Judgment Nagendra Rai, J. 1. The petitioner has filed the present writ application for quashing the assessment order dated January 23, 2003, passed, u/s. 17 of the Bihar Finance Act, 1981 (hereinafter referred to as "the Act") and the demand notice issued pursuant, to the said order for the assessment year 2001-2002, so far as it relates to the inclusion of Rs. 2,95,88,480 in the taxable turnover of the petitioner for the purposes of imposing tax under the Act, which was claimed by the petitioner as a trade discount. 2. The petitioner has also made several other prayers in the writ application but during the course of argument the case was confined only to the aforesaid matter. Thus, the only question for consideration is as to whether the quantitative discount claimed by the petitioner as the trade discount is to be included in its taxable turnover or not for the purpose of assessment under the provisions of the Act. 3. The factual matrix is that the petitioner is a private limited company having its head office at Mumbai and branches at different places including Patna. It is engaged in manufacturing and sale of medicines. It is registered under the Act and is paying sales tax. In the past, it claimed quantitative discount as trade discount and that had been allowed with respect to the previous assessment years, but for the assessment year in question, i.e., 2001-2002 the respondent-authority disallowed the aforesaid quantitative discount and included the same in taxable turnover. 4. According to the petitioner, as per its scheme, it is allowing free quantitative discount to its customer according to normal trade practice and neither in the past the aforesaid amount was added in the taxable turnover in the State of Bihar nor has the said amount been added in the taxable turnover in other States, namely, Uttar Pradesh, Orissa, Assam and West Bengal, where it is carrying on business. Such type of discount is also claimed by other manufacturers of medicines and that is being allowed as trade discount. The copies of the scheme containing the aforesaid quantitative discount have been annexed as annexures 5 series to the writ petition. According to the said scheme, if a stockist purchases certain quantity of strips, vials, etc., as indicated in the scheme, then some vials and strips will be given to them free without charging any price. The copies of the scheme containing the aforesaid quantitative discount have been annexed as annexures 5 series to the writ petition. According to the said scheme, if a stockist purchases certain quantity of strips, vials, etc., as indicated in the scheme, then some vials and strips will be given to them free without charging any price. Further case of the petitioner is that the products given as the quantitative discount to the stockists or dealers are given without charging any consideration. This fact is also admitted by the assessing authority and as such the said transaction does not amount to sale as defined under the Act for the reason that no sale price is charged with regard to the said products and as such the same cannot be included in the taxable turnover for the purposes of tax under the provisions of the Act. 5. The case of the department as evident from the assessment order and the counter-affidavit is that the department does not dispute the fact that the quantitative discount has been given by the petitioner to the stockists, etc., and no consideration money has been received by the petitioner with regard to the products given free under the quantitative discount, but disputes the claim of the petitioner for discount on the ground that the commodity discount given by the petitioner to the wholesalers in the medicines trade is limited only up to the retailer only as it does not pass to the consumer. The medicine is taxed on the first point of sale and on the commodity discount, no tax is shown to be charged, but when it is sold to the consumer, price is realised along with all taxes. When the sale of goods takes place, the petitioner-company issues form "IXC" to its purchasers as a certificate that the goods sold to them are tax-paid at the first point and since the bills, against which form "IXC" is issued, also contained the transactions shown as quantitative discount; such transactions also get covered as tax paid. Form "IXC" is given when the commodity is tax-paid, but in such cases, the petitioner does not show collection of tax on transaction of quantity of discount. Therefore, levy of tax has been done after scrutiny of its accounts and documents presented before the assessing officer and discount shown as commodity discount has been disallowed. 6. Form "IXC" is given when the commodity is tax-paid, but in such cases, the petitioner does not show collection of tax on transaction of quantity of discount. Therefore, levy of tax has been done after scrutiny of its accounts and documents presented before the assessing officer and discount shown as commodity discount has been disallowed. 6. From a perusal of the assessment order, it is clear that the petitioner has been assessed on the gross turnover of Rs. 24,74,26,831.91, out of which Rs. 2,95,88,480.88 was claimed by the petitioner as the trade discount, which has also been assessed along with other taxable turnover. 7. Dr. Devi Pal, learned Senior Counsel appearing for the petitioner raised two points. Firstly, he submitted that according to the scheme of trade discount or quantitative discount, on purchase of certain types of medicines up to a particular quantity, the petitioner gave certain quantities of strips and vials free to the purchasers without charging any consideration and as such the medicines, which were supplied free in terms of the aforesaid scheme are not covered by the definition of the sale as defined under the Act because no consideration money has passed. In support of the first submission, he relied upon two decisions of the Supreme Court in Commissioner of Income-tax, Andhra Pradesh V/s. Motor & General Stores (P.) Ltd. reported in [1967] 66 ITR 692 (SC) ; AIR 1968 SC 200 and Indian Steel & Wire Products Ltd. V/s. State of Madras, reported in [1968] 21 STC 138 (SC); AIR 1968 SC 478 . Secondly, he submitted that the petitioner has given the trade quantitative discount, which is in the nature of trade discount, given according to ordinary trade practice and as such the same is to be deducted, The said discount cannot be included in the taxable turnover for the purposes of imposing tax under the provisions of the Act. In support of the second submission, he placed reliance on the three decisions of the Supreme Court in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes) V/s. Advani Oerlikon (P.) Ltd. reported in [1980] 45 STC 32, in Deputy Commissioner of Sales Tax (Law) V/s. Motor Industries Co. reported in [1983] 53 STC 48 and in Deputy Commissioner of Sales Tax, Ernakulam V/s. Kerala Rubber & Allied Products, reported in [1993] 90 STC 170. 