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TMI Blog2018 (4) TMI 952X X X X Extracts X X X X X X X X Extracts X X X X ..... short-payment of between 1st July 2000 and 31st December 2004. The proceedings were initiated against M/S Trimurti Ispat Ltd for discharging duty liability on clearance of 'mild steel ingots' and 'alloy steel ingots' to M/S Maler Kotla Steel Rolling Mills Pvt Ltd, an entity related to them, on transaction value without compliance of rule 8 of Central Excise (Determination of Price of Excisable Goods) Rules, 2000. 2. The jurisdictional authorities found the two entities to be related on account of common director, shareholding of the buyer in the capital of the seller and substantial share of the market of the seller. The first appellate authority held the two be interconnected undertakings but that, for invoking rule 9 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that '14. In Ms. Mcdowel and Company Ltd. v. Commercial Tax Officer [(1985) 3 SCC 230 = (1985) 154 ITR 148], this Court examined the concept of tax avoidance or rather the legitimacy of the art of dodging tax without breaking the law. This Court stressed upon the need to make a departure from the Westminster principle based upon the observations of Lord Tomlin in the case of IRC v. Duke of Westminster [(1936) AC 1] that every assessee is entitled to arrange his affairs as to not attract taxes. The Court said that tax planning may be legitimate provided it is within the framework of law. Colourable devices, however, cannot be part of tax planning. Dubious methods resorting to artifice or subterfuge to avoid payment of taxes on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est, directly or indirectly, in the business of each other (refer Section 114 of the Evidence Act). It is, however, difficult to lay down any broad principle to hold as to when corporate veil should be lifted or if on doing that, could it be said that the assessee and the buyer are related persons. That will depend upon the facts and circumstances of each case and it will have to be seen who is calling the shots in both the assessee and the buyer. When it is the same person the authorities can certainly fall back on the third proviso to clause (a) of Section 4(1) of the Act, to arrive at the value of the excisable goods. It cannot be that when the same person incorporates two companies of which one is the manufacturer of excisable goods and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere held by the members of the 'Sharma family' but that is quite a vague expression and, therefore, in our view, the Appellate Tribunal was partly right in giving the direction to ascertain the break up of the shares of each member of the family in the two companies. To lift the veil the actual shareholding of both the companies and the persons in control of the management of both the companies needed to be ascertained to consider the identity of interest of both the companies in the business of each other. No presumption of such mutuality of interest in the business of each other could have been drawn without the factual data. 6. For such an exercise to be completed, it is necessary that the impugned order be set aside and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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