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TMI Blog2017 (11) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... facturer may have purchased from the open market parts for the purpose of replacement of the defective parts. For such transactions, it would have paid taxes. The position is not different because the assessee had supplied the parts and had received the price, and the transaction was subject to levy of tax. Revision dismissed - decided against revisionist. - Trade Tax Revision No. 321, 322 of 2004 - - - Dated:- 31-10-2017 - Hon'ble Sudhir Agarwal, J. For the Applicant : P. Agrawal For Opposite Party : C.S.C., Naresh Chandra Misra ORDER 1. Heard Sri Pradeep Agrawal, learned counsel for revisionist(s), learned Standing Counsel for respondents and perused record. 2. Both these revisions involve common questions of law and, therefore, have been heard together and are being decided by this common judgment. 3. Trade Tax Revision No. 321 of 2004 (hereinafter referred to as First Revision ) has raised following two questions of law:- (i) Whether learned Tribunal was justified in including the cost of warranty replacement to the taxable turnover during warranty without recording any specific findings that the price of the replaced parts were charged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , dispute relates to Assessment Year (hereinafter referred to as A.Y. ) 1996-97 and in the second revision, it relates to A.Y. 1995-96. 9. It is admitted that all the parts were replaced by Revisionist in State of U.P., though subsequently, cost thereof was borne by M/s MUL and it was credited to Revisionist. 10. Learned counsel for Revisionist placed reliance on Rajasthan High Court's judgment (at Jodhpur Bench) in CTO (AE) Jodhpur Vs. M/s Marudhara Motors, Jodhpur (S.B. Civil Sales Tax Revision No. 118 of 2008 and other connected revisions); decided on 16.03.2009 by a Single Judge (Dr. Vineet Kothari, J.). On behalf of Commissioner of Trade Tax (hereinafter referred to as Revenue ), reliance is placed on Supreme Court's judgment in Mohd. Ekram Khan and sons Vs. Commissioner of Trade Tax, U.P., Lucknow (2004) 6 SCC 183. 11. I may notice hereat that Rajasthan High Court has culled out extracts of judgment in Mohd. Ekram Khan and sons Vs. Commissioner of Trade Tax, U.P., Lucknow (supra) showing relevant facts founded basis for taking a decision that replacement of parts during warranty is a sale by Agency, liable to be treated as taxable turn-over . The aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh the earlier case o three Judges' Bench decision in case of Premier Automobiles in the following terms: The decision in Premier Automobiles case (supra) is really of no assistance to the assessee. The fact situation there was different. The issues in the said case were different. One of the issues was whether the expenses on account of warranty and statutory bonus were to be excludable while working out the ex-work cost. It was held by this Court that manufacturers furnish warranty covering the cars sold. Under the warranty all defects on account of faulty manufacture have to be set right and the defective parts have to be replaced free of costs by the manufacturer or his dealer within the specified period or given distance travelled by the car. The car manufacturers enter into an agreement with the manufacturers of components providing for a warranty so far as the components supplied are concerned. The whole object behind the warranty is that the consumer who has to make a heavy investment for the vehicle should be assured of a proper performance of the vehicle in a trouble free manner for reasonable length of time. Therefore, entire cost of warranty was to be borne b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tionship. Marudhara Motors is a dealer of Tata Motors under a Contract, whereby Marudhara Motors sells Tata manufactured vehicles, spare parts and provides service support to these products and is under contractual obligations to provide product support during warranty period. (b) In view of the above contractual relationship Tata Motors sells vehicles and spare parts to Marudhara Motors by charging CST against C form. (c) Thereafter Marudhara Motors is free to sell these products to customers/vehicle users through its own Invoice collecting local sales tax at a price not exceeding maximum price prescribed by the manufacturer, but under the warranty, if some parts have gone defective, such parts are replaced free of cost to the customers to avoid delay in first securing such parts from the manufacturer M/s Tata Motors and replacing the same. (d) While selling vehicle manufacturer also sells a warranty bundled along with the vehicle taking upon itself certain obligations about product quality and service. These obligations are subject to a contract the terms of which are given in service manual. (e) Dealer gets the title to vehicle and the warranty bundled with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (vi). Tata Motors pays back the purchase price to Marudhara Motors by crediting its running account for purchase of parl/s Or vehicle as the case may be. 13. Having given this factual backdrop as also analysis of facts involved in Mohd. Ekram Khan and sons Vs. Commissioner of Trade Tax, U.P., Lucknow (supra), Rajasthan High Court has noticed distinction between two cases, in para 20, as under:- 20. The major points of distinction between the two are as follows: (i) In Mohd. Ekram's case relationship between assessee Mohd. Ekram and manufacturer was that of agent and principal, whereas, in the case in hand before this Court the relationship is that of principal to principal and not principal to agent, and that makes the foundational difference. (ii) In Mohd. Ekram's case, as can be seen from para No. 5, the assessee had supplied the goods for which it received the consideration by way of credit notes and/or other modes of payments whereas in the present case the spare parts or defective parts collected by the assessee M/s Marudhara Motors are sent back physically to the manufacturer M/s TATA Motors, who either replenishes those spare parts or gives cred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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