Trademark situs for taxation follows the owner; a sale is deemed export if the owner moves outside India, establishing non-taxability under local laws.

JUDGMENT :

Advait M. Sethna, J.

1. Heard Mr. Patkar, learned counsel for the Applicant and Ms. Jyoti Chavan, learned Additional Government Pleader for the Respondent. With the assistance of the learned counsels, we have perused the record and proceedings before us.

Issue for Consideration:

2. The Sales Tax Reference (“STR” for short) arises from judgment and order dated 5 May 2010 of the Maharashtra Sales Tax Tribunal at Mumbai (5^th Bench) (“Tribunal” for short) in Reference Application Nos.186 and 187 of 2008. The Tribunal framed the following question for reference to this Court:-

“Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the Brand Acquisition Agreement dated 18/01/1996 in respect of trademark ‘Crocin’ entered into by M/s. Duphar Interfran Ltd. with M/s. SKB Play PLC, London is an agreement to sale and such sale is a sale within the State of Maharashtra liable to tax at 4% in terms of Schedule Entry C-I-26 appended to the Bombay Sales Tax Act, 1959?”

3. Apropos the above, an interesting point arises for our determination in the given factual complexion concerning the well- known trademark ‘Crocin’. By this Reference, we are called upon to determine whether the sale of the said trademark has taken place within the State of Maharashtra or is deemed to have taken place during export outside India, under the canopy of Section 5(1) of the Central Sales Tax Act, 1956 (‘CST Act’ for short).

Factual Matrix:

4. The facts relevant for adjudication of this reference are summarized as under:-

5. The Applicant is a Company incorporated under the laws of India having its registered office at Mumbai. It is engaged, inter alia, in the business of manufacture and/or marketing of pharmaceuticals, consumer healthcare products, etc.

6. The Applicant/Company owned and held the trademark “Crocin” registered under the Trade and Merchandise Marks Act, 1958 with the Registrar of Trademarks, Mumbai.

7. By a Brand Acquisition Agreement dated 18 January 1996 (“Agreement” for short), the Applicant sold the said trademark to SKB, a Company incorporated under the Laws of United Kingdom and having its registered office in Milddlesex. The said Company is also engaged, inter alia, in the manufacture and marketing of pharmaceuticals and healthcare products. Such Agreement was executed in London.

8. Pursuant to the execution of the Agreement on 18 January 1996, SKB i.e. the buyer/assignee of the trademark – ‘Crocin’, preferred an application dated 19 January 1996 to the Registrar of Trademarks, Mumbai, who was appraised of the Agreement/Deed of Assignment. Accordingly, the Registrar was requested to enter the name of SKB in the trademark register w.e.f. 18 January 1996 as Proprietor of the said trademark – ‘Crocin’.

9. The Commissioner of Sales Tax, Mumbai issued a determination of disputed question order dated 31 August 1998. This is in the nature of an advance ruling. By the said order, it is held that the assignment of the said trademark is a local sale in Maharashtra liable to sales tax @ 4% as per the Schedule Entry C-I-26 appended to the Bombay Sales Tax Act, 1959. (“BST Act” for short).

10. The Applicant, being aggrieved by the aforesaid determination order dated 31 August 1998 passed by the Commissioner of Sales Tax, Mumbai, preferred an Appeal before the Tribunal. During the pendency of the said Appeal, an Assessment order dated 11 March 1999 was passed by the Assistant Commissioner of Sales Tax, Worli Division, Mumbai for the period 1995-1996. It resulted in an extra demand on the Applicant to the