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TMI Blog1984 (10) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... charges incurred during the warranty period for which no consideration was received from customers are transactions of sale under the provisions of the M.P. General Sales Tax Act, 1958?" 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e spare parts which were replaced to the customers during the warranty period are replaced by the dealer and in case they are replaced, their cost is reimbursed by the manufacturer. It was contended that this warranty was considered by their Lordships of the Supreme Court in the decision in Premier Automobiles v. Union of India AIR 1972 SC 1690 where it has clearly been held that this is included in the sale price of the vehicle. Learned counsel, therefore, contended that tax has already been charged on the sale price of the vehicle and therefore when the principal, i.e., the manufacturer, replaces the part or reimburses its cost, it could not be contended that there is a sale of these spare parts and therefore the assessee could not be ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customer free of charge being the condition of the warranty, he recovers the price from the manufacturer and in substance it is the sale of the spare parts to the manufacturer and therefore it is liable to tax and he therefore contended that the taxing authorities were right in assessing the dealer on the price of these spare parts either when the spare part is replaced or when the cost is reimbursed. As regards the predelivery charges it was contended that in these charges also the cost of parts replaced and repairs effected are charged from the manufacturer and in substance this amount also amounts to sale of these things to the manufacturer and are therefore liable to tax. 7.. The contention advanced by the learned counsel for the reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its members, but does not include a mortgage, hypothecation, charge or pledge, and the word 'purchase' shall be construed accordingly." 8.. The pre-delivery charges are also practically of the same type. The dealer when delivers a vehicle to a customer, he is supposed to deliver the vehicle in a salable condition and he delivers it on behalf of the manufacturer. The vehicle from the manufacturer to the dealer sometimes suffers some damage during transit and in fact it is the responsibility of the manufacturer to make it good so that the customer receives the vehicle in perfect order. The dealer-assessee does it on behalf of the manufacturer and whatever cost is incurred he recovers it from the manufacturer and the manufacturer reimburses i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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