TMI Blog1998 (9) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... r Foods Beverages Ltd., under agreement dated September 6, 1985 and evidenced by Debit Note No. 94/A dated September 13, 1988 for Rs. 1,500 in respect of' royalty charges collected by the respondent did not amount to "sale" as defined in section 2(10) of the Maharashtra Sales Tax on the Transfer of the Right to use any goods for Any Purpose Act, 1985 and, therefore, the respondent is not liable to get registered under the said Act 2.. The material facts giving rise to this reference are as follows: The assessee, M/s. Duke Sons Pvt. Ltd., is a company registered under the Bombay Sales Tax Act, 1959 as also under the Central Sales Tax Act, 1956. It is a holder of registered trade marks, viz., Duke's, Mangola, Pineola, Tango. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax on the Transfer of the Right to use any Goods for Any Purpose Act, 1985 ("1985 Act") on the amount of royalty received by it for transfer of right to use its trade mark to M/s. Salstar Food's Beverages Ltd., the assessee applied to the Additional Commissioner of Sales Tax under section 52 of the Bombay Sales Tax Act, 1959 read with section 8 of the 1985 Act for determination of the question whether it was liable to pay tax on the amount of royalty received by it for the transfer of the right to use its trade mark under the 1985 Act. The Additional Commissioner of Sales Tax (Enforcement Branch), by his order dated March 3, 1989, held that by the agreements in question there was a transfer of right to use the trade marks of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o use trade mark by the assessee to its customers and no tax could be levied on the royalty received by the assessee for the said transfer. Aggrieved by the above order of the Tribunal, the Revenue applied for reference of the question of law arising therefrom to this Court and hence this reference. 3.. We have heard Mr. Rana, learned counsel for the Revenue, who submits that the approach of the Tribunal in deciding the liability of the assessee under the 1985 Act which was enacted by the State of Maharashtra after the 46th Amendment to the Constitution of India and insertion of clause (29A) in article 366 by which the power of the Legislature to levy tax on sale or purchase of goods was extended to include power to levy tax on the transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of section 2 of the 1985 Act which defines "goods" to mean all kinds of movable property (not being newspapers, or actionable claims or money, or stocks, shares or securities). This position is also well-settled by the decision of the Supreme Court in Vikas Sales Corporation v. Commissioner of Commercial Taxes [1996] 102 STC 106 where it was observed that even incorporeal rights like trade marks, copy rights, patents and rights in Personal capable of transfer or transmission are included in the ambit of "goods". In the instant case, the admitted position is that by the agreement in question, the assessee transferred the right to use its trade marks to M/s. Salstar Foods Beverages Ltd. ("transferee") for consideration. Pursuant thereto, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act which defines sale to mean transfer of any right to use any goods for any purpose for cash, deferred payment or any other valuable consideration. From a conjoint reading of the above provisions. it is thus clear that tax is leviable under the Act on the amount received by the assessee for the transfer of the right to use any goods for any purpose. In the instant case, the assessee received a sum of Rs. 1,500 by way of royalty on the transfer of right to use the trade mark of which the assessee is the owner. The right was transferred by an agreement with the transferee by which the transferee was allowed to use the trade marks of the assessee on payment of consideration by way of royalty at the rate specified therein. It was mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e between the goods and some person having the right, either as a proprietor or as registered user, to use the mark whether with or without any indication of the identity of that person. There is a distinction between transfer of right to use a trade mark and assignment of a trade mark. "Assignment" of trade mark is taken to be a sale or transfer of the trade mark by the owner or proprietor thereof to a third party inter vivos. By assignment, the original owner or proprietor of trade mark is divested of his right, title or interest therein. He is not so divested by transfer of right to use the same. Licence to use a trade mark is thus quite distinct and different from assignment. It is not accompanied by transfer of any right or title in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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