WP/3017/2001 of M/S. THE TN CO-OP MILK Vs S/TN EP BY DY COMMSNR (CT), CH on 18 December 2002

:ORDER

N.V.BALASUBRAMANIAN,J.

The petitioner is a Government of Tamil Nadu Undertakingengaged in the business of vending milk and selling milk products. Thepetitioner has a registered trade mark known as, 'AAVIN' registered under theTrade and Merchandise Marks Act,1958 (hereinafter referred to as 'the TradeMarks Act'). It is the case of the petitioner that during the course of itsbusiness during the assessment years 1983-84, 1984-85 and 1985-86, thepetitioner marketed its pr oducts both under the registered trade mark andwithout inscription of the registered trade mark on the packages. There is no dispute that the petitioner sold some of its products during the assessmentyears 1983-84 to 1985-86 without inscription of the registered trade mark onthe packages. The Commercial Tax Officer levied tax on the sale of productswithout inscription of the registered trade mark at 10% relying upon the EntryNo.103 of the I Schedule to the Tamil Nadu General Sales Tax Act, 195 9(hereinafter referred to as 'the TNGST Act'). The said Entry as it stood thenprovided that when the goods were sold under any Brand name registered underthe Trade Marks Act, it was taxable at 10%, and if not, it was taxable at 5%.2. The claim of the petitioner was that the goods were soldwithout the brand name registered under the Trade Marks Act and hence, theywere liable to sales tax at 5%. The Entry 103 was amended with effect from1.1.1987. The assessing authority, however, rejected submission of thepetitioner and levied sales tax at the rate of 10% without making anydistinction between the goods sold with the trade mark and the goods soldwithout the inscription of trade mark, 'AAVIN'. The Appellate AssistantCommissioner, the Sales Tax Appellate Tribunal and the Tamil Nadu TaxationSpecial Tribunal confirmed the order of the Commercial Tax Officer holdingthat the goods sold by the petitioner without the brand name registered underthe Trade Marks Act were leviable to sales-tax at the rate of 10%. It is theorder of the Special Tribunal that is the subject matter of the present writpetitions.

3. We heard Mr.K.J.Chandran, learned counsel for the

3. We heard Mr.K.J.Chandran, learned counsel for the petitioner and learned Special Government Pleader (Taxes). There is nodispute that the petitioner sold most of its milk products with brand name andsome of its products without the brand name and the question is whether thesale of the goods without the brand name inscribed on the packages wouldattract sales tax at the rate of 10% under the Entry 103 of I Schedule to theTNGST Act as it stood then. All the authorities have relied upon section76(1) of the Trade Marks Act to hold that the trade mark was applicable notonly when the mark was available on the package with which the goods weresold, but it has relevance to the places, encloses or annexes, in which goodswere sold or exposed for sale and it has relation to the goods using a trademark or trade description in any sign, advertisement, invoice, catalogue,business letter, business paper, price list or other commercial document, etc.The Special Tribunal was of the view that the commodity sold was identified bythe consumers that it was sold by the dealer having a particular brand name.The Special Tribunal also found that the invoices produced contained the trademark 'AAVIN'. The Special Tribunal found that the goods were sold in thepremises of the petitioner or the bunk shops where 'AAVIN' products were soldand the bunks contained the trade mark 'AAVIN'. The Special Tribunal foundthat the price list and the invoices contained the trade mark 'AAVIN'. TheSpecial Tribunal therefore held that the milk products sold by the petitionerfell under the Entry 103 of the I Schedule to the TNGST Act attracting the taxat the rate of 10%.

