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TMI Blog2016 (10) TMI 938X X X X Extracts X X X X X X X X Extracts X X X X ..... is that the sale of goods is under a trade mark or brand name. It is an undisputed fact that the manufactured goods sold by the appellant-Company were home appliances under the brand name “Sansui”. Thus the second condition is also satisfied. Now the last condition to be satisfied in order to attract section 5(2) of the KGST Act is that the sale is by the brand name holder or trade mark holder within the State and whether the appellant-Company is a holder of the brand name “SANSUI” - when a product is marketed under a brand name, the Assessing Authority is entitled to assume that the sale is by the holder of the brand name or by a person, who is entitled to use the brand name in India. Apart from this, in this case, the marketing is actually done by fully owned subsidiary and/or a group company of the holding company, which was allowed to use the brand name “Sansui”. If the sale between the holding company and the subsidiary company, both having the right to use the same brand name, is at realistic price and the marketing company namely, the appellant-Company charged only usual margins in the trade, then there is no scope for ignoring the first sale, particularly, when the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sansui Electric Co. Ltd. Japan. The Assessing Authority, vide order dated 22.03.2004, dismissed the claim of the appellant-Company with regard to the brand name holder. Aggrieved by the order dated 22.03.2004, the appellant-Company went in appeal before the Deputy Commissioner (Appeals), Ernakulam along with an application for stay. The Deputy Commissioner (Appeals), vide order dated 30.09.2004, dismissed the appeal filed by the appellant-Company being Sales Tax Appeal No. 530 of 2004. d) Aggrieved by the order dated 30.09.2004, the appellant-Company approached the Kerala Sales Tax Appellate Tribunal (in short the Tribunal ) by filing T.A. No. 736 of 2004 which was decided in favour of the appellant-Company vide order dated 12.04.2006. e) The respondent-State, aggrieved by the abovesaid order, preferred a revision petition being ST REV No. 36 of 2007 before the Kerala High Court. A Division Bench of the High Court, vide order dated 25.05.2010, allowed the revision filed by the respondent-State holding that the appellant-Company is the brand name holder of Sansui . Feeling aggrieved, the appellant-Company filed a Review Petition being No. 337 of 2011 before the High Court w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re sold to its subsidiary, the appellant-Company, for marketing in Kerala. Even though Videocon International Ltd. returned the entire sales as first sales on which they have collected tax from the subsidiary company, the appellant-Company was assessed for sales tax by the Assessing Officer while scrutinizing the second sale exemption as claimed by the appellant-Company and found that the goods in respect of which second sale exemption was claimed by the appellant-Company were goods sold under brand name Sansui and so much so, tax under Section 5(2) is payable by the appellant-Company. The appellant-Company opposed the same by stating that the brand name Sansui is owned by Sansui Electric Ltd., Japan and is not at all related to the appellant-Company. During the course of proceedings, the Assessing Officer found that the correspondence sent to the Department was in the letter head with the trademark, logo and brand name of Sansui . Since the products were sold under the brand name Sansui , assessment was made under Section 5(2) of the KGST Act after disallowing second sale exemption as claimed by the appellant-Company. 7) For deciding the controversy in issue, it would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (2) of Section 5, the following conditions are to be satisfied (i) Sale of manufactured goods other than tea; (ii) Sale of the said goods is under a trade mark or brand name; and (iii) The sale is by the brand name holder or the trade mark holder within the State. If all the aforesaid conditions are satisfied, the sale by the brand name holder or the trade mark holder shall be the first sale for the purposes of the KGST Act. 10) Applying the aforementioned conditions to the facts of the present case, it is an admitted fact that the goods sold by the appellant-Company are manufactured goods other than tea. The first condition is satisfied. The next condition to be satisfied is that the sale of goods is under a trade mark or brand name. It is an undisputed fact that the manufactured goods sold by the appellant-Company were home appliances under the brand name Sansui . Thus the second condition is also satisfied. Now the last condition to be satisfied in order to attract section 5(2) of the KGST Act is that the sale is by the brand name holder or trade mark holder within the State and whether the appellant-Company is a holder of the brand name SANSUI . 11) On 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and based on the facts and the filings made by the company, from time to time, with the Stock Exchanges, the promoters together with various Videocon Group Companies were holding 35.11% of equity shares in Videocon International Ltd. as on 31/3/0000. Copy of shareholding pattern of Videocon International Ltd as on 31/3/2000 is produced herewith and marked as Annexure R-1 (G). 6. I respectfully further say and submit that at no point of time the respondent company was a subsidiary of Videocon International Limited. The same is evident from various filings made by Videocon International Limited and the respondent company. Videocon International Limited and, KAIL Limited were/are part of Videocon Group. Affiliated Group The principal operating companies in the Wider Videocon Group outside the Videocon Group, including: Videocon Appliances Limited, Videocon Communication Limited, Applicomp India Limited, Kitchen Appliances India Limited, Millennium Appliances (India) Limited and their consolidated subsidiaries. In this context, other related/relevant definitions are:- Dhoot Family Mr. V.N. Dhoot, Mr. P.N. Dhoot, Mr. R.N. Dhoot and their blood and marital rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. Further, we are of the view that when a product is marketed under a brand name, the Assessing Authority is entitled to assume that the sale is by the holder of the brand name or by a person, who is entitled to use the brand name in India. Apart from this, in this case, the marketing is actually done by fully owned subsidiary and/or a group company of the holding company, which was allowed to use the brand name Sansui . 14) Brand name has no relevance when the products are manufactured and sold in bulk by the holding company to its subsidiary company for marketing. However, the brand name assumes significance when goods are marketed with publicity in the market. Moreover, when the goods are sold under the brand name, necessarily, it has to assume that the marketing company is the holder of the brand name or has the right to market the products in the brand name because, it is the first company introducing the products in the market. The objective of Sec 5(2) of KGST Act is to assess the sale of branded goods by the brand name holder to the market and the inter se sale between the brand name holders is not intended to be covered by Sec. 5(2) of the KGST Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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