PETITIONER:
COMMERCIAL TAX OFFICER & ORS.
Vs.
RESPONDENT:
EMKAY INVESTMENTS PVT.LTD.
DATE OF JUDGMENT: 23/02/1996
BENCH:
JEEVAN REDDY, B.P. (J)
PARIPOORNAN, K.S.(J)
CITATION:
1996 AIR 1622 1996 SCC (7) 540
JT 1996 (3) 402 1996 SCALE (2)729
ACT
HEADNOTE
JUDGMENT
ORDER
Heard counsel for the parties.
Leave granted.
This appeal is preferred against the judgment of the West Bengal Taxation Tribunal. The respondent is a new unit engaged in the manufacture of plywood. It is entitled to exemption from payment of sales tax, being a new industry as contemplated by Rule 3(66a) of the West Bengal Sales Tax Rules, 1941. It, however, appears that in respect of a portion of its products, it is using the brand name "M/s.Merinoply" which brand name belongs to another company called "M/s.Marinoply and Chemicals Limited".
Relying upon the Explanation to Rule 3(66a), the sales tax authorities denied the certificate enabling the respondent to claim exemption from sales tax. Their case was that since the respondent is using the brand name of another unit, which is not entitled to the said exemption, the respondent is disentitled from claiming any exemption. However, when the matter reached the Tribunal, it held in favour of the respondent by a majority of 2:1. It found that the Marinoply brand name is not applied to all the products manufactured by the respondent but only to a certain portion of its products. Notwithstanding this finding, it allowed the respondent’s appeal in full and declared it to be entitled to exemption in respect of all the products manufactured by it. Rule 3(66) insofar as it is relevant reads thus:
"Rule 3.
(66a)(i) Sales by a newly set up
small scale industry of goods
or class of goods, other than those
included in Schedule X appended to
this clause, manufactured by it
during the period of three years,
if the said industry is situated
within the area of the Calcutta
Metropolitan Planning Area as
described in the first Schedule to
the West Bengal Town and Country
(Planning and Development) Act,
1979 [West Bengal Act XIII of 1979]
or five years, if it is situated
elsewhere in West Bengal, since the
date of its first sale of such
manufactured goods:
Provided that the dealer
claiming the benefit of this clause
will be so eligible only if he
keeps separate accounts in respect
of such newly set up small scale
industry, issues serially numbered
cash/credit memos for sales of
goods manufactured in such
industry, keeps vouchers and other
documents for purposes of plant and
machinery for establishment of such
industry and maintains other
records to prove that sales claimed
exempt under this clause were of
goods manufactured in such industry
set up by him.
Provided further that the
dealer claiming the benefit of this
clause will be eligible, if he
possesses a valid certificate of
eligibility in Form No. XXXVIA
granted by the appropriate
Assistant Commissioner in this
behalf, for such period as
mentioned in the said certificate:
Provided also
that............... section 4AA of
that Act.
Explanation:- For the purpose
of this clause ’newly set up small
scale industry’ means a new
industrial unit,-
(i)................
(ii)...............
(iii)..............
(iv)...............
(v)................
(a).............
(b).............
(vi) which does not use the trade
mark of the brand name of any
product of an existing industrial
units,
(vii)............................."
[Extract from the Paper Book]
Clause (vi) of the Explanation is very clear and unambiguous. It says that the said benefit of exemption from sales tax is available only to such newly set up small scale industry which does not use the trade mark or the brand name of any product of an exiting industrial unit. In this view of the matter, the respondent-industry cannot claim the benefit of exemption. But the question is whether it would be reasonable to read the said Explanation literally which would mean that if a manufacturer uses the brand name or trade mark of an existing industrial unit even in respect of a small portion of its productions it would be totally deprived of the benefit of the benefit of the exemption. We are of the opinion that having regard to the object and purpose underlying the said Rule, it would be reasonable to say that the respondent shall not be entitled to the benefit of the said exemption in respect of the goods, for which the trade mark or brand name of an existing industrial unit is used. But insofar as other products for which the brand name is not used are concerned, it will be entitled to claim the benefit of the aforesaid sub-rule. The burden of clearly establishing that in respect of certain of its goods manufactured by it, the trade mark or brand name of an existing industrial unit is not being used, shall be squarely upon the manufacturer.
The appeal is allowed accordingly and the Order of the Tribunal is set aside. No costs.