DCIT TDS 1(1), MUMBAI vs. BHARAT BUSINESS CHANNELS LTD, MUMBAI

आदेश / O R D E R PER R.C.SHARMA (A.M):

2. In the appeals filed by Revenue, Revenue is aggrieved for holding the payment pertaining to installation service falling under 194C in place of 194J as held by the AO.

4. Facts in brief are that the assessee is a company engaged in the business of providing Direct to Home [DTH] services in the name of Videocon d2h' for which the license is given by Ministry of Information & Broadcasting, Government of India. DTH service is a mode by which television signals are provided directly at the home of the subscribers, without passing through any intermediary, such as cable operators. The Set-Top Box (STB) at the premises of the subscribers receives such signals directly through the dish antenna and such signals are viewed on the television by the subscriber. The assessee entered into agreements with various parties (called distributors and dealers) for distribution/ sale of Set-Top Boxes, sale of recharge vouchers, prepaid vouchers etc. The assessee also entered into agreements with various parties (called Installation Service Providers -ISPs) at various locations for carrying out the work of installation of STB and Dish Antenna. As per the existing procedure, the. distributors/ dealers are allowed discounts on sale of STB and recharge vouchers from their Maximum Retail Price (MRP). The distributor/ dealer can sell these items to the customers at a price not exceeding the MRP. As regards the Installation Charges, the assessee M/s. Videocon d2h Limited has deducted tax at source u/s 194C, of the Act .from the charges, paid .whereas no tax has been deducted in respect of discount given on sale of STB and recharge vouchers.

5. The AO issued a show cause notice u/s. 201(1) of the Act dated 15.02.2012 to the assessee to show cause as to why the assessee had not deducted tax at source on the commission being paid in the form of discount for services provided by distributors/ dealers during FY 2009-10 & FY 2010-11 under the provisions of 194J of the Act. The AO also stated in the said notice that the payment in respect of installation charges should have been subjected to tax deduction at source u/s 194J instead of 194C (as has been done by the assessee) of the Act. The AO vide letter dated 28.03.2012 intimated the assessee that inadvertently the word '194J' has been mentioned in place of word '194H' in penultimate line of opening para in letter dated 15.02.2012. Thus in his opinion the discount for services provided by distributors/ dealers was liable to be subjected to TDS u/s 194H of the Act (and not u/s 194J of the Act).

6. The assessee furnished its reply vide letter dated 16.03.2012. The AO, after considering the reply of the assessee, passed order u/s. 201 (1)/ 201 (1A) of the Act holding that payment in the form of discounts given to the distributors/ dealers on sale of set-top boxes/ recharge coupons, etc. is 'brokerage or commission’ in nature and ought to be subjected to TDS u/s. 194H of the Act @ 10% and payments made to the Installation Service Providers are in the nature of 'fees for technical services' and hence the same ought to be subjected to TDS u/s 194J of the Act instead M/s. Videocon d2h Limited of 194C of the Act as done by the assessee. Accordingly, he computed total non-deduction and short deduction of tax u/s. 201(1) of the Act amounting to Rs.18,70,79,597/- and levied interest u/s. 201(1A) of the Act amounting to Rs.4,48,99,103/- and raised aggregate demand of Rs. 23,19,78,700/- as per demand notice issued by him.

