S. N. Variava, J. - (1.) This Appeal is against the Judgment dated 18th February, 1999 passed by the Karnataka High Court.
(2.) Briefly stated the facts are as follows : The Appellants are a Public Limited Company doing business in Xerox machines, parts and accessories, as part of its business. After the Xerox machine is sold to a customer, if the customer so desires, the Appellants enter into one of the two types of Agreements, namely, either a Full Service Maintenance Agreement (FSMA) or a Spares and Service Maintenance Agreement (SSMA). In FSMA the Appellants take on the responsibility of fully maintaining the machine, servicing it and if necessary replacing parts. The Appellants also supply material, like toners and developers. They charge at the rate of 0.27 paise per copy produced by the machine. Under the SSMA, the Appellants agree to maintain the machine including replacement of parts, if necessary, for a lump sum of Rs. 7,000/- per annum. However, the costs of toners, developers etc. are to be borne by the customer.
(3.) It appears that in the Returns filed by the Appellants, for Sales Tax purposes, they declared total taxable turnovers at Rs. 4,23,58,510/- and Rs. 1,63,58,556/-. The Assessing Authority, on verification of the books of accounts, determined the total and taxable turnovers at Rs. 10,34,70,495/- and Rs. 4,70,23,693/-. The Assessing Authority held that amounts received for sale of parts, toners and developers, under the aforementioned two types of Agreements, were includible for the purposes of sales tax.;