Devan Ramachandran, J.

1. State of Kerala has filed the above revision assailing the order of the Kerala Value Added Tax Additional Appellate Tribunal, Palakkad ('the Tribunal' for short), by which it had set aside the orders of assessment and the order of the first appellate authority affirming the assessment, as prayed for by the respondent herein in their appeal before it.

2. The question of law raised in this revision by the State, inter alia, is whether the discounts received by the assessee much after purchase from the supplier would have to be deemed as turn over as per Explanation VII to Section 2(li) of the Kerala Value Added Tax Act ('the Act' for short) or whether it would have to be treated as either a 'cash discount' or 'trade discount' as defined by the Hon'ble Supreme Court in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Advani Oerlikon (P) Limited, 45 STC 32 (SO).

3. The respondent is a registered dealer under the Act and they are trading in cement. They had filed the annual return for the year 2010-11 conceding a total sales turn over of Rs. 1,66,33,860/-. It was also conceded by the assessee that it had obtained an amount of Rs.3,78,297/- as discount from its suppliers subsequent to the purchase from them. On verification of the accounts, it was noticed by the Assessing Officer that the purchase value declared by the assessee was without reckoning the loading and unloading charges paid by them. It was further noticed that when the said charges were also reckoned, the sale price will fall far below the purchase price, thus attracting Explanation VII to Section 2(H) of the Act, which would warrant that the subsequent amounts obtained from the suppliers as 'discounts' be deemed as part of the turnover.

4. Before proceeding further, a reading of the said Explanation would be beneficial in understanding the issues raised in this revision. Explanation VII to Section 2 (ii) is as follows:

"Where a dealer sells any goods purchased by him at a price lower than at which it was purchased and subsequently receives any amount from any person towards reimbursement of the balance of the price, the amount so received shall be deemed to be turnover in respect of such goods."

5. Since the assessing authority found that the assessee had sold the goods at a lower price than it purchased from the suppliers, the Assessing Officer proposed to reckon the amounts that have been received by the respondent from their suppliers as 'discounts' into its total turn over. The assessing authority thus issued an order dated 25.09.2013 assessing the turn over by including the 'discounts' received by the respondent and completed the assessment. The respondent filed an appeal before the Assistant Commissioner (Appeals), Palakkad, which was dismissed confirming the order of the assessing authority. The respondent, thereafter, filed a further appeal, which was numbered as TA (VAT) No. 226/2014 before the Tribunal. The said appeal was allowed in their favour as per order dated 28.01.2015, which is annexed as Annexure-C and impugned by the State in this revision.

6. From the order of the Tribunal, it is obvious that it had in fact confirmed the findings of the assessing authority and the first appellate authority that if the "discounts" are not accounted and the incidental charges like the loading and unloading charges incurred by the dealer are also to be added, then it would become obvious from the accounts that the dealer had sold the goods at a lower price than the price at which they were purchased. This would have been automatically attracted the rigour of explanation VII to Section 2(li) of the Act.

7. The Tribunal, however, then went on to consider the explanation given to the word 'purchase price' or 'sale price' as defined by the section and came to a conclusion that the purchase price of the petitioner should be equal to the price of the suppliers added with expenses and incidentals for the purchase. On such