Brand name sales treated as first sale under Kerala sales tax law; liability upheld for the brand name holder.

Section 5(2) of the Kerala General Sales Tax Act, 1963, was construed as a special deeming provision overriding the general charging provision and treating the sale by the brand name holder or trade mark holder within the State as the first sale for tax purposes where goods are sold under a brand name. The Court held that, on these facts, the appellant as brand name holder was liable to tax on the first sale, even though the licensee manufactured the goods for sale to it. Any tax already paid at an earlier stage by the manufacturer did not defeat the levy; the proper remedy was a refund claim, not avoidance of liability under Section 5(2).

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Issues: Whether, on the true construction of Section 5(2) of the Kerala General Sales Tax Act, 1963, the sale of goods manufactured under the appellant's brand name was the first sale liable to tax in the hands of the brand name holder.

Analysis: Section 5(2) operates notwithstanding the general charging provision and deems the sale by the brand name holder or trade mark holder within the State to be the first sale, provided the goods are sold under a trade mark or brand name. The Court held that where the appellant was the brand name holder and the licensee manufactured the goods for sale to it, the taxable first sale was the sale by the brand name holder within the State. If tax had already been paid at an earlier point by the manufacturer, the remedy lay in seeking refund, not in avoiding the levy under Section 5(2).

Conclusion: The appellant was liable to tax under Section 5(2) as the brand name holder, and the challenge to the levy failed.

Final Conclusion: The interpretation of the special levy provision was upheld, and the tax demand sustained.

Ratio Decidendi: Where goods are sold under a brand name, Section 5(2) deems the sale by the brand name holder within the State to be the first sale for tax purposes, notwithstanding the general charging provision.

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