JUDGMENT Hon’ble Surya Prakash Kesarwani, J.—Heard Sri B.K. Pandey, learned Standing Counsel for the revisionist and Sri M.M. Rai, learned counsel for the respondent. 2. This revision filed under Section 58 of the U.P. VAT Act, 2008 challenging the order dated 1.12.2014 in Second Appeal No. 183 of 2014 (2009-10) passed by the Member, Commercial Tax Tribunal, Aligarh Bench, Aligarh. 3. Learned counsel for the parties were heard at length on 2.12.2016 and their submissions were noted and certain queries were made as under: “Heard Sri Nimai Das, learned counsel for the revisionist and Sri M.M. Rai, learned counsel for the respondent. Learned counsel for the revisionist submits that the respondent has sold the parts to customers for consideration and the consideration on behalf of customers was paid by the manufacturer company in the form of credit notes. Thus all the ingredients of sale namely transfer of property in goods by the respondent-assessee to the customer for valuable consideration are present in the transaction and therefore, the transaction is clearly a sale within the meaning of Section 2(ac) of the U.P. VAT Act, 2008. He supports the assessment order and relies upon a decision of Hon’ble Supreme Court in the case of Mohd. Ekram Khan and Sons v. CTT, 2004 UPTC 1198 (pr 6) as well as the judgment of Bombay High Court in Navnit Motors PVt. Ltd. v. State of Maharashtra, 2012 (Vol. 47) VST 511. Sri M.M. Rai, learned counsel for the respondent submits that the relationship between respondent-assessee and the manufacturer is that of Principal to Principal and not as Principal and Agent. He relied upon a decision of Rajasthan High Court in the case of C.T.O. (AE) Jodhpur v. Marudhara Motors, Jodhpur, 2010 NTN (Vol. 42) 205 (Pr 20, 22, 23 and 26). On a specific query put to Mr. M.M. Rai, that what was the nature of transaction between respondent-assessee and the customer and what was the relationship between them, he states that relationship between the respondent-assessee and the customer is of Seller and Purchaser but nature of transaction is not sale within the meaning of Section 2(ac) of the Act in the absence of any consideration. M.M. Rai, that what was the nature of transaction between respondent-assessee and the customer and what was the relationship between them, he states that relationship between the respondent-assessee and the customer is of Seller and Purchaser but nature of transaction is not sale within the meaning of Section 2(ac) of the Act in the absence of any consideration. He further submits that the credit note given by the manufacturer to the respondent-assessee is in the nature of reimbursement of the amount paid earlier for the purchases of spare parts and therefore, credit notes are not consideration for parts given to the customers by the assessee by way of replacement free of cost. On a further query by the Court that when it is admitted as afore-noted that the relationship between the respondent-assess and the customer is of seller and purchaser then how it can be said that there was no sale, Sri M.M. Rai, stated that the parts were given by the respondent assessee to the customer because of agency agreement between the respondent-assessee and the manufacturer for replacement by the respondent-assessee which is reimbursed by the manufacturer through credit notes. After the arguments were concluded and the statement made by learned counsel for the respondent-assessee was noted as above, learned counsel for the respondent-assessee prays that three days’ time may be granted to obtain further instruction from the respondent-assessee. As prayed, put up on 8.12.2016.” 4. Today Sri M.M. Rai, learned counsel for the respondent stated that he has obtained instructions from the assessee and under his instructions he is submitting the written submission dated 8.12.2016 which is reproduced below: Written Submission of the respondent: “The above mentioned Commercial Tax Revision filed by the Revenue was heard on 1st and 2nd December 2016 by his Lordship and after hearing the parties, his Lordship had directed to clarify the stand on two issues, namely, as to what is the relationship between the respondent and the persons to whom the defective motor parts during the warranty period had been replaced and secondly, the credit note given by the manufacturer i.e. M/s. Tata Motors Ltd. to the respondent. In this connection, on behalf of the respondent, it is humbly submitted that the respondent being the authorized dealer of M/s. Tata Motors Ltd., purchases various parts and vehicles and effects sale to purchasers. In this connection, on behalf of the respondent, it is humbly submitted that the respondent being the authorized dealer of M/s. Tata Motors Ltd., purchases various parts and vehicles and effects sale to purchasers. After sale of vehicles manufactured by M/s. Tata Motors Ltd., the relationship of seller (respondent) and purchaser (customers) ceases. The warranty is offered by the manufacturer to the consumer in respect of his product and certain conditions are attached to it. The warranty is offered for a limited period or running of the product and if any defect in the parts fitted in the sold vehicle arises, the same is to be replaced “free of cost” as per clauses of warranty offered by the manufacturer to the purchaser of the product. Generally, the manufacturer is stationed at far off distance from place of the consumer and he cannot approach the manufacturer directly, the respondent acts as an intermediary between the manufacturer and the purchaser of the product for the replacement of the defective parts and thus could be called a “Service Provider”. In the course of rendering the free service, the respondent replaces the defective part from his own stock purchased earlier from M/s. Tata Motors Ltd. If the same is covered under the warranty period, the respondent returns the defective parts to the manufacturer who after scrutiny, issues credit note for the amount which was paid/payable for that part earlier. Thus, the credit note is nothing but a promise of reimbursement of the amount which was incurred by the respondent at the time of making purchases of parts earlier. So far as the nature of the ‘credit note’ is concerned, it is humbly submitted that it is a commercial document issued by a seller to a buyer. The seller usually issues a credit memo for the same or lower amount than the invoice and then either repays the money to the buyer or sets it off against a balance due from other transactions. In respect of the previously issued invoice, a credit note may reduce or eliminate the amount which the buyer has to pay. The seller usually issues a credit memo for the same or lower amount than the invoice and then either repays the money to the buyer or sets it off against a balance due from other transactions. In respect of the previously issued invoice, a credit note may reduce or eliminate the amount which the buyer has to pay. Generally, the credit note states that certain amount, has been credited to the buyer’s account and at the time of final settlement of the account, the amount mentioned in the credit note is treated as a sum not to be paid.” He relied upon a decision of this Court in the case of Parishudh Machines Pvt. Ltd., Meerut Road, Ghaziabad v. Commissioner of Trade Tax, U.P., Lucknow, (2007) 6 VLJ 152 (Vol. 10) and M/s. Tata Motors Limited v. Commissioner of Trade Tax, 2010 Tax Law Diary 329. 