H. L. DATTU, C.J. –

The assessee is engaged in the manufacture and sale of ice-creams and is the trade mark holder of "SKEI".

During the course of its business, the assessee - company has entered into agreements with certain other units and appointed them as franchisees to manufacture and effect sale of ice-creams with the brand name "SKEI" for fixed amounts of royalty, at the rate of two per cent on the sales turnover of such units.

In the annual returns filed, the assessee had claimed exemption for royalty amounts included in the total turnover. The assessing authority at the first instance had granted exemption in respect of the royalty income from assessment to tax.

The Deputy Commissioner in exercise of his suo motu powers had taken exception to the orders passed by the assessing authority and accordingly has set aside the assessment order on the ground that the grant of exemption was not proper and accordingly had remanded the matter to the assessing authority for fresh disposal in accordance with law.

Pursuant to such remand, the assessing authority included the royalty received by the assessee from its franchisees.

The assessee being aggrieved by the orders passed by the suo motu revisional authority had carried the matter by way of appeal before the Tribunal in T.A. No. 243 of 2006. The Tribunal by its order dated January 17, 2008 has rejected the assessee's appeal and has confirmed the orders passed by the assessing authority for the assessment year 2000-01.

It is the correctness or otherwise of the said order that is called in question by the assessee in this revision petition.

The assessee has framed the following questions of law for our consideration and decision. They are as under :

"(A) Whether royalty income received by the assessee from the franchisees for the use of the trade mark 'SKEI' on their products (ice-creams) is exigible to tax under the Kerala General Sales Tax Act, 1963 in the hands of the assessee ?

(B) Whether under the circumstances of this case, it can be said there exists the concept of 'goods', 'turnover' and 'taxable turnover' with reference to the receipt of royalty by the assessee from their franchisees ?"

In Jojo Frozen Foods (P.) Ltd. v. State of Kerala (S.T. Rev. No. 12 of 2006) disposed of on June 23, 2008, this court after following the observations made by this court in the case of Mechanical Assembly Systems (India) Pvt. Ltd. v. State of Kerala [2006] 144 STC 536, has rejected the assessee's revision petition. In the said decision this court has observed as under :

"The traditional meaning of the word 'goods' has undergone radical change due to technological and scientific developments. Reference may also be made to a recent decision of the apex court in Tata Consultancy Services v. State of Andhra Pradesh [2004] 137 STC 620; [2005] 13 KTR 1, wherein the apex court examined the constitutional definition of the word 'goods' and held that it includes all materials, articles and commodities both tangible and intangible/incorporeal property which is capable of abstraction, consumption and use and which can be transmitted, transferred, delivered, stored, possessed, etc. The court held that software programmes contain all these characteristics. It is relevant to refer to the dictum laid down by the Supreme Court which is extracted below :

'In our view, the term "goods" as used in article 366(12) of the Constitution of India and as defined under the said Act are very wide and include all types of movable properties, whether those properties be tangible or intangible. We are in complete agreement with the observations made by this court in Associated Cement Companies Ltd. [2001] 124 STC 59 (SC); [2001] 4 SCC 593. A software programme may consist of various commands which enable the computer to perform a designated task. The copyright in that programme may remain with the originator of the programme. But the moment copies are made and marketed, it becomes goods, which are susceptible t