law) Board of Revenue (Taxes), Ernakulam vs Messers Motor Industries Co., Ernakulam, ; followed.


judgement:
Appeal No. 176 of 1956 and Petition No. 165 of 1955.
Appeal by special leave from the judgment and order dated March 15/23,1955 of the Orissa High Court, in Civil Reference No, 4 of 1954, 169 N. C. Chatterji, D. N. Mukherjee and R. Patinaik, for the appellant.
Porus A. Mehta and R. H. Dhebar, for respondent No. 1. 1956.
November 29.
The Judgment of the Court was delivered by S.K. DAS J.
The appellant is Shri Lalit Mohan Das, a pleader of about 25 years ' standing.
who ordinarily practiced in the Courts at Anandapur in the district of Mayur bhanj in Orissa.
The Munsif of Anandapur, one Shri L. B. N. section Deo ' drew up a proceeding under sections 13 and 14 of the , against the pleader for grossly improper conduct in the discharge of his professional duty and submitted a report to the High Court through the District Judge of Mayurbhanj on December 12, 1953.
The District Judge forwarded the report, accompanied by his opinion, to the High Court of Orissa on March 9, 1954.
The recommendation of the Munsif was that the pleader should be suspended from practice for one year.
The reference was heard by the High Court of Orissa ' and by its order dated March 15, 1955, the High Court came to the conclusion that the pleader was guilty of grave professional misconduct and suspended him from practice for a period of five years with.
effect from March 15,1955, Shri Lalit Mohan Das then obtained special leave from this Court to appeal against the judgment and order of the Orissa High Court dated March 15 /23, 1955.
He also filed a petition under article 32 of the Constitution.
Learned counsel for the petitioner has not pressed the petition under article 32 and nothing more need be said about it.
We proceed now to deal with the appeal which has been brought to this Court on special leave.
The charges against the appellant were the following On July 15, 1953, the appellant was appearing on behalf of the defendant in Suit No. 81 of 1952 pending before the Munsif of Anandapur.
On that date, there were two other suits pending before the same Munsif.
There were petitions for time in all the three suits.
22 170 The Munsif wanted to take up the oldest suit for hearing, and the oldest suit being Suit No. 54 of 1952, it was taken up first and five witnesses for the plaintiff were examined.
Suit No. 81 of 1952 was postponed to August 18, 1953.
The appellant, who appeared for the defendant in that suit, was informed of the postponement.
When so informed, the appellant made a remark in open Court and within the hearing of the Munsif to this effect: " If the Peshkar is gained over, he can do everything." He then left the Court.
The Munsif was surprised at the remark made and asked the appellant to explain his conduct, by means of a letter sent the same day.
As the appellant sent no reply, the Munsif wrote again to the appellant on July 18, 1953.
To this letter the appellant sent the following reply: "Dear Sir, I am painfully constrained to receive memo after memo for some imaginary act of mine not in any way connected with my affairs for which if any explanation is at all warranted officiallv.
For your second memo I felt it desirable as a gentleman to reply.
Further I may request you to be more polite while addressing letters to lawyers.
Yours faithfully, Sd.
L. M. Das.
Pleader.
" It is obvious that the letter of the appellant was couched in very improper terms and considerably strained the relation between the Munsif and the appellant.
The appellant, it may be stated here, was at that time the President of the Anandapur Sub Divisional Bar Association which consisted of about 14 legal practitioners.
On July 21, 1953, Shri B. Raghava Rao, who was the predecessor in office of Shri Deo, came to Anandapur.
He was the guest of Shri A. V. Ranga Rao, the Sub Divisional Officer.
One Shri N. C. Mohanty, a pleader of.
Anandapur and who was related to the appellant, came to invite the two Munsifs to a luncheon on the occasion of a housewarming ceremony.
On hearing about the trouble between Shri Deo 171 and the appellant, Shri B. Raghava Rao interceded and it appears that the appellant was persuaded to come to the house of the Sub Divisional officer and to ,say that he was sorry for what had happened in court on July 15, 1953, and that he did not happean to insult Shri Deo; Shri Deo, it appears, accepted the apology and for the time being.
the trouble between the two was smoothed over.