8. reported in [1983] 53 STC 48 and in Deputy Commissioner of Sales Tax, Ernakulam V/s. Kerala Rubber & Allied Products, reported in [1993] 90 STC 170. 8. The learned counsel for the State combating both the submissions advanced on behalf of the petitioner, submitted that the scheme of the petitioner is in the nature of bonus discount and not a trade discount and as such the assessing authority has rightly included the aforesaid amount in the taxable turnover. He placed reliance on a judgment of the Madras High Court in the case of State of Tamil Nadu V/s. Ultramarine and Pigments Ltd. reported in [1980] 46 STC 220. 9. Before adverting to the submissions advanced at the Bar, it is apt to refer to the relevant provisions of the Act with a view to appreciate the said submissions. The State has enacted the Act for the purpose of levy of tax on the sale and purchase of goods in Bihar. Gross turnover has been defined under Sec. 2(j) of the Act. According to the definition, gross turnover is the aggregate of sale price received and receivable by a dealer as a consideration for sale. The State has enacted the Act for the purpose of levy of tax on the sale and purchase of goods in Bihar. Gross turnover has been defined under Sec. 2(j) of the Act. According to the definition, gross turnover is the aggregate of sale price received and receivable by a dealer as a consideration for sale. The sale has been defined u/s. 2(t), which runs as follows : "2(t) sale means any transfer of property in goods for cash or deferred payment or other valuable consideration but does not include a mortgage or hypothecation of or a charge or pledge on goods, and includes-- (i) transfer of property in any goods, otherwise than in pursuance of a contract ; (ii) transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract ; (iii) delivery of goods on hire-purchase or any system of payment by instalments ; (iv) transfer of the right to use any goods for any purpose (whether or not for a specified period) ; (v) supply of goods made by a society, trust, club or association whether incorporated or not, to its members or otherwise ; (vi) supply by way of or as part of any service or in any other manner, whatsoever, of goods being food or any drink whether or not intoxicating ; and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply, and all grammatical variations and cognate expressions shall be construed accordingly ; and purchase means such acquisition of property in goods or purchase of those goods by the person to whom such transfer, delivery or supply is made." 10. The said provision was amended in 1984 and the definition of sale was enlarged in view of the definition of "tax on the sale or purchase of goods", inserted as Clause (29A) of Art. 366 of the Constitution of India by the Forty-sixth Amendment. According to the said provision, the sale means any transfer of property in goods for cash or deferred payment or other valuable consideration. According to the said provision, the sale means any transfer of property in goods for cash or deferred payment or other valuable consideration. The sale price has been defined u/s. 2(u) of the Act, which runs as follows : "2(u) sale price means the amount payable to a dealer as valuable consideration in respect of the sale or supply of goods; Explanation I.--Sale price shall include any amount charged by the dealer for anything done in respect of the goods at the time of, or before delivery thereof to the buyer. Explanation II.--Sale price shall not include the cash discount allowed by the dealer according to the ordinary trade practice if shown separately. It shall also not include the cost for transport of the goods from the seller to the buyer, provided such cost is separately charged to the buyer." 11. From the conjoint reading of the aforesaid provisions, it is clear that the levy of tax is made on the sales and according to the definition of the "sale", there should be a transfer of property in goods for cash or deferred payment or other valuable consideration. Unless transfer is made for money consideration, such transfer will not be sale and is not liable to levy of tax under the provisions of the Act. 12. It is settled law that the definition of "sale" as given in the Sales Tax Laws can be interpreted as having the same meaning as in the Sale of Goods Act, 1930. It is equally well-settled that in order to constitute a sale, there should be an agreement between the parties for the purpose of transferring the title of goods. The person entering into the agreement must be competent to contract and the transaction must be supported by money consideration and in pursuance of the transaction, the property must pass in the goods to the buyer. Unless such conditions are fulfilled, the transaction cannot amount to sale. In the case of State of Madras V/s. Gannon Dunkerley & Co. The person entering into the agreement must be competent to contract and the transaction must be supported by money consideration and in pursuance of the transaction, the property must pass in the goods to the buyer. Unless such conditions are fulfilled, the transaction cannot amount to sale. In the case of State of Madras V/s. Gannon Dunkerley & Co. (Madras) Ltd. reported in [1958] 9 STC 353 (SC) ; AIR 1958 SC 560 , it was held by