2002 (12) TMI 589 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of entry 103 of the First Schedule to the TNGST Act regarding sales tax on goods sold without a registered trade mark.

Analysis:
The petitioner, a Government of Tamil Nadu undertaking, sold milk products both with and without the registered trade mark "AAVIN" during the assessment years 1983-84 to 1985-86. The dispute arose when the Commercial Tax Officer levied tax at 10% on products sold without the trade mark, citing entry 103 of the TNGST Act. The petitioner argued that since the goods were sold without the brand name registered under the Trade Marks Act, they should be taxed at 5%. However, the assessing authority, along with subsequent appellate bodies, upheld the 10% tax rate. The Special Tribunal specifically found that even goods sold without the brand name were identified by consumers as products of the petitioner due to various factors such as invoices and the selling premises bearing the trade mark "AAVIN."

The Court analyzed Section 76 of the Trade Marks Act, which deals with infringement by third parties, and concluded that it does not apply to a registered proprietor like the petitioner. The Court emphasized that the mere sale of goods without the brand name in the same location as branded goods does not constitute infringement of the trade mark. The Court also highlighted an amendment to entry 103, clarifying that the focus should be on whether goods were sold under any brand name, not on the manufacturer's trade mark registration status. Referring to a previous judgment, the Court reiterated that goods must be sold under a brand name registered under the Trade Marks Act to attract the 10% tax rate.

Additionally, the Court expressed concern over the lack of a dispute resolution mechanism between the Government of Tamil Nadu and its undertakings regarding sales tax matters. It suggested establishing a separate machinery to resolve such disputes, similar to the process for Central Government undertakings. The Court ultimately quashed the orders imposing the 10% tax rate, ruling that the petitioner should be taxed at 5% for goods sold without the brand name during the relevant assessment years. The writ petitions were allowed, with no costs awarded.

This detailed analysis of the judgment provides a comprehensive overview of the issues addressed by the Court regarding the interpretation of entry 103 of the TNGST Act in relation to the taxation of goods sold without a registered trade mark.