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2013 (4) TMI 680 - KARNATAKA HIGH COURTSales tax on spare parts - Whether no sale involved within the definition in section 2(1)(t) of the Karnataka Sales Tax Act, 1957 - whether the amount received by the assessee for supply of parts to the customers as a part of the warranty agreement was liable to tax? Held that:- In the instant case, customers have purchased the motor vehicles from the manufacturers through the assessee. The sale price includes the price of warranty. The assessee has supplied spare parts, replaced defective parts and returned the defective parts to the manufacturer. Along with the defective parts, the assessee has raised a debit note in the name of the manufacturer. Thereafter the manufacturer has raised a credit note. The manufacturer has paid the assessee the price of the spare parts, which were replaced. If the said spare parts had been purchased in the open market, both of them have to pay sales tax. Therefore, in view of the law laid down in Mohd. Ekram Khan's case [2004 (7) TMI 341 - SUPREME COURT OF INDIA] the consideration paid by the manufacturer to the assessee by way of a credit note represents the sale price of the spare parts which are replaced and is liable to tax. In that view of the matter, the impugned order passed by the Tribunal is liable to be set aside. Hence, Revision is allowed.Order passed by the revisional authority is restored to file in its original.
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