4. We find that the conclusion of the Special Tribunal that the goods sold by the petitioner without brand name should be deemed to be thegoods sold under the trade mark was arrived at on the basis of section 76 ofthe Trade Marks Act which is misconceived. Section 76 occurs in Chapter X ofthe Trade Marks Act which deals with the offences, penalties and procedure andsection 76 deals with the cases of infringement of a trade mark by a thirdparty by placing, enclosing or annexing any goods for sale or for the purpose of any trade or manufacture in or with any package or other thing to which atrade mark or mark or trade description has been applied. Section 76 of theTrade Marks Act is not intended to apply to any infringement by the registeredproprietor of a trade mark as there is nothing in sections 7 8 and 79 of theTrade Marks Act to show that a registered proprietor of the trade mark will beconvicted for the offence of infringement of his own trade mark. Apart fromplacing reliance on section 76 of the Trade Marks Act, nothing was brought tothe attention of this Court to the effect that if the proprietor of a trademark sells the goods without the brand name or trade mark in the same placewhere goods with brand name are sold, it would be deemed that he sold thegoods with the brand name. We hold that the mere fact that the petitioner hassold the goods without brand name in the same bunk or same premises whereother goods with brand name were sold, it cannot be held that the petitionerhas infringed his own trade mark. The mere fact that the goods were sold inthe same place where other goods with brand name were sold or the the invoicesbore the name of the petitioner or the trade mark of the petitioner are notmaterial to attract the Entry 103 of the I Schedule to the TNGST Act as thesaid Entry is intended to cover the goods which are sold under any brand nameand it does not apply to the sale of goods without brand name in the sameplace in which other goods with the brand name were sold.

5. The amendment made to the Entry 103 with effect from

5. The amendment made to the Entry 103 with effect from 1.1.1987 also makes it clear that prior to the amendment what was relevant isto see whether the goods were sold under any brand name and it is notconcerned with the person who manufactured or supplied or sold the goods andthe question whether the said person was having a registered trade mark ornot. The decision of this Court in RAJAM AND COMPANY v. STATE OF TAMIL NADU(91 STC 222) supports the case of the petitioner wherein this Court held thatunless the goods were sold under the brand name registered under the TradeMarks Act, they do not fall under the Entry 103 of the I Schedule to the TNGSTAct attracting tax at the rate of 10%. We therefore hold that all theauthorities were incorrect in holding that the sale of milk products by thepetitioner without the brand name would fall within the Entry 103 of the ISchedule to the TNGST Act as it stood then. The result is that the petitioneris liable to pay sales tax for the sale of goods without the brand name duringthe relevant assessment years in question at the rate of 5%.

6. Before parting with the case, it is surprise to find that there is no machinery provided by the Government of Tamil Nadu to resolve thedisputes that may arise between the Government of Tamil Nadu and the StateGovernment Undertakings in the matter of levy of sales tax. The questionwhether sale would attract 5% or 10% of tax on the sale of the productswithout brand name might be material for other non-governmental organisationsand in so far as the State Government Undertakings are concerned, even if thelevy is upheld at the higher percentage, the result would be that there willbe a transfer of money by book entries. We are of the view that in the caseof disputes arising between the State Government and its Undertakings, atleast in the matter relating to levy of sales tax or other indirect taxes,there should be a separate machinery to resolve the disputes that may arisebetween the State and its own undertakings so that not only the burden on theCourt is lessened, but also considerable litigation expenses and the time andenergy of the officers concerned could be utilised otherwise in their regularwork. We find that so far as the Central Government is concerned, the Supreme Court has directed that it would be a condition precedent to obtain acertificate from the High Power Committee before commencing a litigation bythe Central Government Undertakings against the Central Government.Considering the fact that the petitioner had to approach three differentauthorities and ultimately this Court has to resolve the dispute, we are ofthe view that it will be worthwhile for the State Government to consider toset up an independent machinery to resolve the disputes that may arise betweenthe State Government and its own Undertakings.7. Consequently, the impugned orders are quashed holding thatthe sale of the food products of the petitioner without brand name did notattract the Entry 103 of the I Schedule to the TNGST Act during the assessmentyears in question. The writ petitions stand allowed. In the circumstancesthere will be no order as to costs. Connected W.P.M.Ps. are closed.

Index: YesWebsite: Yesna.

To1. The Deputy Commercial (CT) toto the Government of Tamil Nadu,Chennai (South) Division,PAPJM Building, Greams Road, Chennai-6(with records)

2. The Registrar,Tamil Nadu Taxation Special Tribunal,Singaravelar Maligai,Rajaji Salai, Chennai 600 001.(with records).