TMI Blog2013 (7) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Act and paid the applicable VAT on the said turnover which is not under dispute. The royalty received from the franchisee companies for the respective years is as shown below: Year Amount 2006-2007 ₹ 87,82,219/- 2007-2008 ₹ 89,05,233/- 2008-2009 ₹ 3,27,68,607/- 2009-2010 ₹ 9,80,90,822/- 2010-2011 Rs.16,83,51,132/- The appellant Company had paid service tax on the said amounts under the taxable category of 'Franchise Services' coming under Section 65(47) of Finance Act, 1994. 4. In the similar proposal notices issued for the respective years, the Commercial Tax Officer (first respondent) informed the Company that royalty received by a dealer from franchisees for use of Trade Mark would attract VAT under Entry Sl.No.68 of the Third Schedule to the KVAT Act, 2003 and the transfer of right to use any goods would be taxable under Section 6(1) of the said Act. The Company, in their replies, mainly took up the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven to the proposal notices, the Company had explained the whole concept of franchise agreement , the concept of goods , the relevant constitutional principles under Articles 246 and 254 and had placed reliance upon Entry 97 of List I under the Seventh Schedule of the Constitution and had explained the scope of Entry 54 of List II. It is submitted that in the light of the judgment of the Apex Court in Imagic Creative Pvt. Ltd.'s case (2008 (9) STR 337) the payment of service tax as well as VAT are mutually exclusive and hence once the transaction is clearly covered under the relevant provision for payment of Service Tax, then it cannot be charged for sales tax or VAT again. It is submitted that in the light of the peculiarities of the franchise agreement and the concept of right to use the goods under Article 366 (29A), the tests required to satisfy the same, laid down by the Apex Court in BSNL's case {(2006 (3) SCC 1}, are not satisfied here. 8. Learned counsel also explained that there is no transfer of Trade Mark to the franchisees in the transaction. The agreement does not permit the franchisees to further transfer the Trade Mark to a third party or to use it ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even though considered the exigibility to Sales Tax of the royalty received from the dealers, they were under the KGST Act and in all the three decisions quoted above, the disputed periods were prior to 2003. The service tax for franchise service was introduced with effect from 1.7.2003, whereas KVAT Act was notified to be effective from 1.4.2005 only. Therefore, the Division Bench had no occasion to consider the effect of the provisions under the Finance Act, 1994. It is also submitted by the learned counsel that the facts of the respective decisions show that those were cases where there was no transfer from one dealer to another whereas, herein the appellant Company has only allowed the use of the trade mark and there is no outright transfer. It is only a licence alone. It is also submitted that therein this Court had no occasion to consider the constitutional bar arising under the respective provisions of the Constitution. In the two subsequent decisions, their Lordships followed the former judgment in Mechanical Assembly Systems' case (supra) and herein, even the definition of goods is not attracted. In this context, learned counsel submitted that in the light of Entry 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned counsel submitted that the appellant is free to use the Trade Mark and free to allow other franchisees to use the same. Learned counsel further submitted that in the judgment by a Division Bench of this Court in Jojo Frozen Foods (P) Ltd.'s case {(2009) 24 VST 327} the judgment of the Andhra Pradesh High Court in Rashtriya Ispat Nigam Ltd. v. Commercial Tax Officer {(1990) 77 STC 182} which was confirmed by the Apex Court in State of A.P. v. Rashtriya Ispat Nigam Ltd. {(2002) 3 SCC 314} did not arise for consideration and therefore also the Division Bench judgments of this Court in Jojo Frozen Foods (P) Ltd.'s case (supra) and Kreem Foods Private Ltd's case (supra) are distinguishable. Learned counsel further submitted that the decision of the Bombay High Court in Commissioner of Sales Tax v. Duke Sons Pvt. Ltd. {(1999) 112 STC 370} relied upon by this Court in Jojo Frozen Foods (P) Ltd.'s case (supra) considered the provisions under the Maharashtra Sales Tax on the Transfer of the Right to use any Goods for Any Purpose Act, 1985 which was not the situation in the above two cases. Learned counsel went on to argue that even if the dictum laid down in those c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Systems (India) Pvt. Ltd.'s case {(2006) 144 STC 536}, Jojo Frozen Foods (P) Ltd.'s case {(2009) 24 VST 327} and Kreem Foods Private Ltd.'s case {(2009) 24 VST 333) will show that the transactions by way of transfer of know-how as well as right to use the Trade Mark were found to be covered by the provisions of the KGST Act. It is therefore submitted that those principles will squarely apply herein, as rightly found by the learned Single Judge. 13. In Jojo Frozen Foods (P) Ltd.'s case (supra) and Kreem Foods Private Ltd.'s case (supra) the very same situation arising herein, have been considered and the assessees were found to be liable to pay sales tax on the royalty received by the dealer from the franchisees for use of trade mark. It is submitted that the transaction in question is not a different one. The same is covered by Article 366 (29A) of the Constitution and herein specifically clause (d) of the Article will have relevance. KVAT Act received the assent of the President of India on 10.12.2004. 