A.K.ROY & ANR. versus VOLTAS LIMITED

Citation: [1973] 2 S.C.R. 1089 · Decided: 01-12-1972 · Supreme Court of India · Bench: A.N. GROVER · Disposal: Dismissed

Cited by 7 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

i 
A 
B 
A. K. ROY & ANR. 
v. 
VOLTAS LIMITED 
December l, 1972 
1089 
(A. N. GROVER, K. K. MATHEW AND A. K. 
MUKHERJEA, JJ.J 
Central Exdses & Salt Act 1944, S. 4(a)-Bulk of sales to consumers 
direct-Some goods sold also to wholesalers at 22 per cent trade dis-
count-Duty whether to be levied on 'wholesale cash price' or on list price 
of •ale to consumers-Wholesale market, what is-Ingredients of secll'on-
< 
Components of 'wholesale cash price', 
c 
D 
E 
F 
• 
G 
The respondent was a limited company and carried on, among others, 
the business of manufacturing air-conditioners, water coolers and compo-
nent parts thereof. 
Most of its sales-to the extent of 90 to 95 per cent-
were made by it directly to consumers at list prices. 
It, however, also 
sold the articles to wholesale dealers from different parts of the country 
in pursuance of agreements entered into with them. The agreements pro-
vided among other things, that the dealers should not sell the articles 
sold to them except in accordance with the list prices 
fixed 
by 
the 
·respondent, that the respondent would sell them the articles at the list 
prices less 22 per ce1.t discount, that the dealers will not be entitled to 
any discount on the prices of accessories mentioned in the price. schedule 
and that the dealers should give service to the units sold in their territory. 
Excise duty on the basis of ad valorem va]ue was 
imposed 
on 
air-
conditioners and parts of water coolers with effect from March 1, 1961. 
The respcndent claimed, in accordance with s.4(a) of the Central Excises 
and Salt Act 1944, that the list price after deducting the discount of 
22 per cent allowed to the wholesale 
dealers 
would 
constitute 
the 
'wholesale cash price' for ascertaining the real value dl the articles. 
This 
case was accepted by the excise authorities and assessments were made up 
to the end of 1962 on that basis. Later however the Superintendent of 
Central Excise intimated the respondent that excise 
duty 
would 
be 
assessed and levied not on the basis of wholesale cash price but on the 
basis of retail price under s.4(b ) of the Act .. Assessments 
for 
the 
period January 1, 1963 to December 31, 1963 were made on the basis 
of list prices, for sales to consumers. The respondent's 
appeal having 
been dismissed by the first appellant, the respondent filed a writ petition 
in the High Court. The High Court allowed the petition holding that 
the price for which the articles were sold to the wholesale dealers less 
the discount allowed to them under the agreements 
represented ' the 
'wholesale cash price' and !hat excise duty was chargeable under s.4(a) 
of the Act. 
Appeal to this Court was filed by certificate. 
Dismissing the appeal, 
HELD: (i) For a wholesale market to exist it is not necessary that 
there ~houl~ be a mark~! in the physical sense of the term where articles 
of a hke kind and quality are or could be sold or that the articles should 
be sold to so-called independent buyers. 
[109J Gl 
. Even if there was no market in the physical sense of the term at or 
.. 
H 
near the place of manufacture where the articles df a like kind and quality 
., 
are or cou.ld be sold, that would not in any way affect the 
existence 
of market m . the proper sense of the term provided the articles themselves 
could be sold wh?lesale to traders, even though the articles are sold to 
them on the baS1S of agreements which confer certain advantages upon 
1090 
SUPREME COURT REPORTS 
[1973] 2 s.c.R. 
them. The applica<ion of s.4(.-.) does not depend upon any hypothesis 
to the effect that at the time or place of sale, any further articles of 
like kind and quality should have been sold. If there is an actual price 
for the go<>Qs themselves at the time and place of sl>le and if that is 
o 'wholesale cash price', the clause is not inapplicable for want of sale 
of other goods of like i.ind and quality. [1093 HJ 
A l" 
(ii) There can be no doubt that the 'wholesale cash price' boo to be 
a9Certained only on the basis df transactions at arms length. Once that 
is established the determination of the wholesale cash price for the purpose 
of s.4(a) of the Act may not depend upon the number of such wholesal~. 
dealings. 
The fact that the respondent sold 90 to 95 per cent of the 
articles manufactured to consumers direct wottld not make the price of 
the wholesale sales of the rest of the articles anytheless the 
'wholesale 
cash price' for the purpose of s.4(a) even if

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