TaxTMI 
TaxTMI 
2018 (11) TMI 1272
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....(for brevity KVAT Act) ? and "Whether, in the context of a genuine doubt as to the product description as per the Entries in the various Schedules, the penalty imposed though modified was rightly imposed at all, by the Tribunal?" 2. The issue arises in so far as the products of the assessee referred to in the assessment order at Annexure A produced in OT[Rev.] No.193 of 2015. They are toasted bread, crunch toast, sweet toast and milk toast. Whether they are assessable under Entry 6 of the First Schedule or Entry 7 of the Third Schedule or Entry 11 of SRO 82/06, all appended to the KVAT Act; respectively taxable @ 0%, 4 % and 12.5%, at the relevant time. The Assessing Officer held that it falls under Entry 11 of SRO 82/2006 and not Entry 6 of First Schedule. The Tribunal found that since the products are aligned against the specific HSN Code 1905.40.40, they do not fall under Entry 6 of the First Schedule: "Bread of all types". The Tribunal in fact refused to look into whether the product was registered or not under the Trade Marks Act,1999 [for brevity, 'the Trade Marks Act']. The learned Counsel for the assessee submits that if at all a different view is taken and the product....
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.... assessee if found to be not included in "Bread of all kinds" [Entry 6 of First Schedule]; ought to be excluded from Entry 11 of SRO 82/2006 since the said product is not registered under the Trade Marks Act. Then the question arises as to whether they come under Entry 6 of Third Schedule which takes in all bakery products other than that sold under registered trade mark. 6. The learned Counsel would also rely on Vishnudas Trading v. The Vazir Sultan Tobacco Co. Ltd. [JT 1996 (6) 366], which was relied on in a recent decision of the Hon'ble Supreme Court in Civil Appeal Nos.2943 to 2944 of 2018, M/s.Nandhini Deluxe v. M/s.Karnataka Co-operative Milk Producers Federation Ltd. It is the argument of the assessee that the comprehensive list of goods classified under Trade Mark-Class 30, "bread" and "rusk" are separately shown and hence are treated differently. It is also argued that in a like circumstance a Division Bench of this Court had found that despite there being a brand name shown in the package of a produce, if the said product is not registered under the Act of 1999, then there can be no sale found of a product under brand name registered under the Trade Marks Act. 7. The l....
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....rs to the various classes and the description of the products coming under each class. The class under which the petitioner has obtained registration is Class 30 of the Fourth Schedule, which deals with a number of products including bread. We have to decide as to whether its the Fourth Schedule under the Trade Marks Rules or the International Classification that applies in the relevant assessment year, which we will deal with a bit later. We have also seen from the text book we earlier referred to, that there is a comprehensive list of goods classified under the Trade Mark Class 30 as available in the International Classification. 10. Vishnudas Trading [supra] was a case in which the respondent had obtained registration of the brand name 'Charminar' under the General Class of manufactured tobacco. The appellant had sought for registration of chewing tobacco in the same brand name, which was declined by the authorities for reason of there being a registration obtained under the General Class of manufactured tobacco by the respondent. The appellant then filed an application before the Trade Mark authorities for confining the registration of the respondent to cigarettes, permitting ....
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....neral description; but is distinguishable on the nature of use and general market understanding can be given a separate registration of trade name or mark is what has been answered in the affirmative. The issue arising in a taxation statute has an altogether different perspective when the taxing statute levies a higher tax on branded items sold under trade mark. There the consumers desire or tendency to pick up that product sold under popular brand name is sought to be taxed by the legislature at a higher rate. The reason also is that the product sold under a popular brand name, which is also registered under the Trade Marks Act, is in more demand and the discerning customer prefers it despite the higher price it commands, for reason of the brand name, which bears a certain assurance of the quality of the product. In the present case, the assessee has obtained registration of the brand name for "all types of bread"; bread alone being the separate class as seen from the comprehensive list of goods classified under Class 30. Whether ordinary bread as understood commercially and rusk, are the separate species coming under the same class or genus is the vexing question. We have to keep....
