1994 (11) TMI 411 - HC - VAT and Sales Tax

Summary

Issues:
1. Determination of taxable turnover for the assessment year 1982-83.
2. Tax rate applicable to the turnover of Rs. 9,11,497.
3. Interpretation of the Trade and Merchandise Marks Act, 1958 in relation to sales before registration of trade mark.
4. Applicability of tax rate based on the timing of trade mark application and registration.

Detailed Analysis:
1. The High Court of Madras considered the case of an assessee involved in manufacturing pickles with a taxable turnover of Rs. 12,16,619 for the assessment year 1982-83. The assessing authority and the Appellate Assistant Commissioner had determined different portions of the turnover to be taxable at 5% and 10% respectively. The turnover of Rs. 9,11,497 was specifically under question, with a dispute over whether it should be taxed at 5% multi-point or 10% single point. The assessee appealed to the Appellate Tribunal challenging the tax rate applied by the lower authorities.

2. The issue revolved around the timing of the application for registration of the pickles under the Trade and Merchandise Marks Act, 1958. The Tribunal held that since the application was made on September 21, 1982, the turnover of Rs. 9,11,497 should be taxed at 10% single point from that date. The assessee argued that as the registration certificate was granted only on February 28, 1992, the goods sold between these dates should not be considered as sold under the registered trade mark, warranting a tax rate of 5% multi-point instead.

3. The Court analyzed the legal implications of the Trade and Merchandise Marks Act, 1958 in light of the timing of trade mark registration. The assessee contended that sales made before the registration of the trade mark should not be subject to the higher tax rate applicable to registered products. The Government Pleader argued that even if the registration was pending, goods sold after the application but before registration should be taxed at 10% single point as per the relevant tax provisions.

4. The Court referred to a previous case where a similar issue was addressed, establishing a precedent that sales occurring between the application for registration and the actual registration of the trade mark should be taxed at 10% single point. However, the Court also noted the subsequent amendment to the First Schedule entry, which clarified the tax treatment for goods sold without a registered trade mark during the interim period. Based on the specific provisions and the timeline of events in the present case, the Court concluded that the turnover of Rs. 9,11,497 should be taxed at 5% multi-point instead of 10% single point.

5. Ultimately, the Court set aside the Tribunal's order directing the taxation of the turnover at 10% single point and directed the department to tax the turnover of Rs. 9,11,497 at 5% multi-point. The revision filed by the assessee was allowed, and no costs were awarded in the matter.