A second incident, however, took place on September 25, 1953.
The appellant was appearing for a defendant in another suit before the Munsif It was Suit No. 101 of 1952.
This suit was fixed for hearing on September 21, 1953.
As that date was a holiday, the suit was taken up 'on September 22, 1953.
Another suit, Suit No. 86 of 1952, was also fixed for hearing on that date but Shri N. C. Mohanty, pleader for the defendants in that suit, took time on the ground of the illness of one of the defendants, which ground was supported by a medical certificate.
In Suit No. 101 of 1952 also, the defendants applied for time.
on the ground of illness of their witnesses; but there being no medical certificate in support of the allegation of illness and no witnesses having been summoned in that suit, the learned Munsif refused to grant time, and one Shri P. N. Patnaik who also represented the defendants agreed to go on with the suit.
The suit was then heard for two days, i. e., on September 22 and 23, 1953, and at the request of the defendants ' lawyers the hearing of arguments was postponed to September 25, 1953.
On that date the appellant came to Court accompanied by his junior Shri P. N. Patnaik, for the purpose of arguing the case on behalf of the defendants.
At the very outset of his arguments the appellant made the follwing remarks:The Court is unfair to me, while the Court was fair to Mr. Misra (meaning Shri Bhagabat Prasad Misra who was appearing for the plaintiffs in that suit).
The Court is accommodating and granting adjournments to Mr. Misra while it was not accommodating me.".
The Munsif took objection to these remarks but nothing untoward happened.
The appellant concluded his arguments.
172 A third incident brought matters to a climax, and this incident took place on September 29, 1953.
The appellant was appearing for the defendants in Suit No. 6 of 1951.
In that suit a preliminary point of jurisdiction and sufficiency of court fees was raised and Shri B. Raghava Rao, the predecessor in office of Shri Deo, had dealt with the point and decided it against the appellant 's client.
A Civil Revision taken to the High Court was also rejected. 'The appellant, however, again pressed the same preliminary point and on September.
29, 1953, Shri Deo passed an order dismissing the preliminary objection.
When this order was shown to the appellant, he stood up and shouted at the top of his voice I 'I on behalf of the Bar Association, Anandapur, challenge the order of the Court,.
The Court has no principle as it is passing one kind of order in one suit and another kind of order in another suit.
" The Munsif, it appears, was disgusted at the conduct of the appellant and he stood up and, left the Court room, directing the bench clerk to send a telegram to the District Judge.
, A telegram was accordingly sent to the District Judge asking him to come to Anandapur.
The District Judge asked for a detailed report which was sent on October 1, 1953.
On October 5, 1953, the Munsif drew up a proceeding against the appellant on a charge under section 13 of the referring therein to the three incidents mentioned above.
The appellant was asked to show cause by October 26, 1953.
On November 3, 1953, the appellant denied the allegations made and took up the attitude that the Munsif was not competent to hold the enquiry on the ground that the Munsif was in the position of a complainant.
The appellant gave a different version of what happened on the three dates in question.
With regard to the incident of July 15, 1953, the appellant 's plea was that some other client had come to him.
in connection with a criminal case pending in another Court and to that client the appellant had said that an enquiry should be made from the Peshkar as to the date fixed.
With regard to the incident, on September 25, 1953, the plea of the appellant was^ total denial, and with regard to the last incident, the appellant said 173 that the Munsif behaved rudely and wanted to ' assault the appellant, for which the appellant appears, to have filed a petition to the Governor of Orissa on September 30, 1953, for according sanction for the prosecution of the Munsif.
It may be stated here that on October 8, 1953, a resolution was passed, numbered Resolution 6, which purported to be a resolution on behalf of the Bar Association, Anandapur.
The resolution was in these termis: "Resolved that on September 29, 1953, the Court 's (Munsif) action on the.
dais in rising from the chair, thumping on the table, shouting at the top of his voice, and using the words 'shut up ' against one honourable member (President) of this Bar Association is quite unprecedented.
, undesirable and affecting the prestige of the Bar and may cause apprehension in the mind of the litigant public to get fair justice.
" It may be stated that some other members of the Bar dissociated themselves from the a id resolution at a later date.
