Balagangadharan Nair, J.
1. The two original petitions by the same petitioner challenge the levy of excise duty under the Central Excise Act ('The Act') and have come before us on a reference made by a learned Judge on account of the importance of the questions raised by them. The circumstances under which the levy involved in the two cases came to be assessed are substantially similar but they require to be separately recited, for while in O.P. 3446 of 1976 the challenge is direct, in O.P. 5971 of 1975 the challenge is indirect as the petitioner's statutory remedy became barred by limitation before the filing of the petition. We shall start with the facts that are common to the two cases and indicate in sequence the special facts and questions involved in each.
2. Petitioner is a Public Limited Company with its registered office in Cochin and its factory at Athani near Angamali where it manufactures electric lighting bulbs and fluorescent lighting tubes. These articles are excisable goods falling under Tariff Classification No. 32 (i) and (ii) of the 1st Schedule to the Act. The petitioner sells its products for delivery at the factory gate and also at its several sales depots situated all over India. The price for which the goods are sold to the dealers at the depots include the post-manufaturing expenses such as distribution expense, freight and selling profits. The, sale price which is called the list price is uniform all over India, notwithstanding the fact that the selling expenses incurred by way of freight, insurance etc. differ widely depending upon the distance of the sale point from the factory gate which is the place of removal. Before starting commercial production the petitioner assessed the market for electric lamps and tubes and felt that it would be difficult to market its entire production itself. On 6-11-1967 the petitioner entered into an agreement with Messrs, Crompton Greaves Limited ('Cromptons') for sale to them of 80%+10% of the petitioner's products for a period of 5 years The agreement has been produced as Ext. P1 in O.P. 3446. Under this agreement Cromptous were to deposit sum of Rs. five lakhs with the petitioner which was subsequently increased to Rs. 15 lakhs. On the deposit the petitioner has to pay interest at 3% above the bank rate. The petitioner allowed Cromptons a trade discount of 35% to 40% of the list price. The balance products were sold by the petitiouer to other wholesale dealers through its own sales organisation in different places all over India. In June 1970 the petitioner introduced what it has called quantity discounts. It approached Cromptons by its letter Ex. P2 dated 31-5-1970 to agree to this scheme and to terminate the obligations to sell or purchase 80%+10% of the production. Ext. P2 details the different rates of quantity discount proposed by the petitioner. By its letter Ext. P3 dated 3-6-1970 Cromptons accepted the variation. The quantity discount scheme was introduced with effect from 1-7-1970. Quantity discount was allowed to other wholesale dealers as well.
3. As required by the Rules the petitioner has to submit to the concernedauthorities the price list for the assessment of excise duty. The petitioner submitted its price list for the period 16-3-1971 to 31-8-1973 claiming quantity discountits varying rates from 25% up to 40% depending upon the quantity purchasedin the case of GLS lamps and fluorescent tubes and 17| to 35% in thecase of commercial 0 watt lamps of 8 watts. The first respondent who is theSuperintendent of Central Excise, Always did not accept this claim. Reapproved the list allowing discount of 25% only in respect of GLS lampsand fluorescent lighting tubes and 17 1/2% in the case of commercial 0 wattvacuum night lamps. Ext. P4 dated 16-7-1971 is his order. The petitionedappeal was dismissed by the third respondent, the Appellate Collector ofCentral Excise, Madras. Ext. P6 is the appellate order dated 27-1-1975. Thepetitioner challenged these orders in revision before the Government of India.By the order Ext P.9 dated 19-4-1976 the Joint Secretary, Ministry of Finance,dismissed the revision. In O.P. 3446 the petitioner seeks to quash these threeorders-Exts. P.4, P6 and P9-by a writ of certiorari or other appropriatewrit order and a writ of mandamus directing the respondents to forbear fromcollecting differential duty pursuant to the orders.
