2008 (6) TMI 564

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....n is whether, in the facts and circumstances of the present case, can it be said that there exists the concept of "goods", "turnover" and "taxable turnover" with reference to the receipt of royalty by the assessee from its franchisees? The questions of law raised by the assessee in these revision petitions are no more debatable in view of what has been stated by this Court in the case of Mechanical Assembly Systems (India) Pvt. Ltd. v. State of Kerala [2006] 144 STC 536. In the said decision, the court was pleased to observe as under: (page 545) "The traditional meaning of the word 'goods' has undergone radical change due to technological and scientific developments. Reference may also be made to a recent decision of the ap....

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....n a sale of a software programme on a CD/ floppy disc from a sale of music on a cassette/CD or a sale of a film on a video cassette/CD. In all such cases, the intellectual property has been incorporated on a media for purposes of transfer. Sale is not just of the media which by itself has very little value. The software and the media cannot be split up. What the buyer purchases and pays for is not the disc or the CD. As in the case of paintings or books or music or films the buyer is purchasing the intellectual property and not the media, i.e., the paper or cassette or disc or CD. Thus a transaction of sale of computer software is clearly a sale of "goods " within the meaning of the term as defined in the said Act. The term "all materials, ....

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....any goods for any purpose. The transfer of right to use any goods for any purpose is regarded as 'sale' under the Act as is evident from the definition of 'sale' in clause (10) of section 2 of the Act which defines 'sale' to mean transfer of any right to use any goods for any purpose for cash, deferred payment or any other valuable consideration. From a conjoint reading of the above provisions, it is thus clear that tax is leviable under the Act on the amount received by the assessee for the transfer of the right to use any goods for any purpose. In the instant case, the assessee received a sum of Rs. 1,500 by way of royalty on the transfer of right to use the trade mark of which the assessee is the owner. The right ....

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....the 1985 Act. 7.. 'Trade mark' has been defined in section 2(1)(v) of the Trade and Merchandise Marks Act, 1958 to mean a mark used in relation to goods for the purpose of indicating a connection in the course of trade between the goods and some person having the right, either as a proprietor or as registered user, to use the mark whether with or without any indication of the identity of that person. There is a distinction between transfer of right to use a trade mark and assignment of a trade mark. 'Assignment' of trade mark is taken to be a sale or transfer of the trade mark by the owner or proprietor thereof to a third party inter vivos. By assignment, the original owner or proprietor of trade mark is divested of his r....

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.... in the present case. The right to use the trade mark can be transferred simultaneously to any number of persons. The decision of the Andhra Pradesh High Court in Rashtriya Ispat Nigam Ltd. v. Commercial Tax Officer [1990] 77 STC 182 thus has no application to the transfer of right to use a trade mark." In S.P.S. Jayam and Co.'s case [2004] 137 STC 117, the Madras High Court has held as under: (page 126) "8. Coming to the facts of the present case, the petitioner/assessee permitted M/s. Muthu Agencies to use their trade mark in the course of trade at the rates specified therein for various items during a particular period. Of course, it retained the liberty to make use of the trade mark in the event of the licensor starting to man....