5. Learned Standing Counsel reiterated the submissions made on 2.12.2016 and in addition relied upon a Division Bench judgment of Kerala High Court in the case of MGF Motors Limited v. State of Kerala, [2012] 55 BST 81 (Ker). I have carefully considered the submissions of learned counsel for the parties. Facts of the case: 6. Briefly stated the facts of the present case are that the respondent-assessee is a registered dealer under the U.P. VAT Act, 2008. For the assessment year 2009-10 its assessment was completed by the assessing authority and tax was levied on certain sales of spare parts which was purchased by the assessee from M/s. Tata Motors Ltd. against form-C. The assessee took the stand that transfer of such spare parts by way of replacement of the old/defective parts of the vehicles sold to customers was on account of warranty given by M/s. Tata Motors Ltd. and thus there was no sale. The assessee also took the stand that the parts so replaced were given free of cost to the customers and value thereof was adjusted by M/s. Tata Motors Ltd. by issuing credit note to the assessee. The assessing authority did not accept the contention of the assessee and accordingly imposed tax on such sales of spare parts. The assessment so made resulted in a disputed amount of tax of Rs. 1,22,234/-. The assessing authority did not accept the contention of the assessee and accordingly imposed tax on such sales of spare parts. The assessment so made resulted in a disputed amount of tax of Rs. 1,22,234/-. Aggrieved with the assessment order, the assessee filed First Appeal No. 1301 of 2013 under Section 55 of the U.P. VAT Act before the Additional Commissioner, Grade-II, (Appeal), Commercial Tax, Aligarh which was allowed by order dated 30.12.2013. The first appellate authority relied upon the decision of Rajasthan High Court in the case of C.T.O. (AE), Jodhpur v. M/s. Marudhara Motors, Jodhpur, 2010 NTN (Vol. 42) 205 and a decision of Noida Bench of the Tribunal in the case of Nawab Auto Engineers Pvt. Ltd., Noida, 2012 NTN (Vol. 50) Tribunal-28. Aggrieved with the aforesaid order of the first appellate authority, the Commissioner, Commercial Tax, U.P., Lucknow filed Second Appeal No. 183 of 2014 which has been dismissed by the Tribunal by impugned order dated 1.12.2014. Aggrieved with the order of the Tribunal, the Commissioner, Commercial Tax, U.P., Lucknow has filed the present revision. Discussion and Findings: 7. Undisputedly, the respondent-assessee is an authorized dealer of M/s. Tata Motors Ltd. He purchased vehicles during the assessment year in question and sold it to his customers. Apart from purchase of motor vehicles, he also purchased spare parts against form-C. According to the respondent-assessee, some spare parts were given to the customers by way of replacement under warranty scheme of the manufacturer M/s. Tata Motors Ltd. (hereinafter to be referred as the ‘manufacturer’). With respect to these spare parts, credit notes were issued by the manufacturer to the respondent-assessee. According to the assessee, credit note is a commercial document which has been issued by the manufacturer to the respondent-assessee to repay the money or to set off a balance, due from other transactions. According to the assessee the relationship of seller and purchaser between the respondent-assessee and its customers ceases the moment vehicles are sold. As stated in written argument the warranty has been offered by the manufacturer to the ultimate customer/consumer in respect to the product for a limited period and if during that period any defect, in the parts fitted in the vehicle sold, is found, the same is replaced “free of cost” as per warranty offered by the manufacturer to the ultimate purchaser of the product. It has also been submitted by the respondent-assessee that the assessee has acted as an intermediary between the manufacturer and purchaser of the product for the replacement of defective parts and thus he is service provider. It is admitted to the assessee that he replaced the defective parts from his own stock purchased earlier from the manufacturers and thereafter returned the replaced defective parts of customers to the manufacturer who issued credit notes for the amount which was paid/payable for that part. The first appellate authority and the Tribunal held that the free replacement of parts under the warranty agreement between the manufacturer and the ultimate consumer and issuance of credit note by the manufacturer are two independent transactions and on that basis the free replacement of parts against the credit notes cannot be treated as sale. 8. Thus, the crux of submissions of the respondent-assessee are as under: (i) The spare parts were purchased by the assessee from the manufacturer against form-C. (ii) The relationship of seller (respondent-assessee) and purchaser (hereinafter referred to as the ‘consumer’) ceases after the vehicles are sold. (iii) Warranty has been offered by M/s. Tata Motors Ltd. (hereinafter referred to as the ‘manufacturer’) to the consumer in respect to its product namely motor vehicles, under which, parts fitted in the vehicle are replaced, if claimed by a consumer and found defective during warranty period. (iv) Respondent-assessee is an intermediary between the manufacturer and the consumer. For the purposes of replacement of parts, the respondent-assessee is a service provider. (v) Respondent-assessee replaces defective parts of vehicles of consumer from his own stock. (vi) The cost of spare parts given to consumer under the warranty offered by the manufacturer to the consumer, is reimbursed by the manufacturer to the respondent assessee through credit notes which is a commercial document issued by the manufacturer to the respondent-assessee for repayment of money or to set off a balance due, to eliminate the amount which the buyer has to pay. (vii) The transaction is not a ‘sale’ under Section 2(ac) of the Act. 9. The revision is admittedand it is being finally heard with the consent of learned counsel for the parties on the following question of law : “Whether the transaction in question is a sale within the meaning of Section 2(ac) of the Act and consequently, liable to tax under Section 3 of the Act?” 10. 