7. By the impugned order CIT(A) held that service with regard to installation of Set-Top Box are falling in the definition of ‘works contract’ liable for deduction of tax u/s.194C in place of 194J as held by the AO. The precise observation of CIT(A) was as under:- “ 7.10 I have considered the facts of the case, the written submissions of the appellant as well as the order of the AO on this issue. In this case, it has to be decided whether the payments made by the appellant would constitute 'fees for technical services' as defined in the Explanation 2 to Section 9(1)(vii) of the Act. The AO is of the view that ' activity of Installation of DTH apparatus needs certain skills and technical expertise. On the other hand the case of the appellant is that from the nature of services being rendered by ISPs, it is evident that they do not fall within the scope of technical services. 7.11 The job of the Installation Service Provider is to go to the premises of the subscriber, to install dish antenna and Set-Top Box. Thereafter, the Installation Service Provider has to connect the Set-top Box to the Television of the subscriber by making few wiring connections. This can be done by any sound person after reading the installation manual carefully. With regard to the claim of the AO that training is given by the appellant, the argument of the AR is that basic training/ instructions are provided for a short period to make them understand the process of Installation so that they can apply the same at the place of the subscriber. Further, the services from skilled and technically qualified persons cannot be obtained at a meager amount of Rs. 300/-considering that the work has to be carried out at the place of the subscriber. The work, as is evident, is repetitive in nature. I agree with the appellant that in respect of these services/works outsourced, it cannot be said that the ISPs have rendered any managerial, technical or consultancy services to the appellant within the meaning of Explanation 2 to Section 9(1)(vii) of the Act. These services involve carrying out of "work" within the meaning of section 194C of the Act. The appellant has therefore, correctly deducted tax at source under the said section and the provisions of section 194J are not applicable. I hold accordingly and the demand of tax of Rs.98,00,000/- is hereby deleted. 7.12 This ground of appeal is allowed.

M/s. Videocon d2h Limited 8. It was argued by learned DR that dish antenna amounts to technical services, therefore, AO was correct in holding that assessee was required to deduct tax u/s.194J of the IT Act. As per learned AR installation of DTH needs certain skill and technical expertise, therefore cannot be said to be ‘works contract’.

9. On the other hand, learned AR invited our attention to the various judicial pronouncements referred by CIT(A) in his order in support of the contention that work of installation involved carrying out work contract within the meaning of 194C of the Act. Accordingly, CIT(A) was correct in holding that assessee was required to deduct tax at source u/s.194C of the Act in place of 194J of the IT Act.

, the assessee has raised the following grievance: The CIT(A) has erred in upholding the tax liability of Rs 6,00,99,245 (excluding interest under section 201(1A) of the Act determined by the Assistant Commissioner of Income Tax -TDS by treating the appellant as an assessee in default in respect of non deduction of tax at source on trade discount of Rs 51,67,60,486 granted to prepaid distributors by holding the same as commission and hence liable for deduction of tax at source under the provisions of Section 194H of the Act.

