Differential wholesale pricing by buyer class was upheld, and valuation by the higher Gujarat price was rejected.

Different wholesale prices were held admissible for buyers in Gujarat and buyers in other States because the price difference reflected the higher sales tax burden in Gujarat and the lower central sales tax on inter-State sales. The two buyer groups were treated as separate classes for valuation purposes, so clearances outside Gujarat could not be valued by reference to the higher Gujarat price. On that basis, the demand for differential duty on inter-State clearances was found unsustainable, and the appeal was dismissed.

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Issues: Whether the assessee was entitled to adopt different wholesale prices for buyers in Gujarat and buyers in other States, and whether differential duty could be demanded on clearances to buyers outside Gujarat on the basis of the higher Gujarat price.

Analysis: The price difference was linked to the higher sales tax burden in Gujarat and the lower central sales tax applicable to inter-State sales. The buyers in Gujarat and the buyers in other States were treated as falling in two different classes, making two wholesale prices admissible. On that basis, the demand that clearances outside Gujarat be valued by reference to the higher Gujarat price was held unsustainable.

Conclusion: The demand of differential duty was not justified and the appeal was dismissed.

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