The proceeding against the appellant under the stated, as we have said earlier, on October 5, 1953, and the appellant filed his written statement on November 3, 1953.
On November 5, 1953, the Munsif sent the record to the District Judge in connection with the plea of the appellant that the enquiry should be made by some other judicial officer.
The District Judge, however, took the view that under the provisions of sections 13 and 14 of the the enquiry should be made by the Munsif himself and the records were accordingly sent back to the Munsif.
Thereafter, the appellant non co operated and did not appear at the enquiry though more than one communication was sent to ham The enquiry was concluded on December 11, 1953, and the Munsif submitted his report.
the High Court through the District Judge on December 12, 1953.
On December 22, 1953, the appellant filed an application to the Additional District Judge for time to move the High Court to get an order to have the matter heard by some other judicial officer.
One month 's time was 174 accordingly granted and the Additional District Judge, for some reason which is not very apparent, sent the record back to the learned Munsif In the meantime, the Additional District Judge, it appears, made an effort to settle the trouble.
On December 23, 1953, he met the members of the Bar Association and the Munsif at the inspection bungalow at Anandapur on his way to Mayurbhanj.
At a meeting held there, a copy of a draft resolution to be passed by the members of the Bar Association, Anandapur, was made over.
This draft resolution was in these terms: "This Association re rets very much that an incident relating to the bench clerk of the Civil Court.
should have led to the subsequent unhappy differences between the Bench and the members of the Bar.
As in the interest of the litigant public it is felt not desirable to allow these strained feelings to continue further, this Association unanimously resolves to withdraw Resolution No. 6 dated October 8, 1953, passed against the Court and communicate copies of the same to the addressees previously communicated.
It is further resolved to request the Court to see to the desirability of withdrawing the proceedings that had been started against the various members of the Bar and their registered clerks on their expressing regret to the Court individually in connection with those proceedings.
It is further resolved that the members of the Bar involved in the proceedings be requested to take immediate steps in this direction.
The Association hopes that the bench clerk who has to some extent been the cause for this friction between the Bench and the Bar would be replaced by a person from a different place at an earlier date.
" On January 8, 1954, the appellant appeared in the Court of the Munsif and filed a written apology and expressed his regret.
His signature wag taken on the order sheet and the order of that date reads: "Sri L. M. Das, pleader, appears and expresses his regret.
So the proceeding No. 2 of 1952 is dropped.
Intimate Additional District Judge.
" No resolution, however, was passed in the terms 175 suggested by the Additional District Judge.
On January 19, 1954, two resolution,% were passed in the following terms: "No. 1.
In view of the fact that past misunderstandings between the Munsif and members of the Bar caused by an incident relating to the bench clerk of the Civil Court, have been removed by amicable settlement of differences existing between both parties, it is unanimously resolved that resolution No. 6 dated October 8, 1953, stands withdrawn.
No. 2.
It is further resolved that the copies of the above resolution be sent to the addressees previously communicated of resolution No. 6 of October 8, 1953.
" The learned Munsif, it appears, wanted to see the minute book of the Bar Association, presumably to find out in what terms the proposed resolution was passed.
There was again trouble between the Munsif and the appellant over the production.
of the minute book.
Ultimately, the minute book was produced, and on February 2,1954, the Munsif expressed the view that the resolution passed did not fully carry out the terms of settlement suggested by the Additional District Judge.
Accordingly, the proceeding was re opened and the record was re submitted to the District fudge.
The District Judge thereupon sent the report of the Munsif to the High Court accompanied by his opinion.
The High Court dealt with the report with the result which we have already indicated.
The main contention of Mr. N. C. Chatterji, who has appeared on behalf of the appellant is this.
He has submitted that there was no valid reason for reviving the proceeding against the appellant, after the proceeding had been dropped on January 8, 1954, on the submission of an apology and expression of regret by his client; because, in substance and effect, the terms of the settlement suggested by the Additional District Judge had been complied with.
