TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Join Channel
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether 5% out of the distributor's margin could be added to the assessable value as sales promotion commission; (ii) whether penalty and interest could be levied under sections 11AC and 11AB for a substantial part of the demand period.
Issue (i): Whether 5% out of the distributor's margin could be added to the assessable value as sales promotion commission.
Analysis: The addition was based on an that 5% of the 8% margin allowed to stockists was spent on sales promotion. The stockists were purchasers of the goods and the record did not show that the dealings were not at arm's length or that the stockists acted as selling agents. The relied upon correspondence did not establish that the stockists incurred sales promotion expenditure out of their margin. The authority's reliance on the cited Supreme Court decision was therefore misplaced on the facts.
Conclusion: The 5% margin could not be included in the assessable value, and the assessee succeeded on this issue.
Issue (ii): Whether penalty and interest could be levied under sections 11AC and 11AB for a substantial part of the demand period.
Analysis: The demand related to the period from 1993 to 1997, whereas sections 11AC and 11AB came into force only from 28-9-1996. Those provisions could not be invoked for the pre-enactment portion of the demand, and once the valuation addition itself failed, there was no basis for penalty. The invocation of penal consequences was therefore unsustainable.
Conclusion: Penalty and interest under sections 11AC and 11AB were not sustainable, and the assessee succeeded on this issue as well.
Final Conclusion: The demand, penalty and interest were set aside and the appeal was allowed in full.
Ratio Decidendi: A distributor's margin cannot be added to assessable value without evidence that the stockist functioned as an agent or that part of the margin was ically attributable to recoverable sales promotion charges; penal provisions cannot be applied retrospectively to periods preceding their commencement.
TaxTMI 
