“Mahanagar Gas Ltd” Trade Discount based on Commercial Consideration

The Mumbai Bench of the CESTAT decisively rejects the Revenue’s attempt to treat trade discounts as additional consideration under Rule 6 of the Valuation Rules. It finds that the foundational premise of free infrastructure provided by the buyer was factually incorrect and unsupported by evidence. 

The Tribunal reinforces that valuation adjustments require clear proof of consideration flowing from buyer to seller. In the absence of such nexus, commercially negotiated discounts remain valid and cannot be loaded into assessable value. 

The ruling also draws strength from binding precedent, bringing clarity and consistency to valuation disputes involving bulk supply arrangements.