14. Learned counsel for the appellant had submitted that the assessment orders in the decided cases were prior to 2003 which is not disputed by the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isor' as follows: (47) Franchise means an agreement by which the franchisee is granted representational right to sell or manufacture goods or to provide service or undertake any process identified with franchisor, whether or not a trade mark, service mark, trade name or logo or any such symbol, as the case may be, is involved; (48) Franchisor means any person who enters into franchise with a franchisee and includes any associate of franchisor or a person designated by franchisor to enter into franchise on his behalf and the term franchisee shall be construed accordingly. Section 65(105) read with sub clause (zze) provides as follows: (105) Taxable Service means any service provided or to be provided.-- (zze) to a franchisee by the franchisor in relation to franchise. (other sub clauses omitted) Intellectual Property Right defined under Section 65(55a) and Intellectual Property Service defined under Section 65(55b) are as follows: (55a) Intellectual Property Right means any right to intangible property, namely, trade marks, designs, patents or any other similar intangible property, under any law for the time being in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Others. 19. It may be relevant to consider the important terms of the Model Franchise Agreement between the appellant and its franchisees which is produced as serial No.16 of the Paper Book at page 103. For easy reference, we will extract the following clauses of the agreement: MALABAR GOLD FRANCHISE AGREEMENT This agreement made at Calicut on this the 2nd day of May, 2007, between M/S. MALABAR GOLD PRIVATE LIMITED, a Company registered under Companies Act having its Corporate Office, 17/1491-D, 3rd Floor, Malabar Gate, Ram Mohan Road, Calicut-673004, Kerala, (Hereinafter referred to as FRANCHISER which expression shall unless repugnant to the context includes its successors in interest, assigns, persons or institutions claiming through or under it) represented by its Managing Director, Mr. Ahammed M.P., S/o. Mamed Kutty Haji, aged 50 years, residing at 5/697-H, Malabar Hills Housing Colony, K.P. Chandran Road, Eranhipalam P.O., Calicut, Kerala-673 006. AND M/s. MALABAR COCHIN ARCADE PVT. LTD. with its Registered Office at 17/1491-D, 3rd Floor, Malabar Gate, Ram Mohan Road, Calicut - 673004 (hereinafter referred to as FRANCJHISEE which expressio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of this AGREEMENT, for whatsoever cause, the FRANCHISEE shall make or be entitled to make: A. Any claim to the Trade Name or Trade Names or to any part of the name or names for the time being of MALABAR GOLD or to the name or any part thereof under which MALABAR GOLD is carrying on for the time being the business in the field of Franchise, New Business Opportunities other allied services nor shall the FRANCHISEE use as part of the style of its business any name (s), mark(s) or logo (s), which is or which are deceptively or confusingly similar to the trade name or names or part of its business. B. The FRANCHISEE hereby expressly agrees, admits and acknowledges that all rights, title and interest in the trade name or trade names or in the name or names of MALABAR GOLD in its business or in any letter, work design, logo, business name or part of the style of its business arising out of their use exclusively belongs to MALABAR GOLD, and no right, title or interest is granted by MALABAR GOLD to the FRANCHISEE to use MALABAR GOLD's trade names, style and logo and the name of the division under which MALABAR GOLD is from time to time carrying on the business. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntation of appropriate systems and procedures Sourcing of common items like hoardings, brochures, posters, packing material compliments etc Centralized marketing services like film shooting, advertisement designs TV and newspaper releases etc. Access to centralized customer database Benchmarking services through comparison of performance with other MALABAR GOLD showrooms Option to purchase items made at in - house production centre at discounted rates specified by MALABAR GOLD Assisting to raise fund from financial institutions to carry larger stock level Arranging eminent personalities and celebrities as brand ambassadors of MALABAR GOLD . 5. SHOWROOM OPERATIONS 5.1 STANDARDISATION: The franchisee agrees that the showroom will be set up in accordance with the special standardised designs and dicor of MALABAR GOLD and strict adherence is insisted upon in the specified layout uniformity of equipments and approach for maintaining the standard of image and reputation of MALABAR GOLD . The strict and continuing adherence to the standards, uniformity and other requirements, set out herein is expressly made a condition of this A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EE agrees further that changes in such standards, specifications and procedures may become necessary from time to time and agrees to accept such modifications, revisions and additions which MALABAR GOLD in good faith considers necessary. The FRANCHISEE agrees not to deviate from the standards as laid down by MALABAR GOLD from time to time. 5.6. MAINTENANCE - It is the responsibility of the FRANCHISEE during the tenure of the franchise to ensure that the exterior and interior of the showroom is always maintained in the