Brand name holder liability: exclusive manufacturing and marketing rights made the dealer liable on the deemed first sale.

Where a dealer had the exclusive right to get plastic moulded chairs manufactured through an SSI unit and market them under its brand name, it was treated as the brand name holder for sales tax purposes under section 5(2) of the Kerala General Sales Tax Act, 1963. The manufacturer's sale to the dealer was not the first taxable sale; the dealer's subsequent sale in Kerala was the deemed first sale exigible to tax. The claim that the brand name belonged to a sister concern and was only licensed to the dealer did not alter the position, because the dealer alone controlled manufacture and sale under the brand. The State's revision succeeded and the reassessments stood.

---

---

Issues: Whether the assessee, which got plastic moulded chairs manufactured from an SSI unit and sold them under the brand name "Nilkamal", was liable to pay sales tax as the brand name holder under section 5(2) of the Kerala General Sales Tax Act, 1963.

Analysis: The agreement between the assessee and the manufacturer required the entire production to be sold to the assessee and enabled the assessee to market the goods under the brand name. The assessee's case that the brand name was owned by a sister concern and was only licensed to it did not alter the position, because the assessee alone was entitled to get the goods manufactured and sell them in the brand name. In such circumstances, the sale by the manufacturer to the assessee was not the first taxable sale as a sale by the brand name holder, but the assessee's sale in the State was the deemed first sale within the meaning of section 5(2).

Conclusion: The assessee was liable to pay tax as the brand name holder on the first sale of the goods.

Final Conclusion: The revision filed by the State succeeded and the writ petitions challenging the reassessments failed, resulting in taxation of the sales turnover of the branded goods in the hands of the assessee.

Ratio Decidendi: Where a dealer has the exclusive right to get goods manufactured and market them under a brand name, the dealer is treated as the brand name holder and the sale in its hands is the deemed first sale exigible to tax under section 5(2).

---