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2018 (12) TMI 612 - HC - VAT and Sales TaxTaxability - transfer of right to use of non-exclusive trade mark license - Held that - The exception carved out Clauses (d) and (e) of the paragraph no. 97 of the decision of the Supreme Court in the case of Bharat Sanchar Nigam Ltd. Vs. Union of India and others, 2006 (3) TMI 1 - SUPREME COURT as have been found in existence in the facts of the present case, would continue to deprive the revenue from imposing any tax on such transactions. The Tribunal also appears to have noted that, in the subsequent years, the revenue authorities have themselves accepted the aforesaid position of law and not imposed tax. Revision dismissed.
Issues:
1. Taxability of transfer of right to use non-exclusive trade mark license. 2. Application of division bench judgment in M/s G.D. Goenka (P) Ltd. vs. State of U.P. and others. 3. Merger of earlier order with the Supreme Court's decision. 4. Distinction between non-exclusive licenses and transfer of right to use trade-mark. 5. Stay of division bench decision by the Supreme Court. Issue 1: Taxability of transfer of right to use non-exclusive trade mark license: The High Court heard arguments regarding the taxability of the transfer of the right to use a non-exclusive trade mark license. The revenue challenged the Commercial Tax Tribunal's decision that such transfers were not taxable. The Court referred to a previous decision where it was held that the right to use a trade mark did not qualify as a taxable event as the owner retained the right to further use or transfer the trademark. Issue 2: Application of division bench judgment in M/s G.D. Goenka (P) Ltd. vs. State of U.P. and others: The revenue argued that a division bench judgment in a different case should be applied, which stated that the earlier decision of the single judge loses its binding force. However, the assessee contended that the facts in the present case were different from those in the division bench case, involving non-exclusive licenses rather than the transfer of the right to use a trade-mark. Issue 3: Merger of earlier order with the Supreme Court's decision: The revenue took the matter to the Supreme Court, but the petitions were dismissed on the ground of delay, keeping the question of law open for future cases. The Standing Counsel argued that the earlier decision of the High Court had not merged with the Supreme Court's orders, emphasizing the relevance of a subsequent division bench decision. Issue 4: Distinction between non-exclusive licenses and transfer of right to use trade-mark: The assessee highlighted that the controversy in the present case had already been determined by the High Court's previous decision, emphasizing that the transfer of the right to use a trade-mark did not result in a taxable event due to the retained rights of the assessee for further use or transfers. Issue 5: Stay of division bench decision by the Supreme Court: The Supreme Court granted a stay on the division bench decision, which was pointed out by the Standing Counsel. The Court noted that the revenue authorities had accepted the legal position in subsequent years and did not impose tax, further supporting the dismissal of the revisions due to the absence of factual distinctions from the earlier decision. In conclusion, the High Court dismissed the revisions, affirming that the transfer of the right to use a trade-mark did not create a taxable event based on the retained rights of the assessee for further use or transfers, in line with previous decisions and the absence of factual distinctions.
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