According to Mr. Chatterji an expression of regret having been made earlier than the passing of the resolutions on January 19, 1954, by the Anandapur Bar Association and the bench clerk having already been transferred from 176 Anandapur, the resolutions could not be in the same terms as were suggested by the Additional District Judge; but the two resolutions passed on January 19, 1954 coupled with the expression of individual regret made on January 8, 1954, complied in substance with the essential terms of the draft resolution which the Additional District Judge had made over on December 23, 1953.
Mr. Chatterji has contended that this view of the matter has not been properly considered by the High Court.
He has submitted that in view of the order passed by the learned Munsif himself on January 8, 1954, the proceeding against the appellant should be treated as having been dropped and concluded on that date.
Mr. Chatterji has also drawn our attention to ground No. VI in the petition for special leave dated May 9, 1955, in which the appellant said that he was " willing and prepared to submit before this Court expressions of unreserved regret and apology for his error of judament and indiscretion, if any, in the discharge of his professional duties.
" We cannot accept the contention of Mr. Chatterji that the order passed by the learned Munsif on January 8, 1954, had the effect of terminating and bringing to an end the proceeding against the appellant.
The learned Judges of the High Court rightly pointed out that the report of the Munsif dated December 12, 1953, was a report which was submitted to the High Court.
Under the provisions of section 14 of the , such a report had to be forwarded to the High Court by the District Judge accompanied by his opinion.
It was not open to.
the Additional District Judge to send back the record to the Munsif The efforts of the Additional District Judge were, indeed, well intentioned; but at that stage, after the Munsif had made his report to the High Court, the High Court alone Was competent to pass final orders in the matter.
Apart, however, from that difficulty, we are not satisfied that the terms of settlement suggested by the Additional District Judge were fully complied with in this case.
It is true, that the appellant did express his 177 regret and to that extent the settlement suggested by the Additional District Judge was carried out.
It is also true that by the resolutions passed on January 19, 1954, the earlier resolution of October 8, 1953, was cancelled, but one essential and important part of the terms of settlement suggested by the Additional District Judge was that the Association should express regret at what had happened.
Resolution No. I dated January 19, 1954, was so worded as to give the impression that the misunderstanding between the Munsif and the appellant was all due to the bench clerk and that misunderstanding having been removed Resolution No. 6 dated October,$, 1953, should be withdrawn.
There is nothing in the resolution to show that the appellant was in any way at fault, a fault which he had expiated I by an expression of regret.
It may be pointed out that the earlier ,resolution, Resolution No. 6 dated October 8, 1953, had been communicated to a large number of persons and authorities and the later resolution dated January 19, 1,954, passed in the diluted form in which it was passed, could hardly undo the damage which had been made by the earlier resolution.
On merits we agree with the High Court that the appellant was undoubtedly guilty of grave professional, misconduct.
A member of the Bar undoubtedly owes a duty, to his client and must place before the Court all that can fairly and reasonably be submitted on behalf of his client.
He may even submit that a particular order is not correct land may ask for a review of that order.
At the same time, a member of the 'Bar is an officer of the Court and owes a duty to the Court in which he is appearing.
He must phold the dignity and decorum of the Court and must not do any thing to.
bring the Court itself into disrepute.
The appellant before us grossly ' overstepped the limits of proprieety when he made imputation$; of partiality and unfairiness against the Munsif in open Court.
In suggesting that the Munsif followed no principle in his orders the appellant was adding insult to injury, because the 'Munsif had merely up held an order of his predecessor on the preliminary point of jurisdiction and Court fees, 23 178 which order had been upheld by the High Court in s revision.
Scandalising the Court in such manner is really polluting the very fount of justice; such conduct as the appellant indulged in was not a matter between an individual member of the Bar and a member of the judicial service; it brought into disrepute the whole administration of justice.
From that point of view, the conduct of the appellant was highly reprehensible.
The appellant gave no evidence in support of his version of the incidents, though he had an opportunity of doingso, if he so desired.
The only point left for consideration, is the question of punishment.
On a matter of this nature, this Court would be reluctant to interfere with the order of the High Court as respects the disciplinary action to be taken against a member of the Bar who has been guilty of professional misconduct.
There are, however, two mitigating circumstances.
One is that the learned Munsif himself recommended suspension of practice for one year only.
The appellant was suspended from practice with affect, from March 15,1955.
