Optional post-sale warranty charges are excluded from taxable turnover when separately charged after the sale.

Separately recovered, optional post-sale warranty charges for refrigerators were not part of the sale price or taxable turnover under the U.P. Sales Tax Act, 1948. The dealer charged an additional amount only for a further warranty period after expiry of the initial warranty, and the service contract was voluntary and paid after the sale. On that factual basis, the additional charges stood apart from the sale transaction and were therefore not includible in taxable turnover. The revision failed.

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Issues: Whether optional warranty charges realised separately after the sale of refrigerators formed part of the taxable turnover under section 2(i) of the U.P. Sales Tax Act, 1948.

Analysis: The finding recorded by the authorities was that the dealer charged an additional amount per refrigerator for a further period of warranty after expiry of the initial warranty period. The service contract was optional and the separate payment was made after the sale. On that factual basis, such additional charges were not part of the sale price or taxable turnover. The Court also followed the principle that where warranty for later years is not compulsory and is separately paid for, it stands on a different footing from an inclusive sale price.

Conclusion: The warranty charges were not includible in the taxable turnover, and the revision failed.

Ratio Decidendi: Separately recovered, optional charges for post-sale warranty or service are not includible in taxable turnover when they are not part of the sale price.

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