MALABAR GOLD PRIVATE LIMITED Vs. COMMERCIAL TAX OFFICER

JUDGEMENT

(1.) W .A.Nos.2213, 2214, 2215, 2216 & 2217 of 2012 are filed by the same petitioner in the five writ petitions, viz. W.P.(C) Nos.38505/2010, 38524/2010, 28351/2011, 28376/2011 and 20269/2012 and W.A.Nos.135, 136, 137, 138 and 140 of 2013 are filed by the Commissioner of Central Excise and Customs, who was, the second respondent in all the writ petitions, aggrieved by the common judgment rendered by the learned Single Judge. The petitioner in the writ petitions is Malabar Gold Private Limited, a private limited company (hereinafter referred to as 'the Company') registered under the Companies Act, 1956. The Commercial Tax Officer, Circle III, Kozhikode and the State of Kerala represented by the Secretary to Government, Department of Commercial Taxes, Trivandrum are the contesting respondents.

(2.) THE Company is engaged in marketing, trading, export and import of jewellery, gold ornaments, diamond ornaments, platinum ornaments, watches, etc. under the name of 'Malabar Gold'. It is a registered dealer in the Office of Commercial Tax Officer, Circle III, Kozhikode bearing RC No.32110830404 and 32110830404C under the Kerala Value Added Tax Act, 2003 (for short 'the KVAT Act') and Central Sales Tax Act, 1956 respectively. It is having Service Tax registration No.AADCM9043RST001 dated 28.3.2006 issued under Section 69 of the Finance Act, 1994 under the category of 'Franchise Services'.

(3.) IN the similar proposal notices issued for the respective years, the Commercial Tax Officer (first respondent) informed the Company that royalty received by a dealer from franchisees for use of Trade Mark would attract VATunder Entry Sl.No.68 of the Third Schedule to the KVATAct, 2003 and the transfer of right to use any goods would be taxable under Section 6(1) of the said Act. The Company, in their replies, mainly took up the contention that the transaction actually attracts service tax alone and they have already paid service tax of 10%/12% and the transaction of franchise would not fall under the ambit of sale of goods under the KVAT Act. In that context the Company relied upon the decisions of the Apex Court in BSNL and another v. Union of India and others {(2006) 3 SCC 1} and Imagic Creative Pvt. Ltd. v. Commissioner of Commercial Taxes (2008 (9) STR 337). Overruling the objections, the Commercial Tax Officer issued proceedings imposing tax at 4% as well as interest at 12% under KVAT Act. In two cases penalty under Section 67 of the Act was also imposed. A decision of the Apex Court in Tata Consultancy Services v. State of A.P.{(2005) 1 SCC 308} and that of the decision of a Division Bench of this Court in Mechanical Assembly Systems (India) Pvt. Ltd. v. State of Kerala (2006 (1) KLT 947=2006 (144) STC 546) were relied upon.