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2016 Supreme(SC) 656
SUPREME COURT OF INDIA
DIPAK MISRA, ROHINTON FALI NARIMAN, JJ.
ACC LTD. – Appellant
VERSUS
STATE OF KERALA – Respondent
CIVIL APPEAL NOs. 2678-2679 OF 2010 WITH CIVIL APPEAL NOs. 5980-5981 OF 2010
Decided On : 28-07-2016
IMPORTANT POINT
Cement sold by the Assessee was manufactured by Cochin Cement Ltd. Assessee purchased the cement and sold it under its brand name “ACC”. It is first sale at the hands of the assessee.
Headnote:(a) Kerala General Sales Tax Act, 1963 – Section 5(2A) and 5(2B) – Legislative intention is clear that sale by the brand name holder or the trade mark holder shall be treated as the first sale – Instantly Cement sold by the Assessee was manufactured by Cochin Cement Ltd. – Assessee purchased the cement and sold it under its brand name “ACC” – Courts below rightly held that it is first sale at the hands of the assessee. (Para 6)
(2014) 73 VST 498 (SC) – Relied upon
(b) Binding precedent – When the Court earlier considered and decided on the provision forming an issue in present litigation, the earlier decision would be a binding precedent. (Para 9)
(1901) AC 495; AIR 1987 SC 1073 – Relied upon
(c) Kerala General Sales Tax Act, 1963 – Section 5(2) – Section 5(2) expressing the Legislative intention that the sales at the hands of the brand name holder and trade mark holder would be treated as the first sale – Cryptom Confectioneries Pvt. Ltd. considering section 5(2) – Agreement between the parties not even remotely suggesting that Cochin Cement Limited is a brand name holder or trade mark holder – decision in Cryptom Confectioneries Pvt. Ltd. does not require reconsideration. (Para 10)
Facts of the case:
The appellant entered into an agreement on 08.04.1993 with Cochin Cement Limited.
On the basis of the aforesaid Agreement, the appellant -assessee put forth his stand before the Assessing Officer that his case was covered under Section 5(2) of the Kerala General Sales Tax Act, 1963 (for brevity, "the Act") and, therefore, the sale effected by the Cochin Cement Limited should be treated as the first sale. The Assessing Officer, on the basis of Intelligence Report and other materials brought on record, came to the conclusion that the Cochin Cement Limited had been manufacturing the cement and handing over the same to the assessee.
the order of assessment has received the stamp of approval by the higher authorities as well as by the High Court.
Finding of the Court:
There is no merit in the appeals.
Result: Appeals dismissed.
JUDGMENT
Dipak Misra, J.
The appellant entered into an agreement on 08.04.1993 with Cochin Cement Limited -a company registered under the Companies Act, 1956. The relevant clauses of the agreement are as follows :-
"1. ACC shall sell to Cocem Cement Clinker Ex its Wadi Cement Works on regular basis at the supply rate of 300 T per day so as to enable Cocem to produce Ordinary Portland Cement or any other type of cement as per the marketing need from time to time. The price of clinker will be linked to the price of cement in the Kerala market and will be reviewed every six months on this basis. The formula for such price adjustments will be as detailed in Annexure 'A' attached to and forming part of this Agreement. For the sake of easier operation of the contract it is agreed that a specific quantify of clinker supplied by ACC for any six months period will have a co-relation with the price at which the cement will be handed over to ACC for sale during the said period of six months. Any shortfall on either side in the matter of supply of clinker from ACC and supply of cement by Cocem would have to be made good at the already agreed rate prior to finalisation of price for the subsequent period.
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3. Cocem shall entrust to ACC all matters pertaining to quality assurances in respect of cement produced by Cocem. ACC shall arrange to depute its personnel to the factory of Cocem with a view to ensure that quality of cement produced is as per the internal norms/standard of ACC. Fees to be paid by Cocem to ACC for this service shall be mutually agreed upon by the parties separately.
4. Cement produced by Cocem under ACC's brand same shall only be marketed by ACC and shall not complete with cement directly supplied to the Kerala market by ACC.
5. Clinker ground into cement shall be purchased by ACC at a mutually agreed price which will include the cost that ACC may incur in organising marketing and sale of cement manufactured by Cocem. Cocem will supply cement to different parties strictly as per the programme given by ACC. In respect of direct consumers of cement the billing may be done by Cocem directly to the party strictly in accordance with the direction given by ACC. Cement will be branded as 'ACC'. For use of ACC brand name and rendering marketing services Cocem will pay Rs. 75/-per tonne as charges. This charge will remain firm for 5 years and will be subjected to revision thereafter on mutual terms.
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7. Any complaints/claims arising out of quality of cement, damages, shortages, poor packing due to negligence on the part of Cocem would be debited to Cocem.
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11. Cocem shall not use ACC's Trade Marks/brand names in any form after the termination or expiry of this Agreement.
2. On the basis of the aforesaid Agreement, the appellant -assessee put forth his stand before the Assessing Officer that his case was covered under Section 5(2) of the Kerala General Sales Tax Act, 1963 (for brevity, "the Act") and, therefore, the sale effected by the Cochin Cement Limited should be treated as the first sale. The Assessing Officer, on the basis of Intelligence Report and other materials brought on record, came to the conclusion that the Cochin Cement Limited had been manufacturing the cement and handing over the same to the assessee. On a perusal of the impugned orders, it is noticeable that the report of the concerned intelligent officer has met with approval up to the revisional stage. To have a complete picture we may usefully reproduce the finding recorded by the assessing officer in the order of assessment:-
"As per schedule to the agreement, Associated Cement Cos. is charging Rs. 150/-per ton for marketing and service charges and only after deducting that amount, Associated Cement Co. need pay the balance to Cochin Cement Ltd., after adjusting the price of clinker. During the course of inspection on 16.4.99 effected in the premises of Cochin Cement Ltd., at Ernakulam a copy of the report regarding cement mar
