2013 (12) TMI 1677 - HC - VAT and Sales Tax

Summary

Issues involved: Assessment under Central Sales Tax Act, 1956 and U.P. Trade Tax Act, 1948 for the year 2006-07.

Central Sales Tax Act, 1956 Assessment:
The assessee, involved in manufacturing and selling Indian made foreign liquor, faced tax liability under Section 3F of the U.P. Trade Tax Act, 1948 for transactions related to the trade mark of the company. The contention was whether these transactions constituted a transfer of right to use the trade mark or were mere licenses. The tribunal, through an order dated 8.3.2013, ruled in favor of the assessee, holding it to be a mere license. The decision was based on the criteria set by the Supreme Court in the case of Bharat Sanchar Nigam Ltd. Vs. Union of India, which outlined five conditions for a transaction to be considered a transfer of rights to use goods.

U.P. Trade Tax Act, 1948 Assessment:
The Supreme Court's conditions for a valid transfer of rights to use goods were analyzed in the context of the trade mark transactions. It was noted that in the present case, the right to use the trade mark had been permitted to various companies simultaneously, without any evidence of exclusivity for the transferee. As a result, the 4th and 5th conditions specified by the Supreme Court were not met. Consequently, the permission granted for the use of the trade mark was deemed to be a license and not a transfer of right to use, falling outside the purview of Section 3F of the Trade Tax Act.

Conclusion:
Based on the above analysis, the tribunal's decision to delete the tax liability under Section 3F of the Trade Tax Act was upheld, as the permission to use the trade mark was considered a license and not a transfer of right to use. Therefore, the revisions were dismissed for lacking merit.