9911796707
TMI Blog1991 (2) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... as their all-India sole selling agent and prices of the sole selling agent were approved as normal price under provision (iii) to Section 4(l)(a). 3. M/s. Babul Products filed a Writ Petition in the Gujarat High Court in 1979, making a grievance against the stand taken by the Department that the petitioner s manufactured tobacco which is sold to M/s. Babul Agency does not reflect a transaction at arm s length but it amounts to sale to a related person. The High Court passed an interim order on 2-5-1979 whereby the Department was restrained from levying and collecting excise duty on the value determined under proviso 3 to Section 4(l)(a). This order was subsequently modified in May, 1983 and the respondents herein were permitted to pay the differential duty under protest in lieu of bank guarantee. The final order in the Writ Petition was passed on 4-11-1987, wherein the High Court accepted the contention of the petitioner that the issue for determination in the Writ Petition was answered against the assessee by the judgment of the Supreme Court in the case of Bombay Tyres International -1983 (14) E.L.T. 1896 (SC) = (AIR 1984 Supreme Court 420). Regarding the merits, the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that pending the hearing and final disposal of the petition, your lordships may please grant interim relief/injunction restraining the respondents from levying and collecting excise duty on the value determined under the said proviso (iii) to Section 4(l)(a) of the CESA. The interim order was modified by order dated 8-5-1983 as follows :- Petitioner is permitted to pay the amount of difference in excise duty under protest in lieu of bank guarantee with effect from 11th May, 1983. The respondents will abide by the final decision rendered in the matter so far as refund of such amount is concerned. This order continued upto the date of delivery of the final judgment on 4-11-1987 disposing of the special civil application. The stay order can at best be treated as stay against recovery i.e. collection of duty on the goods assessed at a higher value. The order cannot be held to bar the issue of a show cause notice in terms of Section 11A(1). Service of the show cause notice is a stage prior to determination of levy. The explanation to Section 11A(1) enables the Department to exclude the time during which any interim order/injuction operated for service of the show cause notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Products Veljibhai Thakkar Shri Mohanbhai (i) 23% Brother of Shri Nanubhai Veljibhai partner Thakkar, Partner of Babul Products. Shri Kantilal Raghabji(ii) 05% - Smt. Urmilaben Nanubhai(iii) 17% Wife of Shri Nanubhai Veljibhai Thakkar, Partner of Babul Products. Mohanlal(iv) Shri Nikhilkumar 14% Son of Smt. Triveniben Mohanlal Thakkar, Partner of Babul Products. Smt. Damyantiben(v) Maganlal 17% Wife of Shri Maganbhai Veljibhai Thakkar, Partner of Babul Products. Kumari Bhanaben(vi) 05% Daughter of Smt. Triveniben Mohanlal Thakkar, Partner of Babul Products. ManubhaiKumari Jyotiben (vii) 05% Daughter of Shri Nanubhai Veljibhai Thakkar, Partner of Babul Products. Shri Rashmin(viii) Mohanlal 14% Son of Smt. Triveniben Mohanlal Thakkar, Partner of Babul Products. On 16-12-1974, an agreement was arrived at between the respondent and Babul Agencies whereby Babul Products entrusted Babul Agencies with the work of distribution of its products. Tobacco became excisable for the first time in 1975. On 18-3-1978 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered a distributor of the respondent s products; (g) Messrs Babul Agencies has no control over respondent and vice versa; (h) Delayed payment by Messrs Babul Agencies to the respondent were normal features of the trade and did not constitute extra-commercial relationship; (i) That advertisement expenses were mainly incurred by the respondent-manufacturer and the expenses incurred by Messrs Babul Agencies were not towards sales promotion but in the nature of information of its prices to its customers; (j) Messrs Babul Agencies received 8 to 12 per cent margin in the form of profit out of which 2 to 7 per cent was passed on by it as trade discount to its buyers; (k) That respondent-manufacturer had no interest, direct or indirect, in the business of Messrs Babul Agencies and vice-versa. Accordingly, there was absence of mutuality of business interest; (l) That only on some occasions Messrs Babul Agencies had supplied packing material to Messrs Babul Products in view of special circumstances, which did not show any extra commercial or special relationship; (m) That accommodation facility given to Shri Kantilal Thakkar, partner of Messrs Babul Agencies was given a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tinguishing features between the agreement in that case and the agreement between the parties herein. In the case of Prabhat Zarda Factory, Ratna Zarda Supply Company was a commission agent whereas Babul Agencies purchases the goods from Babul Products on a principal-to-principal basis. The entire publicity expenses and expenses towards sales promotion were to be borne by Ratna Zarda Supply Company while in this case, the expenses incurred by Babul Agencies are mainly towards information about the price from time to time to their buyers and the agreement provides that primary responsibility of advertisement was with the respondent/manufacturer and expenses, if any incurred on this account by Babul Agencies were not to exceed 10 per cent of the total income. Yet another distinction is that in the case of Prabhat, there was financial involvement while in this case, it has been found on facts that except for the interest free deposit of Rs. 41,000.00, there was no other financial involvement between the respondent and Babul Agencies. Babul Agencies also have not incurred any additional expenses on publicity and goodwill protection as in the case of Ratna. In the Prabhat case, the auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... si-corporation. But under the Income Tax Act, the position is somewhat different. A firm can be charged as a distinct assessable entity as distinct from its partners who can also be assessed individually. 3. 1966 (17) STC 326 (SC) - State of Punjab v. Jullunder Vegetables Syndicate. Though under the partnership law, a firm is not a legal entity but only consists of individual partners for the time being, for tax law, income tax as well as sales tax, it is a legal entity. 4. 1981 (8) E.L.T. 177 (Delhi) - Jaswant Sugar Mills Ltd. v. Union of India It is true that the partnership concern by itself is not a legal entity and has been given individual status in various enactments like the Income Tax Act or the Code of Civil Procedure. But whether it is a person or not. Section 3(42) of the General Clauses Act makes it abundantly clear that the partnership firm would be a person distinct from the petitioner. Technically in law, partnership is not a legal entity or a juristic person, yet there are occasions, both in law and in practice, when a firm has been treated as having a distinct personality from those of the partners. Thus, partnership firm is a person or an entity having ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
