Case: CRYPTOM CONFECTIONERIES (P.) LTD Vs. STATE OF KERALA

1. The Appellant is the registered brand owner of CRYPTM. Pursuant to an agreement dated 01.04.1995 entered into between the Appellant and the manufacturing company viz. M/s. Bristo Foods Pvt. Ltd., the manufacturing company had license and right to use the Appellants name CRYPTM. The assessing authority had completed the assessments for the assessment years 1998-99 and 1999-2000 and had levied sales tax u/s 5(2) of the Kerala General Sales Tax Act, 1963 (for short, the Act).2. Being aggrieved by the order passed by the assessing authority the Appellant/Assessee preferred appeal before the First Appellate Authority. The First Appellate Authority confirmed the order passed by the assessing authority holding that the Appellant was the registered owner or holder of the brand name Cryptm which are the two conditions for levy of tax u/s 5(2) of the Act.3. Being aggrieved by the order passed by the First Appellate Authority the Appellant/Assessee preferred appeal before the Kerala Sales Tax Appellate Tribunal, (for short, the Tribunal). The Tribunal vide its order dated 25.05.2004 while partly allowing the appeal has reduced the extent of tax already paid at any previous point of sale.4. Aggrieved by the order so passed by the Tribunal, the Appellant preferred Sales Tax Revision before the High Court. The High Court dismissed the revision petition filed by the Appellant/assessee. Being aggrieved by the impugned judgment and order, the Appellant/assessee is before us in this appeal.

Court's reasoning:
It is an admitted position that the goods manufactured by M/s. Bristo Foods Pvt. Ltd. in the brand name holder, namely the Appellant/assessee falls under Item 39 of the First Schedule to the Act. Therefore, it is single point levy and the levy is at the point of sale.9. 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. Keeping in view the aforesaid provision, let us once again trace the transaction between the Appellant and the licensee, namely, M/s. Bristo Foods Pvt. Ltd.The licensee manufactures the goods, namely, confectioneries and effects supply of sale to the brand name holder. It is the brand name holder, who affects the sale of the confectioneries which are to be taxed as Item 39 of the First Schedule to the Act within the State. Therefore, it is the brand name holder, who has to pay tax u/s 5(2) of the Act. If for any reason M/s. Bristo Foods Pvt. Ltd. has paid the tax while affecting the supply of the manufactured commodity to the Appellant/assessee, the Appellant/assessee and M/s. Bristo Foods Pvt. Ltd. can approach the authorities for claiming the refund of the tax paid by them.