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KATARIA AUTOMOBILES PVT. LTD Versus STATE OF GUJARAT

2015 (4) TMI 777 - GUJARAT HIGH COURT

Whether in the facts and circumstances of the case, the Appellate Tribunal erred in holding that the transaction of exchange of goods by the Appellate to the consumers during the Warranty Period amounts to sale and consequent levy of VAT under the provisions of the Gujarat Value Added Tax Act, 2003 - Held that:- 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 .....

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t - assesseedealer 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. - 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. - Tribunal has not committed any error in dismissing the appeals and confirming the imposition of tax an .....

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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. 2.0. Feeling and aggrieved and dissatisfied with the impugned common judgment and order passed by the learned Tribunal dated 03.07.2014 passed in Secon .....

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n its order that the business place of the appellant was visited on 17.2.2014. That the appellant was a Maruti Cars dealer. It was found by the Assessing Authority that the appellant had not paid tax on sales of parts during the warranty period of the motor cars; that on asking the appellant to pay up the tax and the penalty, the appellant had given the cheques of tax and the interest but he did not agree to pay penalty. The Assessing Authority also stated that earlier also when the place of app .....

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g aggrieved and dissatisfied with the aforesaid separate Provisional Assessment Order dated 16.4.2014, the dealer / assessee preferred three separate appeals before the First Appellate Authority - Deputy Commissioner of Commercial Tax II, Ahmedabad. The First Appellate Authority directed the appellant to make the payment of predeposit. However, the appellant did not make the payment of predeposit as directed and instead contended that the during the warranty period he has replaced parts which di .....

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gned common judgment and order, the learned Tribunal Tribunal has partly allowed the said appeals removing penalty imposed, however confirmed the imposition of tax and interest. It appears that thereafter the assessee / dealer preferred three rectification application nos. 20 of 2014 to 22 of 2014 to rectify, clarify and / or modify the earlier common order that the tax element is to be deducted from the credit notes received for the spare parts and not as per the amount mentioned in the provinc .....

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during the warranty period of the motor cars, for which, manufacturer used to give credit notes, the common appellant has preferred present Tax Appeals. 3.0. 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 / de .....

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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. 3.1. Ms. Gargi Vyas, learned advocate for the appellant has heavily relied upon the recent decision of the Rajasthan High Court in the case of C.T.O (AE) vs. Marudhara Motors reported in (2009) 12 VAT Reporter 17; RLW2009(2) Raj 1430 in support of her above submissions. It is submitted that in the aforesaid decision Raj .....

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decision of the Division Bench of this Court in the case of Ruby Laboratories vs. Commissioner of Sales Tax reported in (1971) 27 STC 326 shall not be applicable to the facts of the case on hand. It is submitted that in the case before the Division Bench, it was found that the cost which manufacturer incurred in manufacturing samples were taken in to account at the time of fixing price of rest of the articles. It is submitted that on finding above, the Division Bench has held that assessee is li .....

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ed Tribunal was with respect to the penalty. It is submitted that in fact the purshis was also submitted before the learned Tribunal submitting that as the assessee / dealer had already made payment of tax and interest, the penalty be removed. It is submitted that considering the purshis submitted by the assessee / dealer before the learned Tribunal, the Tribunal had by common judgment and order removing the order of penalty by observing that the assessee / dealer had already paid the amount of .....

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'ble Supreme Court in the case of Mohd. Ekram Khan and Sons (supra) as well as decision of the Division Bench of this Court in the case of Ruby Laboratories (Supra) and has rightly held that assessee / dealer is liable to pay tax on the credit notes. It is submitted that in the present case the assessee / dealer has specifically admitted that it used to purchase the parts from the market and on purchase of said parts they were replaced in place of defective parts. 4.2. It is further submitte .....

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tes issued by the manufacturer with respect to sale of parts during the warranty period of motor cars. Making above submissions and relying upon above decisions, it is requested to dismiss the present Tax Appeals. 5.0. 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 .....

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spute that as such the appellant - assesseedealer 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 and Sons (supra). While considering the provision of Uttar Pradesh Trade Tax Act, 1948, t .....

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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 .....

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