prescribed standard and quality to the satisfaction of MALABAR GOLD. 5.7 The FRANCHISEE undertakes to retain the said premises/showroom until subsistence of this Agreement (and such renewals as may be mutually agreed from time to time). The FRANCHISEE shall duly and punctually pay all payments/charges/duties/levies and other moneys necessary for effecting and keeping up such premises to the Landlord/Licensor and/or to the Government/Statutory authorities. The FRANCHISEE shall furnish to MALABAR GOLD a copy of such agreement with the Landlord/Licensor and its renewals as well as payments made to Government/Statutory authorities as and when sought by MALABAR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to observe all the statutory requirements for the employees including, but not confined to the Shops and Commercial Establishments Act, Workmen's Compensation Act, Employees' Provident Fund, Employees' Family Pension, ESI and other applicable labour and allied laws. iv. The FRANCHISEE hereby indemnifies MALABAR GOLD from all or any such claims that may arise regarding such employment or employees. v. The FRANCHISEE agrees not to utilise the services of any of these persons for any service other than those specified for the showroom. MALABAR GOLD shall not in any way be liable to bear the loss/damage, liability, debts incurred by the FRANCHISEE or their employees in running the said activities. The FRANCHISEE shall be responsible for the proper conduct and behaviour of all their employees, both part time and full time, in their interaction with all external and internal parties including customers. These persons will be expected to conform to the code of conduct and standards set out by MALABAR GOLD through specific circulars from time to time. vi. It is hereby clarified and declared that the persons employed by the FRANCHISEE at the FRANCHISEE'S of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R GOLD or its representatives shall have the right to inspect the premises of the shownroom and inspect all documents records and accounts whenever they deem fit to ensure conformity with the terms of this agreement. Clauses 6 to 11 omitted. 12. TRANSFER OF RIGHTS The FRANCHISEE agrees not to sub-let or sub-lease or in any way sell, transfer, discharge or distributes or delegate or assign the rights under this agreement in favour of any third party except with the prior written consent of MALABAR GOLD. Clauses 13 to 17 omitted. 18. AGENCY i. The FRANCHISEE agrees that it is not an agent of MALABAR GOLD and it is not entitled to enter into any contract on behalf of MALABAR GOLD. The relationship between MALABAR GOLD and the FRANCHISEE shall be one of principal to principal basis. ii. The parties hereto agrees that the FRANCHISEE is an independent business concern MALABAR GOLD shall not be liable or responsible for any loss sustained by the franchisee either in the conduct of business or in any other manner. Nothing herein contained shall constitute the FRANCHISEE as an agent, legal representative, partner, subsidiary, joint venture or empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business plans of MALABAR GOLD. 25.2.7. Ceasing to conduct the showroom or defaults under any lease or sub-lease or looses its rights to the possession on the premises in which the same is located. 25.2.8. Conduct of any other business similar to MALABAR GOLD's business activity or any activity, which will cause a loss/diversion of business from MALABAR GOLD. 25.2.9. Questioning, disputing or attacking the validity, rights, title or interest of MALABAR GOLD or MALABAR GOLD's logo, trade marks, designs, patents, copy rights or other intellectual property rights, and other material whether copy righted or not. 25.2.10. Committing any other breach of any of its obligations hereunder and the failure to remedy any such breach within 30 days from the receipt of written notice from MALABAR GOLD or any other breach of any of its obligations hereunder where the same is not capable of remedy. 25.3. ON TERMINATION- Upon expiry of this Agreement or an earlier termination of this Agreement, the Franchisee will be bound by the following - 1. The Franchisee will make all payments due to MALABAR GOLD. 2. The Franchisee will stop usage of and re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a sum of ₹ 1,24,19,567/- for the assessment year 1999-2000 as royalty the Sales Tax Officer proposed to levy tax under the KGST Act treating the income from royalty as turnover taxable under the Act. It was contended by the petitioner company that technical know how will not come under the definition of 'goods' and therefore the amount cannot be subjected to tax under the KGST Act. After considering the contentions of the learned counsel for the petitioner that offering technology by deputing suitable personnel and that technical know-how unless incorporated in a tangible media and transferred, cannot constitute goods for the purpose of levy of sales tax, the Division Bench, speaking through Honourable Justice K.S. Radhakrishnan (as His Lordship then was), rejected the said contention. It was held in para 8 that 'technical know-how can also be transmitted, transferred, delivered, stored or possessed, etc. Agreement would definitely indicate that there is a transfer of technology for the manufacture of CCC deputing personnel for consideration, i.e. through human media. Transfer of technology in any manner either through floppy disc, CD or through deputing personn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on franchise service was introduced with effect from 1.7.2003 and the question will be whether the principles laid down in BSNL's case (supra) will support the plea of the appellant. 