PREM MOTORS Vs. COMMISSIONER OF SALES TAX

JUDGEMENT

(1.) THIS is a reference made by the President of the Board of Revenue under Section 44 (1) of the M. P. General Sales Tax Act for answering the question :

(2.) THE facts stated in the reference are that the assessee, M/s. Prem Motors, deals in cars, tractors, motor-cycles and their spare parts. The assessee was assessed to tax for a period 1st April, 1978, to 31st March, 1979. The disputed question as has been stated by the learned President is as to whether the replacement made free of cost during the warranty period of the customers was liable to tax or otherwise. It is stated that the assessee in a number of cases received spare parts from the principal, i. e. , the manufacturer, in lieu of the spare parts supplied by him to the customers during the warranty period and in some cases whether the manufacturer probably was not able to supply the spare parts reimbursed the cost of the material supplied free of cost to the customers.

(3.) THERE is also a dispute about pre-delivery expenditure incurred on account of damage to the parts of vehicles during transit to Gwalior which has been reimbursed by the principals, i. e. , the manufacturers. This reimbursement of the costs of spare parts or supply of spare parts by the manufacturer in lieu of their supply by the assessee to the customers free during the warranty period and reimbursement of pre-delivery charges were assessed to tax by the assessing authorities. The assessee's contention, according to the learned President of the Board, is that these things will not fall within the sale price which the assessee received from the customers and therefore tax on these items assessed is not in accordance with law. It appears the order of assessment was affirmed by the first appellate authority and the second appeal also was rejected and therefore at the instance of the assessee the learned President of the Board has made this reference to answer the question referred to above.