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2016 (10) TMI 938 - SC - VAT and Sales TaxLevy of tax u/s 5(2) of the KGST Act on sales turnover - sale of home appliances under the brand name “Sansui” - first sale or second sale? - Whether the appellant-Company is the holder of the brand name in respect of the “Sansui” products sold by it or not? - Held that: - the sale by the brand name holder or the trade mark holder shall be the first sale for the purposes of the KGST Act, if following conditions are 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. 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” - 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 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 by the assessing officer by levying tax under Section 5(2) of the KGST Act. The tax invoking Section 5(2) of the KGST Act was rightly levied on the appellant-Company for the relevant period as it is proved beyond reasonable doubt that the appellant-Company is the brand name holder of “Sansui” - appeal dismissed - decided against appellant.
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