9911796707
TMI Blog2004 (7) TMI 615X X X X Extracts X X X X X X X X Extracts X X X X ..... al returns filed before the assessing authority for the assessment year 1991-1992, it reported total and taxable turnover at Rs. 8,53,47,143.24 and Rs. 7,45,76,918.96, respectively. For the year 1990-1991, it had declared total and taxable turnover at Rs. 6,84,13,340.23 and Rs. 5,82,79,384.99, respectively. In its books of accounts, the petitioner-company has shown that it received cosmetics, shampoos worth Rs. 6,38,98,221.11 during 1991-1992 and the said articles worth Rs. 6,43,07,478.70 during 1990-91 from its Madras, Pondicherry and Tambaram manufacturing units and offices as stock transfers. Apart from stock receipts, the petitioner also reported purchases of cosmetics worth Rs. 6,91,092.50 during 1990-1991 and Rs. l,26,23,790.87 during 1991-1992 from M/s. J.B. Advani and Co. (Mysore) Ltd., Bangalore. As against the stock receipts from its head office/branches outside the State and goods got manufactured through M/s. J.B. Advani and Company, it has reported during 1990-1991 sales of cosmetics (excluding tax) at Rs. 4,75,11,362.13, white petroleum jelly at Rs. 20,07,119.72, soaps at Rs. 40,12,321.80, shampoos at Rs. 17,30,006.63 and second sales of dream flower talc and sandal t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e manufacture and sales of talcum powder and other toilet articles. If one studies provisions of third proviso to section 5(3)(a) of the Act, it is clear that the provisions are applicable not only to the person who holds the trade mark but also to person who is licensed to use the trade mark admitted. M/s. Ponds (India) Ltd., are admittedly licensed to use the trade mark Ponds and therefore, the said provisions of the K.S.T. Act, 1957 apply on all fours to the case of M/s. Ponds (India) Ltd. Moreover, the fact the J.B. Advani Co. (Mysore) Ltd., Bangalore, have manufactured dream flower talc and sandle talc to the specifications of the dealer-company is not denied. Further, the fact that M/s. J.B. Advani and Co. (Mysore) Ltd., Bangalore, have supplied the said goods only to Ponds (India) Ltd., as per the agreements also not denied. In the circumstances, the dealer-company's contention that they are only second seller of talcum powder cannot be accepted. However, there is a mistake committed while proposing the taxable turnover in the proposition notice. The tax that is paid under protest at Rs. 2,38,845.40 is included in the claim of second sales at Rs. l,93,54,953.60 which in tu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for an answer by this Court on the first four questions of law raised in these revision petitions. Omitting those questions of law, the other questions of law raised for consideration and decision of this Court are: "I. Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the appellants are the registered dealers of the trade mark under the Trade and Merchandise Marks Act, 1958 and whether this finding is based on valid materials? II. Whether, on the facts and in the circumstances of the case, the Tribunal was right in ignoring the fact that the appellant was only an unregistered licensee with M/s. Chesebrough Ponds Inc., under an agreement for user and that the appellant was not the registered holder of the trade mark? III. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in invoking the third proviso to section 5(3)(a) of the K.S.T. Act, which applies only to goods purchased or manufactured with the name or trade mark registered under the Trade and Merchandise Marks Act, 1958 or any other dealer? IV. Whether, on the facts and in the circumstances of the case, the Tribunal is right in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pport of this contention, the learned counsel relies on the observations made by the apex Court in the case of Commissioner of Income-tax, Mysore v. Indo Mercantile Bank Ltd. [1959] 36 ITR 1; AIR 1959 SC 713, wherein the court has observed that the proper function of a proviso is that, it qualifies the generality of the main enactment by providing an exception and taking out as it were, from the main enactment, a portion to which, but for the proviso would fall within the main enactment. Ordinarily, it is foreign to the proper function of a proviso to read it as providing something by way of an addendum or dealing with a subject which is foreign to the main enactment. 9.. On perusal of the language of section 5(3)(a) of the Act, it is clear that it opens with a non obstante clause, which controls the operation of the other provisions of the Act and irrespective of other provisions, the section will have overriding effect. This is a legislative device, which is usually employed to give effect to a particular provision over some other provision either in the same enactment or some other enactment, that is to say, to avoid the operation and effect of all contrary provisions to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... handise Marks Act. III. The manufactured goods are not used by the brand name or trade mark holder as raw materials, component parts or packing materials as defined under explanation to section 5-A of the Act. IV. The sale of such taxable goods by the licensed producer or manufacturer to the brand name holder or trade mark holder, by legal fiction introduced in the proviso, is not to be deemed as first sale in the State. If not for this fiction, it would have been first sale in the State. V. Subsequent sale of such goods by the dealer having the right either as the proprietor of the brand name or trade mark or