NILKAMAL PLASTICS LTD. Vs. THE ASSISTANT COMMISSIONER-I

JUDGEMENT

(1.) The petitioner is a company engaged in the manufacture and sale of moulded plastic furniture. It had entered into a licence agreement with a sister concern M/s.Nilkamal Crates and Containers, which is a partnership firm and the registered proprietor of the trade mark "Nilkamal". It would appear that the said Nilkamal Crates and Containers had also entered into an agreement with M/s.Kaveri Pet and Polyforms (P) Ltd. permitting the said company to manufacture plastic moulded furniture with the trade mark "Nilkamal". Thus, through two separate agreements, entered into with the petitioner as well as Kaveri Pet and Polyforms (P) Ltd., the registered proprietor of the trade mark "Nilkamal", namely, Nilkamal Crates and Containers had arranged their affairs in such a way that moulded plastic furniture with the brand name "Nilkamal" would be manufactured by Kaveri Pet and Polyforms (P) Ltd and thereafter sold to the petitioner who would then distribute the said furniture by way of sale to others within the State. The aforesaid arrangement between the parties attracted the attention of the Sales Tax Authorities in the State, primarily in view of the provisions of Section 5(2A) and 5(2B) of the Kerala General Sales Tax Act, 1963, hereinafter referred to as the 'KGST Act', whereby, as an exception to the general rule with regard to the liability to tax under the KGST Act at the point of first sale, it was made clear that in respect of manufactured goods other than tea, which are sold under a trade mark or brand name, the sale by the brand name holder or the trade mark holder within the State would be deemed as the first sale for the purposes of the KGST Act. In the case of the petitioner, the arrangement referred to above had the effect of bringing into existence two persons who could claim to be brand name holders for the purposes of the aforecited provisions under the KGST Act. In other words, both Kaveri Pet and Polyforms (P) Ltd., as well as the petitioner, who had entered into independent agreements with Nilkamal Crates and Containers, and had obtained permission for using the brand name "Nilkamal" in connection with their respective activities, could validly be referred to as the brand name holders for the purposes of the KGST Act. The issue then arose as to who would be treated as the brand name holder for the purposes of Section 5(2) of the KGST Act in the event of a sale by Kaveri Pet and Polyforms (P) Ltd. to the petitioner, insofar as both the persons were brand name holders. The issue as to the dealer, on whom the tax liability had to be fastened in terms of Section 5(2) of the KGST Act, came to be resolved only by 13.1.2010 when, through the judgment in State of Kerala v. Nilkamal Plastics Limited, 2010 30 VST 510 , a Division Bench of this Court found that in the backdrop of the arrangement referred to above, it would be the petitioner who would be treated as the brand name holder for the purposes of Section 5(2) of the KGST Act and on whom the liability to pay tax would be fastened under the KGST Act. In the present writ petition, the petitioner is aggrieved by an order issued by the respondent imposing a penalty on the petitioner for the assessment year 2003-04. The said order has been passed in terms of Section 45A of the KGST Act and is based on a finding that the petitioner had failed to keep and disclose true and correct accounts for the said assessment year and had also tried to evade payment of tax by claiming exemption and failing to keep true and complete accounts. In the writ petition, Ext.P6 order dated 17.5.2010 passed by the respondent is impugned inter alia on the ground that the said order has been passed without considering the specific contention of the petitioners regarding its bona fides in the matter, as also without noticing the fact that the petitioner had actually disclosed the entire turnover relating to sale of moulded plastic furniture in its returns and had not suppressed any part of the said turnover while filing its returns for the said years.

(2.) A statement has been filed on behalf of the respondent wherein the stand taken is that the petitioner was fully aware of the legal provisions that ensured that the tax liability in respect of the sale of branded moulded plastic furniture would be on it, and had chosen to claim an exemption in respect of second sales by referring to Kaveri Pet and Polyforms (P) Ltd. as the brand name holder for the purposes of Section 5(2) of the KGST Act. It is alleged that the agreements relied upon by the petitioner to substantiate its contentions, that it was not the brand name holder for the purposes of Section 5(2) of the KGST Act, were all prepared to suit the interest of the petitioner and therefore could not be relied upon for the purposes of excluding a tax liability on the petitioner.

(3.) I have heard Sri.M.Pathros Matthai, the learned senior counsel appearing on behalf of the petitioner as also Smt.Lilly.K.T., the learned Government Pleader appearing on behalf of the respondent.