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

a) The above said appeals relate to the assessment under the Kerala General Sales Tax Act, 1963 (in short `the KGST Act) for the year 1999-2000. KAIL Ltd.-the appellant-Company is a dealer in home appliances at Ernakulam having registered office at Bangalore.b) The issue is with regard to the tax under Section 5(2) of the KGST Act on sales turnover of home appliances for Rs. 27,27,20,230/- on the ground that the appellant-Company had sold the home appliances under the brand name "Sansui". To put it more clear, the Assessing Authority- the respondent-State, while scrutinizing the second sale exemption as claimed by the appellant-Company, found that it is the brand name holder of "Sansui" and hence the turnover of the items sold under "Sansui" brand name will be treated as first sale under Section 5(2) of the KGST Act.c) The appellant-Company was served with a show cause notice dated 15.02.2004 by the Office of the Assistant Commissioner (Assmt.), Ernakulam against which a reply was filed on 15.03.2004 denying the averments of the notice stating that the appellant-Company is not the holder of the brand name "Sansui" indicating that the said brand name is owned by M/s Sansui Electric Co. Ltd. Japan. The Assessing Authority, vide order dated 22.03.2004, dismissed the claim of the appellant-Company with regard to the brand name holder. Aggrieved by the order dated 22.03.2004, the appellant-Company went in appeal before the Deputy Commissioner (Appeals), Ernakulam along with an application for stay. The Deputy Commissioner (Appeals), vide order dated 30.09.2004, dismissed the appeal filed by the appellant-Company being Sales Tax Appeal No. 530 of 2004.d) Aggrieved by the order dated 30.09.2004, the appellant-Company approached the Kerala Sales Tax Appellate Tribunal (in short `the Tribunal) by filing T.A. No. 736 of 2004 which was decided in favour of the appellant-Company vide order dated 12.04.2006.e) The respondent-State, aggrieved by the abovesaid order, preferred a revision petition being ST REV No. 36 of 2007 before the Kerala High Court. A Division Bench of the High Court, vide order dated 25.05.2010, allowed the revision filed by the respondent-State holding that the appellant-Company is the brand name holder of "Sansui". Feeling aggrieved, the appellant-Company filed a Review Petition being No. 337 of 2011 before the High Court which was dismissed vide order dated 16.08.2011.f) Aggrieved by the judgments and order dated 25.05.2010 and 16.08.2011, the appellant-Company has preferred these appeals by way of special leave before this

Reasoning: 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.