Case: Kail Ltd. Formerly Kitchen Appl.(I) Ld Vs. State Of Kerala Tr.Jt.Commr.(Law)

held company.5. I further say that Dhoot Brothers are also promoters of Videocon International Ltd. and based on the facts and the filings made by the company, from time to time, with the Stock Exchanges, the promoters together with various Videocon Group Companies were holding 35.11% of equity shares in Videocon International Ltd. as on 31/3/0000. Copy of shareholding pattern of Videocon International Ltd as on 31/3/2000 is produced herewith and marked as Annexure R-1 (G).6. I respectfully further say and submit that at no point of time the respondent company was a subsidiary of Videocon International Limited. The same is evident from various filings made by Videocon International Limited and the respondent company. Videocon International Limited and, KAIL Limited were/are part of Videocon Group.Affiliated Group"The principal operating companies in the Wider Videocon Group outside the Videocon Group, including: Videocon Appliances Limited, Videocon Communication Limited, Applicomp India Limited, Kitchen Appliances India Limited, Millennium Appliances (India) Limited and their consolidated subsidiaries."In this context, other related/relevant definitions are:-Dhoot FamilyMr. V.N. Dhoot, Mr. P.N. Dhoot, Mr. R.N. Dhoot and their blood and marital relations and companies or other entities outside the Wider Videocon Group owned and/or controlled directly or indirectly by all or any such persons.Wider Videocon GroupThe affiliated Group and Videocon GroupVideocon GroupVideocon Industries Limited, and where the context permits, its subsidiaries...." 12. Similarly, paragraph 6 of the same affidavit shows that Videocon International Ltd and KAIL Ltd are part of Videocon group. It also shows that during 1999-2000, the appellant-Company had manufactured 2057 colour television sets and 961 black and white television sets in SANSUI brand at Calcutta factory. Furthermore, at page Nos. 109-110 of the website publication produced by learned senior counsel for the appellant-Company in the High Court shows that as on 30.06.2006, 100% shares of Kitchen Appliances India Ltd. were held by Dhoot family. The given evidences are sufficient enough to show that the appellant-Company is a subsidiary and/or a group company of M/s Videocon International Ltd and hence, is also allowed to use the brand name SANSUI. Further, evidence on record shows that even the letter head used by the appellant-Company for correspondence is printed with the name of SANSUI with their logo and trademark. 13. In Cryptm Confectioneries (P) Ltd. v. State of Kerala (2015) 13 SCC 492, this Court while dealing with exactly similar incidence of tax held as under:- "9. In order to attract Section 5(2) of the Act, the following conditions are to be satisfied:(i) Sale of manufactured goods other than tea;(ii) Sale of the said goods is under a trade mark/brand name; and(iii) The sale is by the brand name holder or the trade mark holder within the State.If the above three conditions are satisfied, the sale by the brand name holder or the trade mark holder shall be the first sale for the purpose of the Act.10. The aforesaid sub-section commences with a non obstante clause i.e. irrespective of Section 5(1) of the Act or any other provision under the Act. The said sub-section speaks of a sale made by a brand name holder or the trade mark holder within the State. The legislature deems that such a sale by the brand name holder or the trade mark holder shall be the first sale within the State. In our opinion this is the only possible construction that can be given to sub-section (2) of Section 5 of the Act." Further, we are of the view that when a product is marketed under a brand name, the Assessing Authority is entitled to assume that the sale is by the holder of the brand name or by a person, who is entitled to use the brand name in India. Apart from this, in this case, the marketing is actually done by fully owned subsidiary and/or a group company of the holding company, which was allowed to use the brand name "Sansui". 14. Brand name has no relevance when the products are manufactured and sold in bulk by the holding company to its subsidiary company for marketing. However, the brand name assumes significance when goods are marketed with publicity in the market. Moreover, when the goods are sold under the brand name, necessarily, it has to assume that the marketing company is the holder of the brand name or has the right to market the products in the brand name because, it is the first company introducing the products in the market. The objective of Sec 5(2) of KGST Act is to assess the sale of branded goods by the brand name holder to the market and the inter se sale between the brand name holders is not intended to be covered by Sec. 5(2) of the KGST Act. 15. However, if the sale between the holding company and the subsidiary company, both having the right to use the same brand name, is at realistic price and the marketing company namely, the appellant-Company charged only usual margins in the trade, then there is no scope for ignoring the first sale, particularly, when the first seller was also the holder of the brand name and was free to market the products in the brand name. However, the evidence on record shows that the margin charged by the appellant-Company while making the further sale of product is unusually high. So the inter se sale between the groups of companies under the control of the same family was only to reduce tax liability and was rightly ignored by the assessing officer by levying tax under Section 5(2) of the KGST Act. 16. In view of the foregoing discussion, we are of the opinion that the tax invoking Section 5(2) of the KGST Act was rightly levied on the appellant-Company for the relevant period as it is proved beyond reasonable doubt that the appellant-Company is the brand name holder of "Sansui". We uphold the decisions rendered by the High Court in revision petition and review petition and no interference is warranted into it.17. Above being the position, the

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]9. As is clear from the language itself that in order to attract sub-Section (2) of Section 5, the following conditions are to beSale of manufactured goods other than tea;(ii) Sale of the said goods is under a trade mark or brand name; and(iii) The sale is by the brand name holder or the trade mark holder within theall the aforesaid conditions are satisfied, the sale by the brand name holder or the trade mark holder shall be the first sale for the purposes of the KGST Act.10. Applying the aforementioned conditions to the facts of the present case, it is an admitted fact that the goods sold by the appellant-Company are manufactured goods other than tea. The first condition is satisfied. The next condition to be satisfied is that the sale of goods is under a trade mark or brand name. It is an undisputed fact that the manufactured goods sold by the appellant-Company were home appliances under the brand name "Sansui". Thus the second condition is alsoare of the view that when a product is marketed under a brand name, the Assessing Authority is entitled to assume that the sale is by the holder of the brand name or by a person, who is entitled to use the brand name in India. Apart from this, in this case, the marketing is actually done by fully owned subsidiary and/or a group company of the holding company, which was allowed to use the brand namethe evidence on record shows that the margin charged by the appellant-Company while making the further sale of product is unusually high. So the inter se sale between the groups of companies under the control of the same family was only to reduce tax liability and was rightly ignored by the assessing officer by levying tax under Section 5(2) of the KGSTare of the opinion that the tax invoking Section 5(2) of the KGST Act was rightly levied on the appellant-Company for the relevant period as it is proved beyond reasonable doubt that the appellant-Company is the brand name holder of "Sansui". We uphold the decisions rendered by the High Court in revision petition and review petition and no interference is warranted into it.