T.V. Sundram Iyengar & Sons Pvt Ltd. Vs Commissioner of CGST And Central Excise (Madras High Court)
The learned Senior counsel would further contend that an agreement will have to be read as a whole and that the individual clauses occurring in the agreement cannot be torn out of context. In this regard, he placed reliance on the decision of the Supreme Court reported in 2008 (10) S.T.R. 545 (SUPER POLY FABRICKS LTD., V. COMMISSIONER OF C. EX., PUNJAB). In the aforesaid decision, the Supreme Court held that there may not be any doubt whatsoever that a document has to be read as a whole. The purport and object with which the parties thereto entered into a contract ought to be ascertained only from the terms and conditions thereof. Neither the nomenclature of the document nor any particular activity undertaken by the parties to the contract would be decisive.
Applying the aforesaid ratio to the facts on hand, even though the document may be styled as a dealership agreement and the petitioner may have to be conform to certain business standards, if read as a whole, one can come to the safe conclusion that the relationship between the parties was one of seller and buyer on principal to principal basis.
The adjudicating authority has not read the document as a whole but instead gave undue emphasis to certain individual clauses occurring in the agreement. Therefore, I come to the conclusion that the finding of the authority that the relationship between the parties is not on principal to principal basis is clearly unreasonable.
The learned Senior counsel drew my attention to the decisions of the various Benches of the Customs Excise and Service Tax Appellate Tribunal (CESTAT), namely, (2018) 66 GST 398 (Prabhakar Marotrao Thaokar & Sons vs. Commissioner of Central Excise, Nagpur and 2019 (24) G.S.T.L. 569 (Tr.-Del) (Hindustan Petroleun Corporation Ltd., vs. Commissioner of Central Excise, Delhi-II), for the proposition that where the sale transaction is on principal to principal basis, merely because a discount was passed by the manufacturer to the assessee, that may not be construed as commission and therefore, it cannot be the subject matter of levy of service tax.
