2004 (9) TMI 663 - HC - VAT and Sales Tax

Summary

Issues:
Whether service charges for maintenance and repairs of refrigerators, charged after the warranty period, should be included in the turnover under the U.P. Trade Tax Act.

Analysis:
The case involved five revisions under Section 11 of the U.P. Trade Tax Act, challenging the Tribunal's order regarding service charges for maintenance and repairs of refrigerators. The main issue was whether these charges should be considered part of the turnover. The dealer argued that the charges were for after-sale services and optional, relying on various legal precedents to support their case.

The Tribunal found that the service charges were indeed for maintenance and repairs of refrigerators for four years after the warranty period, under an optional scheme. This factual finding was not disputed. The definition of turnover under Section 2(i) was analyzed, particularly the inclusion of sums charged for services done before or at the time of delivery. The service charges in question were for post-delivery services, falling outside this definition.

Legal precedents, including the decision of the Apex Court in Collector, Central Excise, Delhi Vs. M/s Kelvinator of India Limited, supported the view that optional service contracts after sale are not part of the assessable value of goods. The Andhra Pradesh High Court decision in the case of State of Andhra Pradesh Vs. Hyderabad Allwyn Ltd. further clarified the distinction between mandatory and optional warranty charges, stating that charges for optional warranties are not includible in turnover.

The Rajasthan High Court also followed this principle in similar cases, emphasizing that optional service charges for subsequent periods should not be considered part of the sale price. The High Court, in line with these precedents, upheld the Tribunal's order, finding no error in its decision. Consequently, all revisions were dismissed.

In conclusion, the judgment clarified that service charges for maintenance and repairs of refrigerators after the warranty period, under an optional scheme, should not be included in the turnover. The decision was based on legal interpretations and precedents emphasizing the distinction between mandatory and optional post-sale service charges.