NUTRINE CONFECTIONARY COMPANY (P) LTD. Vs. STATE OF ANDHRA PRADESH
SALES TAX TRIBUNAL
Nutrine Confectionary Company (P) Ltd.
STATE OF ANDHRA PRADESH
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N. Ratna Raju, Member (D) -
(1.) THESE four appeals have been preferred by the same appellant M/s. Nutrine Confectionary Company (P) Ltd., Chittoor challenging the revision proceedings of the Additional Commissioner (CT), (Legal), Office of Commissioner of Commercial Taxes, Hyderabad. Since the appellants are common and common grounds are urged and the Advocate interceding for the appellants being one and the same, we propose to dispose of these appeals by this common order. The particulars of these appeals are set out in the following table.
Now we may briefly recount the facts leading to these appeals.
(2.) THE appellants are assesses on the rolls of Commercial Tax Officer -II, Chittoor for the assessment years 1995 -96, 1996 -97, 1997 -98 and 1998 -99 under APGST Act, 1957. Their assessments for the years 1995 -96 and 1996 -97 were finalized by the assessing authority vide references shown in Col. 3 of the table against Sl. No. 1 & 2. The said assessments were reassessed by the same assessing authority vide references quoted in the same columns. Similarly, their assessments for the years 1997 -98 and 1998 -99 were finalized by the assessing authority vide references reflected in Col. 3 of the table against Sl. Nos. 3 & 4. Aggrieved, the appellants preferred first appeal before the Appellate Deputy Commissioner (CT)., Kurnool who vide proceedings reflected in Col. 4 of the table disposed of the appeals partly allowing and remanding, allowing and partly allowing and partly dismissing the appeals. However, the Additional Commissioner of Commercial Taxes, Office of Commissioner of Commercial Taxes, A.P., Hyderabad revised the orders of the Appellate Deputy Commissioner (CT)., in exercise of power under Section 20(2) of the APGST Act vide references reflected in Col. 5 of the table. Consequently, the turnovers impugned, tax/turnover taxes are reflected in Col. 6 of the table supra. Aggrieved, the appellants preferred these four appeals vide T.A. Nos. reflected in Col. 2 of the table supra. Heard both sides,
(3.) THE learned Advocate interceding for the appellants referring to the written statement of objections submitted as follows:
"1. The appellant is common in all the four appeals. All the appeals are filed against the orders of Additional Commissioner revising the orders of the Appellate Deputy Commissioner and restoring the orders of Commercial Tax Officer in exercise of powers under Section 20 of the APGST Act, 1957.
2. The appellant is engaged in the confectionary business. It has entered into agreements with the following parties:
1. All the agreements are similar in nature. The appellant is the owner of "Bunny" Logo and Nutrine Trade Mark and also has extensive information on the recipes, material procurement, marketing, advertisement etc., required for a confectionery trade. These five parties have entered into separate agreements with the appellant not only for use of the Logo and Trademark but also for providing formulations and recipes for confectionery products, helping to design the wrappers and to find suitable parties for procurement of materials. The following are the salient features of the agreement.
2. The party of the First part shall allow the party of the Second part to use the "Nutrine" Trademark and "Bunny" logo on the wrappers, pouches, containers, invoices, letterheads and advertisement materials. It is expressly understood that there will be no exclusive entrustment of the Logo and Trademark to the party of the Second part and the party of the first part will use the same for its own operations. Some of the common clauses of the agreement are as under:
Clause 2: "The party of the first shall allow the party of the second part to use the "Nutrine" trademark and "Bunny" Logo on the wrappers, pouches, containers, invoices, letterheads and advertisement materials. It is expressly understood that there will be no exclusive entrustment of the Logo and Trademark to the party of the Second part and the party of the second part and the party of the First part will use the same for its own operations."
Clause 4: "The party of the First part hereby agrees to suggest suitable items of confectionery products keeping in view the facilities available with the second party provide formulas and recipes for such products and periodically suggest measures for cost reduction."
Clause 5: "The party of the first part will also suggest locations and areas for getting maximum marketing advantage for their products, the method of advertising their products and proper structuring of the prices."
Clause 7: The party of the second part shall use the Logo and Trademark only at the places permitted by the first party.
Clause 9: In consideration of the party of the First part permitting usage of Logo and Trademark and providing various supports and amenities as detailed above, the party of the second part shall pay a sum of Rs. 500/ - (Rupees five hundred only) per ton of production as Royalty.
Clause 10: The royalty amount mentioned above shall be calculated on the monthly production and shall be paid to the first party within 15 days from the end of the month."
3. In the light of the terms and conditions as set out under the various five agreements, the question that arises is:
Whether there is liability to tax on the royalty received by the appellant under Section 5 -E of the APGST Act?
4. The assessing authority rejected contentions of the appellant and confirmed the levy holding that the royalty is received only for the use of "Bunny" Logo and Trademark. Appeal was preferred before the Appellate Deputy Commissioner contending inter -alia that the agreement is for not merely use of Logo and Trademark but also for various other services and there is no separate royalty fixed for use of "Bunny" logo and trade mark. That there are multiple users of the logo and trade mark, hence there is no exclusivity to any particular lessee. Even during the period of lease, the appellant is entitled to use the Logo and Trade mark in its own business. That there is no exclusive entrustment to these parties for absolute use and enjoyment over the Logo and Trade Mark. That royalty is not 'Sale Price' but a portion of the proceeds paid to the owner as a right for the use of it.;
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