3. The assessee, engaged in the business of providing mobile telephone services, was subjected to a survey on its business premises on 26 th August 2008. During the course of this survey, it was noted that the assessee sells "pre-paid vouchers, of various face value, to its distributors, at a rate lower than its face value". It was also noted that the "the difference (between the face value and the price at which is sold) is nothing but commission on which no tax has been deducted". It was also noted "the relationship between the .... (appellant) and the distributor was on principal and agent basis, and, therefore, any M/s. Videocon d2h Limited amount paid to the agent by way of the margin is commission". It was also noted that under section 194H, a person making payment for commission has the obligation to deduct tax at source, but the assessee has not complied with this statutory obligation. It was in this backdrop that the assessee was that the proceedings for treating the assessee as an assessee in default, in this respect, were initiated against the assessee. During the course of these proceedings, it was explained by the assessee that there is no principal agent relationship between the assessee and its distributors, and that the assessee sells the products, on the outright sale basis though at a discounted price, to its distributors who, in turn, are free to sell the same to the retailer at such price, as they may deem expedient, within the MRP. It was also explained that the distributors are making advance payments to the assessee, that the distributors are free to decide their terms and conditions of doing business with the retailers, and that, as per specific provisions in the agreement entered into by the assessee and the distributors, the assessee is not responsible for created by the distributor. The relationship between the assessee and the distributors, it was thus highlighted, is on principal to principal basis. It was submitted that since distributor does not render any service to the assessee, the difference between the sale p rice and the MRP cannot be treated as discount for the purposes of Section 194H. Certain judicial precedents were also cited by the assessee to support his case but, for the reasons we will set out in a short while, it is not really necessary to go into that aspect of the matter. None of these submissions, however, impressed the Assessing Officer. He proceeded to reject these submissions and hold the assessee as an assessee in default, for not deducting tax at source from commission on sale of prepaid airtime, under section 201 of the Income Tax Act, 1961. While doing so, the Assessing Officer observed as follows: The above submission of the assessee have been duly considered. However, the same is not acceptable on the following grounds: - Before making any conclusion that difference between MRP and Sale Price to distributor is commission or riot it is necessary to ascertain that whether the nature of business entered into between the company and distributor are sale and purchase of goods or providing service through various distributors/ agents. The Hon'ble High Courts of Kerala WP No. 29202/2001 in the case of BPL Mobile Ltd. held that sim card as well as recharge company delivered by BPL Mobile Cellular Ltd is to be considered as transaction between Service Provider & Distributors and the said transaction is only that of service and not sale and purchase of goods. In the present case the deductor is doing exactly the same business. Therefore, it is not possible to hold that sim card and recharge coupon delivered by the company to distributors are goods because the relationship between the company and distributors is to provide service M/s. Videocon d2h Limited to customers through distributors. It is quite apparent that service can only be rendered and not sold. This is because the company has right to operate of cellular telephone service provided and ultimate service is provided by the company to every customers. The distributors are acting and link in the chain of providing Mobile service. Ultimate service are provided by company to the public at large. Therefore, essence of service rendered by the distributors are not sale of any product or goods. Since it is not possible for the company to provide all these services directly to the customers, the deductor has made out business solution to appoint distributors to take care of operational activity of the company to provide service and the distributor is important link in that chain of service. Moreover, the essence of prepaid card and postpaid card, sim card etc are same to provide service to customers and difference is of billing. In prepaid card amount are received in advance whereas, in postpaid card bills are being raised after providing the service. Therefore, if postpaid card is subject to section 194H, it is quite unlikely that prepaid system would be outside the purview of section 194H. This view has also been upheld by The Hon'ble Delhi High Court in the case of CIT v/s Idea Cellular Limited in appeal No.2010-TIOL-139-HC- DEL-IT in which it is held that it is a case of Principal and Agent relationship and the commission offered in form of Discount on pre paid SIM Cards is liable to TDS u/s 194H of the IT Act. In view of the above facts and considering the findings in the case of M/s. BPL Mobile Cellular Limited (WP No. 29202 of 2005), and also in view of finding of Delhi High Court, the essence of the contract between company and distributors is that of service and margin between MRP and sale price is nothing but commission. This view has also been upheld by the Hon'ble ITAT, Cochin in to 113/Coch/2007 in the case of Vodafone Essar Cellular Limited vs. ACIT, Cochin (in the case of deductor itself). The Hon'ble ITAT has taken into consideration all relevant facts and the decision cited by the company and held that there is no relationship of principal to principal and difference of price -is nothing but commission. In view of the above, I am of the considered view that deductor is liable to deduct the tax at source u/s.194H on amount of difference between MRP and sale price paid by the distributors. The such difference is works out to Rs.51,67,60,486/-. Therefore, the deductor is treated as deemed defaulter u/s,201(1) of the I.T. Act to the above extent and also liable to charge interest u/s.201(1A) of the I.T. Act.

4. Aggrieved by the stand so taken by the Assessing Officer carried the matter in appeal before the CIT(A) but without much success. Learned CIT(A) extensively reproduced from the written submissions filed by the assessee and then proceeded to dismiss the grievance of the assessee on the basis of the following reasoning:

M/s. Videocon d2h Limited 2.09 I have considered the facts of the case and the submissions as advanced by the AR carefully and I have also gone through th e various decisions cited by the AR. The dispute in this ground is whether discount offered to distributors by the assessee can be considered to be commission so as to subject to TDS under provisions of Section 194H of the Act. 2.10 In my view, the case of the appellant is squarely covered by the judgment of the Kerala High Court in the case of Vodafone Essar Cellular Limited reported at 235 ITR 393. The Kerala High Court has, in paragraph 6, categorically held as under: ........because we have clearly found that the discount paid to the distributors is for service rendered by them and the same amounts to "commission" within the meaning of that term contained under Expln. (i) to s. 194H of the Act. The impugned orders issued under ss. 201(1) and 201(1A) of the Act are only consequential orders passed on account of default committed by the assessee under s. 194H and, therefore, those orders were rightly upheld by the Tribunal. We, therefore, dismiss all the appeals filed by the assessee. Thus, respectfully following the above judgment of Hon'ble Kerala High Court (in the case of the group company of the appellant), I am of the view that discount offered by the appellant to its prepaid distributors is in the nature of commission within meanings of Explanation (i) to Section 194 H of the Act. I, therefore, hold that the learned AO has rightly held that the appellant was required to deduct tax at source under section 194 H of the Act on commission given by the assessee.