9. The revision is admittedand it is being finally heard with the consent of learned counsel for the parties on the following question of law : “Whether the transaction in question is a sale within the meaning of Section 2(ac) of the Act and consequently, liable to tax under Section 3 of the Act?” 10. Before I proceed to examine the aforesaid question, it would be appropriate to quote the relevant provisions of the U.P. VAT Act, 2008, the Central Sales Tax Act, 1956 and the Central Sales Tax Rules, 1957 as under: U.P. VAT Act, 2008 Section 2(ac) “sale” with its grammatical variations and cognate expressions, means any transfer of property in goods (otherwise than by way of a mortgage, hypothecation, charge or pledge) by one person to another, for cash or for deferred payment or for any other valuable consideration and includes,— ........................................” Central Sales Tax Act, 1956 [Section 2(g) - “sale”, with its grammatical variations and cognate expressions,means any transfer of property in goods by one person to another for cash or deferred payment or for any other valuable consideration, and includes,—.....................” Section 8 - Rates of tax on sales in the course of inter-State trade or commerce.— (1) Every dealer, who in the course of inter-State trade or commerce, sells to a registered dealer goods of the description referred to in sub-section (3), shall be liable to pay tax under this Act, which shall be three percent, of his turnover or at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of that State, whichever is lower: Provided that the Central Government may, by notification in the Official Gazette, reduce the rate of tax under this sub-section. (2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter-State trade or commerce not falling within sub-section (1), shall be at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of that State. Explanation—For the purposes of this sub-section, a dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law.]; (3) ..................... Explanation—For the purposes of this sub-section, a dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law.]; (3) ..................... (4) The provisions of sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority: Provided that the declaration is furnished within the prescribed time or within such further time as that authority may, for sufficient cause, permit. (5) ..................... (6) ..................... (7) ..................... (8) ....................” The Central Sales Tax Rules, 1957 “Rule 12(1) The declaration and the certificate referred to in sub-section (4) of Section 8 shall be in Forms ‘C’ and ‘D’ respectively: [Forms C and D] Provided that Form ‘C’ in force before the commencement of the Central Sales Tax (Registration and Turnover) (Amendment) Rules, 1974, or before the commencement of the Central Sales Tax (Registration and Turnover) (Amendment) Rules, 1976, may also be used up to the 31st December, 1980 with suitable modification: (Omitted) Provided further that a single declaration may cover all transactions of sale, which take place in a quarter of a financial year between the same two dealers. Provided also that where, in the case of any transaction of sale, the delivery of goods is spread over to different quarters in a financial year or of different financial year it shall be necessary to furnish separate declaration or certificate in respect of goods delivered in each quarter of financial year.” Supply of spare parts - whether Sale? 11. It is admitted case of the respondent-assessee that after completion of the transaction of purchase of the motor vehicles by it from the manufacturer, it sold the motor vehicles to consumers. In the written submission, the respondent-assessee has admitted that the relationship of seller and purchaser between him and the consumer ceased after the vehicles were sold to consumers. The warranty has been offered by the manufacturer to consumers. 12. In the written submission, the respondent-assessee has admitted that the relationship of seller and purchaser between him and the consumer ceased after the vehicles were sold to consumers. The warranty has been offered by the manufacturer to consumers. 12. The purchases of spare parts as an inter-State transaction against Form-C on concessional rate of Central Sales Tax became a complete transaction of sale/purchase under Section 2(g) read with Section 6 and 8 of the Central Act the moment spare parts were sold and delivered by the manufacturer to the respondent-assessee for consideration. 13. No warranty has been given by the respondent-assessee to consumers. Since the assessee is an authorized dealer of the manufacturer and it also sells parts of vehicles in the ordinary course of its business and as such under some commercial arrangement he facilitates the manufacturer to carry out his obligations of warranty towards consumers and therefore, the respondent-assessee has supplied parts of motor vehicles covered by warranty of the manufacturer, from his own stock of spare parts and received consideration from the manufacturer by way of credit notes. The price of such spare parts of his stock delivered to consumers has been paid to him by the manufacturer through credit notes instead of cash payment. 14. The transaction of sale of motor vehicles to consumers and the sale of spare parts by the respondent-assessee for consideration through credit notes by delivering it to consumers under the warranty of the manufacturer, are two separate transactions. The purchase of spare parts by the respondent-assessee from the manufacturer under the completed transaction of sale has no connection with the other transaction of sale of spare parts delivered to consumer for consideration through credit notes received from the manufacturer. 15. From the point of view of the respondent-assessee there are four separate and independent transactions; firstly, the transaction of purchase of motor vehicles from the manufacturer; secondly, the transaction of sale of motor vehicles to consumers; thirdly, transaction of purchase of spare parts from persons including manufacturer and fourthly supply of spare parts to consumers under warranty agreement between him and the manufacturer, for consideration in the form of credit notes. 16. 16. Perusal of Section 2(ac) of the U.P. Act indicates that for a transaction of sale, three ingredients are required namely : (i) Transfer of property in goods otherwise than by way of mortgage, hypothecation, charge or pledge; (ii) By one person to another; (iii) For cash or for deferred payment or for any other valuable consideration and includes certain transfers specified in clause (i) to (vi). 