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TMI Blog2005 (10) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... Motors is a partnership firm and a clealer registered under the provisions of the Karnataka Sales Tax, 1957 ('KST Act' for short) and the Central Sales Tax Act, 1957 ('CST Act' for short). They are authorised dealers for M/s Telco, now known as M/s Tata Motors, which manufactures and sells motor vehicles and spare parts and also authorised service agent for the said manufacturer. The respondent has effected local purchase of motor vehicle from M/s Telco and has affected their second sales and in so far as the spare parts are concerned the respondent affects purchases from both local registered dealers and also form outside the state. In the annual return filed for the assessment year 1.4.1998 to 31.3.1999, the respondent had declared total and taxable turnover at ₹ 50,64,56,248/- and ₹ 12,45,958/- both under the KST and CST Act. In the returns so filed, it had claimed exemption on the turnover of spare parts which ware utilised as replacement parts in repect of vehicles which were covered under the warranty by the manufacturer for replacement of such parts during the warranty period, on the ground that, the same was provided to the vehicle serviced free ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not appropriated and therefore, these parts going in as replacement at this stage involveing no sale. The assessee company in the usual course of its business of sale of spare parts having placed order for the purchase of spare parts and having received the consignment of the spare parts for the sale is not aware of the events of the replacement of the defective parts from out of the general stock of the spare parts purchased and held in stock. The spare parts replaced against the defective parts at the time of service of the motor vehicles being a future event subsequent to the purchase of the spare parts and further the probability of replacement also being not definite and the appropriation of the parts against the defective parts as replacement takes place being future events, it is clear that this appropriation of the spare parts is on behalf of manufacturer M/s Telco on whose behalf the assessee has acted as service agent and therefore the sale by the assessee as a dealer of spare parts to that of the service agency is a sale liable to tax. The assessee has acted in two ways one as the dealer in spare parts and another as service agency for motor cars on behalf of Telco. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he owner of the vehicle. 2. The dealer meets the warranty obligation of the manufacturer in consideration of various benefits under the agreement and on the faith of the same. There is no independent transaction of sale. 3. The essence of sale is that the agreement and the sale relates to the same subject matter. Thus, transaction resembling sales were held excluded like chettel employed in providing service/work, barter, damages, received from bailee for the lost goods, etc. The reimbursement of the cost of the goods employed by the dealer while meeting thr manufacture's warranty, is not under a contract of sale. 4. If the dealer commits breach of the obigation to meet the manufacture's warranty, it will be a breach of dealership agreement and not of a contract of sale. 5. The dominant intention of the manufacture, the owmer of the vehicle and the dealer is not to sell or purchase a part for price. The mind of the parties is focussed on the warranty and the obligations thereunder. It is a complex transation involving three parties. 6. The burden of establishing a sale is on the revenue. A sale cannot be extrated out of a situation. 7. Tax Officer can unre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Megarry, J. in Shepherd Homes Ltd. v Sandham (No.2) observed: One must not, of course, conture even a reserved judgement of Pussell, L.J. as if it were an Act of Parliament . And, in Harrington v British Railways Board . Lord Marris said : (All ER p. 761c): There is always peril in treating the words of a speech or a judgment as though they were words in a legislative enactment, and it is to be remembered that judicial utterances made in the setting of the facts of a particular case. 11. Circumsstantial flexibility, one additional or difference fact may make a world of differnce between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper. 12. The following words of Lord Denning in the matter of applying precedents have become locas classicus: Each case depends on its own facts and a close similarity between one case and another is not enough becouse even a single significant detail may alter the entire aspect in deciding cases, one should avoid the temptation to decide case (as said by Cardoza) by matching the colour of one case against the colour another. To decide therefore, on which side of the line a case falls, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saying so, the Court has stated : 6 The decision in Premier Automobiles Ltd. case (1972) 2 SCR 526, 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 replace free of costs by the manufacturer or his dealer with in the apecitied 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 concened. The whole abject 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 bome by the manufacturer. The issue was entire was different from the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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