The order of suspension has now lasted for a little more than a year and eight months.
The second mitigating circumstance is that the appellant did file la written apology and expressed regret to the learned Munsif onJanuary 8, 1954.
It is unfortunate that the appellantdid not take up a more contrite attitude in the High Court.
In this Court, the appellant tried to make out that the proceeding against him should not have been revived; he however showed his willingness to offer an apology and ex pression of regret Having regard to all the circumstances, we think that the punishment imposed errs on the side of excess.
We would accordingly reduece the period of susppusion to, two years only.
In the result, the petition, under article 32 is dismissed and the appeal is,also dismissed subject to the reduction of the period of suspension as indicated above.
In the circumstances of this case, there will be, no 'order for costs.

summary:
The appellant pleader who already had strained relation with the Munsif made certain objectionable remarks in open Court, suggesting partiality and unfairness on the part of the Munsif.
The Munsif drew up a proceeding under sections 13, 14 Of the , against the pleader and submitted a report to the High Court through the District judge.
An application to the Additional District judge was filed by the pleader, for time to move the High Court to get an order to have the matter heard by some judicial Officer other than the 168 Munsif who had made the report.
One month 's time was accordingly granted, and for some reason which is not very apparent, the Additional District judge sent the record back to the Munsif.
The Additional District judge made an effort to settle the trouble.
It was arranged that the pleader should apologise and a resolution should be passed by the members of the local Bar Association.
Accordingly, the pleader appeared in the Court of the Munsif and filed a written apology and expressed his regret, and the Munsif dropped the proceeding.
It was later found that the resolution was not passed in the terms suggested by the Additional District judge, and the terms of settlement suggested by the latter were not fully carried out.
Accordingly, the proceeding was re opened and the report was re submitted to the District judge who with his opinion forwarded the same to the High Court.
The High Court suspended the pleader for 5 years.
It was contended on behalf of the appellant that there was no valid reason for reviving the proceeding, after it had once been dropped on the submission of an apology and expression of regret.
Held, that the report under section 14 of the is a report which is submitted to the High Court.
When a report is made to the High Court by any Civil judge subordinate to the District judge, the report shall be made through the District judge and the report must be accompanied by the opinion of such judge.
Once the report has been made, it is not open to the District judge to send back the record to the Subordinate Civil judge, and no order passed by the Subordinate Civil judge can have the effect of terminating or bringing to an end the proceeding.
The High Court alone is competent to pass final orders on the report.
A member of the Bar is an officer of the Court, and though he owes a duty to his client and must place before the Court all that can fairly and reasonably be submitted on behalf of his client, he also owes a duty to the Court and must uphold the dignity and decorum of the Court in which he is appearing.
Making amputations of partiality and unfairness against the subordinate Civil judge in open Court is scandalizing the Court in such a way as to pollute the very fount of justice ; such conduct is not a matter between an individual member of the Bar and a member of the judicial Service.
With regard to disciplinary action against a member of the Bar, the Supreme Court would be reluctant to interfere with the order of the High Court unless there are clear mitigating circumstances.


judgement:
Civil Appeal No. 210 of 1983.
Appeal by Special leave from the Judgment and order dated the 11th June, 1981 of the Kerala High Court in T.R.C. No. 117 of 1980.
P.A. Francis and V.J. Francis for the Appellant.
section Balakrishnan for the Respondent.
The Judgment of the Court was delivered by VENKATRAMIAH, J.
In this appeal by special leave arising under the Kerala General Sales Tax, Act, 1963 (hereinafter referred to as 'the Act ') two questions arise for consideration.
They are (i) whether on the facts and in the circumstances of the case the Appellate Tribunal was justified in law in holding that the assessee was entitled to, exemption under Rule 9 (a) of the Kerala General Sales Tax Rules, 1963 (hereinafter referred to as 'the Rules ') from payment of sales tax on the turnover relating to 'service discount ' and (ii) whether the value of goods returned by the purchasers could be deducted under Rule 9 (b) (i) of the Rules from the total turnover of the year of assessment in which the goods were actually returned when they had been sold in the previous assessment year.