17. The first and second ingredient of transfer of property in goods in the form of spare parts by the respondent-assessee to the consumers for the manufacturer has been admitted by the respondent-assessee as also evident from the written submission quoted above. The only thing that remains to be considered, is whether the transfer was for cash or for deferred payment or for any other valuable consideration. In the case of Mohd. Ekram Khan and Sons v. CTT, 2004 UPTC 1198 (pr 6): (2004) 6 SCC 183 (paras 1, 5 and 6) Hon’ble Supreme Court, in similar circumstances, noted controversy and submissions and held as under: “1. These two appeals relate to a common judgment rendered by a learned Single Judge of the Allahabad High Court. The appellant (hereinafter referred to as the ‘assessee’) was a dealer registered under the Uttar Pradesh Trade Tax Act, 1948 (hereinafter referred to as the ‘Act’),for the relevant assessment years i.e. 1990-91 and 1996-97. The only question involved in these appeals is whether the amount received by the assessee for supply of parts to the customers as a part of the warranty agreement was liable to tax. The assessee was an agent of M/s Mahindra and Mahindra (hereinafter referred to as the ‘manufacturer’). The manufacturer had warranty agreement with the purchasers of vehicles (hereinafter referred to as the ‘customers’) to replace defective parts during the warranty period. As found by the taxing authorities and the High Court, the manufacturer made payment for certain price as the parts were supplied by the assessee to the customers. Credit notes were issued by the manufacturer to the assessee in respect of the price of the parts supplied to the customers. The assessing officer was of the view that the payments received through credit notes amounted to a sale in terms of Section 2(h) of the Act. Said Provision, so far as relevant reads as follows: “2. Credit notes were issued by the manufacturer to the assessee in respect of the price of the parts supplied to the customers. The assessing officer was of the view that the payments received through credit notes amounted to a sale in terms of Section 2(h) of the Act. Said Provision, so far as relevant reads as follows: “2. (h) ‘Sale’, with its grammatical variations and cognate expressions, means any transfer of property in goods (otherwise than by way of a mortgage, hypothecation, charge or pledge) for cash or deferred payment or other valuable consideration and includes—” 5. In response, learned counsel for the revenue submitted that the transaction between the assessee and the manufacturer was a separate transaction. It is not the case of the assessee that the manufacturer had supplied the goods to the customers. If it had supplied parts to the customers through assessee; the position may have been different. The manufacturer was obligated to make the replacement. If it did not possess the parts to meet the contractual obligation, it would have purchased the parts from any seller of the parts and would have paid the sales tax. In the instant case, the assessee had supplied the goods for which it received the consideration by way of credit notes and/or other mode of payment. That being the position, the High Court was justified in its view about the taxability of the transactions. 6. The decision in Premier Automobiles case (supra) is really of no assistance to the assessee. The fact situation there was different. The issues in the said case were different. One of the issues was whether the expenses on account of warranty and statutory bonus were to be excludable while working out the ex-work cost. It was held by this Court that manufacturers furnish warranty covering the cars sold. Under the warranty all defects on account of faulty manufacture have to be set right and the defective parts have to be replaced free of costs by the manufacturer or his dealer within the specified period or given distance travelled by the car. The car manufacturers enter into an agreement with the manufacturers of components providing for a warranty so far as the components supplied are concerned. The car manufacturers enter into an agreement with the manufacturers of components providing for a warranty so far as the components supplied are concerned. The whole object behind the warranty is that the consumer who has to make a heavy investment for the vehicle should be assured of a proper performance of the vehicle in a trouble free manner for reasonable length of time. Therefore, entire cost of warranty was to be borne by the manufacturer. The issue was entirely different from the one at hand and the ratio in the said case provides no answer to the present dispute. Prem Nath’s case (supra), as the factual position goes to show, dealt with transfer of property in the part or parts replaced in pursuance of the stipulation of warranty as part of the original sale of car for the fixed price paid by the buyer/consumer. The price so fixed and received was a consolidated price for the car and the parts that may have to be supplied by way of replacement in pursuance of the warranty. That decision also throws no light on the present controversy. Though the decision in Geo Motor’s case (supra) and Prem Motor’s case (supra) support the stand of the assessee, we find that basic issue as to the nature of the transaction between the assessee and the manufacturer was lost sight of. As noted above, in a case manufacturer may have purchased from the open market parts for the purpose of replacement of the defective parts. For such transactions, it would have paid taxes. The position is not different because the assessee had supplied the parts and had received the price. The categorical factual finding recorded by the taxing authorities and the High Court is that the assessee had received the payment of the price for the parts supplied to customers. That being so, the transaction was subject to levy of tax as has been rightly held by the High Court. The decisions in Geo Motor’s case(Supra) and Prem Motor’s case (supra) stand overruled.” (Emphasis supplied by me) 18. Perusal of the judgment in the case of Mohd. That being so, the transaction was subject to levy of tax as has been rightly held by the High Court. The decisions in Geo Motor’s case(Supra) and Prem Motor’s case (supra) stand overruled.” (Emphasis supplied by me) 18. Perusal of the judgment in the case of Mohd. Ekram Khan and Sons (supra) shows that the question involved in the said case before the Hon’ble Supreme Court was “whether the amount received by the assessee for supply of parts to the consumers as a part of the warranty agreement of the manufacturer with the consumer was liable to tax?” The Hon’ble Supreme Court noted the facts that the manufacturer had warranty agreement with the purchasers of the vehicles (consumers) to replace defective parts during the warranty period, credit notes were issued by the manufacturer to the assessee in that case in respect of the price of parts supplied to customers and held the transaction to be a taxable sale. Similar definition of the word “Sale” under Section 2(h) of the U.P. Trade Tax Act, 1948 was considered by the Hon’ble Supreme Court. The judgment in the case of Premiere Automobiles, 1972 (2) SCR 526, was distinguished and Geo Motors v. State of Kerala, 2001 (122) STC 285 , Prem Motors v. CST, (1986) 61 STC 244 (MP), were overruled. It was observed that though the decision in Geo Motors case (supra) and Premiere Motors case (supra) support the stand of the assessee, we find that basic issue as to nature of these transactions between assessee and the manufacturer was lost sight of. Accordingly, the transaction was held to be a transaction of sale. The aforesaid judgment of Hon’ble Supreme Court in the case of Mohd. Ekram Khan and Sons (supra) squarely applies on the facts of the present case. 19. In the case of MGF Motors Limited v. State of Kerala, [2012] 55 VST 81 (Ker), a Division Bench of Kerala High Court considered similar controversy, the judgment of Hon’ble Supreme Court in the case of Mohd. Ekram Khan and Sons (supra) and the judgment of Hon’ble Rajasthan High Court in the case of Marudhara Motors (supra) and held as under: “The learned Government Pleader resisted the claim of the petitioner by stating that, on facts, the transaction is a pure sale because manufacturer is not sending parts free of cost for replacement. Ekram Khan and Sons (supra) and the judgment of Hon’ble Rajasthan High Court in the case of Marudhara Motors (supra) and held as under: “The learned Government Pleader resisted the claim of the petitioner by stating that, on facts, the transaction is a pure sale because manufacturer is not sending parts free of cost for replacement. On the other hand, the system is for the petitioner to purchase spare parts in bulk from the manufacturers and others and stock the same. As a dealer, the petitioner replaces the automobile parts by utilising the stock held by them, either purchased from vehicle manufacturer or from other sources, and then forward the warranty claim to the manufacturer, who issues credit note for the sale price alongwith the tax, if claimed by the petitioner. So far as the petitioner is concerned, the position is that the transaction is purchase and resale, and even though the price of the replaced part is not collected from the vehicle owner, the petitioner gets reimbursement of the value from the manufacturer. So much so, in our view, it is the purchase and sale of spare parts by the petitioner as authorised dealer of the manufacturer and the replacement therefor is resale effected by the petitioner for which payment is received through credit note issued by the manufacturer. So much so, we feel the distinction brought by the petitioner does not justify deviation from the decision of the Supreme Court holding that free replacement of parts during warranty period amounts to sale of such parts. Consequently, we dismiss the Sales tax revision case.” (Emphasis supplied by me) 20. The judgment in the case of Parishudh Machines Pvt. Ltd. (supra) relied by the respondent-assessee, is distinguishable, inasmcuh as, the facts were entirely different which has been noted by the learned Single Judge in para 2 of the judgment as under: “........ During the year under consideration applicant had sold one such machine to M/s. Munjal Showa Limited, Gurgaon against bill No. 07, dated 25.4.1996 for Rs. 65,43,222/-. Against the aforesaid bill on the claim of the purchaser that the machine was not properly working and as a result of negotiations credit note for Rs. 14,29,900/- was issued by the applicant in favour of M/s. Munjal Showa Limited, Gurgaon. The sale consideration was reduced by Rs. 14,29,900/- and on the balance amount the liability of tax has been admitted. 14,29,900/- was issued by the applicant in favour of M/s. Munjal Showa Limited, Gurgaon. The sale consideration was reduced by Rs. 14,29,900/- and on the balance amount the liability of tax has been admitted. Assessing authority disallowed the claim of reduction of the sale consideration by Rs. 14,29,900/- and had levied Central Sales Tax on the entire amount of bill for Rs. 65,43,222/-.” 21. Single Bench judgment of Rajasthan High Court in the case of Marudhara Motors (supra) was a case of reassessment as evident from para 2 of the judgment and a finding was recorded in paras 20 and 21 of the judgment as under: “such spare parts are supplied by the present assessee free of cost to the consumers is a fact not disputed by the revenue in the present case. ................. Since title of property in goods namely spare parts passed from the hands of respondent-assessee to the customers free of cost and such title of property in spare parts does not pass from the assessee-dealer to the manufacturer, no taxable sale can be said to have taken place in the hands of respondent-assessee at all. 22. In para 23 the Court treated the replacement of parts as a “sales return” which is not the case in the present set of facts. 23. The judgment of Hon’ble Supreme Court in the case of Mohd. Ekram Khan and Sons (supra) is binding under Article 141 of the Constitution of India. This judgment and the judgment of Kerala High Court in the case of MGF Motors (supra) are directly on the issue involved in this revision and state the correct position of law. 24. The order of this Court in the case of Commissioner of Commercial Tax, U.P., Lucknow v. M/s. Vikrant Automobiles, Mohakampur, Meerut; Sales/Trade Tax Revision Defective No. 76 of 2015 decided on 6.11.2015 relied by the respondent-assessee, is reproduced below: “Heard Sri Bipin Kumar Pandey, learned counsel for the revenue. There is delay of 5 days in filing the revision. The delay is explained. The revenue was prevented by sufficient cause in not filing the revision within time. Accordingly delay is condoned. Delay Condonation application No. 381178 of 2015 is allowed. The supply of spare parts to the customer during the warranty period without charging any consideration is sought to be taxed by the revenue as a sale. The delay is explained. The revenue was prevented by sufficient cause in not filing the revision within time. Accordingly delay is condoned. Delay Condonation application No. 381178 of 2015 is allowed. The supply of spare parts to the customer during the warranty period without charging any consideration is sought to be taxed by the revenue as a sale. The tribunal by the impugned order dated 25.7.2015 has held otherwise and that the transaction is not assessable in the hands of the dealer. It is well recognized that in supply of spare parts to the customer by the dealer during the period of warranty free of charge, no sale consideration passes from the customer to the dealer and therefore the cost of the spare parts cannot be included in the turnover of the sale of the dealer. The revision has no merit and is dismissed.” 