the apex Court as follows : "Thus, according to the law both of England and of India, in order to constitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods, which of course presupposes capacity to contract, that it must be supported by money consideration, and that as a result of the transaction property must actually pass in the goods. Unless all these elements are present, there can be no sale. Thus, if merely title to the goods passes but not as a result of any contract between the parties, express or implied, there is no sale. So also if the consideration for the transfer was not money but other valuable consideration, it may then be exchange or barter but not a sale. And if under the contract of sale, title to the goods has not passed, then there is an agreement to sell and not a completed sale." 13. A Constitution Bench of the Supreme Court in the case of Indian Steel & Wire Products Ltd. V/s. State of Madras [1968] 21 STC 138 (SC) ; AIR 1968 SC 478 , also reiterated the same view and held that to constitute a valid sale, there should be four elements, namely, (i) parties competent to contract, (ii) mutual assent, (iii) the property must pass in the goods from the seller to the buyer, and (iv) a price in money paid or promised. 14. In the case of Commissioner of Income-tax V/s. Motors & General Stores (P.) Ltd. [1967] 66 ITR 692 ; AIR 1968 SC 200 , the apex Court, while considering the question as to the meaning of sale held that the presence of money consideration is an essential element in a transaction of sale. If the consideration is not money but some other valuable consideration, it may be an exchange or barter but not a sale. 15. If the consideration is not money but some other valuable consideration, it may be an exchange or barter but not a sale. 15. Thus, before any transaction can be termed as sale, the aforesaid four conditions have to be fulfilled. In the present case, the admitted fact is that under the discount scheme, some free medicines were supplied by the petitioner to the distributors or stockists for which no consideration money was paid by them. It is not the case of the department that any consideration money has been received by the petitioner for any of the products supplied free under the discount scheme. In that view of the matter, one of the basic ingredients, i.e., payment of money, which is essential element in a transaction of sale is lacking. Therefore, the supply of free medicines by the petitioner is not covered by the definition of "sale" as provided under the Act and as such the same cannot be included in the taxable turnover for the purpose of assessment under the Act. 16. So far as the second point is concerned, the case of the petitioner is that it is allowing quantitative discount to its stockists as per the scheme announced, copies of which have been annexed as annexures 5 series. According to the said scheme, on purchase of certain quantities of particular medicine, some vials or strips, as the case may be, of such medicine, were also given free. For example, if a stockist or wholesaler purchases 375 strips of kit-kat tablets, he will be given 25 strips of kit-kat free of cost. The petitioner has also filed invoices to show that the price of the medicines, which were supplied under the free discount scheme, were not included in the invoices (annexures 4 series) though they were shown under the category of medicines supplied to the stockists or dealers. The question is as to whether the said supply of free medicines on purchase of certain fixed quantity of medicines is to be treated as trade discount or not. Explanation II of the definition of "sale price" provides that the sale price shall not include the cash discount allowed by the dealer according to the ordinary trade practice. There is no provision for trade discount or quantitative discount. Explanation II of the definition of "sale price" provides that the sale price shall not include the cash discount allowed by the dealer according to the ordinary trade practice. There is no provision for trade discount or quantitative discount. But the settled law is that even the trade discount given by the assessee in the ordinary course of business is not to be included in the taxable turnover. 17. In this connection, reference may be made to the judgment of the Supreme Court in the case of Advani Oerlikon (P.) Ltd. [1980] 45 STC 32. In that case the assessee-company was carrying on business as selling agent for a certain brand of welding electrodes. It supplied goods to the retailers, but charged the catalogue price less than the trade discount. The assessing authority disallowed the trade discount on the ground that the same could not be excluded from the catalogue price. The assessee succeeded before the higher authorities of the department and the High Court also upheld the claim of the assessee. Thereafter, the matter went before the apex Court. That was a case under the Central Sales Tax Act, but the definition of the sale price u/s. 2(h) of the said Act is the same as the definition given under the Act. The apex Court held that though only cash discount is provided under the definition of the sale price, but a trade discount is also to be deducted from the sale price. Cash discount is allowed by wholesalers to retailers on expeditious payment. Trade discount is a deduction from catalogue price given by the wholesaler to retailer so that he may sell the goods at catalogue price and make a reasonable margin of profit after taking into account his business expenses. In a case where trade discount is allowed, the sale price is an amount determined after deduction of the trade discount. The law laid down by the apex Court is as follows : "At the outset, it is appropriate that we set forth the two relevant definitions contained in the Central Sales Tax Act. sec. 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 sec. sec. 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 sec. 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 a deduction on account of cash discount is alone specifically contemplated from the sale consideration in the definition of sale price by sec. 