25. Both sides have relied upon the relevant principles explaining the meaning of the term goods by the Apex Court in Tata Consultancy Services' case {(2005) 1 SCC 308}. Therein, in para 19 the Apex Court held as follows: Thus this Court has held that the term goods for the purposes of sale tax, cannot be given a narrow meaning. It has been held that properties which are capable of being abstracted, consumed and used and/or transmitted, transferred, delivered, stored or possessed etc. are goods for the purposes of sales tax. The submission of Mr. Sorabjee that this authority is not of any assistance as a software is different from electricity and that software is intellectual incorporeal property whereas electricity is not, cannot be accepted. In India the test, to determine whether a property is goods , for purposes of sales tax, is not whether the property is tangible or intangible or incorporeal. The test is whether the concerned item is capable of abstraction, consumption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m (E) will be relevant for the purpose of this case, apart from the other important findings. Article 366(29A) was introduced by the Constitution (Forty-sixth Amendment) Act, 1982. The background of the introduction of the same has been discussed in paragraphs 39 to 44 of the judgment. Sub-clause (d) of Article 366(29-A) of the Constitution is relevant for the purpose of this case which reads as follows: 366 (29-A) 'tax on the sale or purchase of goods' includes-- (a) to (c), (e) and (f) omitted. (d) a tax on the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration. In the light of the introduction of the same, if the relevant tests are satisfied, the same will be a deemed sale. In para 43, the Apex Court held that even after introducing separate categories of deemed sales in the said Article, the meaning of the word goods was not altered. For easy reference, we extract the said paragraph hereunder: 43. Gannon Dunkerley (State of Madras v. Gannon Dunkerlay Co. Ltd. - AIR 1958 SC 560) survived the 46th Constitutional Amendment in two respects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusion the Court would have to approach the matter from the point of view of a reasonable person of average intelligence. 30. In para 56 the principles stated in Tata Consultancy Services' case {(2005) 1 SCC 308} (para 81) with regard to the meaning of the term goods were quoted and the said view was adopted in para 57. We extract the said paragraphs hereunder: 56. This view was adopted in Tata Consultancy Services v. State of Andhra Pradesh (supra) for the purposes of levy of sales tax on computer software. It was held:- A goods may be a tangible property or an intangible one. It would become goods provided it has the attributes thereof having regard to (a) its utility; (b) capable of being bought and sold; and (c) capable of being transmitted, transferred, delivered, stored and possessed. If a software whether customized or non-customised satisfies these attributes, the same would be goods . 57. This in our opinion, is the correct approach to the question as to what are goods for the purposes of sales tax. We respectfully adopt the same. 31. In para 73 their Lordships held that the dictum laid down in 20th Century Finance Corpn. Ltd. v. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the learned counsel. The matter was further explained from paragraphs 76 onwards, after considering the judgment of the Apex Court in Rashtriya Ispat Nigam Ltd.'s case {(2002) 3 SCC 314}. We extract paragraphs 76, 77, 78 and 79 hereunder: 76. In State of Andhra Pradesh and Anr. v. Rastriya Ispat Nigam Ltd. (2002) 3 SCC 314, it was claimed by the Sales Tax Authorities that the transaction by which the owner of certain machinery had made them available to the contractors was a sale. The Court rejected the submission saying that:- . . . . . .the transaction did not involve transfer of right to use the machinery in favour of contractors. The effective control of the machinery even while the machinery was in use of the contractor was that of the respondent-Company; the contractor was not free to make use of the machinery for the works other than the project work of the respondent or.. . . . . (para 4 page 315) 77. But in Agrawal Brothers v. State of Haryana and Anr.(1999) 9 SCC 182, when the assessee had hired shuttering in favour of contractors to use it in the course of construction of buildings it was found that possession of the shuttering material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer of right to use goods as defined in answer to the previous question by giving a telephone connection. C) The nature of the transaction involved in providing the telephone connection may be a composite contract of service and sale. It is possible for the State to tax the sale element provided there is a discernible sale and only to the extent relatable to such sale. D) The issue is left unanswered. E) The aspect theory would not apply to enable the value of the services to be included in the sale of goods or the price of goods in the value of the service. Against question (E), viz. whether the aspect theory will apply, it was held that it will not apply to enable the value of the services to be included in the sale of goods or the price of goods in the value of the service. 