TaxTMI 
TaxTMI 
2018 (3) TMI 1323
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....rnataka in STA Nos. 2456 and 2457/ 12 with Cross Appeal STA Nos. 1142 and 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 Nos. 2456 and 2457/12 with the cross appeal therein in case of M/s. United Breweries Limited v. State of Karnataka has been carried before this court by the State of Karnataka in S. T. R. P. Nos. 384 of 2014 and 1 to 3 of 2015 and the Division Bench of this court vide order dated October 1, 2015 (State of Karnataka v. United Breweries Ltd. [2016] 6 VST-OL 19 (Karn)) for the reasons recorded in the order has found that no sales tax would be leviable on the assesseeon the amount received by the assessee as "brand franchisee fees" from the CBU in case of manufacture of beer. 5. We may record that the relevant discussion in the above referred decision are at paragraphs 10 to 21 which read as under (pages 23 to 28 in 6 VST-OL): "10. The submission of Sri Shivayogiswamy, learned Additional Government Advocate appearing for the revision petitioner is that the Tribunal has wrongly held that no tax would be leviable on 'brand franchise fees' which has b....
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....ng their submissions. 13. The relevant provisions of the KST Act, Finance Act, 1994 and the Constitution of India, are reproduced below: Section 2(1)(m) of the KST Act: ' "Goods" means all kinds of movable property (other than newspapers, actionable claims, stocks and shares and securities) and includes livestock, all materials, commodities and articles (including goods, as goods or in some other form) involved in the execution of a works contract or those goods to be used in the fitting out, improvement or repair of movable property, and all growing crops, grass or things attached to, or forming part of the land which are agreed to be severed before sale or under the contract of sale.' Section 5C of the KST Act: '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-sections (5) and (6) of the said section, every dealer shall pay for each year a tax under this Act on his total 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 ra....
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....rson making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made.' 14. There can be no doubt that sale of goods can be taxed under Constitution of India, which would include tax on transfer of right to use any goods for any purpose. The price of such sale is to be taxed. 'goods' is defined under the KST Act which may be tangible or intangible. In the present case, the transfer of right to use brand name/ trade name would be intangible goods. 15. We shall first consider the case relating to the sale of beer. With regard to taxability on the payment of the 'brand franchise fees'received by the assessee in the case of manufacture of beer, with the brand name/trade mark continuing to belong to the assessee, what we have to first consider is, whether there is complete transfer of right to use the said property (being brand name/trade name) in favour of the manufacturer (CBUs) or not ? 16. The manufacturer, as per the agreement, has the right to use the brand name only for, and on behalf of, the assessee, and does not acquire any right over such brand name/trade mark belonging to the assessee....
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....ever, if no such right to use is given to the manufacturer, it would not amount to transfer of right. 18. In the case of manufacture of beer, the amount paid towards 'brand franchise 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 (55b) of section 65 of the Finance Act, 1994. 19. The law is well-settled that double taxation on the same goods is not permissible. The apex court in the case of Bharat Sanchar Nigam Ltd. v. Union of India [2006] 3 VST 95 (SC); [2006] 145 STC 91 (SC); [2006] 282 ITR 273 (SC); [2006] 6 RC 276; [2006] 2 STR 161 (SC) has held that the transaction can be either co....