25. The aforequoted order passed in the case of M/s. Vikrant Automobiles (supra) is of no help to the respondent-assessee in view of the distinct facts of the present case as noted above and the law laid down by the Hon’ble Supreme Court in the case of Mohd. Ekram Khan and Sons (supra) which is binding precedent under Article 141 of the Constitution of India and which was not even placed by the parties before the Court in the aforesaid case of M/s. Vikrant Automobiles (supra). 26. In the impugned order, the Tribunal has recorded a finding that under the agreement the defective parts of motor vehicles have been replaced free of cost and in view thereof the manufacturer issued credit notes and therefore, imposition of tax is not justified. The finding so recorded by the Tribunal is not only perverse but also self contradictory and contrary to the charging section as well as definition of “Sale” under the U.P. Act and Central Act. The Tribunal has completely lost sight of the distinct four transactions of sales/purchases of the respondent-assessee namely, the completed transaction of inter-State purchase of motor vehicles, completed transaction of sale of motor vehicle to consumers, completed transaction of inter-State purchase of spare parts and lastly the transaction of supply of spare parts to consumers in lieu of valuable consideration received through credit notes of the manufacturers. 27. The impugned order of the Tribunal refers to clause-18 of some agreement/guidelines of the manufacturer but has completely failed to examine it. 27. The impugned order of the Tribunal refers to clause-18 of some agreement/guidelines of the manufacturer but has completely failed to examine it. The aforesaid clause-18 has been quoted in the order of first appellate authority which is reproduced below: “The dealer agrees that the only warranty binding on the company shall be the warranty published by the company and all implied warrantees under law are hereby excluded. The dealer shall have no authority to give to his purchasers a different warranty binding upon the company. The dealer shall meet the company’s warranty obligations to the purchasers of the products and/or the spare parts in accordance with sales procedure and advice issued or to be issued by the company from time to time.” 28. Perusal of the afore quoted clause clearly indicates that the warranty on the product has been offered by the manufacturer to the consumers and the respondent-assessee has no authority to give to his purchasers a different warranty binding upon the company. The second limb of the aforesaid clause further clarifies that replacement of defective parts of motor vehicle purchased by a consumer is the warranty obligation of the manufacturer. There is no obligation on the part of the respondent-assessee under the warranty of the manufacturer to consumers to replace the defective parts. The respondent-assessee is not even a party to that warranty. The supply of parts by the respondent-assessee to consumers to replace the defective parts and receipt of consideration through credit notes in lieu thereof from the manufacturer is a separate transaction of sale. Valuable Consideration: 29. The words “Valuable consideration” as has been used in the definition of “Sale” under Section 2(ac) of the U.P. Act and Section 2(g) of the Central Act has been explained by Hon’ble Supreme Court in various judgments. In the case of Dhampur Sugar Mills Limited v. Commissioner of Trade Tax, (2006) 5 SCC 624 (paras 2, 3, 23 and 29) Hon’ble Supreme Court noted the fact and held as under: “2. Whether the adjustment of price of molasses from the amount of licence fee would amount to sale within the meaning of Uttar Pradesh Trade Tax Act, 1948 (‘the Act’, for short), is the question involved in this appeal which arises out of the judgment and order dated 21.5.2004 passed by the High Court of Judicature at Allahabad in Trade Tax Revision No. 1866 of 1993. 3. 3. The basic facts are not in dispute. One M/s. Swaroop Vegetables Products Industries Ltd. (‘the Company’, for short) owned and possessed a sugar mill known as Sir Shadilal Sugar and General Mills situated at Mansurpur District, Muzaffarnagar in U.P. A Deed of Licence was executed by the said Company in favour of the appellant herein on 3.9.1987; pursuant whereto and in furtherance whereof, the appellant herein executed a performance guarantee to ensure performance of the said Deed of Licence dated 3.9.1987. In terms of the said agreement dated 3.9.1987, a performance guarantee was executed by the appellant herein, wherein it was agreed to by and between the parties that a major part of the licence fee would be paid in the shape of molasses. The contention of the appellant all along was and still is that it is in lieu of the consideration for the right to use the said sugar mill, i.e., the licence fee. The appellant was required to handover molasses to the said Company for an amount equivalent to the licence fee and such a transaction would not constitute a sale of molasses so as to attract the provisions of the Act. 23. An adjustment of price in a case of this nature, in our opinion, therefore, would come within the purview of the term “other valuable consideration”, inasmuch as both the appellant and the Company, were aware that they have to fulfil their respective terms of obligations, i.e., (i) payment of licence fee on monetary terms; and (ii) payment of price of molasses supplied by the appellant to the Company, which is again on monetary terms. Parties, therefore, by mutual consent only have agreed to adjust the price of molasses supplied with the amount of licence fee. The rate for supply of molasses was to be determined by the Central Government. In that view of the matter, presumably one party or the other shall make good the shortfall or the excess upon taking into consideration the price of molasses fixed by the Central Government. The transaction, in our opinion does not constitute an exchange or barter. It was not a transaction by way of transfer of stock. It was also not a transfer by way of a mortgage or lease. 29. Molasses manufactured in the sugar mills, was the property of the appellant and it answers the description of “goods”. The transaction, in our opinion does not constitute an exchange or barter. It was not a transaction by way of transfer of stock. It was also not a transfer by way of a mortgage or lease. 