TaxTMI 
TaxTMI 
2005 (9) TMI 607
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....and on facts in holding that the second sale of "CRYPTM" branded confectionery items effected by the petitioner was liable to tax under the Kerala General Sales Tax Act, 1963? (ii) Ought not the Appellate Tribunal to have found that the purchase by the petitioner was of branded goods in respect of which the seller too had a right in respect of the use of the brand name and consequently the seller was to be regarded as a brand name holder for the purposes of section 5(2) of the KGST Act? Assessee is a private limited company engaged in the manufacture of confectioneries under the brand name "Cryptm". An agreement dated April 1, 1995 was executed between the assessee and M/s. Bristo Foods Pvt. Ltd., Cochin, to manufacture confectionerie....
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....e parties concerned. Assessee had claimed exemption as second sales on a turnover of Rs. 1,24,51,106.59 and Rs. 1,43,96,250.75 during the year 1998-99 and 1999-2000. Assessee had stated that he had purchased goods from M/s. Bristo Foods Pvt. Ltd., paying tax under the KGST Act and hence the sale effected by the assessee being second seller in the State, is not liable to tax again under the KGST Act. Assessing officer held that the assessee being the brand name holder of "cryptm" is liable to tax under section 5(2) of the KGST Act on the sales turnover of the products sold under the brand name "cryptm". Assessing authority therefore completed the assessment for the above two years disallowing the claim of exemption of second sales. In app....
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....nt of sale. Learned Special Government Pleader (Taxes) Sri. Raju Joseph on the other hand, took us through the terms and conditions of the agreement executed between the assessee and M/s. Bristo Foods Pvt. Ltd., and contended that the brand name holder as well as owner of the brand name continues to be the assessee. Agreement is only the arrangement between the parties and will not take away the liability of the brand name holder from paying tax. Counsel submitted assessee itself is the first seller in the State and consequently the authorities below are justified in holding that the assessee is not entitled to get exemption. We may for easy reference extract section 5(2), 5(2A) and (2B). "5(2) Notwithstanding anything contained in....
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.... be the first sale for the purpose of the Act. When we examine the agreement executed between the assessee and the Bristo Foods Pvt. Ltd., and apply section 5(2) it is clear that the assessee has only permitted M/s. Bristo Foods Pvt. Ltd., to manufacture confectioneries using the brand name "Cryptms". For the user of that brand name Bristo Foods Pvt. Ltd., have agreed to pay 0.5 per cent of the annual turnover as royalty to the assessee. Clause 5 of the agreement stipulates that the assessee shall have exclusive right to sell its branded products in Kerala market. Assessee therefore continued to be the brand name holder of "Cryptms". Sale of goods is under the brand name "Cryptms" and sale is by the brand name holder, the assessee. By the a....