9911796707
TMI Blog1982 (8) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... he Government. The sale prices are published and a trade discount of 10% is given by the petitioner-company to the wholesalers. In fact two types of transactions take place. According to the petitioners, in certain cases the wholesalers purchase the goods from the petitioner-company and get a trade discount of 10% and thereafter the wholesalers in turn, sell the goods to third parties and pass on a discount of 5% out of the aforesaid 10% obtained by them. The other types of cases are those where orders are booked by the wholesalers and, on their instructions, the company despatches the goods directly to the purchasers. In such cases, the wholesalers instruct the petitioner-company to give a discount of 5% to such purchasers and the remaining 5% discount is credited to the wholesalers' account. It is to be noted that in either case the amount of discount which is retained by the wholesalers is only 5%. 4. According to the petitioners no over-riding commission is given to any of the wholesalers. It is further averred that exclusive territories are not assigned to different wholesalers. 5. The petitioners contend that the said wholesalers are not related persons, within the meanin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts, by order dated 31st January, 1979, the revision was dismissed in the following terms :- "Government of India observe that in terms of the agreement between the petitioners and the wholesalers they were at liberty to retain the entire 10% discount and direct that 5% be credited on the invoice separately. Documents have been produced to show that in the event of non-payment by an independent wholesale buyers, the amount will be adjusted from the deposit lying with the petitioners. This would show that the socalled wholesalers have interest in the business of the petitioners and vice-versa and, therefore, they are "related person" within the meaning of new section 4. The quantum of discount which is uniformlly passed on to any independent wholesale buyer is normal wholesale rate being 5% the same is admissible for abatement and not 10% as claimed by the petitioners, which is given preferentially to selected wholesale buyers." 8. The aforesaid decisions are sought to be challenged in the present writ petition. The two main submissions of the petitioners are that the wholesalers were not related persons and, secondly, the goods have not been properly valued for the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of wholesale trade at the time of removal, to dealers (not being related persons) or where such goods are not sold to such dealers, to dealers (being related persons) who sell such goods in retail : (b) (2) (3) For the purposes of this section - (a)... (b) ... (c) "related person" means a person who is so associated with the assessee that they have interest, directly or indirectly, in the business of each other and includes a holding company, a subsidiary company, a relative and a distributor of the assessee, and any sub-distributor of such distributor." It appears to us that the definition of the expression "related person" can be divided into two parts. The first part is where a related person" would mean a person who is so associated with the assessee that the two of them have direct or indirect interest in the business of each other. The second part is where, by fiction, certain entities or persons like holding company, subsidiary company, a relative and a distributor of the assessee, and any sub-distributor of such distributor are included in the term "related person". In the present case we need not dilate on the second part of the definition, because t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court as follows : "Assuming that the term of the agreement create an interest in Usha vis-a-vis the business of the petitioner there is nothing to indicate and no material to justify the conclusion that the petitioner has any interest in the business of Usha. As will be seen later, the petitioner sells its goods to Usha and receives the price therefor within 90 days. It has no doubt certain responsibilities for servicing the goods sold by Usha but there is no manner of interest direct or indirect in the business of Usha so far as the petitioner is concerned. The term of the above definition contemplate two persons who are so associated that they are mutually interested in the business of each other. Examples of the kind may be two companies associated with each other as holding and subsidiary companies or two companies or persons associated as the company and its managing agent or the company and its Secretaries and Treasurers, firms having related partners, companies having common shareholders in the majority and the like. It is very difficult to say that a mere purchaser or even a sole selling agent (if Usha could be said to be one) would be a related person within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing at the assessable value under section 4 of the Act. In the impugned order, however, it was stated that the petitioners had not given the requisite information as for in columns 5 to 10 of the proforma submitted by them. In the absence of the particulars, it was held, the price specified in Column 11 could not be accepted. In our opinion, the Assistant Collector erred in not referring to the letter, dated 21st August, 1981. In the said letter it was stated that the figures contained in the proforma had been certified by a registered Cost Accountants' firm. It was further stated that if the figures were to be verified and checked then the Excise Department could do so as and when desired. It was lastly submitted in this letter that "in case the Department wished to examine the records of the company for satisfying itself about the correctness of the cost certificate we may please be given permission to avail provisional assessment under rule 9B of the Central Excise Rules, 1944 pending approval of our price list, as provided order sub-rule (6) of Rule 173(c)". In case the Assistant Collector felt that certain data had not been furnished by the petitioners then in accordance with ..... 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