TMI Blog2001 (1) TMI 941X X X X Extracts X X X X X X X X Extracts X X X X ..... am. The assessment years are 1984-85 and 1985-86. The assessee is the revision-petitioner and it is the appellant before the Tribunal. 2.. The dispute raised in this case is whether the cost of spares replaced by the petitioner/appellant during the warranty period forms part of the petitioner's turnover and is liable to tax. The petitioner is the agent for automobile manufacturers like Hindustan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning of the Kerala General Sales Tax Act, 1963 (hereinafter referred to as "the Act"). It is only a free replacement for customer. The manufacturer issues credit notes for the value together with excise duty and sales tax thereby cancelling the original sale made to the petitioner in respect of the item replaced. Therefore, there is only a sale cancellation between the manufacturer and the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king purchase purely for replacement and the value of the goods replaced are reimbursed by the manufacturer by issue of credit notes. The assessing authority took the view that exemption cannot be allowed. The Appellate Tribunal was of the view that the petitioner has transferred the property in the spare parts replaced to the customer. The transfer was effected in the course of trade or business. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reducing the sale value. Learned counsel for the petitioner brought to our notice a decision of the Delhi High Court reported as Commissioner of Sales Tax v. Prem Nath Motors (P) Ltd. [1979] 43 STC 52. In the above decision, the court observed as follows: "Now, the warranty was to replace the defective part or parts free of cost. When a part is replaced in accordance with the stipulation or w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the price fixed and received from the buyer/consumer. The price so fixed and received was a consolidated price for the car and the parts that may have to be supplied by way of replacement in pursuance of the warranty". We agree with the above reasoning of the Delhi High Court. 7.. In the result, the order of the Appellate Tribunal is set aside and we direct to give exemption to the turnover of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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