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TMI Blog2004 (4) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... tems during a particular period. Of course, it retained the liberty to make use of the trademark in the event of the licensor starting to manufacture the products. Equally, it retained the liberty to grant licence to any other individual person or company to use the trademarks. Trademark is the property right and it exclusively belongs to the party who has registered it. Such a right is an intangible or incorporeal goods, which can be merchandised by the registered owners. As pointed out by the Supreme Court, the word goods is defined in very wide terms so as to bring in both tangible and intangible objects. General Clauses Act would explain movable property as property of every description except immovable property. Trademark right is intangible goods, which can be subject-matter of transfer. As already pointed out, M/s. Muthu Agencies was granted permission to use the trademark without any restriction whatsoever for a particular period. Consequently, it can only be taken as transfer of a right to use and not a mere right to enjoy. Simply because the assessee retained the right for himself to use the trademark and reserved the right to grant permission to others to use the tradema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in [1986] 61 STC 165 (SC) (H. Anraj v. Government of Tamil Nadu), held that the transfer of trademark right is a sale of incorporeal goods for consideration and therefore, the amount received is taxable under the Tamil Nadu General Sales Tax Act, 1959. The aggrieved petitioner/assessee preferred T.C. (A) No. 3709 of 1997 before the Tamil Nadu Taxation Special Tribunal, Chennai. The said Tribunal, after duly considering the matter, dismissed the appeal, with a direction to the assessing authority to give effect to the order for assessment under section 3-A of the Tamil Nadu General Sales Tax Act, 1959. 3. Learned counsel for the petitioner contended that the transaction will not amount to sale. Or in other words, there was no transfer of a right to use the trademark for consideration and, in fact, Tvl. Muthu Agencies was given a mere right to enjoy the trademark for a period, and in those circumstances, it can only be said that the petitioner/assessee received the amount only towards royalty and hence, the said amount should have been exempted while calculating the turnover. 4. On the other hand, learned counsel, appearing for the Revenue, submitted that the transaction is a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or things attached to, or forming part of the land which are agreed to be severed before sale or under the contract of sale." While the word "property" has not been defined in the Tamil Nadu General Clauses Act, 1891, and in the General Clauses Act, 1897, the terms "movable property" and "immovable property" are defined. "Movable property" is defined as to mean property of every description except immovable property. The term "immovable property" is defined as to include land, benefits to arise out of land and things attached to earth or permanently fastened to anything attached to earth. 7. Let us proceed to deal with the various rulings cited by both sides in a chronological order which would help us to decide the issue in question. A. [1990] 77 STC 182 (AP) (Rashtriya Ispat Nigam Ltd. v. Commercial Tax Officer). The petitioner in that case owned Visakhapatnam Steel Project and for the purpose of steel project, allotted different works of the project to contractors. To facilitate the execution of work by the contractors with the use of sophisticated machinery, the petitioner had undertaken to supply the machinery to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h or estate. Referring to the Jowitt's Dictionary of English Law (Sweet & Maxwell Limited, 1977), the court observed as under: "This definition also shows that the expression signifies 'things and rights considered as having a money value'. Even incorporeal rights like trademarks, copyrights, patents and rights in personam capable of transfer or transmission, such as debts, are also included in its ambit." The Court, in the later part of the said judgment, again observed as follows: "Similarly, patents, copyrights and other rights in rem which are not rights over land are also included within the meaning of movable property." C. [1999] 112 STC 370 (Bom) (Commissioner of Sales Tax v. Duke & Sons Pvt. Ltd.). In that case, there was an agreement between Duke & Sons Pvt Ltd. and M/s. Salstar Foods & Beverages Ltd., on 6th September, 1985. The latter was permitted to use the trademark of the assessee on the bottles of beverages manufactured by them in Maharashtra and to market the same under the trademark of the assessee. The assessee charged royalty for the use of its trademarks at the rate specified in the agreement. With a view to ascertainin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of trademark to him. It can be done merely by authorising the transferee to use the same in the manner required by the law as has been done in the present case. The right to use the trademark can be transferred simultaneously to any number of persons. The decision of the Andhra Pradesh High Court in Rashtriya Ispat Nigam Ltd. v. Commercial Tax Officer [1990] 77 STC 182 thus has no application to the transfer of right to use a trademark." In the present case, it has to be pointed out that this is also a case of transfer of a trade mark and that here also the assessee retains his right to use it himself so also to transfer such a right to others. The Revenue's claim that this ruling fully supports its stand has to be sustained. D. [1990] 113 STC 317 (SC) (Aggarwal Brothers v. State of Haryana). The assessee hired shuttering to builders and contractors who use it in the course of construction of buildings. On the hire-charges received, sales tax was sought to be imposed. A writ petition was filed to quash the assessment orders. On behalf of the Revenue, it was contended that the customers were in effective control of the shuttering during the periods it remained in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that electricity also falls within the meaning of "goods", held that the Department of Telecommunications is a "dealer", which collects rentals for the supply of transfer of use of telephonic connection, which is compendiously called "service" and the supply of the telephone satisfies the requirements of a "transfer of the right to use the goods" within the meaning of "sale" and the department also receives the consideration and therefore, the department is liable to pay the sales tax. The Supreme Court observed that even if a subscriber uses his own telephone, that would not make any difference. The court ruled as under: "Before taking up the other contentions, we may conveniently dispose of a short point-ambit of the definition of the term 'goods' quoted above. It is defined in very wide terms so as to bring in both tangible and intangible objects. It takes in its fold every kind or class of movables, including all material commodities and articles involved in the execution of a works contract, and growing crops, grass, trees and things attached to or fastened to anything permanently attached to the earth which un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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