OEM branded goods sales fall under the third proviso, not the sixth, when the manufacturer lacks trademark rights.

Where a manufacturer under an OEM arrangement merely fabricates branded goods to the brand owner's specifications without any independent right to use the trademark, the transaction falls under the third proviso to section 5(3)(a) of the Karnataka Sales Tax Act, not the sixth proviso. The sixth proviso applies only to sales under a brand name by the trademark holder, brand-name holder, or a dealer with the right to use the mark, and only where the sale is made to specified intermediaries. Explanation III cannot be used to secure set-off when the sixth proviso itself does not apply. The clarification was upheld and the appeal failed.

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Issues: Whether the sale of branded goods manufactured by a dealer for the brand owner under an OEM arrangement falls under the third proviso or the sixth proviso to section 5(3)(a) of the Karnataka Sales Tax Act, 1957, and whether the brand owner can claim reduction of tax on the basis of Explanation III.

Analysis: The sixth proviso applies only where goods are sold under a brand name by the trademark holder, brand name holder, or another dealer having the right to use the trademark, and the sale is exclusively to a marketing agent, distributor, wholesaler, or other dealer. Where a manufacturer merely fabricates goods to the specifications of the brand owner and affixes the brand name as part of those specifications, without acquiring any independent right in the trademark, the transaction is not a sale under a brand name by such manufacturer. In that situation, the transaction is governed by the third proviso, because the goods are manufactured with the brand name of another dealer and are then sold to that brand owner. Explanation III cannot be invoked to convert an exempt sale by the manufacturer into tax already paid for purposes of the sixth proviso when the sixth proviso itself is inapplicable.

Conclusion: The transaction between the manufacturer and the brand owner is covered by the third proviso, not the sixth proviso, and the claimed set-off is not available.

Final Conclusion: The clarification of the authority was upheld and the appeal failed.

Ratio Decidendi: A manufacturer that merely affixes another dealer's trademark under an OEM arrangement, without any independent right to use the mark, does not fall within the sixth proviso to section 5(3)(a); such a transaction is governed by the third proviso.

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