Case Details:
| Particular | Details |
| Case No. | W.P. (C) No. 13408 of 2009 & 6404, 16931 of 2010 |
| Case Name | Lal Products v. Intelligence Officer |
| Court | Kerala High Court |
| Date of Judgement | 06-12-2018 |
| Citation | GIG-CLS-0018 |
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Issue-In the above case, Lal Products (petitioner) sold its trade mark “Chandrika”, obtained for bath-soaps, to “Wipro Chandrika Ltd” and the agreement was executed in Ahmedabad in the assessment year 2004-05 and was treated as a sale within the State of Gujarat and sales tax was paid in accordance with the tax enactment applicable to that State at 4% on the volition of the Petitioner. Admittedly, the registered office of the seller was in Kerala and the registered office of the purchaser was in Bangalore. The sales tax authorities initiated penalty proceedings and imposed penalty at twice the amount of tax sought to be evaded. The penalty order produced and the notice of demand are under challenged. As per the assessment order, the non-competition fee received by the petitioner-assessee based on an agreement entered into with the purchaser of trade mark, was assessed as local sale, under the Kerala General Sales Tax Act, 1968 . In carrying out the assessment, the Assessing Officer also levied tax, as inter-State sale on the sale of “Good-Will”, i.e.: sale of trade mark, by the assessee to the purchaser, for which transaction penalty was earlier levied. The sale of good-will was treated as inter-state under the Central Sales Tax Act.
Held- It was held that as to the assessment of non-competition fee, at the hands of the petitioner, it is to be observed that the fee is paid by the transferor to the transferee. Also, in pursuance to an agreement by which the transferee-assessee manufactures the goods under trade mark, which right has already been transferred. There is no sale of goods in the said transaction and it has to be reiterated that the fees are paid by the purchaser outside the State to the petitioner within the State. Hence order assessing to the extent it assess the non-competition fee was set aside and Order was upheld to the extent the transfer of trade mark or good will is assessed under the CST Act.