The assessee M/s. Motor Industries Co., Ernakulam is a dealer in diesel, fuel injection parts etc.
For the assessment year 1973 74 ending March 31, 1974 the assessment had been completed under the Act on the best judgment basis determining the taxable turnover at Rs. 47,42,687.71 by disallowing the claim for exemption of an amount of Rs. 69,707.68 which the assessee had claimed as 'service discount ' under Rule 9 (a) of the Rules and a further amount of Rs.982.83 under Rule 9 (b) (i) of the Rules being the 387 value of goods returned.
The Assistant Commissioner of Sales Tax (Assessment) who was the assessing authority disallowed the claim in respect of 'service discount ' on the ground that the amount in respect of which deduction was claimed had not been allowed as a discount in accordance with the terms of sale but had been allowed as an over riding commission and 'incentive ' to promote trade.
He disallowed the claim in respect of the value of goods which had been returned OD the ground that it related to the sales completed in the previous assessment year i.e. 1972 73.
Aggrieved by the order of assessment the assessee filed an appeal before the Deputy Commissioner, Agricultural Income Tax and Sales Tax (Appeal), Ernakulam.
In that appeal, the exemption claimed in respect of 'service discount ' was allowed But the claim in respect of 'sales returns ' was allowed to the extent of the turnover of Rs. 552 70 being the turnover of goods returned within a period of three months from the date of sale.
The appeal filed against that order by xf8he Department before the Appellate Tribunal was dismissed.
Against the order of the Tribunal the Department filed a revision petition before the High Court of Kerala which again was dismissed by its judgment dated June l l, 1981.
This appeal is preferred with the special leave of this Court against the aforesaid judgment of the High Court.
Under Chapter II of the Act which contains the charging pro visions the incidence and levy of tax is on the turnover of any dealer during any assessment year computed in accordance with the Act.
Explanation (2) (ii) given in section 2(xxvii) of the Act which defines the expression 'turnover ' says that subject to such conditions and restrictions, if any, as may be prescribed in that behalf 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.
Clause (a) and sub clause (i) of clause (b) of Rule 9 of the Rules which prescribes the method of computation of the taxable turnover of an assessee read thus: "9.
Determination of taxable turnover In determin ing 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 388 (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: (b) (i) all amounts allowed to purchasers in respect of goods returned by them within a period of 3 months from the date of delivery of the goods to the dealer when the goods are taxable on the amount for which they had been sold provided that the accounts show the date on which the goods were returned and the date on which and the amount for which refund was made or credit was allowed to the purchaser .
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 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 389 to accept the submission made on behalf of the Department Rule A 9 (a) says that all amounts allowed as discount either in accordance with regular practice on 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 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.
We are not inclined to accept the submission that the 'service discount in question ' is in the nature of a set off on account of reciprocal promises or amounts to consideration for an agreement styled as 'trading in '. 'Trade in ' contracts are those where P goods are transferred by the seller for consideration partly in money and partly in exchange of some other goods to be sold by the buyer tn the seller.
In such cases there may be one contract of sale only of the principal goods coupled with a subsidiary agreement that if the buyer delivers to the seller the other goods an agreed allowance will be made.
There may also be cases where the buyer may become entitled to an extra allowance for some service unconnected with the sale of the goods in question being rendered to the seller.
In such cases the allowance in they price of the goods sold given by the seller to the buyer either by way of consideration for the goods supplied by the buyer to the seller or for services rendered by the buyer lo the seller would not be a trade discount as such which would qualify for 390 deduction in the determination of the taxable turnover.
In the instant case the service said to have been rendered by the buyers for securing the 'service discount ' is an integral part of the transaction of sale itself which incidentally confers on the assessee the benefit of popularisation of the assessee 's goods in the market.
The discount so allowed is merely a percentage of the price of the goods sold which has nothing to do with any other goods supplied or other service rendered by the buyers to the assessee.
The fact that the discount is not allowed at the time of sale but on a later date at the end of the month would not make it any the less a trade discount.
We are, therefore, of the view that The High Court has rightly upheld the deduction of the 'service discount ' claimed in this case by the assessee from the total turnover.
