1. Heard the learned counsel for the petitioner and the learned Additional Government Advocate appearing for respondents No. 1 to 4.

2. The petitioner claims that it is a dealer in cars and is entitled to deduction of discounts allowed to customers in the sale price of cars after the cars were sold by issuing credit notes as authorized by Rule 31 of Karnataka Value Added Tax Rules, 2005 (Hereinafter referred to as the ‘KVAT Rules’ for brevity) read with Section 30 of Karnataka Value Added Tax Act, 2003 (Hereinafter referred to as the KVAT Act, for brevity), during the tax periods in 2006-2007 and 2007-2008.

According to the petitioner, the decision of this court in M/s. Pratham Motors Private Limited vs. Additional Commissioner of Commercial Taxes and Others, 2012 (74) Kar. LJ 97, applies to the facts of the present case on all fours and therefore, the second reassessment order passed by the fourth respondent under Section 39(2) of KVAT Act for the years 2006-2007 and 2007-2008 disallowing the claims to deduction and the appellate order passed by the third respondent, in the appeals which were clubbed together and filed against the order passed by the fourth respondent, are liable to be set aside.

3. The learned Counsel for the petitioner draws attention to the relevant provisions of law, which would be pertinent to consider the case of the petitioner, namely, Rules 31 and 3(2)(c) of the KVAT Rules and Section 30 of the KVAT Act. The provisions read as follows:-

“31. Particulars of credit and debit notes – Where a registered dealer has given a tax invoice in respect of a sale of goods and thereafter the goods or any part thereof are returned to the seller if the sale is cancelled or for any other reason, or the value of the sale is altered, whether due to a discount or otherwise, he shall, subject to the provisions of Section 30, give to the buying dealer a credit or debit note containing the following details, namely:-

(1) The nature of the document issued;

(2) A consecutive serial number;

(3) The date of the issue of the document;

(4) The name, address and registration number of the selling dealer;

(5) The name and address of the buyer, together with buyer’s registration number, if registered;

(6) The number and date of the relevant tax invoice;

(7) The value of the goods and the amount of the tax credited or debited to the buyer;

(8) Signature of the selling dealer or his agent.”

Clause (c) of sub-rule (2) of Rule 3 reads as follows:

“3. Determination of turnover. –

(1) xxx

(2) The taxable turnover shall be determined by allowing the following deductions from the total turnover:-

(a) xxx

(b) xxx

(c) 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 any contract or agreement entered into in a particular case and the tax invoice or bill of sale issued in respect of the sales relating to such discount shows the amount allowed as discount.

Provided further that the accounts show that the purchaser has paid only the sum originally charged less discount.”

Section 30 of the KVAT Act reads as follows:-

“30. Credit and Debit Notes.-(1) Where a tax invoice has been issued for any sale of goods and within six months from the date of such sale the amount shown as tax charged in that tax invoice is found to exceed the tax payable in respect of the sale effected or is not payable on account of goods sold being returned within the prescribed period, the registered dealer effecting the sale shall issue forthwith to the purchaser a credit note containing particulars as prescribed.

(2) Where a tax invoice has been issued for sale of any goods and the tax payable in respect of the sale exceeds the amount shown as tax charged in such tax invoice, the registered dealer making the sale, shall issue to the purchaser a debit note containing particulars as prescribed.

(3) Any registered dealer who receives or issues, credit notes or d