1987 (2) TMI 270

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....sed Oxygen Gas of 99.5% purity. The sale price for the first year was fixed at 70 paise per cubic metre of the Gas. The appellants sold their entire output of Oxygen Gas to Rishi Gases. Rishi Gases in turn sold the entire Gas to Asiatic Oxygen & Acetylene Co. Ltd. @ Rs. 3.25 per m3. M/s. Asiatic sold the Gas, along with their own production, at prices ranging from Rs. 4.665 to Rs. 5.701 per m3. The lower authorities have held that the price of 70 paise per m3, charged by the appellants from Rishi Gases was not a price at arm's length. The Appellate Collector has further held that the sale to Rishi Gases was only a paper transaction. Both the lower authorities have held that the sale price of Asiatic was the correct assessable value in terms....

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.... Paise per m3, charged from Rishi Gases. That this price was not the sole consideration for the sale is established from the following three circumstances which the appellants themselves have admitted :- (1)    The price of 70 paise per m3 was arrived at on the basis of manufacturing cost and manufacturing profit only. It did not include the appellants' selling cost and selling profit. Perhaps, the appellants' thinking was influenced by the interpretation of Section 4 accepted by the various courts prior to 1983. The said interpretation stood over-Rule d by Supreme Court judgment in the case of M/s. Bombay Tyre International [1983 E.L.T. 1986 (S.C.)] in which it was held that all costs upto the point of delivery of the goo....

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....ificial low price of 70 paise per m3 and the other three circumstances already mentioned above in this paragraph, the conclusion is inescapable that Rishi Gases were only a shadow unit created to depress the taxable value of Oxygen Gas. Incidentally, Rishi Gases had their office in the same premises as Asiatic Oxygen. In the facts and circumstances of this case, the learned representative of the department very aptly relied on the Supreme Court judgments at 1969 S.C.R 988 - Juggilal Kamlapat v. C.I.T. and 59 S.T.C. 277 - McDowell & Co. and asserted that the lower authorities were justified in 'lifting the corporate veil' and unmasking the 'colourable device' adopted by the appellants to suppress the real value of their compressed Oxygen Gas....