In Brief
Tata Motors and its dealers challenged sales tax liability on free replacement of defective spare parts supplied under vehicle warranty. Dealers argued the price of vehicles inclusive of warranty coverage means no separate consideration passes for replacement parts. The Revenue contended credit notes from the manufacturer constitute taxable consideration. The Supreme Court, expressing reservations about the controlling precedent in Mohd. Ekram Khan & Sons, declined to decide the matter and remanded it to a larger Bench, identifying the crucial question: whether sales tax applies to returned defective parts when customers pay nothing and the vehicle price already includes warranty costs."]
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