TaxTMI 
TaxTMI 
2015 (2) TMI 656
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....leged sales tax dues for the period 19982002 being exhibits F1 to F4 hereto; (iii) quashing and setting aside the said Orders dated August 9, 2012 for levy of interest and penalty in respect of the said alleged sales tax dues for the period 1998 - 2002 being exhibits G5 to G8 hereto; (iv) quashing and setting aside the said Assessment Notices dated March 15, 2011 for levy of sales tax for the years 20022005 being exhibit H1 to H3 hereto; (v) quashing and setting aside the said Notice dated 13th August, 2012 issued under Section 39 of the Bombay Sales Tax Act, 1959 by Respondent No.2 to the Branch Manager, Canara Bank, Fort Market Branch being Exhibit C8 hereto. (b) this Hon'ble Court be pleased to issue a writ of Mandamus or a writ in the nature of Mandamus or any other appropriate writ, order or direction directing Respondent No.2 to refund to Petitioner No.1 an amount of Rs. 2,66,11,200/being the total amount of part payment of sales tax paid in respect of the Assessment Order dated August 2, 2003 along with interest thereon at a rate which this Hon'ble Court deems fit; 2. At the outset Mr. Kumbhakoni, learned Senior Counsel appearing for the respondents in....
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....d it was rightly dismissed on 15th January, 2013. Thereafter the petitioner is pursuing this Writ Petition. Mr. Kumbhakoni submits that the petitioners are a Corporate entity and advised by legally trained and competent minds. They are not illiterate or downtrodden persons who would on account of their financial condition or situation do not have access to competent legal advice or assistance. In such circumstances, he would submit that in the absence of a statement in the Writ Petition that the remedy is not available or if available is not efficacious all the more this Writ Petition should be dismissed. Further, there is no explanation forthcoming as to why the petitioners purported to avail of the remedy during the pendency of the Writ Petition. The petitioners having availed of it and not succeeded therein now should not be allowed to pursue the Writ Petition. 6. Mr. Kumbhakoni has relied upon a judgment of the Kerala High Court in that regard passed in Writ Appeal No.715 of 2005 decided on 20th October, 2005 in the case of Assistant Commissioner of Central Excise & Ors. Vs. Krishna Poduval & Ors. 7. On the other hand, Mr. Chinoy, learned Senior Counsel appearing for the ....
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....the Constitution of India that we reject the preliminary objection raised by Mr. Kumbhakoni. We are not entertaining it at this belated stage as the Writ Petition cannot be dismissed on this short point. Having found that there are extensive pleadings of both sides including the written submissions it will not be proper to shut out the petitioners on the availability of the alternate remedy. Even otherwise we do not find that in the given facts and circumstances the remedy resorted to under Section 61(1) of the BST Act, 1959 would be efficacious and complete. Hence the preliminary objection is rejected. 9. Now on the merits of the case. 10. The present Writ Petition has been instituted by the petitioners by relying upon the fact that the first petitioner a Company incorporated under the then Companies Act, 1913 and registered under the Indian Companies Act, 1956 is the principal or holding company in the group of companies mainly referred to as TATA Companies and collectively belonging to House of TATA. TATA Companies are engaged in diverse business activities in varied sectors, namely, steel, automobiles, information technology, chemicals, tea/coffee, telecommunication, expo....
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....the Act of 1985. Therefore he issued notices for assement for the years 199899, 199900, 200001 and 200102. Annexures B1 to B4 are the copies of these notices. Following the same, he passed four orders of assessment of dated 2nd August, 2003 (Annexures C1 to C4). There were four appeals preferred against these orders to the Deputy Commissioner of Sales Tax (Appeals). The part payment of the sales tax levy was made during the course of these appeals. The appeals came to be disposed of by the Appellate Authority by an order dated 22nd February, 2011. He passed four orders copies of which are at Annexure D1 to D4. 13. Aggrieved and dissatisfied with these orders, four Second Appeals were filed before the Maharashtra Sales Tax Tribunal being Second Appeal Nos.232 to 235 of 2011. 14. The petitioners heavily relied upon the grounds in the memo of appeal before the Tribunal. They specifically relied upon the orders passed by the Tribunal in the case of (i) M/s. Smokin' Joe's Pizza Pvt. Ltd. Vs. State of Maharashtra in Appeal No.25 of 2004 decided on 25th November, 2008; and (ii) M/s. Diageo India Pvt. Ltd. Vs. State of Maharashtra in Second Appeal Nos.1432 to 1438 of 2006 dec....
