TaxTMI 
TaxTMI 
2017 (1) TMI 1015
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.... order dated 26.9.2014 passed by the Tribunal in respect of sales tax appeals whereby appeals of the State are dismissed. 3. The perusal of the order passed by the Tribunal and more particularly, the observations beginning from paragraph 12 onwards on the above referred question shows that the Tribunal has relied upon its decision in case of M/s.United Breweries vs. State of Karnataka in STA Nos.2456 & 2457/12 with Cross Appeal STA Nos.1142 & 1143/13 and the said aspect is apparent from the perusal of paragraphs 12 of the said decision. 4. The aforesaid decision of the Tribunal in STA 2456 & 2457/12 with the Cross appeal therein in case of M/s.United Breweries Limited vs. State of Karnataka has been carried before this Court by the State ....
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....ufactured from the CBUs, the know-how and specifications are supplied by the assessee to the CBUs, according to which beer is manufactured on behalf of the assessee, for which, the cost of raw materials and the labour is paid in the account of the assessee. In turn, the CBUs sell the beer on behalf of the assessee, not to the customers of its choice but to the customers so directed by the assessee and also at the price fixed by the assessee, and a fixed amount of 'brand franchise fees' of Rs. 10/- per case was paid by the CBUs to the assessee. It is submitted that the exclusive right to use the three brand names (details of which have been extracted hereinabove) remained with the assessee, and it is only the manufacturing part which was car....
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.... Levy of tax on the transfer of the right to use any goods. - Notwithstanding anything contained in sub-section (1) or sub-section (3) of Section 5, but subject to sub-section (5) and (6) of the said Section, every dealer shall pay for each year a tax under this Act on his taxable turnover in respect of the transfer of the right to use any goods mentioned in column (2) of the Seventh Schedule for any purpose (whether or not for a specified period) at the rates specified in the corresponding entries in column (3) of the said schedule. Provided that no tax shall be levied under this section if the goods in respect of which the right to use is transferred, have been subjected to tax under Section 5. Sub-Section (55b) of Section 65 of the Fina....
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....ansfer 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; (e) a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, ....
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....nditions as provided by the assessee. The CBUs cannot sell the beer to customers of its choice, but only to the intended customers of the assessee at the price fixed by the latter. In return, the manufacturer is given the price of the raw material and the labour charges. Since the produce is to be transferred by the CBUs on behalf of, and at the price fixed by the assessee, to the intended customers of the assessee, after deducting the price of raw material and other variable costs plus the labour cost, the remainder of the amount so received by the manufacturer is given to the assessee, which is split as 'brand franchise fees' and other surplus profit of the assessee. Such 'brand franchise fee' in the present case is Rs. 10/- per case. I....
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....nchise fees' is to the assessee, and admittedly the assessee, has not transferred any right to the manufacturer of beer to exploit the brand name for its own use. The manufacturers (CBUs) do not get effective control of the brand name for full commercial exploitation. As such, it cannot be considered as 'sale' of intangible goods by the assessee, which would be subject to Sales Tax under the KST Act. It is also noteworthy that, for the amount received by the assessee as 'brand franchise fees' from the CBUs, admittedly, the assessee is paying Service Tax, as the same is covered as Intellectual Property Service under sub- Section 55(b) of Section 65 of the Finance Act, 1994. 19. The law is well settled that double taxation on the same g....