ADITYA MUSIC Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) ALL these three appeals are filed by the same appellant M/s. Aditya Music, Hyderabad, aggrieved by the separate revision orders of the Deputy Commissioner (CT), Abids Division, Hyderabad, dated 20.11.2001, revising the final assessments made by the assessing authority namely, Commercial Tax Officer, Abids Circle, Hyderabad, under APGST Act for the years 1996 -97, 1997 -98 & 1998 -99. As the revisions are made on common grounds, common issues arise in these 3 appeals and therefore they are heard together and disposed of by common order. The particulars of the appeals are given below.

(2.) THE Deputy Commissioner proposed revision of assessments for these 3 years on common grounds. The Deputy Commissioner proposed to withdraw exemption on the turnovers which are treated by the assessing authority as relating to second sales of Audio Cassettes, holding that these turnovers are liable to tax U/s. 5 -AA of APGST Act which provides for levy of tax on Trademark Holder stating that whenever a dealer holding a trade mark or the patent sells goods at any point of sale other than the first point of sale, he shall be deemed to be the first seller in the State and shall be liable to pay tax accordingly. The Deputy Commissioner issued showcause notice to the appellant proposing the revision stating that the appellants are dealers in pre -recorded Audio Cassettes and are distributors in Andhra Pradesh and other Slates and exporters also. He stated that they are mainly distributors of Telugu Cassettes mainly newly released films and registered in Indian Music Industries for preventing the piracy or misuse of copyrights. The master recording copyrights are purchased from the concerned Film Producer and Master Recording Cassette is given to the recording dealers M/s. Shabdhalaya, M/s. Jet Speed Audio Ltd., M.S. Super Recording Co., M/s. Regal Cassettes, and M/s. Prasad Digi Audio for recording. The appellants supply In -lay Cards printed by order in their trademark by M/s. Pragati Art Printers. The recorded cassettes are fully packed by inserting in -lay cards and the stock are purchased by the appellants for sale. The price of each cassette is fixed by the appellant only based' on purchase cost of rights, purchase of empty cassette, recording and packing, and purchase of in -lay cards, profit and other expenses like freight etc., It is mentioned on the in -lay cards "Produced and marketed by M/s. Aditya Music" and it is also mentioned "Unauthorised copying, usage, publishing, public performance, hiring renting or Broadcasting of this sound recording is prohibited", and the trade mark of the in -lay cards is "M/s. Aditya Music". The Deputy Commissioner observed that the copy rights are with M/s. Aditya Music and also the pricing of the commodity is done by M/s. Aditya Music and all rights are of M/s. Aditya Music with respect to production of number of cassettes, distribution and release in the market with the trade mark of M/s. Aditya Music and therefore they are trade mark holders liable to pay tax U/s. 5 -AA of APGST Act. The Deputy Commissioner further observed that the appellants received the stock i.e., Audio Cassettes, pre -record cassettes from market and in turn supplied the same cassettes on their trade mark of M/s. Aditya Music to the Distributors and customers. Ultimately, he came to the conclusion that the appellants are trademark holders liable to pay tax U/s. 5 -AA of APGST Act. The Deputy Commissioner further proposed to revise the rate of tax on the first sales of Audio Cassettes and enhanced the same to 16% observing that the dealers paid lower rate of tax at 4% and 3.5% respectively for turnovers covering different periods whereas this item falls under Item No. 10 of the Ist Schedule to APGST Act exigible to tax @16%.

(3.) ON the other hand, the learned State Representative contends, regarding the rate of tax on the first sales of Audio Cassettes that audio cassettes are covered by Entry 10 of Ist Schedule to APGST Act and therefore liable to tax @ 16% as held by the Deputy Commissioner. He contends that they are not electronic goods coming within the purview of the G.Os., granting confessional rate of tax to electronic goods. Regarding with -drawl of exemption and levying tax on the second sales of Audio cassettes. U/s. 5 -AA of APGST Act, the learned State Representative contends that the appellant purchased copyright and after getting the music recorded in the cassettes, selling them with his trade mark "Aditya Music" and therefore he is liable to pay tax on these turnovers as holder of the trademark U/s. 5 -AA of APGST Act.