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....If the facts and circumstances were identical, then, the least that was expected from the Tribunal was to consider the submissions of the petitioners seriously and not brushed them aside and equally the orders passed by it from time to time. They have been so brushed aside with one or two line observations that the facts and circumstances of the petitioners' case are not identical but distinguishable. How they could be said to be distinguishable has not been clarified at all. 18. Mr. Chinoy, has submitted that the Hon'ble Supreme Court has considered some what identical issues in the case of BSNL (supra). There is a concurrence in the opinions of the learned Judges constituting the Bench. In a concurring opinion and judgment, His Lordship Hon'ble Mr. Justice Dr. AR Lakshmanan had summarized the legal principles. Mr. Chinoy relied upon paras97 and 98 of the judgment in the BSNL case (supra). 19. Mr. Chinoy submits that if the agreement in question is perused as well it would be apparent that the same is to ensure that the brand and equity is protected. The House of TATA has certain standing and reputation in the Industry and society. If there is an anxiety to prote....
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....ence its order is vitiated by an error of law apparent on the face of record. 22. Mr. Chinoy has contended that the Tribunal's order is perverse because the judgment in the case of BSNL was binding on it. There is an apparent inconsistency in the Tribunal's order and conclusions. It is thus a mockery of the rule of law. 23. Even on merits according to Mr. Chinoy if nonexclusive right has been the subject matter of the agreements and there are 113 companies which are allowed the facility in terms of the agreement, then, the case squarely falls within para98 of the conclusions recorded in the case of BSNL. For all these reasons, the Writ Petition deserves to be dismissed. 24. On the other hand, Mr. Kumbhakoni, learned Senior Counsel appearing for the respondents would submit that the present Writ Petition deserves to be dismissed. The Tribunal's order cannot be said to be perverse or vitiated by any error of law apparent on the face of record. Mr. Kumbhakoni has submitted that the enactment has to be seen for what it is. The Act of 1985 is dealing with the right to use any goods. The words "exclusive" and "unconditional" which are being read into this enactment b....
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....t is entitled as the Maharashtra Sales Tax on the Transfer of Right to use any Goods for any Purposes Act, 1985. It is an Act to levy and collect the tax on the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration in the State of Maharashtra. The Act originally enacted came to be amended from time to time. It is containing several definitions. The definition section is Section 2 and which opens with the words "In this Act, unless the context otherwise requires". "Goods" means all kinds of moveable property (not being newspapers, or actionable claims or money, or stocks, shares or securities). "Registered dealer" is defined to mean - a dealer registered under section 7 of the Act. The term "Sale" is defined in Section 2(10) to mean the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or any other valuable consideration, and word "sell" with all its grammatical variations and cognate expressions, shall be construed accordingly. "Sale price" is defined in Section 2(11) to mean the amount of valuable consideration ....
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.... price received or receivable in respect of such use on or after the appointed day and the transfer of right to use any goods agreed to on or after the appointed day. Levy of tax is on the turnover of sales in respect of the transfer of the right to use goods specified in the Schedule and at such rate as is set out in Section 4. 30. Section 4A provides for setoff drawback etc. Then Section 5 sets out the liability of dealer and by Section 6 Sales Tax is made payable by dealer. 31. Chapter III is entitled as "Registration" and contains Section 7, whereas by Chapter IV certain provisions of the Bombay Sales Tax, 1959 are made applicable. By Section 8A certain sales are not liable to tax under the Act. Chapter V is entitled as "Miscellaneous and Rules". There is a power give to the State to amend the schedule by inserting any entry in respect of transfer of right to use any goods for any purpose and by Section 10 there are powers conferred in the State to make rules generally to carry out the purpose of this Act and by subsection (2) the rules may provide for matters set out therein. The schedule and which is referable to Sections 2(12), 4, 6 and 9 to the extent relevant reads a....
