Right to use trade mark can be transfer of right to use goods :
In CST v. Duke and Sons (1999) 112 STC 370 (Bom HC DB), it was held that transfer of intangible property like trade mark by mere permission in writing is ‘transfer of right to use goods’ and is taxable. Trade mark itself or right therein need not be transferred.
Agreement allowing other companies to use assessee’s trade mark and logo is transfer of right to use goods and is taxable – Nutrine Confectionery v. State of Andhra Pradesh (2011) 6 GST 562 = 40 VST 327 (AP HC DB) * Tata Sons v. State of Maharashtra (2015) 80 VST 173 (Bom HC DB).
In SPS Jayam & Co. v. Registrar, TNTST (2004) 137 STC 117 (Mad HC DB), it was held that trade mark is a property right. Such a right is intangible or incorporal goods, which can be merchandised by registered owners. Transfer of right to use trade mark for consideration is deemed sale of goods and sales tax can be levied.
However, in Glaxo Smithkline Asia P Ltd. v. Assessing Authority (2007) 8 STR 450 (Del HC DB), there was only non-exclusive license to use trade mark. A prima facie was held that this is not transfer of right to use goods and hence not subject to sales tax.
Distinction between transfer of right to use and allowing use of trade mark – It brand name is transferred with right to use it and exploit it for commercial use, it would be transfer of right to use trade mark (brand name) and Vat will apply. If the assessee had only allowed another person to use his brand name (in this case it was on beer manufactured with brand name of assessee) it is only service and service tax will be payable – State of Karnataka v. United Breweries (2015) 63 taxmann.com 41 = 54 GST 544 (Karn HC DB).
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