Trade discount excluded from assessable value absent proof of buyer-provided benefit or consideration flow

Trade discount is not includible in assessable value as additional consideration unless there is proof that the buyer provided a free benefit or other direct or indirect flow of consideration to the assessee. On the stated facts, the assessee separately paid lease rent for the premises through a sub-lease arrangement and bore the cost of installing the dispensing infrastructure itself, so the factual basis for invoking the valuation rule failed. In the absence of cogent evidence of any consideration flowing from the buyer, the discount retained its character as a commercial trade discount and could not be added to value; the duty and interest demand was therefore unsustainable.

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Issues: Whether the trade discount extended to the buyer could be treated as additional consideration for the purpose of assessable value under the valuation rules.

Analysis: The dispute turned on whether any facility or benefit was provided free of cost by the buyer so as to constitute an additional consideration flowing to the assessee. The factual foundation for invoking the valuation rule failed because the assessee was paying lease rent for the land through a sub-lease arrangement and had itself incurred the expenditure for installation of the dispensing infrastructure. In the absence of any cogent evidence showing a direct or indirect flow of consideration from the buyer to the assessee, the discount remained a commercial trade discount. The issue was also covered by the earlier decision on identical facts, where the same principle was applied to hold that a separately paid lease arrangement does not convert a trade discount into additional consideration.

Conclusion: The trade discount could not be treated as additional consideration and could not be added to the assessable value; the demand of duty and interest was unsustainable.

Final Conclusion: The appeal succeeded and the demand order was set aside, with consequential relief as admissible in law.

Ratio Decidendi: Where the buyer does not provide any free benefit and the assessee separately pays lease rent for use of the premises, a trade discount cannot be recharacterised as additional consideration for inclusion in assessable value in the absence of proof of any flow of consideration from the buyer.

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