5. The assessee is not satisfied with the stand so taken by the learned CIT(A) as well, and is in further appeal before us.

M/s. Videocon d2h Limited 10. As we take note of the views so expressed by Hon'ble Karnataka High Court, we may also note that this issue has been decided against the assessee by, amongst others, Hon'ble Kerala High Court, in the case of Vodafone Essar Cellular Ltd vs. ACIT [(2010)332 ITR 255 (Ker)]. The same approach has been adopted by some various other Hon'ble non jurisdictional High Courts as well, such as in the cases of Bharti Cellular Limited Vs ACIT [(2013) 354 ITR 507 (Cal)] and CIT Vs Idea Cellular Limited [(2010) 325 ITR 148 (Del)]. In the case of Vodafone Essar Cellular Ltd (supra) Their Lordships have, inter alia, observed as follows :- 4. The main question to be considered is whether Section 194H is applicable for the "discount" given by the assessee to the distributors in the course of selling Sim Cards and Recharge coupons under prepaid scheme against advance payment received from the distributors. We have to necessarily examine this contention with reference to the statutory provisions namely, Section 194H .... What is clear from Explanation (i) of the definition clause is that commission or brokerage includes any payment received or receivable directly or indirectly by a person acting on behalf of another person for the services rendered. We have already taken note of our finding in BPL Cellular's case (supra) abovereferred that a customer can have access to mobile phone service only by inserting Sim Card in his hand set (mobile phone) and on assessee activating it. Besides getting connection to the mobile network, the Sim Card has no value or use for the subscriber. In other words, Sim Card is what links the mobile subscriber to the assessee's network. Therefore, supply of Sim Card, whether it is treated as sale by the assessee or not, is only for the purpose of rendering continued services by the assessee to the subscriber of the mobile phone. Besides the purpose of retaining a mobile phone connection with a service provider, the subscriber has no use or value for the Sim Card purchased by him from assessee's distributor. The position is same so far as Recharge coupons or E Topups are concerned which are only air time charges collected from the subscribers in advance. We have to necessarily hold that our findings based on the observations of the Supreme Court in BSNL's case (supra) in the context of sales tax in the case of BPL Cellular Ltd. (supra) squarely apply to the assessee which is nothing but the successor company which has taken over the business of BPL Cellular Ltd. in Kerala. So much so, there is no sale of any goods involved as claimed by the assessee and the entire charges collected by the assessee at the time of delivery of Sim Cards or Recharge coupons is only for rendering services to ultimate subscribers and the distributor is only the middleman arranging customers or subscribers for the assessee. The terms of distribution agreement clearly indicate that it is for the distributor to enroll the subscribers M/s. Videocon d2h Limited with proper identification and documentation which responsibility is entrusted by the assessee on the distributors under the agreement. It is pertinent to note that besides the discount given at the time of supply of Sim Cards and Recharge coupons, the assessee is not paying any amount to the distributors for the services rendered by them like getting the subscribers identified, doing the documentation work and enrolling them as mobile subscribers to the service provider namely, the assessee. Even though the assessee has contended that the relationship between the assessee and the distributors is principal to principal basis, we are unable to accept this contention because the role of the distributors as explained above is that of a middleman between the service provider namely, the assessee, and the consumers. The essence of a contract of agency is the agent's authority to commit the principal. In this case the distributors actually canvass business for the assesssee and only through distributors and retailers appointed by them assessee gets subscribers for the mobile service. Assessee renders services to the subscribers based on contracts entered into between distributors and subscribers. We have already noticed that the distributor is only rendering services to the assessee and the distributor commits the assessee to the subscribers to whom assessee is accountable under the service contract which is the subscriber connection arranged by the distributor for the assessee. The terminology used by the assessee for the payment to the distributors, in our view, is immaterial and in substance the discount given at the time of sale of Sim Cards or Recharge coupons by the assessee to the distributors