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TMI Blog2018 (8) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... aced during warranty period is includible in the turnover of the appellant and is liable to tax. 2. Facts of the case are that the appellant is a dealer engaged in sale of Four Wheeler Vehicles and their spare parts and accessories, as a Distributor of reputed manufacturer of such vehicles viz. Hyundai Motors India Limited. The appellant is duly registered Dealer under the provisions of the Madhya Pradesh Value Added Tax Act, 2002 (herein after referred to as the Act) as also under the provisions of Central Sales Tax Act, 1956. The appellant's assessment for the period from 01.04.2009 to 31.03.2010 under the provisions of the Act was completed by the Divisional Deputy Commissioner, Commercial Tax, Division No.3, Indore vide order dated 19.09.2011 (Annexure A/1). During the course of assessment proceedings, the appellant claimed that Warranty Charges received by the appellant from Manufacturer for replacement of the defective parts under warranty to the customers could not be subjected to tax, because according to the appellant, there was no sale of goods in question by the appellant in favour of the company. The Assessing Authority levied tax on the Warranty Charges of Rs. 15,43, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has distinguished the decision of the Supreme Court in the case of Mohammad Ekram Khan & Sons v. Commissioner of Trade Tax, UP, Lucknow reported in (2004) 4 STJ 233 (SC) = AIR 2004 SC 3965 and has followed Three Judges' Bench decision of the Apex Court in the case of Premier Automobiles Limited v. Union of India reported in AIR 1972 SC 1690 and Delhi High Court decision in the case of CST, Delhi v. Prem Nath Motors reported in (2004) 3 STJ 384 (Delhi) and submitted that Warranty Charges received by the appellant from the manufacturer are not liable to be taxed. 7. Learned Appellate Board replying on the decision of the Supreme Court in the case of Mohammad Ekram Khan & Sons v. Commissioner of Trade Tax, UP, Lucknow (supra), has held that defective parts are replaced by the appellant on the basis of consent between appellant and manufacturer, without charging any consideration from the customers, but the appellant receives consideration from the manufacturer company through Credit Notes. Thus, the appellant receives consideration for parts replacement under the warranty from the manufacturer, as such, the amount received by the appellant from the Principal by way of Credit Notes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive 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. The categorical factual finding recorded by the taxing authorities and the High Court is that the assessee had received the payment of the price for the parts supplied to customers. That being so, the transaction was subject to levy of tax as has been rightly held by the High Court. The decisions in Geo Motor's case(Supra) and Prem Motor's case (supra) stand overruled. 7. However, learned counsel for the assessee submitted that even if it is conceded for the sake of arguments that the transactions attracted levy of sales tax, no categorical finding has been recorded about the nature of the sale i.e. whether it is intra-State or inter-State in character. It was submitted that the manufacturer was located in the State of Maharashtra and, therefore, the transaction would be inter-State in nature. We find no such plea advanced by the assessee before the forums below. On the contrary assessing authorities had categorically recorded a finding that the transaction is intra-State in nature. In view of the factual findi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, Jodhpur reported in 2009(67) Kar.L.J. 416 (Raj.) (HC) has taken a contrary stand. The Apex Court in M/s. Mohd. Ekram Khan's case has held that 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 by the manufacturer. The manufacturer may have purchased parts from the open market for the purpose of replacing the defective parts. For such transactions it would have paid tax. The position is not different because the assessee had supplied the parts and had received the prices. That being so, the transaction was subject to levy of tax. In the instant case, customers have purchased the Motor Vehicles from the Manufacturers through the assessee. The sale price includes the price of warranty. The assessee has supplied spare parts, replaced defective parts and returned the defective parts to the manufacturer. Along with the defective parts, the assessee has raised a debit note in the name of the manufacturer. Thereafter the manufacturer has raised a credit note. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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