V. K. SINGHAL, J. - (1.) THIS revision has been preferred under section 15 of the Rajasthan Sales Tax Act, 1954 (hereinafter to be called as "the Act") challenging the order of the Rajasthan Sales Tax Tribunal dated March 30, 1988 and the following question of law has been framed as arising out of the order of the Tribunal : " Whether, in the facts and circumstances of the case, the purported warranty charges were not found part of the sale price ?"
(2.) BRIEF facts of the case are that for the assessment year 1983-84 (July 1, 1982 to June 30, 1983) the assessing authority found that the assessee is effecting sale of the refrigerators to its two sister concerns and in respect of the bills issued to them, four-year service warranty charges at the rate of Rs. 300 per refrigerator have been collected. The said amount was not shown as part of the sale price. It was found that only one-year service warranty was given to the customers and there is no reference of four-year warranty. The assessing authority also came to the conclusion that the said amount is not optional and has been collected from all dealers. It was further found that as a matter of fact the assessee has not produced copy of any contract nor it has been informed as to how many refrigerators have been received for repair and no service or repair is undertaken for the alleged four years. It was only in papers that the amount of Rs. 300 have been shown to bifurcate the sale price and, therefore, the said amount was included in the sale price and tax was levied thereon. It was also found that the purchasers have sold the goods to the consumers as tax-paid, in which only one amount is mentioned and there is no mention of the warranty charges of four years. The Deputy Commissioner (Appeals) has held that the amount recovered by way of four-year service contract charges or warranty charges does not form part of the sale price without discussing any of the points mentioned on the assessment order, but on the legal point. In the second appeal preferred before the Rajasthan Sales Tax Tribunal, the judgment of the Andhra Pradesh High Court in the case of State of A. P. v. Hyderabad Allwyn Ltd. [1990] 78 STC 56; (1989) 30 STL 94 was referred, wherein, the following observations were made : " There are two types of warranties. One is a warranty for a period of one year and the other is a warranty for a period of four years. So far as one-year warranty is concerned, there is no option to the customer. Every person purchasing the refrigerator must necessarily pay the warranty charges for one year. In other words, there will be no sale unless the customer agrees to the warranty for one year and pays warranty charges thereof. But so far as four-year warranty is concerned, it is optional with the purchaser. It is open to the purchaser either to take a four-year warranty by paying warranty charges therefor or not. In these circumstances, the Tribunal held that so far as warranty charges for one-year warranty are concerned, they are includible. But the warranty charges for four-year warranty are not includible. We think the Tribunal was right in holding so. It is clear that so far as four-year warranty is concerned, it is a distinct and separate agreement or contract, as it may be called. The four-year warranty agreement is distinct from the sale agreement. The sale of refrigerators is not dependent upon taking four-year warranty. The Tribunal was, therefore, right in saying that the warranty charges relating to four-year warranty are not includible in the turnover. " The Tribunal came to the conclusion that four-year warranty charges do not form part of the sale price. The submission of Mr. Bafna on behalf of the assessing authority is that the assessing authority has observed that collection of Rs. 300 was compulsory and the said warranty/guarantee was not optional and that no evidence was produced before the assessing authority and the Deputy Commissioner (Appeals) and the Sales Tax Tribunal has proceeded only on the legal aspect of the matter without examining the facts of the case. He has relied upon the case of the honourable Supreme Court in Union of India v. Bombay Tyre International Ltd. (1984) 1 SCC 467 to show that the amount collected adds to the value of the goods and is assessable as such. Further reliance has been placed on the decision of the Supreme Court in Mcdowell & Company Limited v. Commercial Tax Officer [1985] 59 STC 277; (1985) 3 SCC 230, wherein it has been held that colourable measures for avoidance of tax by making suitable arrangements in commercial transactions have to be discouraged and the statutes should be so construed as to disfavour tax evading measures adopted by the assessee. Mr. Mehta on behalf of the assessee has submitted that in view of the decision reported in [1990] 78 STC 56 (AP) (State of A. P. v. Hyderabad Allwyn Ltd.) referred to above, no tax is payable on the warranty charges. He has also referred to the decision of the Supreme Court in the case of Collector of Central Excise v. Kelvinator of India Ltd. [1988] 69 STC 427, wherein it was held in the case of the assessee itself that four-year warranty charges was optional and was entered into later on. This was clearly after-sale facility, which was not to be included in the assessable value. I have considered over the matter. In the case of Commercial Taxes Officer v. Weston Electroniks Ltd. S. B. Sales Tax Revision No. 164 of 1988 decided on November 26, 1991 [reported in [1992] 87 STC 522 (Raj ). ], this Court has held as under : " The definition of sale price as provided under section 2 (p) of the Rajasthan Sales Tax Act, 1954, clearly envisages that only that amount which is paid or is payable to a dealer as consideration for sale of goods will be included in the sale price. This definition has further been extended to include such further sums which might be charged for anything done by the dealer in respect of the goods at the time of or before the delivery. If the dealer is charging one sale price irrespective of the warranty for the second and subsequent years then the position may be different, but if it is optional to the purchaser to avail the benefit of the warranty or not to avail in respect of the second and the subsequent years for which a separate payment is made in addition to the sale price, then such separate payment cannot be included in the sale price. The payment by way of warranty is like an insurance charge and when the said amount is collected there is no transfer of property and at a future date a contingency may or may not arise where the defective part is replaced. In such a situation it cannot be said that the amount has been collected in respect of an act done before or at the time of delivery of the goods. The said amount has been charged not in respect of any goods delivered but for some future act. I am also in agreement with the contention of Mr. Kotwani that the definition as given under the Central Excises Act for the purpose of 'cost' cannot be applied nor the decision thereof have any relevancy because the Rajasthan Sales Tax Act, is a self-contained code and in view of the specific definition the assistance from the other Act cannot be taken. In these circumstances, I am of the view that if the payment in respect of warranty were voluntary in nature and have separately been charged then it will not form the part of the sale price. The assessee has neither produced the books of account, nor the information required was furnished before the assessing authority and the Tribunal has proceeded only on the basis of one bill. It would be proper to send the matter back to the Commercial Taxes Officer for examination whether there was separate price for the sale of the commodity with warranty and without warranty or it was one price as contended by Mr. Bafna in all cases and if it is found that the price was one whether the warranty is taken or not, then no benefit can be availed by the assessee. But if the amounts charged are separate for the value of the commodity and the warranty charges and the said payment have not been collected from all the dealers, then the same will not form part of the sale price. " In view of the decision given by this Court I am of the view that the matter should go back to the assessing authority for recording finding as to whether the warranty charges were optional and whether they were separately charged. The assessee shall produce the books of accounts, documents and the agreement in proof of the contentions raised by him that the said charges do not form part of the sale price.
(3.) WITH these observations, the revision is partly allowed. No order as to costs. Petition partly allowed. .;