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TMI Blog1998 (9) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... ent is not liable to get registered under the said Act 2.. The material facts giving rise to this reference are as follows: The assessee, M/s. Duke & Sons Pvt. Ltd., is a company registered under the Bombay Sales Tax Act, 1959 as also under the Central Sales Tax Act, 1956. It is a holder of registered trade marks, viz., Duke's, Mangola, Pineola, Tango. The assessee manufactures concentrates for manufacturing aerated waters, beverages, etc., and sells the same to bottlers in the State of Maharashtra as also outside the State of Maharashtra for use in manufacture of aerated waters, beverages, etc. Such transactions between the assessee and the purchasers of concentrates take place in terms of the written agreement between them. As per these agreements, the assessee sells the concentrates to the customers for use in manufacturing aerated waters, beverages, etc., at their bottling plants. Such purchasers of concentrates are also permitted to market their beverages by using the trade mark of the assessee. The assessee charges royalty for the user of its trade marks by the customers. These agreements are known as "franchise agreements". In the present case, the assessee entered into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be regarded as sale within the meaning of clause (10) of section 2 of the 1985 Act. The Tribunal accepted the above contention of the assessee and held that permission to use the trade mark without transfer of the trade mark or any right therein could not be regarded as a sale within the meaning of clause (10) of section 2 of the 1985 Act. The Tribunal, therefore, set aside the order of the Additional Commissioner of Sales Tax and held that the transaction in question did not amount to transfer of right to use trade mark by the assessee to its customers and no tax could be levied on the royalty received by the assessee for the said transfer. Aggrieved by the above order of the Tribunal, the Revenue applied for reference of the question of law arising therefrom to this Court and hence this reference. 3.. We have heard Mr. Rana, learned counsel for the Revenue, who submits that the approach of the Tribunal in deciding the liability of the assessee under the 1985 Act which was enacted by the State of Maharashtra after the 46th Amendment to the Constitution of India and insertion of clause (29A) in article 366 by which the power of the Legislature to levy tax on sale or purchase o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the right to use the trade mark for the purpose of marketing its products under the terms of the agreement, the transferee was liable to pay to the assessee the amount in question by way of royalty. The question that arises for consideration is whether the right to use the trade mark without transfer of any right or interest therein would amount to "sale" within the meaning of clause (10) of section 2 of the 1985 Act. 6.. The Maharashtra Sales Tax on the Transfer of the Right to use any Goods for Any Purpose Act, 1985 was enacted with a view to levying tax on transfer of right to use any goods for any purpose for cash, deferred payment or any other valuable consideration in the State of Maharashtra. Under section 3 of the Act, tax is leviable on the turnover of sales in respect of transfer of right to use any goods. "Turnover of sales" has been defined in clause (15) of section 2 to mean aggregate of the amounts of sale price received or receivable during the year by a dealer in respect of the transfer of the right to use any goods. "Sale price" has been defined in clause (11) of section 2 to mean the amount of valuable consideration received or receivable for the transfer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of indicating a connection in the course of trade between the goods and some person having the right, either as a proprietor or as registered user, to use the mark whether with or without any indication of the identity of that person. There is a distinction between transfer of right to use a trade mark and assignment of a trade mark. "Assignment" of trade mark is taken to be a sale or transfer of the trade mark by the owner or proprietor thereof to a third party inter vivos. By assignment, the original owner or proprietor of trade mark is divested of his right, title or interest therein. He is not so divested by transfer of right to use the same. Licence to use a trade mark is thus quite distinct and different from assignment. It is not accompanied by transfer of any right or title in the trade mark. The transfer of right to use a trade mark falls under the purview of the 1985 Act and not the assignment thereof. The manner of transfer of the right to use the goods to the transferee would depend upon the nature of the goods. For transfer of right to use a trade mark-, permission in writing as required by law may be enough. In case of tangible property, handing over of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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