M/S PHILIPS ELECTRONIC INDIA PVT. LTD. V. COMMERCIAL TAXES OFFICER

STR/33/2024

AI Insights

M/s Philips Electronic India Pvt. Ltd. filed multiple sales tax revision petitions against the Commercial Taxes Officer, challenging the levy of entry tax on goods replaced under warranty. The petitioner argued that the goods were exempt from entry tax as they were not meant for sale and were previously taxed. The Rajasthan Tax Board dismissed the appeals, leading to the current petitions. The High Court examined whether the issues raised constituted substantial questions of law. It concluded that the questions were factual, relating to the applicability of law to specific circumstances, and thus did not meet the criteria for substantial questions of law as defined by precedents.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 725806 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 23-01-2025
• Assessment Year: misc
• Other Referred Cases: Tata Motors Ltd. Vs. Deputy Commissioner of Commercial Taxes (SPL), M/s M. Ekaram Khan and Sons Vs. CTT, Prem Nath Motors Vs. State Commissioner of Sales Tax, Geo Motors Vs. State of Kerala, Chandrabhan (Deceased) Through Lrs vs Saraswati, M.Janardhan Vs. Joint Commissioner of Income Tax
• Laws Referred To: Rajasthan Value Added Tax Act 2003, Rajasthan Entry Tax Act 1999
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: PANKAJ GHIYA
• Keywords: Entry Tax; Exemption; Sales Tax Revision; Substantial question of law; Warranty Replacement
• Section: 3; 23; 4; 84

