The division bench of the Supreme Court while rejecting the plea of the appellant-assessee to treat the sales at the hands of the manufacturer as First Sale, has categorically held that, the sale effected by the appellant, bing the brand name holder/trademark holder would be treated as the First Sale U/s. 5[2] of the Kerala General Sales Tax Act, 1963.
The appellant ACC Limited had been in an agreement with M/s. Cochin Cement Limited since 1993, for manufacturing cement and handing over the same to the assessee for sale under the Brand Name. The petitioners contended that the Cochin Cement Limited is the brand name holder of the present appellant and, therefore, the sale at its hand has to be treated as first sale for the purposes of this Act.
While rejecting the contentions, the division bench comprising of Justice Dipak Misra and Justice Rohinton Fali Nariman observed that, “On a conjoint reading of the aforesaid provisions, it is discernible that the Legislature has clearly expressed its intention to treat the sale by the brand name holder or the trade mark holder as the first sale”. The bench relied on the decision of Cryptom Confectioneries Pvt. Ltd. Vs. State of Kerala where a two-Judge Bench of the Supreme Court had observed that, “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 of 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”.
Observing the above decision to be a binding precedent, the Hon’ble Court found that in the earlier decision, Section 5(2) was considered and a view has been expressed and, therefore, it cannot be said that a provision has not been referred to or not considered.
While dismissing the appeal, the division bench also observed that, “What is limpid is that Section 5(2) is an expression of the Legislative intention that the sales at the hands of the brand name holder and trade mark holder would be treated as the first sale. On a perusal of the agreement entered into between the parties, it is not remotely suggestive of the fact that Cochin Cement Limited is a brand name holder or trade mark holder. Hence, the ambitious submission of Mr. Ganesh has to melt as a glacier, and we say so. Ergo, the decision in Cryptom Confectioneries Pvt. Ltd. does not require reconsideration”.
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