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....) Ltd. v. The Commissioner Commercial Taxes[(2014) 22 KTR 307(Ker)], wherein the issue was whether the pickle sold by the dealer allegedly under the registered trade mark would be exigible to tax at the higher rate of 12.5%. The challenge in the said case was from an order of clarification which found the pickle sold by the assessee to be exigible to tax at the higher rate. A Division Bench of this Court found that the trade mark registration taken by the assessee was not with respect to pickles and hence the pickle sold by the assessee though showing the trade mark in the cover of the package, would not be exigible at the higher rate. In the present case also, the contention of the assessee is that there is no trade mark registration with respect to "rusks, toasted bread etc.", which is also separately dealt with under SRO No.82/2006 as distinguished from "breads". 15. The specific claim of the assessee was under Entry 6 which exempts from tax " Bread of all kinds". We notice that Entry 6 is aligned to HSN code 1905.90.90. Hence to understand the correct description of the goods we have to look at the Customs Tariff as available under Chapter 19, of the Customs Act. The specific ....
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....HSN 1905.90, "Other" is shown which is preceded by again(one) "-" which makes it also a subclassification of the general heading, as distinguished from "rusks...etc.". Under that "Others", there are four items and a further "Other" with "---"(three). Hence the "Other" preceded with "---"(three) aligned with HSN code 1905.90.90 is the sub-classification of that "Other" above it, preceded by "-"(one) aligned with HSN Code 1905.90. It is crystal clear that the articles described under 1905.90.90 is a subclassification of the articles aligned with 1905.90, which is a sub-classification of the general heading aligned to HSN Code 1905. That "Other" with "---"(three) and aligned to HSN code 1905.90.90, does not include "Rusk, toasted bread and similar toasted products" aligned to HSN Code 1905.40.00 as per the Customs Tariff Act.In understanding "bread of all kinds" under the First Schedule to the KVAT Act the description as in the Customs Tariff Act has to be adopted since Entry 6 is aligned with HSN Code 1905.90.90. Hence the toasted products sold by the assessee does not fall under Entry 6 of the First Schedule. 17. Now the question is whether the products fall under Entry 7 of Third ....
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....cle; yeast baking powder; salt, mustard; vinegar, sauces (condiments), spices; ice." Bread being the only sub-item provided and the registration being for "All kinds of bread" the toasted products of the assessee is sold under brand name is the compelling argument. 20. Section 7 of the Trade Marks Act deals with classification of goods and service and require the Registrar to classify the goods and services, as far as may be in accordance with international classification of goods. Rule 22 of the Rules deals with classification of goods and services and for the purpose of registration of trade marks goods and services are to be classified in the manner specified in the Fourth Schedule. The assessee obtained registration of trade mark for "all types of breads". 21. Commercially and as understood in the market, as also in the perspective of the consumer, rusk and bread are not the same. One will not ask for rusk when he needs bread nor vice-versa. Though the Fourth Schedule was available in the Trade Mark Rules, in the subject assessment years, even then, the International classification had a significance as per the rules which is evidenced from Rule 22 which is extracted herein:-....
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....gory which is aligned to the specific 8 digit HSN Code; as we earlier found with reference also to the number of "-" preceding the entries in the Customs Tariff Act. However the items including breads sold under brand name registered under the Trade Marks Act, is included in S.R.O No. 82/2006 exigible to a higher rate of tax. In this context, we have to notice the Rules of Interpretation of Schedules as seen from the Appendix of the KVAT Act. We specifically extract Sl.No.5 as follows: "5.Breads of all kinds under entry 6 of first schedule does not include crisp bread, ginger bread and pizza bread." Hence what was excluded from breads of all kinds were only crisp bread, gingerbread and pizza bread which were brought under SRO No. 82/2006, in Entry 11. Entry 11 also included "rusk,toasted bread and similar toasted products" and if the legislature understood those toasted products as included in the category of breads, then, definitely there would have been a specific exclusion provided as was provided in the case of crispbread, gingerbread and pizza bread. The KVAT Act, in that context can only be considered to have dealt with bread and rusk as two different products. 23.It is ba....