Judgement Text

"[2025:RJ-JP:4093] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR S.B. Sales Tax Revision / Reference No. 33/2024 M/s Philips Electronic India Pvt. Ltd., Vkia, Jaipur Through Its Authorized Signatory Ashok Saini S/o Sh. Prem Singh. ----Petitioner Versus Commercial Taxes Officer, Anti Evasion, Zone-Iii, Jaipur. ----Respondent Connected With S.B. Sales Tax Revision / Reference No. 30/2024 M/s Philips Electronic India Pvt. Ltd., Vkia, Jaipur Through Its Authorized Signatory Ashok Sanii S/o Sh. Prem Singh. ----Petitioner Versus Commercial Taxes Officer, Anti Evasion, Zone-Iii, Jaipur. ----Respondent S.B. Sales Tax Revision / Reference No. 31/2024 M/s Philips Electronic India Pvt. Ltd., Vkia, Jaipur Through Its Authorized Signatory Ashok Saini S/o Sh. Prem Singh ----Petitioner Versus Commercial Taxes Officer, Anti Evasion, Zone-Iii, Jaipur. ----Respondent S.B. Sales Tax Revision / Reference No. 32/2024 M/s Philips Electronic India Pvt. Ltd., Vkia, Jaipur Through Its Authorized Signatory Ashok Saini S/o Sh. Prem Singh, ----Petitioner Versus Commercial Taxes Officer, Anti Evasion, Zone-Iii, Jaipur. ----Respondent For Petitioner(s) : Mr. Pankaj Ghiya For Respondent(s) : HON'BLE MR. JUSTICE ASHOK KUMAR JAIN Order 23/01/2025 [2025:RJ-JP:4093] (2 of 9) [STR-33/2024] 1. These sale tax revision petitions were preferred by petitioners assessee aggrieved from order dated 10.10.2023 in appeal Nos.2019/694, 2019/696, 2019/697 and 2019/698 passed by Rajasthan Tax Board, whereby appeals preferred by the petitioner were dismissed. 2. Learned counsel for petitioner while relying upon judgment in case of Tata Motors Ltd. Vs. Deputy Commissioner of Commercial Taxes (SPL) 2023 150 taxman.com 382 (SC) submitted that this is a case of wrong levy of entry tax on goods under the replacement warranty and learned tax Board without considering the purpose and exemption as provided under the law has dismissed the appeals. He further submitted that the goods were sold on previous occasion and tax was already collected by the tax authority. He further submitted that on complaint of consumer some parts or goods has to be replaced under the warranty and company has transferred the goods or parts from manufacturing facility and same is exempted from levy of entry tax. He further submitted that learned Tax Board has erroneously applied the judgment in case of M/s M. Ekaram Khan and Sons Vs. CTT (2004) 6 SCC 183. At last, he submitted that the entry tax can be levied upon the goods specifically meant for sale in Rajasthan, therefore once the goods are not meant for sale then they are not taxable under the entry tax regime. He further referred the substantial question of law as suggested in para 5 and submitted that these are substantial question of law which requires consideration in the instant case. [2025:RJ-JP:4093] (3 of 9) [STR-33/2024] 3. Heard learned counsel for petitioner and perused the material placed on record along with judgment as referred by learned counsel for petitioner. 4. The facts giving rise to instant revision petitions are that after receiving notice from CTO Anti Evasion, Zone-III, Jaipur, a reply was filed by the petitioner through counsel refuting the demand on the ground that goods imported in the State of Rajasthan were for replacement, as tax has already been paid on original goods and now imported goods are exempted under the VAT regime. A reliance has been placed on judgment in case of Prem Nath Motors Vs. State Commissioner of Sales Tax 1986 (61) STC 244 MP and Geo Motors Vs. State of Kerala 2001 taxman.com 1983 (Kerala). Further on ground of validity to levy entry tax, a request is made to drop the notice. On 30.05.2014, order for tax assessment was passed after considering the grounds as advanced by petitioner assessee. Aggrieved from tax assessment order, an appeal under Section 23 of Rajasthan Entry Tax Act 1999 was filed and same was dismissed by the appellate authority. Dissatisfied from order, appeal before Tax Board, Ajmer was filed and same was dismissed on 10.10.2023. 5. Herein we are considering a sale tax revision petition filed under Section 84 of Rajasthan Value Added Tax Act 2003 filed on certain substantial question of law. In a revision petition filed by any of the aggrieved person, interference on finding of fact is almost impermissible. A revision can only be filed on substantial question of law and the scope of revision is too narrow but certainly a revision is not a fact finding inquiry. [2025:RJ-JP:4093] (4 of 9) [STR-33/2024] 6. In case of Chandrabhan (Deceased) Through Lrs vs Saraswati 2022 SCC Online (SC) 1273 while considering the provision of Section 100 of CPC, Hon’ble Supreme Court has explained substantial question of law as debatable and not previously settled by law of land or not a mere question of law. A question of law having a material bearing on the decision of a case will be a substantial question of law, if it is not covered by any specific provision of law or settled legal principles emerging from binding precedents. A substantial question of law will also arise in a contrary situation, where the legal position is clear either on account of provision of law or binding precedents but the court below has decided the matter, either ignoring or acting contrary to such principle. The substantial question of law arises because the decision of court below was rendered on a material question, violated the settled position of law. 7. the definition of substantial question of law was also considered by Hon’ble Supreme Court in case of M.Janardhan Vs. Joint Commissioner of Income Tax (Appeal (Civil) No.4232/2003 order dated 28.01.2005) reported as AIR 2005 SC 1309, wherein a reliance has been placed in case of Chunilal V. Mehta & Sons. Ltd. Vs. Century Spg. and Mgf. Co. Ltd. AIR 1962 SC 1314 and Hon’ble Supreme Court laid down the following test to determine whether substantial question of law is involved. The test are: (i) Whether directly or indirectly it affects substantial rights of the parties, or; (ii) The question is or general public importance, or; [2025:RJ-JP:4093] (5 of 9) [STR-33/2024] (iii) Whether it is an open question in the sense that issue is not settled by pronouncement of this court or Privy Council or by the federal court or; (iv) The issue is not free from difficulty, and (v) It calls for a discussion for alternative view. 8. There is no scope of interference by the High Court with a finding of fact recorded whether such finding can be treated to be a finding of fact. 9. Herein it is necessary for this Court to consider whether there exist substantial question of law to entertain present revision petitions. The petitioner is required to show perversity in the order of Rajasthan Tax Board and if he is able to establish existence of substantial question of law then this revision petition can be admitted on substantial question of law but without substantial question of law, the revision petition cannot be entertained. 