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 wholesale dealer to a retailer shows the catalogue price and against that a deduction of the trade discount is shown. The net amount is the sale price, and it is that net amount which is entered in the books of the respective parties as the amount realisable : Orient paper Mills Ltd. V/s. State of Orissa [1975] 35 STC 84 (Orissa). Under the Central Sales Tax Act, the sale price which enters into the computation of the turnover is the consideration for which the goods are sold by the assessee. In a case where trade discount is allowed on the catalogue price, the sale price is the amount determined after deducting the trade discount. The trade discount does not enter into the composition of the sale price, but exists apart from and outside it and prior to it. It is immaterial that the definition of sale price in sec. 2(h) of the Act does not expressly provide for the deduction of trade discount from the sale price. The trade discount does not enter into the composition of the sale price, but exists apart from and outside it and prior to it. It is immaterial that the definition of sale price in sec. 2(h) of the Act does not expressly provide for the deduction of trade discount from the sale price. Indeed, having regard to the circumstance that the sale price is arrived at after deducting the trade discount, no question arises of deducting from the sale price any sum by way of trade discount." 18. The same question was again considered by the apex Court in the case of Deputy Commissioner of Sales Tax (Law) V/s. Motor Industries Co. [1983] 53 STC 48. That was a case under the provisions of the Kerala General Sales Tax Act. The assessee was a dealer in diesel fuel injection parts, etc. Service discount was given by the assessee as the additional trade discount to the main distributors over and above the normal trade discount in consideration of the extra benefit derived by the assessee by reason of marketing of its goods through them. Dealing with the said matter, the apex Court held that the service discount was a trade discount and the same is to be deducted from the total turnover provided they are supported by entries in the accounts of the assessee. It was observed that "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 ones 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. Hence any concession in price shown in such circumstances by way of an additional incentive with a view to promote ones 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". 19. Again the apex Court upheld the same view in the case of Deputy Commissioner of Sales Tax, Ernakulam V/s. Kerala Rubber & Allied Products, reported in [1993] 90 STC 170. 20. Thus, the settled law is that the trade discount allowed by the assessee to the customers is not part of the sale price and as such is not includible in the taxable turnover of the dealer. 21. Learned counsel appearing for the State did not dispute the aforesaid legal proposition but submitted that the transaction in the present case is not a trade discount, on the other hand, the scheme offered was in the nature of giving bonus to the dealer under the scheme and the same cannot be termed as cash discount. In support of the said assertion, he relied upon a decision of the Madras High Court in the case of State of Tamil Nadu V/s. Ultramarine and Pigments Ltd., reported in [1980] 46 STC 220. 22. In my view, the decision cited by the learned counsel for the State supports the case of the petitioner as in that case quantity discount was allowed by the assessee. In that case, the assessee was a manufacturer and a dealer in ultramarine blue. The assessee allowed quantitative discount under the scheme subject to periodical variations. The said discount was allowed on the basis of customers off-take in a specified period. The rate of discount and the quantity to be taken were indicated in the scheme. The Madras High Court held that the allowance of the discount formed an integral part of the agreement or contract between the parties affecting the price and would qualify for deduction. The rate of discount and the quantity to be taken were indicated in the scheme. The Madras High Court held that the allowance of the discount formed an integral part of the agreement or contract between the parties affecting the price and would qualify for deduction. The sale price realised for sale of the articles would only be the net amount after adjustment of the discount. Thus, the said case also supports the stand of the petitioner. 23. The stand of the petitioner that in ordinary trade practice, it is claiming the said discount finds support from the fact that in the previous assessment orders, the department has allowed the aforesaid discounts and has not included the aforesaid amount in the taxable turnover. The petitioners case is that such discount has been allowed in case of other manufacturers but the said benefit has been denied to the petitioner. 24. The quantitative discount formed integral part of the agreement between the parties affecting the price and, thus, the price of the said quantitative discount will qualify for the deduction. There is another reason also to come to the aforesaid conclusion. If the total quantity including the quantity given free in terms of the scheme is treated as sale, in that case on payment of price for lesser quantity (vials and strips), more quantity is being supplied and, thus, the aforesaid price includes the price of the medicines supplied free and as such the price of the medicines supplied free cannot be added in the taxable turnover. 25. Thus, in my view, the department was not justified in including the quantitative discount, which is a trade discount, with the taxable turnover of the petitioner and to levy tax on the same. Accordingly, the part of the assessment order including the aforesaid amount Rs. 2,95,88,480 in the taxable turnover and charging tax/ penalty thereon under the Act is quashed. 26. In the result, this writ application is allowed to the extent indicated above. M.L.Visa, J. 27 I agree.