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....nforcing the said mark or symbol; PROVIDED HOWEVER that where on the date of execution of this Agreement the Subscriber has already been granted a Registered User of the Proprietor's existing Trade Marks and an Agreement to that effect is valid and subsisting such Agreement will continue to remain in force in accordance with the terms of such Registered User's Agreement." 34. By clause (4) use of the business name, marks and marketing indicia is set out and the business name, marks and marketing indicia can be used in terms of the said clauses. By clause (5) control of use of the marks and marketing indicia is dealt with and clauses 5.1 and 5.2 therein read as under : "5.1 In order to maximise the impact and benefit to both parties of the subject matter of this subscription (a) the Subscriber shall supply the Proprietor with detailed Major Campaign schedules which involve the Business Name, Marks or Marketing Indicia as soon as these are known and agreed internally by the Subscriber; (b) the Proprietor shall supply the Subscriber with information similar to that referred to in sub clause 5.1(a) in relation to Major Campaign schedules sponsored by the Propriet....
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....that a person may have various rights in respect of any goods, namely, to sell, to possess, to use, to consume etc., but, from and out of these rights, right to use goods is the subject matter of the act. It is transfer of the right to use goods which is subjected to levy in terms of this Act. The assignment by way of sale or otherwise of any right including a title in any goods is not covered by the Act. Further argument is that the Act applies to transfer of not only tangible but intangible / incorporeal goods. That is how the schedule entry No.7 and Section 2(12), 4, 6 and 9 have been referred by Mr. Kumbhakoni. Further argument is that the trade mark is goods within the meaning of the said term as defined by the Act and that transfer of right to use a trade mark is covered by the Charging Sections or by chapter II of the Act. There may not be assignment of the trade mark but there could be transfer of the right to use the trade mark and which is taxable. 38. Mr. Kumbhakoni has highlighted in his oral and written arguments the attributes in case of tangible goods and it is submitted that in case of machinery, physical possession or control of the goods would be necessary to u....
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.... in favour of the subscribers. We are of the opinion that so long as the agreement transfers the right to use intangible goods which are the trade marks in this case, then, there is no question of the petitioners escaping the consequences of the enactment. The enactment and the definitions which we have referred together with the substantive provisions does not envisage exclusive and unconditional transfer of the above right. The Act has been brought in and with a specific object. The definition of the term "goods" means all kinds of property (not being newspapers, or actionable claims or money, or stocks, shares or securities). Therefore in terms of this definition and the schedule entry No.7, intangible / incorporeal goods and particularly trade marks are brought within the purview of the enactment. Even the definition of the term "dealer" in section 2(4) would indicate that it means any person who whether for commission, remuneration or otherwise transfers right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration and includes State Government or Central Government which so transfers the right to use ....
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.... tax under entry No.97 of list I or entry No.92C of list I after 2003. If the nature of the transaction partakes character of both sale and service then the mute question whether both the legislative authorities could levy separate taxes together or only on one of them. 45. The service providers and the States were before the Hon'ble Supreme Court. The service providers contended that there is no sale transaction involved and the attempt of the several States to levy tax on the production of mobile phone facilities by them to subscribers was constitutionally incompetent. It was their case that the transaction in question was merely a service and that the Union Government alone was competent to levy tax thereon. The States contended that the transaction was a deemed sale under Article 366 (29A)(d) of the Constitution of India read with charging sections of the various Sales Tax Enactments and, therefore, they are competent to levy the sales tax on the transactions. The High Courts of Allahabad, Andhra Pradesh and Punjab and Haryana held that there was no sale of goods under the State Sales Tax Acts justifying levy of sales tax on rentals charged by service providers to the su....