is a payment received or receivable by the distributor for the services to be rendered to the assessee and so much so, it falls within the definition of commission or brokerage under Explanation (i) of Section 194H of the Act. The test to be applied to find out whether Explanation (i) of Section 194H is applicable or not is to see whether assessee has made any payment and if so, whether it is for services rendered by the payee to the assessee. In this case there can be no dispute that discount is nothing but a margin given by the assessee to the distributor at the time of delivery of Sim Cards or Recharge coupons against advance payment made by the distributor. The distributor undoubtedly charges over and above what is paid to the assessee and the only limitation is that the distributor cannot charge anything more than the MRP shown in the product namely, Sim Card or Recharge coupon. Distributor directly or indirectly gets customers for the assessee and Sim Cards are only used for giving connection to the customers procured by the distributor for the assessee. The assessee is accountable to the subscribers for failure to render prompt services pursuant to connections given by the distributor for the assessee. Therefore, the distributor acts on behalf of the assessee for procuring and retaining customers and, therefore, the discount given is nothing but commission within the meaning of Explanation (i) on which tax is M/s. Videocon d2h Limited deductible under Section 194H of the Act. The contention of the assessee that discount is not paid by the assessee to the distributor but is reduced from the price and so much so, deduction under Section 194H is not possible also does not apply because it was the duty of the assessee to deduct tax at source at the time of passing on the discount benefit to the distributors and the assessee could have given discount net of the tax amount or given full discount and recovered tax amount thereon from the distributors to remit the same in terms of Section 194H of the Act.' 11. There is no, and there cannot be any, dispute about the fundamental legal position that in the hierarchical judicial system, that we have in our country, lower tiers of judicial hierarchy has to respectfully follow the views expressed by the higher tiers of judicial hierarchy. In the case of ACIT Vs Dunlop India Limited [(1985) 154 ITR 172 (SC)], Hon'ble Supreme Court has observed, quoting the House of Lords, as follows: We desire to add and as was said in Cassell & Co. Ltd. vs. Broome (1972) AC 1027 (HL), we hope it will never be necessary for us to say so again that "in the hierarchical system of Courts" which exists in our country, "it is necessary for lower tier", including the High Court, "to accept loyally the decisions of the higher tiers". "It is inevitable in a hierarchical system of Courts that there are decisions of the supreme appellate tribunal which do not attract the unanimous approval of all members of the judiciary.... But the judicial system only works if someone is allowed to have the last word and that last word, once spoken, is loyally accepted" (See observations of Lord Hailsham and Lord Diplock in Broome vs. Cassell). The better wisdom of the Court below must yield to the higher wisdom of the Court above. That is the strength of the hierarchical judicial system 12. The question whether the non- jurisdictional High Court binds the Tribunal benches or not came up for consideration before Hon'ble Bombay High Court in the case of CIT Vs Godavaridevi Saraf [(1978) 113 ITR 589 (Bom)]. That was a case in which Their Lordships were in seisin of the question as to "whether, on the facts and circumstances of the case, and in view of decision in the case of A.M. Sali Maricar & Anr. vs. ITO & Anr. [(1973) 90 ITR 116 (Mad)] the penalty imposed on the assessee under s. 140A(3) was legal ? The specific question before Their Lordship s thus was whether the Tribunal, while sitting in Bombay, was justified in following the Madras High Court decision. It was in this context that Hon'ble Bombay High Court concluded as follows: "It should not be overlooked that IT Act is an all India stat ute, and if a Tribunal in Madras has to proceed on the footing that s. 140A(3) was non-existent, the order of penalty under that section cannot be imposed M/s. Videocon d2h Limited by any authority under the Act. Until a contrary decision is given by any other competent High Court, which is binding on the Tribunal in the State of Bombay (as it then was), it has to proceed on the footing that the law declared by the High Court, though of another State, is the final law of the land..............an authority like Tribunal has to respect the law laid down by the High Court, though of a different State, so long as there is no contrary decision on that issue by any other High Court........."

