Kerala General Sales Tax Act - sale by brand name holder or trade mark holder to be first sale for purpose of Sec 5(2) - KAIL is the brand name owner of 'Sansui'

By Vijay Kumar

KAIL sold products like television, washing machine etc. manufactured under the brand name "Sansui". The entire products are purchased by KAIL from Videocon International Ltd. Videocon International Ltd., the holding company, brings the goods to Kerala on stock transfer and the entire goods were sold to its subsidiary, KAIL, for marketing in Kerala. Even though Videocon International Ltd. returned the entire sales as first sales on which they have collected tax from the subsidiary company, KAIL was assessed for sales tax by the Assessing Officer while scrutinizing the second sale exemption as claimed by KAIL and found that the goods in respect of which second sale exemption was claimed by the appellant-Company were goods sold under brand name "Sansui" and so much so, tax under Section 5(2) is payable by the appellant-Company.

The Supreme Court yesterday observed 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".

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