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....t eventually concluded and in favour of BSNL that the goods do not include electromagnetic waves or radio frequencies for the purpose of article 366(29A)(d). The goods in telecommunication are limited to the handsets supplied by the service provider. As far as the SIM cards are concerned, the issue is left for determination by concerned assessing authorities. 48. There may be a transfer of right to use goods as referred in the answer to the question (A) (see para92) by giving a telephone connection. That is how the Hon'ble Supreme Court concluded the issue. However, the nature of the transaction involved in providing telephone connection may be a composite contract of service and sale. It is possible for the State to tax the sale element provided there is a discernible sale and only to the extent relatable to such sale. Thus, the questions formulated in the majority judgment at para32 have been answered in para92. This paragraph read as under : "92. For the reasons aforesaid, we answer the questions formulated by us earlier in the following manner: (A) Goods do not include electromagnetic waves or radio frequencies for the purpose of article 366(29A) (d). The goods in ....
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.... period for which it is to be transferred, the owner cannot again transfer the same rights to others."` 50. Para-98 is relied upon by Mr. Chinoy. However, that cannot be read in isolation and out of context. It must be read in the backdrop of the underlying controversy, namely, relationship between a telephone connection service provider and its customer. Such a transaction is essentially of service. 51. It is in relation to such a controversy that the observations, findings and conclusions must be confined. We do not see as to how they can be extended and in the facts and circumstances of the present case to the enactment that we are dealing with. Going by the plain and unambiguous language of the Act of 1985 we cannot read into it the element of exclusivity and a transfer contemplated therein to be unconditional. Therefore the tests in para (d) and (e) cannot be read in the Act of 1985. 52. We are in agreement with Mr. Kumbhakoni that the judgment of this Court in the case of Commissioner of Sales Tax Vs. Duke and Sons Pvt. Ltd., reported in 1999 (1) Mh.L.J. 26 cannot said to be no longer good law in the light of the judgment of the Hon'ble Supreme Court in BSNL'....
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....e question of law framed by this Court at para1 came up for consideration. After noting the rival contentions, the Division Bench held as under : "5. We have considered the rival submissions in the light of the facts of the case. There is no dispute about the fact that trademarks are goods within the meaning of clause (5) of section 2 of the 1985 Act which defines "goods" to mean all kinds of movable property (not being newspapers, or actionable claims or money, or stocks, shares or securities). This position is also well settled by the decision of the Supreme Court in Vikas Sales Corporation vs. Commissioner of Commercial Taxes where it was observed that even incorporeal rights like trademarks, copy rights, patents and rights in person am capable of transfer or transmission are included in the ambit of "goods". In the instant case, the admitted position is that by the agreement in question, the assessee transferred the right to use its trademarks to M/s Sal star Foods and Beverages Ltd. ("transferee") for consideration. Pursuant thereto, the transferee marketed its products under the trademark of the assessee and for transfer of the right to use the trademark for the purpose of....
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....ademark would not amount to transfer of right to use the trademark within the meaning of clause (10) of section 2 of the Act. However, on perusal of the clear provisions of the 1985 Act, we find it difficult to accept the same. This contention, in our opinion, goes counter to the very scheme and object of the 1985 Act. The 1985 Act was enacted for the purpose of levying tax on the transfer of right to use the goods. It is not applicable to transfer of right or title in the goods which may attract the provisions of the Bombay Sales tax Act. In case of trademark, what is taxable under the 1985 Act is the transfer of right to use the trademark. Admittedly, by agreement between the assessee and M/s Sal star Foods and Beverages Ltd. there was a transfer of right to use the trademark to M/s Sal star Foods and Beverages Ltd. The royalty of Rs. 1,500/was payable in respect of transfer of the right to use the trademark. Such transfer clearly falls within the provisions of 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 of goods for the purpose of indicating a connection in the course of trade b....
