TMI Blog2004 (3) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... d equity shares in the company M/s. Koron Business Systems Ltd. There are two common Directors. The department's contention is that the two companies are related persons and the transaction between them should be rejected on that ground. The period of dispute is 3-1-1984 - 23-6-1988. The show cause notice was issued on 4-1-1989 alleging suppression of facts with an intent to evade duty. Case was adjudicated nine full years later. In fact this order could be set aside on that ground alone. However we examine the merits and the aspect of limitation in the interest of justice. 2. The Commissioner sets out the following reasons for concluding that M/s. Koron Business Systems Ltd. and M/s. Kores (India) Ltd. are related persons : (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not establish mutuality of interest and therefore are not related persons. In the present case, M/s. Kores (India) Ltd., the distributor, holds shares in the company M/s. Koron Business Systems Ltd. who manufacture the photocopying machines. They are however two separate private limited companies. It also appears that major part of the goods produced by M/s. Koron Business Systems Ltd. are sold through M/s. Kores (India) Ltd. These circumstances still cannot lead to the conclusion that M/s. Koron Business Systems Ltd. and M/s. Kores (India) Ltd. are related persons as sought to be made out by the Commissioner. The same view is held by the Bombay High Court in the case reported in 1988 (36) E.L.T. 102 (Bom). 5. The Commissioner laid emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e service it renders to its customer. Unless it is established that such collections are flowing back to the assessee (M/s. Koron Business Systems Ltd.) it is not permissible to load the value by this amount. Further, we also observe that on occasions M/s. Koron Business Systems Ltd. has directly sold the machines to government organisations and even in those cases similar sum is collected, but the same is passed on to M/s. Kores (India) Ltd. who has to render after sale service. The Commissioner's finding that this situation establishes that the two companies are related persons has to be rejected. 7. It was also argued before us that the show cause notice is time barred. The department was well aware of the circumstances under which M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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