by a dealer who is authorised or permitted to use the trade mark or brand name either directly or through another dealer, either on his account or on account of others is deemed to be the sale by the first dealer liable to tax under section 5(3)(a) of the Act. The term "deemed" is used by the Legislature to create a fiction to include what is obviously not a sale by the first dealer to be a sale for the purpose of section 5(3)(a) of the Act. 12.. The illustration appended to the proviso throws some light in understanding the true scope and ambit of the proviso to sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rks Act. Section 48 of the Trade and Merchandise Marks Act provides for "registered users". A person other than the registered proprietor of a trade mark may be registered as the registered user in respect of any or all the goods in respect of which the trade mark is registered, but subject to the provisions of section 49 of the Act. The said provision came up for consideration before the apex Court in the case of Gujarat Bottling Co. Ltd. v. Coca Cola Company (1995) 5 SCC 545. In the said decision, the court has observed: "Use of a registered trade mark can be permitted to a registered user in accordance with provisions of the Act and for that purpose, the registered proprietor has to enter into an agreement with the proposed registered user. The use of the trade mark can also be permitted de hors the provisions of the Act by grant of licence by the registered proprietor to the proposed user. Such a licence is governed by common law. Such licensing of trade mark is permissible provided (i) the licensing does not result in causing confusion or deception among the public; (ii) it does not destroy the distinctiveness of the trade mark, that is to say, the trade mark, before the pub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products and are having their factory located at A13 and 14, Peenya Industries Estate, III Stage, Bangalore 560 056, from where they have been manufacturing cosmetic products in the past. And whereas PIL on the other hand has been engaged in the business of cosmetics, among other things, and is the licensed user of the trade mark "Ponds" (bearing No. 96629, registered in class of goods 3) under the Trade and Merchandise Marks Act, 1958, in respect of Ponds, sandal talc, etc., of M/s. Conopco Inc., U.S.A. (formerly known as Chesebrough Ponds Inc., U.S.A.). JBA has offered and proposed to PIL that they have spare production capacity and that they are in a position to manufacture, sell and supply Ponds, sandal talc as per specifications of PIL. PIL on its part has considered the said offer of JBA and the parties have accordingly arrived at this arrangement under which JBA shall manufacture, sell and supply Ponds, sandal talc as per terms and conditions stipulated hereunder. 3.. JBA shall manufacture, sell and supply Ponds, sandal talc as detailed in annexure I of this agreement, from the said premises to PIL as per specifications communicated by PIL to JBA from time to time. PIL on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BA shall manufacture, sell and supply Ponds, sandal talc as per terms and conditions stipulated hereunder. 3.. JBA shall manufacture, sell and supply Ponds, sandal talc as detailed in annexure I of this agreement, from the said premises to PIL as per specifications communicated by PIL to JBA from time to time. PIL on its part has represented and confirmed that the said brand name Ponds belongs to M/s. Conopco Inc., U.S.A. (formerly known as Chesebrough Ponds Inc., U.S.A.) and they are the authorised licensed users of the abovesaid trade mark. PIL has accordingly permitted JBA to use the said trade mark on the finished product manufactured by them in pursuance of this agreement and/ talc, etc., of M/s. Conopco Inc., U.S.A (formerly known as Chesebrough Ponds Inc. U.S.A). Secondly, M/s. J.B. Advani and Co., shall manufacture and supply Ponds sandal talc as per the terms and conditions stipulated under the agreement. Thirdly, it is also evident that the petitioner-company had not only represented but had also confirmed that they are authorised licensed users of the trade mark "Ponds", which belongs to M/s. Conopco Inc., U.S.A. formerly known as M/s. Chesebrough Ponds Inc., U.S.A. an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be deemed for the purpose of liability of tax as not a sale in view of the first limb of the proviso to section 5(3)(a) of the Act. The subsequent sale of such manufactured goods by the petitioner-company having the right to use the trade mark is deemed to be first sale in the State in view of the legal fiction created by the second limb of the proviso. 19. Now coming to the expression "otherwise to use the said name or trade mark" in the second limb of the proviso, it does not control the words "the sale of such goods by brand name or trade mark holder" in the first limb of the proviso. In order to attract the proviso, it is not necessary that subsequent sale of such goods has to be only by the dealer having the right as proprietor of the trade mark or licensed user of the trade mark or brand name registered under the provisions of the Trade Marks Act. Even if the proprietor of the trade mark has permitted the use of the brand name or trade mark by another dealer either by entering into an agreement or by granting a licence, the sale by the licensee for the purpose of proviso to section 5(3)(a) of the Act would be attracted. In our view, it is not necessary that the ot ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