13. In the case of CIT Vs Shah Electrical Corporation [(1994) 207 ITR 350 (Guj)], vide judgment dated 23 rd June 1993, Their Lordships had an occasion to consider the aforesaid views. It was in this context that Their Lordships have observed as follows: 3. What is contended by the learned advocate for the Revenue is that the Tribunal decided the appeal on 26th Oct., 1976. By that time, the Andhra Pradesh High Court had upheld the validity of s. 140A(3). He drew our attention to the judgment of the Andhra Pradesh High Court in Kashiram vs. ITO (1977) 107 ITR 825 (AP). From the report, it appears that the said judgmen t was delivered on 10th Dec., 1975. Therefore, the Tribunal was not right in proceeding on the basis that only the Madras High Court judgment was in the field and, therefore, it was open to it to proceed on the basis that s. 140A(3) was non-existent. He also submitted that for that reason, the Tribunal was not right in following the judgment of the Bombay High Court in Godavaridevi's case (supra).

Sl.No. Terms of the Agreement with Terms of the Agreement with Corresponding clause in the distributors highlighted in the distributors highlighted in the agreement of the assessee with its Hon’ble Karnataka High Court’s Hon'ble ITAT Ahmedabad's distributors for distribution for pre- paid/recharge vouchers. judgment in case of Bharati Airtel Judgement in case of Limited vs. DCIT (2014) 372 ITR Vodafone Essar Gujarat 33 (Kar. HC) and extracted in the Limited - I.T.A. No.: decision of ITAT Ahmedabad 386/Ahd/ll 1 The agreement stipulates that the Clause 17.2 specifically rincipal to Principal arrangement: distributors have to represent to the provides that the relationship Clause 8 - Nothing in this agreement customers that the distributor's created by the agreement is that shall constitute or deemed to constitute M/s. Videocon d2h Limited il'itvmnil with the customers/its of a buyer and seller and that lartnership between the parties hereto, dealers is on Principal-to-Principal the agreement is on a principal or constitute or be deemed to constitute basis and assessee is no way to principal' basis and neither the distributor as an agent of the concerned or liable to the party is, nor shall be deemed to Company for any purpose whatsoever, customers/dealers of the be, an agent/partner of the and the Distributor shall have no Distributor- (Page 16 and 17 of the other. It Is also provided thai authority or power to bind the Company decision I A I Ahmedabad in nothing in the Agreement shall or to contract in the name of the Vodafone Essar Gujarat Ltd.) be construed to render the Company in any way or for any distributor of a partner or agent purpose The relationship between the of the assessee. parties hereto shall be that of a vendor and a purchaser on principal-to- principal basis. (PB Page No. 55) Clause 9 - The Distributor may describe himself as the Company's "Authorize;: Distributor" in respect of the Products, but roust not hold himself out as the company's agent for sales of the Products or as being entitled to bind the company| in any way. (PB Page No. 55) 2 Distributor shall not make any Clause le of Annexure III to the Clause 27. The Distributor shall at all promise •^presentation or to give agreement provides that the times, during the continuance o: this any warranty or guarantee .vith distributor shall not make any agreement, offer for sale and sell the respect to services and products, promises or representation or products of the Company according to who are not authorized by the give any warranties or the specifications supplied by the assessee' - Page 69. guarantees in respect of the Company to the dealer from time to service tickets except such as time, either generally or in any are consistent with those which particular case, and shall not make accompany the Service ticket or representation or give any warranty in as expressly authorized by the respect of the Products other than those assessee in writing. - Page 17 contained in the Company's conditions of sale as prevalent and operating at the time of the offering for sale or the sale. The Distributor shall keep the Company indemnified against all losses, damages or claims that may arise out of any unauthorized representations made by the authorized dealer. (PB Page No. 59} 3 That the insurance liability for the As per clause (iv) of Annexure Clause 28 - The Distributor agrees and entire stock in trade in the premises II to the agreement, the assessee undertakes that it shall, during this at the address under reference will i not liable for any loss, agreement and at all time thereafter, be of the Distributor and the pilferage or damage to the keep the Company indemnified against liability for any los or damage due recharge vouchers/service any loss or damage that ma\ be suffered to any fire, burglary, theft etc., will tickets post-delivery of the ame by the Company or any claim or b> of the