2015 (4) TMI 777 - HC - VAT and Sales Tax

Whether in the facts and circumstances of the case, the Appellate Tribunal erred in holding that the transaction of exchange of goods by the Appellate to the consumers during the Warranty Period amounts to sale and consequent levy of VAT under the provisions of the Gujarat Value Added Tax Act, 2003 - Held that - Tribunal has confirmed the imposition of tax and interest on sales of parts during the warranty period of motor cars and tax element is to be deducted from the credit notes received for the spare parts. It is the case on behalf of appellant that during the case of transaction / transactions the assessee who is motor car dealer only replaced the defective parts during the warranty period of motor cars and manufacturer used to issue credit notes for the same and therefore, the appellant-assessee- dealer is not liable to pay tax on the sales of parts during the warranty period of the motor cars. However, it is required to be noted and it is not in dispute that as such the appellant - assesseedealer is purchasing the parts from the open market and is replacing the same in place of defective parts during the warranty period of motor cars and for which manufacturer is issuing credit notes. - as manufacturer would have paid taxes if he brought defective parts from market, the position would not be different in case of assessee who supplied parts and received price for it. - Tribunal has not committed any error in dismissing the appeals and confirming the imposition of tax and interest on sale of parts during the warranty period of motor cars. No substantial question of law arise as sought to be suggested - Decided against assessee.

Summary

Issues involved:
1. Confirmation of imposition of tax on sales of parts during the warranty period of motor cars.
2. Dispute over liability to pay tax on credit notes received for spare parts.
3. Interpretation of relevant legal precedents and judgments.

Detailed Analysis:
1. The judgment addresses the issue of confirming the imposition of tax on sales of parts during the warranty period of motor cars. The appellant, a dealer, argued that replacing defective parts during the warranty period did not involve a sale, as no consideration was received from the car owners. The appellant contended that credit notes issued by the manufacturer for replaced parts should not attract tax liability. The appellant heavily relied on a Rajasthan High Court decision to support this argument. However, the respondent, representing the State Revenue, argued that the appellant had already paid tax and interest, and the Tribunal rightly removed the penalty. The respondent emphasized that the appellant admitted to purchasing parts and replacing them, making them liable for tax. The Tribunal upheld the tax imposition based on the Supreme Court's decision in a similar case, where transactions involving replacement parts during warranty periods were deemed taxable sales.

2. The second issue revolved around the dispute over the liability to pay tax on credit notes received for spare parts. The appellant argued that they should not be liable for tax on credit notes issued by the manufacturer for spare parts sold during the warranty period of motor cars. The appellant cited a Rajasthan High Court decision to support their stance. However, the court disagreed with the Rajasthan High Court's interpretation, asserting that the Supreme Court's decision in a similar case established the liability for tax on such transactions. The court held that the appellant's transactions were subject to tax as they involved the supply of parts for which consideration was received, either through credit notes or other payment methods.

3. The judgment extensively discussed and interpreted relevant legal precedents and judgments to determine the tax liability in the present case. The court analyzed the decisions of the Supreme Court and the Rajasthan High Court to establish the applicability of tax laws in transactions involving spare parts during warranty periods. Ultimately, the court dismissed the appeals, stating that the issue was conclusively settled by the Supreme Court's decision, and no substantial question of law arose. The court upheld the Tribunal's decision to confirm the imposition of tax and interest on the sales of parts during the warranty period of motor cars, based on established legal principles and precedents.