Branded-goods proviso construed: exclusive dealing, not single-distributor exclusivity, brought the sales within the tax rule.

The sixth proviso to section 5(3)(a) of the Karnataka Sales Tax Act, 1957 applies to branded-goods sales made exclusively to a marketing agent, distributor, wholesaler or other dealer by the brand owner or authorised user. "Exclusively" was construed to describe the mode of dealing with the goods, not to require that only one distributor exist in the State for the same product. On that interpretation, sales of RAJPHOS fell within the proviso even though another dealer also sold the product, so the petitioner's transactions remained within the statutory class covered and the challenge to the tax demand failed.

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Issues: Whether the sixth proviso to section 5(3)(a) of the Karnataka Sales Tax Act, 1957 applies to sales of branded goods merely because more than one distributor sells the same product, and whether the petitioner's transactions in RAJPHOS were outside the proviso.

Analysis: The proviso was held to apply where branded goods are sold exclusively to a marketing agent, distributor, wholesaler, or other dealer by the brand name holder or person entitled to use the mark. The Court read "exclusively" as qualifying the manner of supply or dealing with the goods, not as requiring a single dealer across the State. It found that the petitioner's transactions fell within the statutory class of sales covered by the proviso, and rejected the contention that the presence of another dealer selling the same product excluded the petitioner from its scope.

Conclusion: The proviso applied to the petitioner's transactions and the challenge failed.

Final Conclusion: The petition was held to be without merit and the tax demand sustained.

Ratio Decidendi: For the branded-goods proviso to section 5(3)(a), exclusivity is satisfied by exclusive dealing in the statutory sense and does not require that only one distributor exist for the same product in the State.

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