The appeal should, therefore, fail in so far as this part of the case in concerned.
But on the second point which arises for consideration in this case, the case of the Department appears to be well founded.
Rule 9 (b) (i) of the Rules provides that all amounts allowed to purchasers in respect of goods returned by them within a period of three months from the date of delivery of the goods to the dealer, when the goods are taxable on the amount for which t hey have been sold are deductible from the total turnover in determining the taxable turnover (provided the accounts show the relevant entries).
The two important conditions which have to be satisfied for claiming the deduction under Rule 9 (b) (i) are that the goods in question must have been returned within three months from the date of delivery and that necessary entries are made in the accounts of the assessee.
If these conditions are satisfied, the amount allowed to the purchaser for the returned goods would be deductible from the total turnover.
The final assessment under the Act is always made in respect of one year i.e the financial year which commences on April I of every calendar year and ends with March 31 of the succeeding calendar year.
That is clear from the scheme of section 5 of the Act and Rules 11, 18, 20 and other rules found in the Rules.
Any deduction that can be made under Rule 9 (b) (i) of the Rules can only be made from the total turnover of the assessment year in which the goods that are returned within three months of the date of delivery were actually sold.
Such deduction cannot be claimed from the total turnover of the succeeding financial year.
The reason is obvious and it can be easily demonstrated by taking the illustration of a dealer who ceases to be a dealer in the subsequent financial year.
In his case unless deduction 391 is allowed in the financial year in which the goods that are subsequently returned were actually sold, he would have to pay tax on the amount for which the goods in question were sold in the assessment year in which they were sold and he would not be able to claim any deduction in the subsequent year as he has ceased to be a dealer in that year.
There may also be difference in the tax liability if the rates of tax are varied in the subsequent assessment year.
Further by such deduction the turnover relating to the subsequent financial year which is otherwise taxable under the statute would escape taxation to the extent of the deduction Such a result cannot be permitted to ensue.
It is true that in the case of many sales which have taken place in the months of January, February and March in any financial year, the assessee would become aware of his right to claim the deduction under Rule 9 (b) (i) in his return pertaining to that assessment year during the subsequent financial year if such goods are returned within three months of the date of delivery.
It is quite possible that in such cases the assessee would have filed his annual return under Rule 18 of the Rules without any opportunity to claim any deduction where the goods are returned subsequent to the filing of the return but before the expiry of three months from the date of their delivery This, however, need not present much difficulty as an assessee in that position can always file a revised return and claim the deduction or even if assessment is completed, demand adjustment or refund by preferring the claim in time.
The learned counsel for the Department states that such an adjustment or refund ', can be claimed by an assessee.
The above statement made on behalf of the Department is in accordance with the scheme of the any Act and the Rules.
In order to make the position clear the State 1, Government may take steps to introduce a suitable amendment in the Rules or in the Act.
We are, however, of the view that even in p the absence of such an amendment, the deduction in respect of 'sales 7 , return ' has to be allowed in the assessment relating to the financial year in which the sales of the returned goods had taken place and even where assessment for that year is completed, the Department has to comply with the demand for adjustment or refund by making necessary rectification in the order of assessment, provided that other conditions are satisfied, as that is the inevitable consequence of Rule 9 (b) (i) which allows deduction of the value of the goods returned within three months from the date of their delivery from the total turnover of that assessment year.
But in any view of the matter it is not possible to hold that such deduction in respect of returned goods can be claimed in the assessment proceedings for the financial year subsequent to the financial year in which the sales have taken 392 place.
We do not, therefore, agree with the contrary view expressed A by the High Court relying on its decision in The Jay Engineering Works Ltd. vs State of Kerala(l).
The appeal of the Department has to be allowed to the above extent.
In the result the appeal is dismissed in so far as the first question is concerned.
The appeal is allowed in so far the second question is concerned.
The orders of assessment for the assessment year 1973 74 shall be modified accordingly.
As a consequence of this decision, the order of assessment for the year 1972 73 shall be rectified in accordance with this judgment.
No costs.

summary:
The respondent was an assessee under the Kerala General Sales Tax Act, 1963.
