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TMI Blog2019 (2) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... the spare part, based on a credit note, which may be issued for the said purpose. Matter referred to Larger Bench. - CIVIL APPEAL No. 1822 of 2007 - - - Dated:- 5-2-2019 - C.A. No. 3004-3006/2017 C.A. No. 1821/2007 C.A. No. 2756/2012 C.A. No. 3856/2013 C.A. No. 3824/2011 C.A. No. 3827/2011 C.A. No. 3820/2011 C.A. No. 3821/2011 C.A. No. 3825-3826/2011 C.A. No. 3823/2011 C.A. No. 3822/2011 SLP(C) No. 15642-15643/2011 SLP(C) No. 25905/2013 SLP(C) No. 12806-12808/2016 SLP(C) No. 12280/2014 C.A. No. 5815/2012 C.A. No. 8049/2009 C.A. No. 6167/2009 C.A. No. 6171/2009 C.A. No. 6166/2009 C.A. No. 6160/2009 C.A. No. 6173/2009 C.A. No. 6161/2009 C.A. No. 6164/2009 C.A. No. 6163/2009 C.A. No. 6162/2009 C.A. No. 6165/2009 C.A. No. 5967/2011 C.A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales tax is paid on the stock of spare parts purchased from Tata Motors. The defective parts are sent back to Tata Motors and credit note may be given by Tata Motors for the said parts. The customer does not pay for the replacement of the defective part, which is stated to be the crucial fact. The stand of the Revenue is that sales tax is liable to be paid even qua the return of the spare parts, as credit note is given for the same, to the dealer. 4. In the facts of this case, the assessment order and the appeal went against the appellant/dealer, while the Tribunal held in favour of the appellant/dealer. However, the High Court, relying upon the judgment of this Court in Mohd. Ekram Khan Sons v. Commissioner of Trade Tax, U.P., Lucknow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nter into an agreement with the manufacturers of components, providing for a warranty so far as the components are concerned. The whole object behind warranty is that a consumer who has made a heavy investment, while purchasing a car, is assured of proper performance of the vehicle in a trouble-free manner for a reasonable length of time. It is, thus, his submission that this fundamental concept appears to have been lost in Mohd. Ekram Khan Sons. (supra). 8. Commissioner of Sales Tax v. M/s. Prem Nath Motors (P) Ltd.: ILR (1978) II Delhi 273 Learned senior counsel drew our attention to paras 17 18 of this judgment, where observations have been made to the effect that a dealer sells cars along with a warranty, under which it is agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to the manufacturer. What is effectively done is a passing on, of the parts, from the manufacturer to the customer, but in order to avoid delays and prevent any inconvenience to the customer, he replaces the part first and gets them from the manufacturer later. The cost for the same is reimbursed by the manufacturer. It may be noted that this judgment has specifically been overruled in the Mohd. Ekram Khan Sons(supra) case. 10. Geo Motors v. State of Kerala (2001) 122 STC 285 (Kerala Division Bench): The reasoning of the Delhi High Court in Commissioner of Sales Tax v. M/s. Prem Nath Motors (P) Ltd. (supra) was adopted to conclude that the transaction could not be categorised as a sale even though the dealer had purchased spare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omer. 13. Learned senior counsel, thus, contended that the aforesaid significant aspect clearly distinguishes his case from the case of Mohd. Ekram Khan Sons (supra), i.e., the aspect of the replacement being undisputedly free. In this behalf, he referred to Section 4(1) of The Sale of Goods Act, 1930, which reads as under: 4. Sale and agreement to sell.- (1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one partowner and another. The submission, thus, is that for the sale of the parts of the car, a price has to be paid, which is not so in the present case. 14. SLP (C) Nos.12806-1280 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel also referred to the judgment in Bharat Heavy Electricals Ltd. v. Commissioner of Customs Central Excise, Indore (2003) 9 SCC 185 to contend that while considering the issue of excise duty in respect of components towards the complaint reserve , it was held that the same would be excisable. It was observed that while the initial price charged for the machinery may include the element of the complaint reserve , at the time of purchase, it is not known whether there will be any requirement to replace any part and, in many cases, the parts are not required to be replaced. In such an eventuality, the price equivalent of the complaint reserve is not returned to the customer. 20. We are not delving into the controversy in any furth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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