Related person valuation fails where common shareholding alone does not justify using downstream sale price as assessable value.

Common shareholding alone was insufficient to treat two limited companies as related persons for valuation purposes, because each company remained a separate legal entity. The downstream sale price to unrelated buyers could not be adopted as the assessable value merely on that basis, especially where not all goods were routed through the alleged related party. The note therefore states that the revenue's valuation challenge failed and the lower appellate valuation was sustained.

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Issues: Whether the two limited companies were related persons for valuation purposes, and whether the price at which goods were sold by one company to unrelated buyers could be adopted for assessment under Rule 6C(ii) of the Valuation Rules, 1975.

Analysis: The demand was founded on differential duty computed with reference to the price at which the goods were subsequently sold to unrelated buyers. The mere fact that the companies had common shareholders was held to be insufficient to establish that they were related persons, since each limited company is a separate legal entity. It was also noted that not all goods were sold through the alleged related party, which weakened the basis for adopting the downstream sale price as assessable value.

Conclusion: The companies were not related persons, and the price at which the related party sold the goods to unrelated buyers could not be taken as the assessable value. The revenue's challenge failed.

Final Conclusion: The valuation adopted by the lower appellate authority was sustained and the revenue's appeal was dismissed.

Ratio Decidendi: Common shareholding, without more, does not make two limited companies related persons for valuation purposes, and downstream sale prices to unrelated buyers cannot be adopted as assessable value absent a legally sustainable basis.

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