In determining the taxable turnover for the assessment year 1973 74, it claimed exemptions in respect of a 'service discount ' under r. 9(a) and an amount of Rs. 982.83 in respect of 'sales returns ' under r. 9(b)(i) of the Kerala General Sales Tax Rules, 1963.
The Assistant Commissioner disallowed the claim on both the counts stating that while the 'service discount ' had not been allowed as a discount in accordance with the terms of the sale but as an overriding commission and incentive to promote trade, the 'sales returns ' related to the sales completed in the assessment year 1972 73.
In appeal, the Deputy Commissioner allowed the assessee 's claim in respect of 'service discount ' in full and that in respect of 'sales returns ' to the extent of Rs. 552.70.
The Department 's appeal before the Appellate Tribunal and the revision filed by it before the High Court were dismissed.
The appellant contended that the 'service discount ' could not strictly be termed as discount as it was in lieu of services rendered by the respondent 's main distributors by way of popularisation of the sales and consumption of the products sold by the assessee and that it was either in the nature of a set off on account of reciprocal promises or it amounted to consideration for an agreement styled as "trading in"; and That the deduction claimed in respect of 'sales returns ' could not be allowed from the taxable turnover for the year 1973 74 as any deduction under r. 9(b)(i) could only be made from the total turnover or the assessment year in which the goods were actually sold.
Dismissing the appeal in so far as it concerned the 'service discount ', and allowing the same in respect of 'sales returns ', ^ HELD: 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 385 the price of goods for any commercial reason would be a trade discount which can legitimately be claimed as a deduction under r.9(a).
Such a concession is usually allowed with the object of improving prospects of one 's own business.
It is common experience that when goods are marketed through reputed concerns, the demand for such goods increases and correspondingly the business of the manufacturer or the wholesale dealer would become more and more prosperous.
Hence any concession in 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.
[389A D] In the instant case, the 'service discount ' in respect of which the deduction was claimed was the additional trade discount allowed by the assessee to its main distributors 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.
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.
Apart from buying the products of the assessee, no other service was rendered by the dealers to the assessee.
The additional discount or 'service discount ' is no other than the discount referred to in r.9 (a).
[388 E H; 389 D E] (b) 'Trade in ' contracts are those where goods ale transferred by the seller for consideration partly in money and partly in exchange of some other goods to be sold by the buyer to the seller.
In such cases there may be one contract of sale only of the principal goods coupled with a subsidiary agreement that if the buyer delivers to the seller the other goods, an agreed allowance will be made.
There may also be cases where the buyer may become entitled to an extra allowance for some service unconnected with the sale of the goods in question being rendered to the seller.
In such cases the allowance in the price of the goods sold given by the seller to the buyer either by way of consideration for the goods supplied by the buyer to the seller or for services rendered by the buyer to the seller would not be a trade discount as such which would qualify or deduction in the determination of the taxable turnover.
[389 P H; 390 A] In the instant case.
the service said to have been rendered by the buyers for securing the 'service discount ' is an integral part of the transaction of sale itself which incidentally confers on the assessee the benefit of popularisation of the assessee 's goods in the market.
The discount so allowed is merely a percentage of the price of the Goods sold which has nothing to do with any other goods supplied or other service rendered by the buyers to the assessee.
The fact that the discount is not allowed at the time of sale but on a later date at the end of the month would not make it any the less a trade discount.
The High Court rightly upheld the deduction of the 'service discount ' claimed in this case.[390A.C] 2.
The two important conditions which have to be satisfied for claiming the deduction under r. 9(b)(i) are that the goods in question must have been returned within three months from the date of delivery and that necessary entries are made in the accounts of the assessee If these conditions are satisfied, the amount allowed to the purchaser for the returned goods would be deductible from the total turnover.
Any deduction that can be made under 386 this rule can only be made from the total turnover of the assessment year in which the goods that are returned within three months of the date of delivery were actually sold.
Such deduction cannot be claimed from the total turnover of the succeeding financial year.
If The assessment for the relevant year is completed, the department has to comply with the demand for adjustment or refund by making necessary rectification in the order of assessment.
[390 E H. 391 F G] Jay Engineering Works vs State of Kerala, 43 S.T.C. 492, overruled.