4. O.P. 5971 is concerned with the quantitative discount disallowed by the authorities for the period 1-7-1970 to 31-3-1971. In the petition besides the terms of the agreement with Cromptons the petitioner has set out the rates of quantity discount allowed to other wholesale purchasersdeduction of the discount allowed to the purchasers. The first respondent however approved only 25% in the case of bulbs and 30% on decoration lamps, Ext. P9 dated 28-6-1971 is his order. From this order the petitioner preferred an appeal which was dismissed by the third respondent under Ext. P3-dated 28-10-1974 on the ground that it was barred by limitation. The petitioner preferred an unsuccessful revision before the Government of India challenging the appellate order on the merits and praying for condonation of the delay in filing the appeal. Ext. P6 dated 29-8-1975/11-9-1975 is the order in the revision. The . petitioner challenges those orders on the tame grounds as in the other original petition and asserts that despite the fact that the appeal was statute barred it is nevertheless entitled to challenge them in the original petition.
5. The second respondent in each case has filed a counter affidavit on behalf of the respondents contesting the original petition.
6. In Writ Appeal No. 302 of 1978 this Bench had occasion to examine at length the concept of the expression 'excise duty' and consider its ambit in relation to the question whether it embraces post-manufacturing expenses and profit. In the judgment in that case pronounced by the learned Chief Justice it was ruled :
'The very nature of excise duty requires a proximate connection with production or manufacture. At any rate, what has passed beyond the |region of manufacture and production and entered the domain of sale, can-not pass as excise duty. It appears to us clear enough that the inclusion of post-manufacturing expenses would indicate that the levy is somethingOther than a duty of excise.' and
'We are therefore of the opinion, that the respondents were wrong in insisting on the post-manufacturing- expenses and the post-manufacturing profits to be included in the reckoning for determining excise duty. Inthe light of the decisions noticed, this has vitiated the assessment.'
7. It is unnecessary to refer to the other case law on the point as the judgment in Writ Appeal No. 302 of 1978 contains a full discussion including the most relevant cases, A.K. Roy v. Voltan Ltd. (AIR 1973 SC 225) and Atic Industries v. Asstt. Collector, Central Excise (AIR 1975 SC 960).
8. In the light of the law thus laid down the petitioner is right in contending that the list price less the discount allowed to its purchasers constitutes the 'wholesale cash price' which alone is amenable to the assessment of excise duty as the discount partakes of the nature of post-manufacturing expenses and has to be deduced in order to determine the assessable price.
9 The orders of the first respondent-Ext. P4 in O P. No. 3446 and Ext. P1 in OP. No. 5971 disallowed the quantity discount claimed by the petitioner on the view that Cromptons were favoured buyers as the agreements between them and the petitioners were the result of extra commercial considerations, involving special financial obligations. This ground was also pressed on us by the learned Central Government Pleader. In Voltas' case (A.l.R. 1973 SC 225) dealing with a similar contention to condemn an agreement between Voltas - the manufacturer and its dealers allowing a trade discount of 22%, the Supreme Court observed that for a wholesale market to exist it was not necessary 'that the articles should be sold to so-called independent buyers', that the absence of a physical market 'would not in any way affect the existence of market in the proper sense of the term provided the articles themselves could be sold
10. There is no finding and no material to show that the agreement between the petitioner and Cromptons was not at arms length and in the usual course of business or that the trade discount was determined by any extra commercial consideration and not by business exigencies. The two decisions make it clear that the conferment of certain benefits upon Cromptpns does not vitiate the trade discount or make them favoured buyers. It is also significant to mention that the petitioner allows similar quantity trade discounts to other wholesale dealers as well. We reject the Central Government Pleader's contention. It follows that the petitioner's case has to be decided in accordance with the principles laid down in these two decisions and W.A. No. 302 of 1978.
11. turning to O.P. No. 5971, [1979 ELT (J 397)] the petitioner is faced with the hurdle that it had allowed its appeal from the original order Ext. P1 to become barred. The appeal was dismissed on that ground by the order Ext. P3. Counsel sought to get round the situation, contending that the third respondent (the appellate authority) ought to have condoned the delay which was explained before them and alternatively that despite the loss of the statutory remedy the petitioner is entitled to contest the validity of the order. The first contention fails at the threshold as the Act confers no power to condone the delay in filing the appeal.