10. A perusal of three order available on record firstly passed by Tax Assessing Authority, secondly by appellate authority and thirdly by Rajasthan Tax Board were consistent on finding of fact and it reflect that there is concurrent finding of fact recorded by all the three authorities below. 11. The judgment in case of Prem Nath Motors Vs. State Commissioner of Sales Tax (supra) and Geo Motors Vs. State of Kerala (supra) were overruled by Hon’ble Supreme Court in case of M/s M. Ekaram Khan and Sons Vs. CTT (supra). The appellate authority after order of tax assessing authority has considered the provision of Sections 3 and 4 of Entry Tax Act and on factual basis the claim of petitioner was dismissed. [2025:RJ-JP:4093] (6 of 9) [STR-33/2024] The Tax Board after considering entry 18 and 20 and notification dated 09.03.2011 has opined that no illegality or error committed by the tax assessing authority and appellate authority after going into the material. 12. In case of Tata Motors Ltd. Vs. Deputy Commissioner of Commercial Taxes (supra) while following the judgment in case of M/s M. Ekaram Khan and Sons Vs. CTT (supra) the reference was answered in following terms: i) The judgment of this Court in Mohd. Ekram Khan is applicable to a situation where a manufacturer issues a credit note to a dealer acting under a warranty given by the manufacturer pursuant to a sale of an automobile in the following situations. The dealer replaces a defective part of the automobile by a spare part maintained in the stock of the dealer or when the same is purchased by the dealer from the open market. In such situations, the credit note issued in the name of the dealer is a valuable consideration for a transfer of property in the spare part made by the dealer to the customer and hence a sale within the meaning of the sales tax legislations of the respective States under consideration. The value in the credit note is thus exigible to sales tax under the respective sales tax enactments under consideration. ii) The judgment in Mohd. Ekram Khan does not apply to a case where the dealer has simply received a spare part from the manufacturer of the automobile so as to replace a defective part therein under a warranty collateral to the [2025:RJ-JP:4093] (7 of 9) [STR-33/2024] sale of the automobile. In such a situation also, the dealer may receive a consideration for the purpose of the service rendered by him as a dealer under a dealership agreement or any other agreement akin to an agent of the manufacturer which is not a sale transaction. On the above understanding of the judgment of this Court in Mohd. Ekram Khan, we are of the view that the same does not call for any interference. In light of the above, in our view, overruling of the judgments in the case of Prem Motors and Geo Motors in Mohd. Ekram Khan, is just and proper. (iii) It is reiterated that a credit note issued by a manufacturer to the dealer, in the situations explained above, is a valuable consideration within the meaning of the definition of sale and hence, exigible to sales tax under the respective State enactments of the States under consideration. In the result, appellants- dealer/assessee are liable to pay sales tax under the respective State enactments under consideration. (iv) In view of the above, the appeals filed by the dealers are dismissed. The appeals filed by the revenue are allowed. Parties to bear their respective costs. 13. The counsel for petitioners submitted that his case is squarely covered in Clause (ii) as the petitioner has received spare parts from manufacturer to replace defective parts under a [2025:RJ-JP:4093] (8 of 9) [STR-33/2024] warranty collateral to the consumer. Herein both tax authority authority and appellate authority have considered the claim based on facts and they have ruled against the petitioner. The finding of fact has already been recorded against the petitioner and on facts, the claim of petitioner was not found to be in accordance with exemption as provided under the notification. The liability is upon the petitioner to show that his case falls in the category of exemption. 14. A perusal of entire material including grounds and the submissions clearly indicated that herein it is a question of applicability of law in a given fact and circumstances but when a notice was served and opportunity of hearing was granted to the petitioner then it was duty of the petitioner to substantiate his defence from the supporting material but the order of authorities below clearly indicated that on issue of fact the petitioner has failed to support his claim with proof. When petitioner has failed to substantiate the proof in support of his fact then it cannot be treated as a substantial question of law. The grounds raised by the petitioner is question of fact and not a substantial question of law. The Rajasthan Tax Board after considering the legal position has rightly dismissed the appeal preferred by the petitioner and there is no scope of interference 13. In view of aforesaid, no substantial question of law exists or arose from the grounds raised by the petitioner, therefore the petitions are devoid of merits and liable to be dismissed. 14. Accordingly, Sale Tax Revision Petitions (STRs) are dismissed. 15. Misc. application, if any, stands disposed of. [2025:RJ-JP:4093] (9 of 9) [STR-33/2024] (ASHOK KUMAR JAIN),J PREETI VALECHA /259-262 "