29. Molasses manufactured in the sugar mills, was the property of the appellant and it answers the description of “goods”. In view of the terms and conditions of the Deed of Licence, the appellant was the owner thereof. The Company was to use the molasses for the purpose of manufacture of sugar in its factory. Transfer of such molasses by the appellant to the Company, would not be a transfer by way of transfer of stock. It is transfer of the ownership in goods wherefor the Company was to pay the price to the appellant. The transaction, therefore, beyond any doubt, answers the description of “sale” within the meaning of the provisions of the U.P. Trade Tax Act, 1948. For each supply of molasses the appellant would be entitled to the price thereof. The amount towards the price of the goods could be paid either by way of cash or deferred payment. Instead of cash, the price of molasses was to be adjusted from the amount payable by the appellant to the owner by way of consideration for use of the mill. Such a mutual arrangement is merely one for the purpose of adjusting the accounts. The transactions between the parties are in effect and substance involve passing of monetary consideration. It would, thus, come within the purview of the expression “any other valuable consideration”, which expression would take colour from deferred payment being a monetary payment, but does not loose its character of some other monetary payment by way of mutual arrangement. The parties are not bartering or exchanging any goods so that the element of monetary consideration is absent. Money is a legal tender. Cash is, however, narrower than money. The words “deferred payment” and “other valuable consideration” enlarge the ambit of consideration beyond cash only. Entry 54 of List II of the Seventh Schedule to the Constitution of India provides for “sale of goods”. Once a sale of goods takes place, the State becomes entitled to impose tax on sale or purchase of goods. The words “deferred payment” and “other valuable consideration” enlarge the ambit of consideration beyond cash only. Entry 54 of List II of the Seventh Schedule to the Constitution of India provides for “sale of goods”. Once a sale of goods takes place, the State becomes entitled to impose tax on sale or purchase of goods. For construction of the words “sale of goods”, now the Court is not necessarily required to fall upon the definition of sale of goods, as contained in the Sale of Goods Act, 1930. It has to be governed by its enlarged definition under Clause (29-A) to Article 366 of the Constitution of India. Once an essential component of sale takes place, Sales tax would, indisputably, be payable. By reason of such an arrangement by the parties, the State is not creating a new taxable event nor imposing a new tax which was unknown in law.” (Emphasis supplied by me) 30. In the case of Commissioner of Central Excise, Mumbai v. Fiat India (P) Ltd. and another, (2012) 9 SCC 332 (paras 68, 69, 70, 71, 72 & 73) Hon’ble Supreme Court has held as under: “68. Now what requires to be considered is what is the meaning of the expression `sole consideration’. Consideration means something which is of value in the eyes of law, moving from the plaintiff, either of benefit to the plaintiff or of detriment to the defendant. In other words, it may consist either in some right, interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other, as observed in the case of Currie v. Misa (1875) LR 10 Ex. 153. 69. Webster’s Third New International Dictionary (unabridged) defines, consideration thus: “Something that is legally regarded as the equivalent or return given or suffered by one for the act or promise of another.” 70. In volume 17 of Corpus Juris Secundum (p.420-421 and 425) the import of ‘’consideration’ has been described thus: “Various definitions of the meaning of consideration are to be found in the text-books and judicial opinions. A sufficient one, as stated in Corpus Juris and which has been quoted and cited with approval is “a benefit to the party promising or a loss or detriment to the party to whom the promise is made..... A sufficient one, as stated in Corpus Juris and which has been quoted and cited with approval is “a benefit to the party promising or a loss or detriment to the party to whom the promise is made..... At common law every contract not under seal requires a consideration to support it, that is, as shown in the definition above, some benefit to the promisor, or some detriment to the promisee.” 71. In Salmond on Jurisprudence, the word ‘’consideration’ has been explained in the following words. “A consideration in its widest sense is the reason, motive or inducement, by which a man is moved to bind himself by an agreement. It is for nothing that he consents to impose an obligation upon himself, or to abandon or transfer a right. It is in consideration of such and such a fact that he agrees to bear new burdens or to forego the benefits which the law already allows him.” 72. The gist of the term ‘’consideration’ and its legal significance has been clearly summed up in Section 2(d) of the Indian Contract Act which defines ‘’consideration’ thus: “When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration to the promise.” 73. From a conspectus of decisions and dictionary meaning, the inescapable conclusion that follows is that ‘’consideration’ means a reasonable equivalent or other valuable benefit passed on by the promisor to the promisee or by the transferor to the transferee. Similarly, when the word ‘’consideration’ is qualified by the word ‘’sole’, it makes consideration stronger so as to make it sufficient and valuable having regard to the facts, circumstances and necessities of the case. (emphasis supplied by me) 31. From the law laid down by Hon’ble Supreme Court in the case of Dhampur Sugar Mills Ltd. (supra), Fiat India (P) Ltd. (supra) and Mohd. (emphasis supplied by me) 31. From the law laid down by Hon’ble Supreme Court in the case of Dhampur Sugar Mills Ltd. (supra), Fiat India (P) Ltd. (supra) and Mohd. Ekram Khan and Sons (supra) it is clear that in the facts of the present case, credit notes received by the respondent-assessee for specific amount in terms of money towards price of the spare parts supplied by the respondent-assessee to consumers in fulfillment of the warranty obligations of the manufacturer towards consumer, construed valuable consideration in lieu of the price of such spare parts and thus a transaction of sale within the meaning of Section 2(ac) of the U.P. Act has emerged attracting liability to tax under Section 3 of the Act. 32. Although I have discussed all aspects of the matter and held that the transaction in question is a transaction of taxable sale under the U.P. Act and the impugned order of the Tribunal deserves to be set aside and the order of the assessing authority deserves to be restored, yet some discussion is required with respect to the contract of “warranty” which was undisputedly between manufacturer and the consumer. Warranty : 33. The word ‘Warranty’ has not been defined either under the U.P. Act or the Central Act. The dictionary meaning of the words “Warrantee”, “Warrantor” and “Warranty” have been given in the Black’s Law Dictionary, IXth Edition as under: Warrantee : “A person to whom a warranty is given; esp., a person who receives a written warrantee. The term also sometimes applies to the beneficiary of an implied warranty.” Warrantor : “A person who gives a written warranty or becomes obligated under an implied warrantee.” Warranty : 1. Property. ...........................” 