1993 (10) TMI 339 - AT - VAT and Sales Tax

Issues Involved:
1. Eligibility certificate under rule 3(66a) of the Bengal Sales Tax Rules, 1941.
2. Violation of condition No. (vi) regarding the use of the trade mark or brand name of an existing industrial unit.
3. Delay in disposing of the application for the eligibility certificate.

Issue-wise Detailed Analysis:

1. Eligibility Certificate under Rule 3(66a):

The applicant, a company engaged in manufacturing plywood and other products, applied for an eligibility certificate under rule 3(66a) of the Bengal Sales Tax Rules, 1941. This rule provides tax exemption for sales from newly set up small-scale industrial units for three years if situated within the Calcutta Metropolitan Planning Area and for five years if situated elsewhere in West Bengal. The applicant claimed to have met all conditions and applied for the certificate for the period from March 31, 1990, to March 30, 1991. The application was initially rejected by the Assistant Commissioner and later confirmed by the Additional Commissioner on the grounds of using the trade mark "Merino," owned by M/s. Merinoply and Chemicals Ltd.

2. Violation of Condition No. (vi):

Condition No. (vi) of rule 3(66a) stipulates that a new industrial unit must not use the trade mark or brand name of any product of an existing industrial unit. The respondents argued that the applicant violated this condition by using the trade mark "Merino" on its products. The applicant countered that the use of "Merino" was limited to products supplied to M/s. Merinoply and Chemicals Ltd. under a specific agreement and that other products were branded with the applicant's own trade names, "Pelican" and "Penguin." The Tribunal found that the limited use of the trade mark "Merino" for specific orders did not enhance the applicant's business prospects and thus did not constitute a violation of condition No. (vi).

3. Delay in Disposing of the Application:

The applicant also claimed that there was an unusual delay in the disposal of the application for the eligibility certificate, resulting in significant losses. The respondents denied any unreasonable delay, stating that thorough investigation was necessary. The Tribunal did not find it necessary to express views on this issue due to the resolution of the primary issue regarding the eligibility certificate.

Judgment:

The Tribunal, by majority judgment, quashed the impugned orders dated July 31, 1991, and February 1, 1992, and directed respondent No. 2 to grant the eligibility certificate to the applicant within four weeks. The decision was based on the finding that the limited use of the trade mark "Merino" did not violate condition No. (vi) of rule 3(66a) and that the refusal to grant the certificate was improper and unfair. The operation of the judgment was stayed for eight weeks upon verbal prayer by the learned State Representative.

Separate Judgment by Chairman:

The Chairman disagreed with the majority view, emphasizing that the applicant's use of the "Merino" trade mark, even if limited, was an attempt to leverage the established brand name of Merinoply and Chemicals Ltd. to enhance its own product's marketability. The Chairman concluded that this constituted a violation of condition No. (vi) and that the rejection of the eligibility certificate was justified.

Order by the Tribunal as per Majority Judgment:

The application was allowed, and the impugned orders were quashed with a direction to grant the eligibility certificate within four weeks. The operation of the judgment was stayed for eight weeks upon verbal request by the State Representative.

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