TaxTMI 
TaxTMI 
TaxTMI 
1985 (2) TMI 42
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....ll over the country to whom 98% of the Mopeds manufactured by them are sold. Not more than 2% of the Mopeds are delivered at the factory gate ; the bulk of the mopeds representing about 80% of the manufacture are delivered to the various dealers at the depots maintained by the appellants. The Appellants have entered into agreement with the dealers in connection with the sale of the Mopeds manufactured by them and these agreements are substantially in the same terms and it will, therefore, be sufficient if we refer to a specimen agreement for the purpose of ascertaining the terms and conditions on which the mopeds are supplied by the appellants to the dealers. Clause 2 (a) of the agreement provides that the dealer shall keep a deposit of Rs. 6,000/- with the appellants as a guarantee for due fulfilment of the agreement and this deposit will carry simple interest at the rate of 4½% per annum and Clause 2(b) declares inter alia that upon termination of the agreement, the balance of the deposit if any, after deducting all amounts due to the Appellants shall be returned to the dealer with interest. Clause 3 (a) of the agreement is material since considerable reliance has been placed up....
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.... retail buyers orders than he may have on hand unfulfilled, together with all deposits made thereon by the purchasers and also the list of prospective buyers with the dealer. (b) In the event of the termination of this agreement, however, the dealer shall not be released from any obligation arising out of any transaction entered into or consummated prior to the date of such termination, either by him or by his branches. These are the material terms and conditions on which mopeds are supplied by the appellants to the dealers. 3. The Appellants submitted their price lists for approval to the excise authorities and the price lists showed the price charged by the Appellants to the dealers after deducting the so-called commission of Rs. 110/- in respect of Suvega Standard Moped, Rs. 145/- in respect of Suvega Deluxe Moped and Rs. 165/- in respect of Suvega Samrat Moped. These price lists were approved by the excise authorities and excise duty was paid by the Appellants on the basis of these price lists at the time of clearance of the mopeds. This practice continued right up to 30th April, 1979 when the Assistant Collector of Central Excise, Nellore took the view that the appell....
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....9 from the appellants. The appellants being aggrieved by the decision of the Division Bench preferred the present appeal after obtaining a certificate from the High Court. 5. Mr. Nariman learned Counsel appearing on behalf of the appellants assailed the judgment of the Division Bench of the High Court on both the grounds on which the impugned demand was challenged in the High Court. He contended that there was absolutely nothing to show that the dealers were related persons vis-a-vis the appellants and the Division Bench of the High Court was, therefore, clearly in error in taking the view that the dealers were related persons. Now the concept of related persons was for the first time introduced in the Act by the Amending Act 22 of 1973 and the expression 'related person' came to be defined in clause (c) of sub-section (4) of Section 4 to mean a person who is so associated with the assessee that they have interest, directly or indirectly, in the business of each other and includes a holding company, a subsidiary company, a relative and a distributor of the assessee and any sub-distributor of such distributor. This definition came up for consideration before this Court in the....
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....terest which each has in the business of the other may be different ; the interest of one in the business of the other may be direct, while the interest of the latter in the business of the former may be indirect. That would not make any difference, so long as each has got some interest direct or indirect, in the business of the other." Here on the facts it is difficult to see how it can at all be contended that the appellants had any interest in the business of the dealers or that the dealers had any interest in the business of the appellants. We shall presently analyse the terms of the agreement between the appellants and the dealers but one thing is clear from the terms of the agreement that the appellants sold the mopeds to the dealers on principal to principal basis and if that be so, it is not possible to say that the appellants had any interest in the business of the dealers. The dealers were wholesale buyers of the mopeds manufactured by the appellants and since the transactions between them were on principal to principal basis, it is difficult to appreciate how the appellants' could possibly be said to have any interest, direct or indirect, in the business of the dealers.....