JUDGMENT

R. S. PATHAK, J.:—This appeal by special leave raises the question whether for the purpose of computing the turnover assessed to sales tax under the Central Sales Tax Act, 1956 the sale price of goods is determined by including the amount paid by way of trade discount.

2. The assessee is a private limited company carrying on business as sole selling agent for a certain brand of welding electrodes. For the goods supplied to retailers, it charged them the catalogue price less trade discount. The catalogue price is the price which the retailer is entitled to charge the consumer. For the assessment year 1971-72, the returns filed under the Central Sales Tax Act, 1956 showed a taxable turnover of inter-State sales amounting to Rs. 8,71,624/-. This figure was derived by deducting from the catalogue price the amount of Rs. 1,06,708/- paid as trade discount by the assessee to retailers. The Sales Tax Officer refused to allow the deduction and computed the taxable turnover at Rs. 9,78,332/-. The Sales Tax Officer was of the view that the amount paid by way of trade discount could not be excluded from the catalogue price. The assessee appealed, and the Appellate Assistant Commissioner upheld its claim that trade discount did not from part of the turnover, and it could not therefore attract sales tax. A second appeal filed by the Revenue was dismissed by the Appellate Tribunal. The Revenue applied in revision to the High Court of Kerala and the revision application has been dismissed. The Revenue appeals.

3. It is contended before us by the Revenue that the High Court has erred in affirming that an amount paid by way of trade discount cannot be included in the taxable turnover for the purpose of assessment. It is pointed out that the definition of "sale price" in S. 2 (h) of the Central Sales Tax Act permits the deduction of sums allowed as cash discount only and makes no reference to sums allowed by way of trade discount. It is contended that in effect the assessee enters into two distinct contracts with the retailer, the first contract relates to the sale of goods at the catalogue price and the second contract stipulates that notwithstanding the liability of the retailer under the first contract to pay the entire sale price, he may actually pay the sale price less trade discount. On that submission, it is sought to be urged that since the sale is effected under the first contract, the entire amount treated as consideration for the sale under that contract has to be included in the taxable turnover.

4. We have considered the matter carefully and in our judgment the appeal must fail.

5. At the outset, it is appropriate that we set forth the two relevant definitions contained in the Central Sales Tax Act. Section 2 (j) defines "turnover" to mean "the aggregate of the sale prices received and receivable by him (the dealer) in respect of sales of any goods in the course of inter-State trade or commerce.........." And S. 2 (h) of the Act defines the expression "sale price" to mean "the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed as cash discount according to the practice normally prevailing in the trade........" It is true that no deduction on account of cash discount is alone specifically contemplated from the sale consideration in the definition of sale price by S. 2 (h), and there is no doubt that cash discount cannot be confused with trade discount. The two concepts are wholly distinct and separate. Cash discount is allowed when the purchaser makes payment promptly or within the period of credit allowed. It is a discount granted in consideration of expeditious payment. A trade discount is a deduction from the catalogue price of goods allowed by wholesalers to retailers engaged in the trade. The allowance enables the retailer to sell the goods at the catalogue price and yet make a reasonable margin of profit after taking into account his business expense. The outward invoice sent by a