KATARIA AUTOMOBILES (P.) LTD. Vs. STATE OF GUJARAT

JUDGEMENT

(1.) AS common question of law and facts arise in this group of appeals and as such they arise out of the impugned judgment and order passed by the Gujarat Value Added Tax Tribunal, Ahmedabad (hereinafter referred to as the "Tribunal") and even the dispute is between the same parties but with respect to different Assessment Years, all these appeals are decided and disposed of by this common judgment and order. Feeling and aggrieved and dissatisfied with the impugned common judgment and order passed by the learned Tribunal dated 03.07.2014 passed in Second Appeal Nos. 411 of 2014 to 413 of 2014, by which, the learned Tribunal has partly allowed the said appeals, however confirmed the imposition of tax and interest but removing the penalty imposed only, common appellant/dealer/assessee has preferred present Tax Appeals.

(2.) MS . Gargi Vyas, learned advocate for the appellant has vehemently submitted that learned Tribunal has materially erred in confirming the imposition of tax by the Assessing Authority on sales of parts during the warranty period of the motor cars. It is vehemently submitted by Ms. Gargi Vyas, learned advocate for the appellant -assessee/dealer that as such while replacing the defective parts during the warranty period of the motor cars, there is no element of sale at all and the assessee/dealer as such did not charge anything from the owner of the cars. It is further submitted that as such whatever the parts are replaced by the dealer/assessee during the warranty period of motor cars, assessee/dealer used to send the particulars of the same to the manufacturer and the manufacturer instead of replacing the defective parts is giving the credit notes. It is submitted that therefore, when there is no element of sale there shall not be any liability of any tax on the amount mentioned in the credit notes.

(3.) HEARD the learned advocates for the respective parties at length. That by the impugned common judgment and order, the learned 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 -assessee -dealer 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. The aforesaid issue/issues involved in the present appeal is as such squarely covered by the decision of the Hon'ble Supreme Court in the case of Mohd. Ekram Khan & Sons (supra). While considering the provision of Uttar Pradesh Trade Tax Act, 1948, the Hon'ble Supreme Court has confirmed the levy of tax on replacement of defective parts of vehicle during the warranty period dismissing the appeal against the order passed by the High Court holding that such transactions constitute sale attracting levy of tax and the Hon'ble Supreme Court has held since assessee had received the payment of parts supplied to customers, transactions were subject to levy of tax. It is further observed and held that 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. In the case before the Hon'ble Supreme Court also assessee had supplied the goods for which he had received the consideration by way of credit notes and/or other mode of payment. Under the circumstances, as such issued involved in the present appeal is squarely covered by the decision of the Hon'ble Supreme Court in the case of Mohd. Ekram Khan & Sons (supra).