TMI Blog2023 (7) TMI 1013X X X X Extracts X X X X X X X X Extracts X X X X ..... The fact that an exemption prevailed and enured in favour of a unit does not in any way detract from the circumstance that the levy subsists. This fundamental aspect appears to have been completely ignored by the High Court when it ruled that such sale had to be ignored altogether. The High Court, therefore, acted clearly in error in reversing the findings of Tribunal - the impugned judgment and order is hereby set aside; the appeals are allowed. - CIVIL APPEAL NOS. 8078-8080 OF 2010 CIVIL APPEAL NOS. 10696-10697 OF 2011 - - - Dated:- 15-3-2023 - HON'BLE MR. JUSTICE S. RAVINDRA BHAT And HON'BLE MR. JUSTICE DIPANKAR DATTA For the Appellant : Mr. C N Sreekumar, Sr. Adv. Mr. Prakash Ranjan Nayak, AOR Mr. S.K. Bagaria, Sr. Adv. Mr. Prakash Shah, Adv. Mr. Jas Sanghvi, Adv. Mr. Durga Prasad Poojari, Adv. Mr. Prabhat Chaurasia, Adv. Mr. Jasdeep Singh Dhillon, Adv. Mr. Rahul Gupta, AOR Mr. Kumar Ajit Singh, Adv. For the Respondent : Mr. C. K. Sasi, AOR Mr. Abdulla Naseeh V.T., Adv. Ms. Meena K Poulose, Adv. ORDER The Kerala High Court by the impugned judgment reversed an order of the Kerala Sales Tax Appellate Tribunal (hereinafter referred to as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant period is extracted below: 5. Levy of tax on sale or purchase of goods (1) Every dealer (other than a casual trader or agent of a non-resident dealer) whose total turnover for a year is not less than two lakh rupees and every casual trader or agent of a nonresident dealer, whatever be his total turnover for the year, shall pay tax on his taxable turnover of that year,- (i) in the case of goods specified in the First or Second Schedule, at the rates and only at the points specified against such goods in the said Schedules; (ii) [Omitted] (iii) In the case of transfer of the right to use any goods for any purpose (whether or not for a specified period) at the rate of eight per cent at all points of such transfer; (iv) (a) In the case of transfer of goods involved in the execution of works contract where transfer is in the form of goods at the rates and at the points specified against such goods in the First, Second or Fifth Schedule; (b) In the case of transfer of goods involved in the execution of works contract (where the transfer is not in the form of goods but in some other form) specified in the Fourth Schedule, at the rate specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le the rate specified in column (8) of that Schedule shall apply to such sales.] (vi) [Omitted by Kerala Finance Act 1997, w.e.f. 1-4-97]: PROVIDED that no tax shall be payable on that part of the turnover on which tax has already been levied on the preceding sales in the State: PROVIDED FURTHER that where a tax has been levied under this sub-section or under section 5-A, in respect of the sale or purchase of goods specified in the Second Schedule, and such goods are sold in the course of inter-State trade or commerce, the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be prescribed. (2) Notwithstanding anything contained in this Act in respect of goods, other than tea sold in auction in the State, which are sold under the trade mark or brand name, the sale by the brand name holder or the trade mark holder within the State shall be the first, sale for the purposes of this Act. As is evident every dealer, unless exempted, has to pay tax on the taxable turnover by virtue of Section 5(1). In the present case, the goods (furniture) are described in Entry 64 of the First Schedule to the KGST Act. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 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. 22) However, 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 seller was also the holder of the brand name and was free to market the products in the brand name. However, the evidence on record shows that the margin charged by the appellant-Company while making the further sale of product is unusually high. So the inter se sale betwee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der 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. 22) However, 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 seller was also the holder of the brand name and was free to market the products in the brand name. However, the evidence on record shows that the margin charged by the appellant-Company while making the further sale of product is unusually high. So the inter se sale between the groups of companies under the control of the same family was only to reduce tax liability and was rightly ignored ..... X X X X Extracts X X X X X X X X Extracts X X X X
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