Branded goods first-sale treatment applies only when the seller is the brand name holder; prior interpretation remained binding.

Under section 5(2) of the Kerala General Sales Tax Act, 1963, first-sale treatment for branded goods applies only where the sale is by the brand name holder or trade mark holder within the State. On the facts, cement was manufactured by one entity and marketed by the assessee under the ACC brand, but the arrangement did not show that the manufacturer was itself the brand name holder or trade mark holder for section 5(2). The assessee's claim to first-sale status therefore failed. The SC also declined to reconsider the earlier interpretation of section 5(2), treating it as binding precedent with no sufficient basis for reference to a larger Bench.

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Issues: (i) Whether the sale of cement effected under the arrangement between the parties was liable to be treated as the first sale under section 5(2) of the Kerala General Sales Tax Act, 1963 on the footing that the assessee was the brand name holder or trade mark holder. (ii) Whether the earlier decision holding that such sales fall within section 5(2) required reconsideration.

Issue (i): Whether the sale of cement effected under the arrangement between the parties was liable to be treated as the first sale under section 5(2) of the Kerala General Sales Tax Act, 1963 on the footing that the assessee was the brand name holder or trade mark holder.

Analysis: Section 5(2) creates a special rule that sales of manufactured goods sold under a trade mark or brand name are to be treated as first sales where the sale is by the brand name holder or trade mark holder within the State. Sections 5(2A) and 5(2B) reinforce the legislative scheme by dealing with sales to a brand name holder and the tax consequences where such goods are dealt with otherwise than by sale within the State. On the agreement and the surrounding materials, the cement was manufactured by Cochin Cement Limited and marketed by the assessee under the ACC brand. The arrangement did not show that Cochin Cement Limited itself was the brand name holder or trade mark holder for the purpose of section 5(2).

Conclusion: The claim that the sale by Cochin Cement Limited was the first sale was rejected, and the assessee's contention failed.

Issue (ii): Whether the earlier decision holding that such sales fall within section 5(2) required reconsideration.

Analysis: The earlier decision had directly considered section 5(2) and laid down the governing construction of the provision. It was treated as a binding precedent, and the present case disclosed no basis to depart from that interpretation. The Court found no merit in the plea that the terms brand name holder and trade mark holder had not been considered so as to justify reference to a larger Bench.

Conclusion: Reconsideration of the earlier decision was declined.

Final Conclusion: The statutory scheme governing first sale of branded goods was applied against the assessee, and the appeals were dismissed.

Ratio Decidendi: Under section 5(2) of the Kerala General Sales Tax Act, 1963, the special first-sale treatment applies only where the sale is by the brand name holder or trade mark holder within the State, and a directly applicable precedent construing that provision is binding unless there is a compelling basis for reconsideration.

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