Court upholds Public Limited Company's right to issue tax invoices for trademark use at 4% tax rate.

The Court held that the petitioner, a Public Limited Company, did not violate any statutory provisions under the U.P. VAT Act by issuing tax invoices for the transfer of the right to use its trade mark at 4% tax rate. The Court found that the petitioner had complied with the Act and was authorized to issue tax invoices for taxable goods. The notice issued by the Deputy Commissioner alleging improper issuance of tax invoices without actual sales was deemed without jurisdiction, and the petitioner's writ petition was allowed, resulting in the quashing of the notice.

---

---

Issues:
Challenge to notice under U.P. VAT Act for issuing tax invoices without actual sales.

Detailed Analysis:
The petitioner, a Public Limited Company, transferred the right to use its trade mark to another company during the assessment year 2008-09, receiving a consideration of Rs. 3,79,65,114.00. The petitioner charged tax at 4% and issued tax invoices. The Deputy Commissioner issued a notice under Section 54(1)(11) of the U.P. VAT Act, alleging that tax invoices were issued without actual sales, which could attract a penalty.

The petitioner contended that the transfer of the right to use the trade mark falls under taxable goods at 4% as per the U.P. VAT Act. The licensee was entitled to sub-license rights under the agreement, allowing the petitioner to issue tax invoices. The respondent argued that tax input credit cannot be claimed for transfers of the right to use goods, as per the U.P. Amending Act 11 of 2009.

The Court noted that the transfer of the right to use the trade mark was taxable at 4% and that the petitioner had complied with the Act by charging and depositing tax. The petitioner, being a registered dealer, was authorized to issue tax invoices for taxable goods. The Court found that the issuance of tax invoices did not violate any statutory provisions under Section 54 of the Act.

Regarding the argument on tax input credit, the Court stated that the question was not directly relevant to the current case, especially since the licensee had not challenged the rejection of their input tax credit claim. The Court concluded that the notice issued by the Deputy Commissioner was without jurisdiction, as the petitioner's actions did not breach any statutory provisions to warrant a penalty under Section 54(1)(11) of the U.P. VAT Act. Consequently, the notice was quashed, and the writ petition was allowed.

---