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2012 (11) TMI 927 - HC - VAT and Sales TaxRoyalty for use of Trade Mark – held that:- petitioner themselves concede that their trademark has been transferred for the use of their franchisees and that as consideration thereof, they have received royalty. - Decision of BSNL v. Union of India [2006 (3) TMI 1 - SUPREME COURT]. distinguished. As far as the requirement that transfer of trademark to the transferee should be to the exclusion of the transferor is concerned, if the petitioner had a case that the franchisee has no exclusive right within the territory allotted to it, it was for them to plead and prove this contention. There is no such plea and copy of the agreements have not even been produced by them. - Further, the specimen franchisee agreement made available by the counsel for the petitioner shows that the franchisee has undertaken not to use the showroom for any purpose or activity other than that are provided in the agreement and to stock only products authorised by the petitioner. The second requirement to be satisfied is that what is transferred for use should be "Goods" as defined in the Act to come within "sale" as defined in the Act. Since the statutory provisions of the KVAT Act are similarly worded, this court is entitled to place reliance on these principles, which are also binding on this Court. For this reason, introduction of Service Tax is inconsequential. Trade Mark is "Goods" as defined in the Act - Royalty received by the petitioner is exigible to tax under the KVAT Act. Faced with this situation, counsel for the petitioner relied on the Apex Court judgment in Imagic Creative (2008 (1) TMI 2 - SUPREME COURT OF INDIA) and contended that Service Tax and VAT being mutually exclusive, since the petitioner is paying service tax on royalty received, the impugned demand for tax and penalty are illegal. - In this judgment, I have already held that royalty received is liable to be taxed under the Act and this Court is not called upon to decide the legality of the levy of service tax on the royalty received by the petitioner. Therefore, if the petitioner has a case that levy of service tax is illegal for any reason, it is upto them to challenge the levy in appropriate proceedings. - Decided against the assessee.
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