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2013 (7) TMI 101 - KERALA HIGH COURTLevy of VAT on transfer of Trade Mark to the franchisees - scope of the term 'intangible goods' - deemed sale - royalty received from franchisees for use of Trade Mark - Entry Serial No.68 of the Third Schedule to the KVAT Act, 2003 - Held that:- even though both sides relied upon the provisions of Articles 246 and 254 of the Constitution of India, we need not enter into a finding on the said question, as we are of the view that the tests laid down in BSNL's case (2006 (3) TMI 1 - Supreme court) are squarely applicable here. Herein, it cannot be said that there are goods deliverable at any stage which is the test laid down by the Apex Court in paragraphs 78 and 79 of BSNL's case (2006 (3) TMI 1 - Supreme court) and for that reason also, there is no transfer of right to user at all. Coupled with the same, is the fact that during the period in question the franchisee is having the right, it is not to the exclusion of the franchisor and as it is seen that even during the period during which the transaction is going on, the franchisor can again transfer the right to others, the tests laid down in sub paragraphs (d) and (e) under para 97 of BSNL's case (2006 (3) TMI 1 - Supreme court) are not satisfied. We are unable to agree with the view taken by the learned Single Judge [2012 (11) TMI 927 - KERALA HIGH COURT]. The view taken in para 14 of the judgment is that the transaction in question is a deemed sale as defined under Section 2(x)(iii) of the KVAT Act. The above view was taken by concluding that the trade mark of the appellant is transferred to the franchisees for their use and the consideration received is the royalty paid to the appellant. In para 17, the principles stated in BSNL's case (2006 (3) TMI 1 - Supreme court) were distinguished on the facts of the said case and it was held that in the said case the Court was not dealing with a case involving transfer of intellectual property rights such as trade mark. It was held that there is total transfer of trade mark on payment of royalty which alone will attract the provisions of KVAT Act. With great respect, we are unable to agree with the same. Order of single judge reversed [2012 (11) TMI 927 - KERALA HIGH COURT] - Decided in favor of assessee.
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