Trade Mark is goods & Royalty received for use of it is liable to VAT

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HIGH COURT OF KERALA

Malabar Gold (P.) Ltd.

v.

Commercial Tax Officer

WP (C) NOs. 38505, 38524 OF 2010 & 28351, 28376 OF 2011 & 20269 OF 2012

NOVEMBER 14, 2012

 

The Kerala High Court upheld the demand of VAT by holding that Trade Mark is goods and Royalty received from franchisees for use of its trademark and for sharing business know-how is leviable to VAT.

The Court held that as per Article 366 (29A) of the Constitution of India, “tax on the sale or purchase of goods” includes a tax on the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration” and “Goods” under Section 2(xx) of the Act means that all kinds of movable property (other than newspapers, actionable claims, electricity, stocks and shares and securities) and includes livestock, all materials, commodities and articles and every kind of property (whether as goods or in some other form) involved in the execution of a works contract, and all growing crops, grass or things attached to, or forming part of the land which are agreed to be severed before sale or under the contract of sale. The expression would mean all kinds of movable property, including livestock, all materials, commodities and articles other than what are excluded in the section itself.