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2015 (2) TMI 656 - HC - VAT and Sales TaxTransfer of right to use trademark - Levy of VAT on such transfer - Held that - agreement that is relied upon is entitled TATA Brand Equity & Business Promotion Agreement . By clause1 which contains interpretation and definition , the term Marketing Indicia has been defined to mean certain trading names, logos, advertising slogans and images, colour schemes, styles of labelling, emblems and other manifestations characteristic of the TATA brand to be developed by the Proprietor for use by the Subscribers to this and similar Agreements. The term Protect/Protection has been understood by parties to include the creation and development of a mark or a symbol (which may or may not incorporate the word TATA) by the Proprietor in pursuance of this Agreement to project the group image and further includes the registration of such mark either as a trade mark under the Trade and Merchandise Mark Act, 1958 or as a work under the Copyright Act, 1957. The expression also includes certain steps with a view to prosecute, defend and enter into legal proceedings. By Clause (2) Obligations and responsibilities of the proprietor are set out and by Clause (3) the grant in terms of the agreement is set out. So long as the agreement transfers the right to use intangible goods which are the trade marks in this case, then, there is no question of the petitioners escaping the consequences of the enactment. The enactment and the definitions which we have referred together with the substantive provisions does not envisage exclusive and unconditional transfer of the above right. The Act has been brought in and with a specific object. The definition of the term goods means all kinds of property (not being newspapers, or actionable claims or money, or stocks, shares or securities). Therefore in terms of this definition and the schedule entry No.7, intangible / incorporeal goods and particularly trade marks are brought within the purview of the enactment. Even the definition of the term dealer in section 2(4) would indicate that it means any person who whether for commission, remuneration or otherwise transfers right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration and includes State Government or Central Government which so transfers the right to use such goods and also any society, club or association of persons which transfers the right to use such goods to its members. The tax is therefore leviable on the turnover of sales in respect of transfer of right to use any goods and in the present case according to assessee after the appointed day. Levy is on the turn over of sales in respect of transfer of the right to use the goods specified in the schedule. The schedule entry itself reflects as to how on 18th March, 1988 by a Government notification of the Finance Department the transfer of right to use the goods of incorporeal or intangible character i.e. to say patents, trademarks and import licenses have been brought in under the Act. Tribunal did not act perversely or committed an error apparent on the face of record in rejecting the petitioner s appeals. May be the Tribunal could have rendered a detailed finding and conclusion. However, upon perusal of the order passed by the Tribunal we find that it referred to the facts. It has also adverted to the contentions of the parties. It also referred to its own conclusions rendered in the case of M/s. Smokin Joe etc. However, it concludes that the facts and circumstances in the present case are not identical to the cases dealt with by it and of the above franchisees. Once such conclusion is reached by us, then, strictly it is not necessary to deal with the judgments on the rule of precedents and propriety of disregarding coordinate bench decisions. This rule is reiterated by this Court and equally by the Hon ble Supreme Court. In fact, this Court has followed several such judgments of the Hon ble Supreme Court. There cannot be any dispute or quarrel about this principle but its application would depend on the given facts and circumstances. When a coordinate Bench decision can be distinguished and such distinction is founded on facts and circumstances which are peculiar to the other case, that course is equally permissible in law. We do not see how the tribunal can be faulted for not applying and following the rule of consistency or judicial discipline. In our view, reliance therefore placed on the judgments laying down and reiterating the above principle is entirely misplaced. - No merit in petition - Decided against appellant.
Issues Involved:
1. Maintainability of the Writ Petition under Article 226 of the Constitution of India. 2. Availability and efficacy of alternate remedies under Section 61(1) of the Bombay Sales Tax Act, 1959. 3. Nature of the agreement between the petitioners and the subscribers. 4. Applicability of the Maharashtra Sales Tax on the Transfer of Right to Use any Goods for any Purpose Act, 1985 (Act of 1985). 5. Interpretation of the term "sale" and "transfer of the right to use" under the Act of 1985. 6. Relevance of precedents, including the Supreme Court judgment in BSNL's case. 7. Judicial discipline and consistency in Tribunal decisions. Detailed Analysis: 1. Maintainability of the Writ Petition under Article 226 of the Constitution of India: The petitioners sought relief under Article 226 of the Constitution of India to quash various orders and notices related to sales tax dues and recovery. The respondents argued that the petitioners had an alternate and equally efficacious remedy under Section 61(1) of the Bombay Sales Tax Act, 1959, which they did not initially avail. The court noted that the petitioners had filed a Writ Petition after the limitation period for the alternate remedy had expired and had pursued the Writ Petition despite the availability of the alternate remedy. However, the court rejected the preliminary objection on maintainability, stating that the availability of an alternate remedy does not create an absolute bar to entertaining a Writ Petition under Article 226. 2. Availability and Efficacy of Alternate Remedies under Section 61(1) of the Bombay Sales Tax Act, 1959: The court considered whether the alternate remedy under Section 61(1) was equally efficacious. The petitioners argued that the application under Section 61(1) could not be termed as an efficacious remedy because it was the Tribunal's prerogative to refer questions of law to the court. The court found that the remedy under Section 61(1) was not necessarily efficacious and complete in the given circumstances and thus decided to entertain the Writ Petition. 3. Nature of the Agreement between the Petitioners and the Subscribers: The petitioners entered into a "TATA Brand Equity and Business Promotion Agreement" with various TATA companies to protect and enhance the brand equity of the TATA name. The agreement allowed the use of the TATA name and trade marks by the subscribing companies. The petitioners argued that this agreement did not attract the provisions of the Act of 1985, as it did not constitute a transfer of the right to use goods. 4. Applicability of the Maharashtra Sales Tax on the Transfer of Right to Use any Goods for any Purpose Act, 1985 (Act of 1985): The court examined whether the agreement fell under the purview of the Act of 1985, which levies tax on the transfer of the right to use any goods. The respondents argued that the Act covers both tangible and intangible goods, including trade marks. The court agreed with the respondents, stating that the agreement involved a transfer of the right to use intangible goods (trade marks) and thus fell within the scope of the Act of 1985. 5. Interpretation of the Term "Sale" and "Transfer of the Right to Use" under the Act of 1985: The court analyzed the definitions of "sale," "goods," and "turnover of sale" under the Act of 1985. It concluded that the Act does not require the transfer of the right to use goods to be exclusive or unconditional. The court found that the agreement between the petitioners and the subscribers constituted a transfer of the right to use trade marks, which is taxable under the Act. 6. Relevance of Precedents, Including the Supreme Court Judgment in BSNL's Case: The petitioners relied on the Supreme Court judgment in BSNL's case to argue that their agreement did not constitute a transfer of the right to use goods. However, the court distinguished the BSNL case, noting that it dealt with the provision of telephone services, which is different from the transfer of the right to use trade marks. The court held that the principles laid down in the BSNL case were not applicable to the present case. 7. Judicial Discipline and Consistency in Tribunal Decisions: The petitioners argued that the Tribunal's decision was inconsistent with its previous decisions in similar cases. The court acknowledged the importance of judicial discipline and consistency but found that the Tribunal had distinguished the present case based on its specific facts and circumstances. The court concluded that the Tribunal's decision was not perverse or erroneous. Conclusion: The court dismissed the Writ Petition, holding that the agreement between the petitioners and the subscribers involved a transfer of the right to use trade marks, which is taxable under the Act of 1985. The court rejected the preliminary objection on maintainability and found that the alternate remedy under Section 61(1) was not necessarily efficacious. The court also distinguished the BSNL case and upheld the Tribunal's decision, emphasizing the importance of judicial discipline and consistency.
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