2. Contracts. An express or implied promise that some thing in furtherance of the contract is guaranteed by one of the contracting parties; esp. a seller’s promise that the things being sold is as represented or promised. .......................” 34. In P. Ramanatha Aiyar’s “The Law Lexicon” 3rd Edition 2012 the words “Warrantee”, “Warrantor” and Warranty have been given meaning as under: Warrantee : “A person to whom a warranty is made.” Warrantor : “A person who gives or makes warranty.” Warranty : “A promise that a statement, proposition or representation is true. The promise could be expressed or implied.” 35. The promise could be expressed or implied.” 35. In the case of Bharat Heavy Electricals Ltd. v. Commissioner of Customs & Central Excise, Indore, (2003) 9 SCC 185 , Hon’ble Supreme Court held as under: “3. It has been submitted that the part has to be replaced free of cost during the warranty period. It is submitted that the sale price of the machinery includes the price of the part which is subsequently being replaced. It is submitted that there cannot be double levy of excise on the same part. We see no substance in this submission. The price charged for the machinery may include the element of ‘complaint reserve’. However, at that time it is not known whether there will be any requirement to replace any part. In many cases, parts are not required to be replaced. When parts are not replaced the component of ‘complaint reserve’ is not returned to the customer. This shows that so far as the customer is concerned the total amount paid, including the component towards ‘complaint reserve’ is price for the machinery. 4. It is next submitted that the value of an assessable goods can be zero. It is submitted that when a part is replaced under a warranty to the assessee the value is zero. It is submitted that as the value is zero, no excise duty should be payable on that part. We are unable to accept this submission also. In order to promote sales manufacturers and dealers very often offer incentives e.g. supply of free T.V. or some other equipment or goods. One of the incentives offered, is a warranty to replace a part within a particular period. Merely because manufacturers and dealers choose to offer such incentives does not mean that a good which is otherwise excisable, should be exempted from paying excise duty. When offering the incentive, the manufacturer or dealer is choosing to take upon himself the cost of that good. So far as the Revenue is concerned, that good remains excisable.” (Emphasis supplied by me) 36. When offering the incentive, the manufacturer or dealer is choosing to take upon himself the cost of that good. So far as the Revenue is concerned, that good remains excisable.” (Emphasis supplied by me) 36. In the case of Government of India v. Madras Rubber Factory Limited, (1995) 4 SCC 349 (para 46) a three Judges Bench of Hon’ble Supreme Court while considering as to whether warranty discount is a trade discount under Section 4 of the Central Excise and Salt Act, 1944, explained the effect of warranty on tyres and held it to be relating to the goods which are subsequently sold to the same customers, as under: “The question is whether the claim, put forward as TAC/Warranty discount is a trade discount within the meaning of Section 4(4)(d)(ii)? We think not. It is only a claim for refund by the buyer for the manufacturing defect in the tyre sold by the assessee, which is being honoured by the assessee in a manner acceptable to both the parties. In a given case, a buyer may well insist that he must be reimbursed in cash and not in kind. In such a case, the assessee cannot certainly refuse such a claim; it would have to pay cash. The nature and character of the amount so being refunded is certainly not a trade discount contemplated by Section 4(4)(d)(ii), whether the claim is honoured by paying cash or by deducting it from the price of the new tyre. As rightly pointed out by Bhagwati, C.J. In the order dated 20.12.1986, “what is really relevant is the nature of the transaction” (SCC p. 760, para 8). The learned Chief Justice pointed out further that “the warranty is not a discount on the tyre already sold, but relates to the goods which are being subsequently sold to the same customers. It cannot be strictly called as discount on the tyre being sold. It is in the nature of a benefit given to the customers by way of compensation for the loss suffered by them in the previous sale” (SCC p. 760, para 8). He characterised it as “a compensation in the nature of warranty allowance on a defective tyre” (SCC p. 760, para 11). We express our respectful concurrence with the said observations.” 37. He characterised it as “a compensation in the nature of warranty allowance on a defective tyre” (SCC p. 760, para 11). We express our respectful concurrence with the said observations.” 37. Thus, in the present set of facts, the manufacturer is warrantor and the consumer is warrantee to whom the warrantor has made a statement or representation with regard to his product i.e. motor vehicle. Thus, in the present set of facts the manufacturer being warrantor has made certain promise with regard to its product to consumers (warrantee) called warranty. The respondent assessee has not given warranty to consumers. Supply of parts by him is a sale for consideration received by him through credit notes. Conclusion : 38. The provision of Section 2(ac) of the U.P. Act, facts of the case and the judgments of Hon’ble Supreme Court as discussed above, leaves no manner of doubt that the respondent-assessee has sold spare parts for valuable consideration attracting liability to tax under the U.P. Act. Consequently, the question of law framed in para 9 above is answered in affirmative i.e. in favour of the revisionist and against the assessee. 39. For the reasons stated above, the impugned order of the Tribunal cannot be sustained and is hereby set aside. The assessment order passed by the assessing authority for the assessment year 2009-10 (U.P.) is restored. 40. The revision is allowed. However, there shall be no order as to costs.