35. In the concurring judgment, the relevant principles were laid down in paragraphs 96 and 97. The said paragraphs are extracted below: 96. The entire infrastructure/instruments/appliances and exchange are in the physical control and possession of the petitioner at all times and there is neither any physical transfer of such goods nor any transfer of right to use such eq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht of the dictum laid down by the Apex Court as above, specifically in relation to Article 366(29-A)(d) and Entry 54 of List II, the learned Special Government Pleader is not right in submitting that the said principles cannot be attracted here, as the facts are different and that we will have to understand the same only on the facts of the said case and the transaction therein. We cannot agree. The whole concept of goods and sale and the relevant principles prior to the introduction of Article 366 (29-A) and the relevant principle which may apply after introduction of the said article therein, have been emphasised by the Apex Court in the said decision. Learned counsel for the appellant is right in submitting that the said principles will have application to understand the scope and ambit of the term right to use . 39. BSNL's case {(2006) 3 SCC 1}was again considered by the Apex Court in Imagic Creative Pvt. Ltd.'s case (2008 (9) STR 337). Their Lordships, in the said judgment, considered a case of composite contract and held that demand to pay sales tax for the value of the entire contract irrespective of element of service provided, is not correct. Therein, Artic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... starts and it continues till the use of the terminal is continued and therefore it attracts sales tax under the said Act. The Division Bench of the Bombay High Court, while considering the question, relied upon the principles stated by the Apex Court in BSNL's case (supra) to consider whether the delivery of goods is necessary for effecting transfer of right to use the goods and paragraphs 72, 75, 76 and 98 of the above judgment, have been extracted at pages 326 and 327. Thereafter, it was held as follows in page 327: From these observations, it is clear that even though the actual delivery of the goods is not necessary for effecting transfer of right to use the goods but the goods must be available at the time of transfer, must be deliverable and delivered at some stage. It was further held that the goods, i.e. computers and terminals were always in possession of the respondents and they were never delivered or handed over to the ONGC. It is also observed that merely because a person agrees to provide service to a particular customer during a particular period of time of day to the exclusion of all other customers for the purpose of convenience, it does not mean th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the factor which is relevant. 42. Herein, it is submitted that the terms of the franchise agreement will show that the company retains the effective control and merely because there is an agreement by way of franchise agreement enabling the franchisees to use the trade mark on the products of the Company, it cannot be said that the franchisees have got effective control of the trade mark. Here, the franchsiee's rights are limited. It is bound to sell the products of the Appellant Company. Even while the franchise agreement with one is in force, the company can use the trade mark on their own and can enter into franchise agreement with other parties. The effective control is with the appellant Company during the term of the agreement. We find force in the said submission and the dictum laid down by the Apex Court in BSNL's case (supra) will support the plea of the appellant Company. 43. Even though learned Special Government Pleader for Taxes vehemently submitted that the agreement herein does not contain any service element, we cannot agree. Clause 4 of the agreement is under the heading Support from Malabar Gold . They are providing various services as mentioned the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service is referred to in the clauses therein. We do not agree, in the light of clauses 3, 4 and 5 of the model agreement as already noticed. Since what is termed as 'taxable service' is any service to be provided to a franchisee by a franchisor in relation to a franchise, the terms of the agreement will have to be understood in that context. 45. In the light of the principles stated in para 98 of the judgment in BSNL's case (supra), the provisions of the agreement, especially clauses (3) and (5) will show that the franchisor retains the right, effective control and possession and it is not a case of transfer of possession to the exclusion of the transferor. We notice that under clause (12) the franchisee has no right to sub-let or sub-lease or in any way sell, transfer, discharge or distribute or delegate or assign the rights under the agreement in favour of any third party, which is also significant. On termination of the agreement also, going by clause 25.3, the franchisee shall forfeit all rights and privileges conferred on them by the agreement and the franchisee will not be entitled to use the trade name or materials of Malabar Gold . Merely because, going by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th 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 (supra) 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 (supra) 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 (supra) are not satisfied. 49. Therefore, we are unable to agree with the view taken by the learned Single Judge. 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 app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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