C.N. Ramachandran Nair, J.

1. The question raised in the connected Writ Petitions and Writ Appeals is whether the appellants/petitioners are entitled to exemption from tax payable under the Value Added Tax Act, 2003, hereinafter called the "Act", on the discount allowed by them after sales through credit notes issued to purchasers. Excepting one or two assessee-dealers who are engaged in sale of automobiles and spares, all other assessees are either manufacturers or wholesalers of cement. Admittedly assessees made sales, collected tax under the Act, and remitted the same along with monthly returns. However, according to them, depending upon the target achieved, and the prompt payments, assessees have later issued credit notes to dealers representing discount which appellants/petitioners are entitled to deduction in the determination of taxable turnover and therefore the tax paid on the discount given should be refunded to them. The learned single Judge considered all the contentions in a detailed judgment but rejected the claim stating that the provisions of the Act and Rules and Form 8, which is the format of tax invoice prescribed under the Act and Rules do not provide for deduction of discount except cash discount separately shown in the tax invoice. It is against this judgment of the learned single Judge that Writ Appeals are filed by some of the assessees. However, when Writ Appeals are posted for hearing, pending Writ Petitions are also posted and we have heard senior counsel Sri. K.P. Kumar and other counsel appearing for the appellants/petitioners and Special Government Pleader appearing for the respondents.

2. Sales tax under the VAT regime came into force in the State with effect from 1.4.2005. The charging Section, namely, Section 6(1) of the Act provides for levy of tax on the taxable turnover. "Taxable turnover" under Section 2(l) means the turnover on which a dealer shall be liable to pay tax as determined after making such deductions from his total turnover and in such manner as may be prescribed. "Turnover" as defined under Section 2(lii) and clause (ii) of Explanation III to Section 2(lii) provides for exclusion of discount in the computation of turnover. The said clause of Explanation III providing for deduction of discount as originally contained in the statute is as follows:

(ii) Any cash discount on the price allowed in respect of any sale where such cash discount is shown separately or any amount refunded in respect of articles returned by customers shall not be included in the turnover.

The above provision was substituted by the following clause by Act 39 of 2005 notified on 28.8.2005 with retrospective effect from 1.4.2005:

(ii) Any discount on the price allowed in respect of any sale where such discount is shown separately in the tax invoice and the buyer pays only the amount reduced by such discount; or any amount refunded in respect of goods returned by customers shall not be included in the turnover.

The question raised in all these cases pertains to interpretation of the above provision. In the first place, senior counsel Sri. K.P. Kumar and other counsel appearing for the assessees contended that tax could be levied only on the sale price, and cash discount granted should not constitute price at all and so much so it cannot be treated as forming part of turnover much less taxable turnover, irrespective of how and when such discount is granted. Alternatively they contended that discount allowed to their dealers through credit notes issued later was allowable under the original provision prior to it's amendment and disallowance is only on account of retrospective amendment made by Act 39 of 2005 which according to them is arbitrary and liable to be declared unconstitutional by this Court as violative of Articles 14, 19 (1)(g) and 301 of the Constitution of India. We therefore proceed to consider one after another of the contentions raised on behalf of the assessees.

3. Before proceeding to consid