Distributor.' to the distributors The assessee demand made against the Company does not compensate the due to any act. deed, misfeasance or distributors for any unsold negligence or. the pan of the dealer/s, stock. its servants or agents or persons with whom the dealer s ha= contracted or dealt with in any manner whatsoever in connection with its performance as 3 dealer/s of the Distributor or by breaching any of the terms or conditions mentioned in this agreement, including but not limited to. any failure to. Comply with any direction/s of the Distributor or to follow any instruction/s from the Distributor with respect to any matter relating to the Product being sold by the company. The Distributor shall also take the necessary insurance cover for all the stock at the warehouse and shall keep the company indemnified against any loss, theft of such stock. (PB Page No. 59) 4 The Distributor has no express or Distributor docs not have an Clause 29 - The Distributor hereby implied right or authority to assume authority to assume or create agrees that the dealer's appointed by it, M/s. Videocon d2h Limited or undertake any obligation in any obligations VWL's behalf in rms of this agreement, would not in respect of or on in the name of the or incur any liability on behalf anyway be constituted as agent/s of the assessee.' of VWL r accept any contract Company for any purpose whatsoever, binding upon VWL (clause 17.1 and the dealer/s shall have no authority of the Agreement). or power to bind the Company or 10 contract, or create a liability, in the name of the Company, in any way or for any purpose whatsoever. The relationship between the distributor and the dealer/s shall be that of a vendor and purchaser on principal-to-Pirincipal basis. The Distributor also agrees that all the benefits/incentives/usufructs earned by the dealers out of any incentive scheme/s. promotional schemes or ithcrwise introduced by the Company in the market, shall reach such dealers and lie Distributor shall keep the Company indemnified against an\ or all claim's, demand/s of dealers in this regard. (PB Page No. 59) 5 Channel Partner be liable to pay all The distributor shall pay all Clause 21 - The prices of products shall the taxes such as ales tax, service licenses, fee, taxes, duties, sales be exclusive of all applicable including tax applicable and payable in lax, service tax and any other but not limited to VAT/sales tax or any respect of the subject matter of this charges, assessments penalties other applicable local tax at applicable agreement and statutory increase in whether statutory or otherwise rates, for which the Distributor shall be respect thereof - Page 72. levied by any authority in additionally liable. The distributor shall connection with the operation make prompt payment of taxes and of distributor's office (Clause shall keep the company indemnified III(b) of Annexure III to and harmless against any demands, agreement). - Page 17 notices in this regard. (PB Page No. 56) 6 After sale of products The assessee shall not be Clause 38 - Within 45 da\s of distributor/channel partner cannot responsible for any post termination of this Agreement. ±e return goods to the assessee for delivery defect in he service Distributor shall complete the sale of whatsoever reason' tickets. No request of refund of the balance stock of the Products lying any money shall be with it/him. In the event, the Distributor fails to sell the entire balance stock of entertained by the assessee in any circumstances (Clause the Products, such number of unsold e- Products shall be either sold to any Annexure I). other distribute: of the Company as may be identified b> the Company or be deal: «ith in such manner as |the Company may direct. (PB Page No. 62) Distributors are even prevented the distributor shall not make Clause 26.11 - During the continuance 7 from making any representation to any promises or representations of this agreement, offer for sale the retailers unless authorized by 01 and sell / provide the Products of the the assessee'. ,ive any warranties or Company according to the guarantees in respect of the specifications supplied by the Company products (i.e to the Distributor, from time to time, SIM cars and pre-paid either in an particular case, and shall vouchers) (Clause le Annexure not make any representation III). warranty/ies in respect of the Products, other than these ccn:ii7. company's conditions of sale as prevalent and operating at the time of offering for sale, or the sale. The Distributor shall keep the Company indemnified against all losses, damages or claims that may arise out of any unauthorized representations made the Distributor. The Company shall not be responsible for acts and defaults of the Distributor, its employees, representatives, dealer/s servants, agents or other persons. (PB Page No. 57) Clause 27 - The Distributor shall at all times, during the continuance of this