12. On the second contention it was urged that the erroneous order Ext. P1 has no legal validity and that Article 265 of the Constitution enjoins that no tax shall be levied or collected save by authority of law. Reliance was placed in support of this contention on Rayalaseema Construction v. Deputy Commercial Tax Officer (10 S.T.C. 345). The petitioner in that case was assessed to sales tax on 'works contracts'. While steps for recovering the tax were pending, Madras High Court pronounced that the levy of sales tax on 'works contracts' was illegal. The petitioner resisted the collection of tax on this ground and filed a writ petition in the Madras High Court for a mandamus or other direction to stop the Deputy Commercial Tax Officer from collecting the tax. The High Court held that Article 265 enjoins that every stage in the entire process of taxation commencing from the taxing statute to the taking away of money from the packet of the citizen must be authorized by the law, that the finality of an assessment under the terms of a taxing statute is not always conclusive of the legality of the assessment and that an assessment made without jurisdiction or in pursuance of a provision which is found to be ultra vires, continues to be unlawful. It was further held that if those employed to administer the law make mistakes in the exercise of their powers, the persons affected must ordinarily use the remedies of appeal, reference or revision as the case may be but where there is an absence of jurisdiction the situation is materially altered. The learned Judges concluded thus:
'In relation to a tax, where an assessing officer acts outside the boundaries of his jurisdiction, his acts would to that extent be null and void. No one would have any power to call upon a citizen to make payment of a tax so imposed and, if any authority seeks to collect a tax so imposed the citizen can call in aid Article 265, and seek the assistance of this Court.'
In this view the learned Judges granted the writ. This case was taken on appeal to the Supreme Court-Deputy Commercial Tax Officer v. Rayalaseema Constructions (17 S.T.C. 505). It was contended for the appellant that Article 265 did not permit calling in question an assessment that had already become final. After noticing that the provisions purporting to impose sales tax on 'works contract' had been declared to be ultra vires by the Supreme Court agreeing with the Madras High Court, the Supreme Court observed that those provisions were therefore void and that 'It follows thatin the instant case, the Sales Tax Authorities have acted outside the Act in 'making an assessment on the basis of the relevant part of the charging Section which was declared to be ultra vires by this Court.' On this ground the Court dismissed the appeal.
13. The Supreme Court had occasion to notice 17 S.T.C. 505 in a subsequent case Dhulabhai v. -State of M.P. (AIR 1969 SC 78). This was what the Court observed:
'Again in Deputy Commercial Tax Officer, Madras v. Rayalaseema Constructions, (1966) 17 STC 505 (S.C.) the, problem was the same as dealt with in Venkataraman's Co. Ltd. case, (supra). The earlier case was followed and it was held that the sales tax authorities having given effect to an ultra vires prevision Section 18-A of the Madras Gentral Sales Tax Act, 1939 was no bar to the maintainability of the suit to recover tax paid under such an assessment, since the authorities must be taken to have acted outside and not under the Madras General Sales Tax Act'.
14. The appellate judgment 17 S.T.C. 505 and the above observation delimit and explain the scope of the decision in Rayalaseema Construction by the Madras High Court. In view of these pronouncements we cannot accept the petitioner's wide contention, based on the observations in the judgment of the Madras High Court, that the order Ext. P1 is still liable to be challenged as offending Article 265, despite the statutory finality which it had acquired. The provision on the basis of which tax was levied in the Rayalaseema Construction case was ultra vires the Legislature and the statutory finality as is clear from the Supreme Court decisions, could afford it no immunity as it lacked authority of law. That could not be said of Ext. P1 in O.P. No. 5971, for all that could be urged against it is wrong, which is different from an order based on an ultra vires provision. Ext. P1 is not nonest and having become final provides the necessary legal authority for the collection of the tax within the meaning of Article 265. The contention therefore fails.
We allow O.P. 3446 of 1976 and quash Exts. P4, P6 and P9, leaving the respondents at liberty to levy excise duty in accordance with law and in the light of the abservations made 'above. We dismiss O.P. No. 5971 of 1975. Parties will bear their costs in both the Original Petitions.