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2006 (2) TMI 168 - SUPREME COURTWhether the commission paid by M/s. DCM Textiles, the respondent herein, to its dealers was deductible as a trade discount for the purposes of computing assessable value of cotton yarn? Held that:- the agreement entered into between the respondent and dealers was on 'principal to principal basis' and it was an absolute sale made by the respondent in favour of the dealers. The dealer is required to make full payment of the cotton yarn purchased by him forthwith and he is given half per cent cash discount if the payment is made within one day, 0.25 per cent if the payment is made within four days and if the payment is not made within seven days then from 8th day onwards the dealer becomes liable to pay interest on the delayed payment. This indicates that there was an absolute sale made by the respondent to its dealers and the sale was on 'principal to principal basis'. Original authority as well as Commissioner (Appeals) had stressed upon the point that since the trade discount was not paid to the dealer at the time of the preparation of the invoice and was to be paid later based on the net sale value of the sale effected (½ per cent of the net sale value); that the agreement between the parties amounting to be an agency agreement and not the dealership agreement and the sale was not from principal to principal basis. We agree with the Tribunal that this view is not sustainable of the facts of the case. Appeal dismissed.
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