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....uestion was answered in favour of the Revenue against the assessee. The amount received by the assessee on the transfer of right to use the sale was held as liable to be taxed under the Act of 1985. Thus, the peculiar provision of the Act of 1985, the insertion in the Schedule of intangible and incorporeal goods including Patents and Trade Marks, that the Division Bench concluded as above. Thus, there can be a transfer of the right to use these goods and it need not be exclusive and unconditional. The Transferor may simultaneously use it and during the period of a agreement to transfer the right to use it. 54. This judgment has been quoted with approval by a Division Bench of the Kerala High Court in Kreem Foods Private Limited Vs. State of Kerala reported in (2009) 24 VST 333. There, His Lordship Hon'ble Mr.Justice H.L. Dattu, who was then the Hon'ble Chief Justice of Kerala High Court, spoke for the bench and relied on a decision rendered in Jojo Frozen Foods (P) Ltd v. State of Kerala (S.T.Rev. No.12 of 2006) disposed of on June 23, 2008 and reported in (2009) 24 VST 327 and Mechanical Assembly Systems (India) Pvt. Ltd. vs. State of Kerala reported in (2006) 144 STC 536. ....
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....goods for any purpose, whatsoever, whether or not for a specified period, to any lessee or licensee for cash, deferred payment or other valuable consideration, in the course of his business shall, on the total amount realized or realizable by him by way of payment in cash or otherwise on such transfer or transfers of the right to use such goods from the lessee or licensee, pay a tax at the rate of eight paise on every rupee of the aggregate of such amount realized or realizable 'by him during the year. (b) The transfer of right to use any such goods entered into by any dealer, shall be deemed to have taken place in this State whenever the goods are used within the State, irrespective of the place where the agreement whether written or oral for such transfer of right is made: Provided that no such tax shall be levied if the total turnover of the dealer including such aggregate is less than rupees two lakhs." 7. When it is the case of transfer of right to use any goods/section 5E of the GST Act overrides all other provisions of the GST Act. What is taxable is the consideration received by the dealer for "transfer of the right to use any goods for any purpose, whatsoever" to ....
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....m of Rs. 500 (rupees five hundred only) per tonne of production as royalty. 10. The royalty amount mentioned above shall be calculated on the monthly production and shall be paid to the first party within 15 days from and of the month." The agreement is without any title to give any indication as to nature of the agreement. But it is settled rule of interpretation of documents that every documents or deed has to be interpreted keeping in view the intention of the parties. It is also well settled that the intention of the parties to a transaction has to be determined with reference to the language and if there is any difficulty or ambiguity in so doing, it is always open to look to attending circumstances. In the absence of any evidence with regard to the circumstances that lead the parties to enter into the transaction or enter into a deed or document, such circumstances can even be inferred from the agreement itself. Clause 2 itself uses the terminology to the effect that,"the party of the first part shall allow the party of the second part to use 'Nutrine' trademark and 'bunny' logo...".This is very clear and unambiguous and amounts to transfer of the right to use the trade....
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.... incorporeal or intangible in character like copy right, patent, trademark) etc." 56. Pertinently in paras15 & 16, a reference was made to the judgment of the Hon'ble Supreme Court in the case of BSNL (supra) and the same was distinguished. The Bench concluded that the consideration received as royalty for allowing use of the trade mark and logo is covered by the A.P. enactment. The royalty is realized in respect of transfer of right to use goods and is thus taxable. 57. Thus, far from the judgment of the Division Bench of this Court in M/s. Dukes and Sons (supra) being no longer a good law, that judgment and the ratio therein has been consistently referred and quoted with approval by the Kerala High Court and Andhra Pradesh High Court. This was subsequent to the judgment of the Hon'ble Supreme Court in BSNL (supra). With respect, we concur with all the aforesaid decisions and rulings. 58. We are of the opinion that the Tribunal did not act perversely or committed an error apparent on the face of record in rejecting the petitioner's appeals. May be the Tribunal could have rendered a detailed finding and conclusion. However, upon perusal of the order passed by the Tribu....