Sanjay Kishan Kaul, J. - (1.) The common question of law, which arises for consideration in these appeals, is the liability towards sales tax, in respect of the free replacement of defective parts in motor vehicles, during the period of warranty.
(2.) Civil Appeal No.1821/2007, filed by one of the dealers [M/s. Prerana Motors (P) Ltd.], was taken up as the main appeal for addressing the submissions and, thus, reference to some of the relevant facts is qua that appeal.
(3.) M/S. Prerana Motors (P) Ltd./appellant is a dealer of Tata Motors. Sales Tax is paid on the vehicles sold. There is a warranty given to the purchaser for free replacement of parts, during the period of warranty. To facilitate this, the dealer is obliged to keep a stock of spare parts. The purchaser has an option to go to any dealer, and not be confined to the dealer from whom the purchase was made. Sales tax is paid on the stock of spare parts purchased from Tata Motors. The defective parts are sent back to Tata Motors and credit note may be given by Tata Motors for the said parts. The customer does not pay for the replacement of the defective part, which is stated to be the crucial fact. The stand of the Revenue is that sales tax is liable to be paid even qua the return of the spare parts, as credit note is given for the same, to the dealer.;