Taxation of branded goods upheld where group-company transfer was treated as a device to reduce liability.

Section 5(2) of the Kerala General Sales Tax Act targets the real sale of branded goods by the brand name holder to the market, and a transfer between group entities may be treated as part of that taxable sale where the facts show common family control and a tax-reduction device. On the materials disclosed, including the affidavit filed after withdrawal of the SLP, the Court found no error warranting reopening of the earlier assessment. The review challenge to the assessment therefore failed on merits, and the assessment under section 5(2) was left undisturbed with costs.

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Issues: Whether the assessment of sales tax on the review petitioner under section 5(2) of the Kerala General Sales Tax Act was liable to be reviewed on the ground that the inter se sale between group companies should not have been treated as the taxable first sale.

Analysis: The review was sought after withdrawal of the SLP and the materials placed before the Court, including the affidavit filed pursuant to the earlier direction and the group-company disclosures, showed that the review petitioner and the brand owner were under the control of the same family. The Court found that the earlier assessment proceeded on the basis that real sales of branded goods to the market were made by the review petitioner and that the inter se transfer between group entities was only to reduce tax liability. The Court also noted that section 5(2) targets sale of branded goods by the brand name holder to the market and that the facts disclosed no error warranting reopening of the earlier judgment.

Conclusion: The challenge to the assessment under section 5(2) failed and the review petition was not maintainable on merits.

Final Conclusion: The review petition was dismissed, and the assessment of the review petitioner under section 5(2) was left undisturbed with costs.

Ratio Decidendi: In a review, the Court will not interfere where the earlier assessment of branded goods is supported by admitted group control and the inter se transfer is found to be a device to reduce tax liability, especially when the provision is aimed at taxing the real market sale.

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