2010 (12) TMI 1112 - HC - VAT and Sales Tax

Summary

Issues:
- Interpretation of section 5AA of the Andhra Pradesh General Sales Tax Act, 1957
- Liability of a dealer to pay sales tax under section 5AA
- Requirement of registration of trade mark under the Trade Marks Act, 1999 for attracting section 5AA
- Comparison with relevant case laws like Ponds (India) Ltd. v. State of Karnataka and Bechu & Company v. Assistant Commissioner

Analysis:
The High Court of Andhra Pradesh dealt with a revision under section 22(1) of the Andhra Pradesh General Sales Tax Act, 1957, to determine the liability of a registered dealer to pay sales tax under section 5AA of the Act. The petitioner, involved in the sale of lubricating oil packed with the name "VICROCIL," argued that unless the trade mark is registered under section 27 of the Trade Marks Act, 1999, section 5AA of the APGST Act is not applicable. On the contrary, the respondent relied on the case of Bechu & Company v. Assistant Commissioner, emphasizing that sales by the holder of a trade mark are deemed as the first sale liable to tax, regardless of registration status.

The court analyzed section 5AA of the APGST Act, which states that a dealer holding a trade mark selling goods other than declared goods at a point other than the first sale is deemed the first seller liable to pay tax, with provisions for tax deductions from preceding sales. The court clarified that the provision does not mandate trade mark registration to trigger section 5AA. Citing precedents like Ponds (India) Ltd. v. State of Karnataka and Bechu & Company, the court emphasized that the liability arises when a dealer sells goods identifiable with a name, becoming a trade mark holder, and any sale by such dealer is considered the first point of sale subject to tax.

Referring to the Kerala High Court case of Bechu & Company, the court highlighted that the Trade Marks Act does not inhibit unregistered trade mark holders from using trade marks or brand names for business. It noted that the right of a trade mark holder, whether registered or not, is protected under the Trade Marks Act, with section 27 providing prima facie proof of such rights. In this context, the court concluded that the petitioner's sale of lubricating oil under the name "VICROCIL" qualifies as a sale under a trade mark, dismissing the tax revision case based on these grounds, without imposing any costs.