Vicrocil OIL Company vs State of Andhra Pradesh

V. V. S. Rao J.

In this revision u/s 22(1) of the Andhra Pradesh General Sales Tax Act, 1957 (the APGST Act), the question is whether the petitioner, a registered dealer on the rolls of the Commercial Tax Officer, Osmangunj Circle, Hyderabad, is liable to pay sales tax u/s 5AA of the APGST Act. The fact of the matter, which is not seriously in dispute in brief, is that for the assessment year 1997-1998 the petitioner was assessed u/s 5AA of the APGST Act. Its appeal was, however, allowed by the Appellate Deputy Commissioner on March 4, 1999. In purported exercise of power u/s 20(1) read with section 20(2) of the APGST Act, the jurisdictional Joint Commissioner revised the order on November 29, 2001 restoring the assessment made by the Commercial Tax Officer. The petitioner then went in appeal before the Sales Tax Appellate Tribunal. The same, being T. A. No. 114 of 2002, was rejected on November 24, 2008. Counsel for the petitioner submits that the petitioner purchases lubricating oil in bulk from registered sales tax dealers, packs them in plastic sachets of 500 ml, 1000 ml and 5000 ml as required under the provisions of the Lubricating Oils Packing and Regulations Act, 1998, and sells them by printing the name of his company "VICROCIL". According to the counsel, VICROCIL is not a registered trade mark nor it is a brand name. It is only printed to indicate that it is packed by the petitioner company. According to the counsel, unless the trade mark is registered u/s 27 of the Trade Marks Act, 1999, section 5AA of the APGST Act is not attracted. Per contra, the senior standing counsel relies on Bechu & Company v. Assistant Commissioner (Assessment), Special Circle I, Kozhikode [2003] 132 STC 68 (Ker), and submits that, irrespective of registration, if the sale is effected by the holder of the trade mark it shall be deemed to be the first sale liable to be taxed.

Section 5AA of the APGST Act reads as under :

5AA. Levy of tax on trade mark holder.--(1) Notwithstanding anything contained in this Act whenever a dealer, who holds the trade mark or the patent thereof, sells goods other than the declared goods at any point of sale other than first point of sale, he shall be deemed to be the first seller in the State and shall be liable to pay tax accordingly and for determining the tax due to be paid by him, the tax levied and collected at the preceding point of sale if any, on the same goods shall be deducted from the tax payable by him at that point of sale."

A plain reading of the above would show that the liability of a dealer who sells goods identifiable with a name becomes a holder of a trade mark and any sale by him would be deemed as the first point of sale excisable to sales tax subject, however, to allowing of set off of the tax paid by him on the goods: The provision does not contemplate registration of trade mark as a condition for attracting section 5AA of the APGST Act. A similar question was considered in Ponds (India) Ltd. v. State of Karnataka (2006) 146 STC 556 (Karn) and Bechu & Company (2003) 132 STC 68 (Ker).

The Kerala High Court in Bechu & Company (2003) 132 STC 68 (Ker) considered a similar question and held that, "... As the Special Government Pleader has pointed out any person can do business by using a trade mark or a brand name for which there is no legal impediment. This is also recognized by the Trade and Merchandise Marks Act. It is in that context the relevance of the definition of "trade mark" and the provisions of section 27 of the Trade and Merchandise Marks Act occurs. There is no inhibition under the said Act for the user of a trade mark or brand name by unregistered trade mark holders or brand name holders. Section 27 of the said Act only states that no person shall be entitled to file or institute any proceedings to prevent or to recover damages for the infringement of an unregistered trade mark. An unregistered trade mark holder is also the owner of the trade mark which was but the registration grants exclusive right to the registered proprietor of the trade mark to use such trade mark..."

Even under the provisions of the Trade Marks Act the right of a holder of a trade mark, whether or not registered, is protected. Section 27 of the Trade Marks Act only indicates the prima facie proof of such right and so as to claim a right and enforce such right in the intellectual property of the trade mark it does not require registration. In this case, admittedly, the petitioner sells lubricating oil with the name "VICROCIL" and that itself would be deemed a sale under a trade mark. The tax revision case for the above reasons is dismissed without any order as to costs.