The revisions and writ petitions raise an identical issue as to issue as to where the situs of a sale is, when the sale is of a trade mark or patent, admittedly assessable to tax as a sale of intangible, incorporeal goods. Court held that ,The situs of sale of intangible property like trademarks & patents the situs of the owner of an intangible asset , would be the closest approximation of the situs of an intangible asset. On the above reasoning it was held that the exercise of the right to a trade mark or a patent right ; which has been obtained by the assessee , who had their principal palaces business in the State of Kerala is exercised from the places of business in the State of Kerala is exercised from the principal places of business . When transferring their rights obtained under a statute to another entity having place of business in another state ; from where the transferee intend to exercise such rights thereafter , postulate , a movement of the intangible corporeal goods from one State to another and hence would be an interstate sale assessable to tax under the GST Act. The Transferor’s principal places of business being with in the State of Kerala , the sale would be an interstate sale . The transfer is not a transfer of right to use , but a transfer of property in goods vesting the complete rights with the transferee and transferor having no subsisting right thereafter .Accordingly S. 3 of the CST Act applies on all forces and the agreement of transfer of the intangible , incorporeal rights , nay, goods ,occasions the movement of the said goods from Kerala to other State where the transferee has their principal places of business . The agreement executed in Gujarat and Puducherry does not make the sale with in that Sate or union Territory , as S.4 of the CST Act provide that sale of goods is deemed to take place in a State only when the goods are with in the State . Other wise any goods could be taken by the seller to another state and delivered to the purchaser making it an inter-state sale. Accordingly dismissing the petition ,sustaining the order of to the extent the transfer of patent right is assessed under the CST Act.Likewise the revisions are with respect to the penalty levied and O.T.Rev.33 of 2009, by the assessee, is allowed finding no cause for penalty on the reasoning above and as a consequence the revision of the State O.T. Rev.No.19 of 2010 is rejected. W.P.(C) No.16931 of 2010 is dismissed sustaining the order of assessment to the extent the transfer of patent right is assessed under the CST Act. ( W.P(C).No.13408 of 2009-U, dt. 06.12.2018)
Lal Products v. Intelligence Officer (Ker)(HC), www.itatonline.org
The Central Sales tax Act , 1956
S. 3. When is a sale or purchase of goods said to take place in the course of inter -state or commerce- When is a sale or purchase of goods said to take place outside a State – The situs of sale of intangible property like trademarks & patents the situs of the owner of an intangible asset , would be the closest approximation of the situs of an intangible asset. On the above reasoning it was held that the exercise of the right to a trade mark or a patent right ; which has been obtained by the assessee , who had their principal palaces business in the State of Kerala is exercised from the places of business in the State of Kerala is exercised from the principal places of business . When transferring their rights obtained under a statute to another entity having place of business in another state ; from where the transferee intend to exercise such rights thereafter , postulate , a movement of the intangible corporeal goods from one State to another and hence would be an interstate sale assessable to tax under the CST Act. The Transferor’s principal places of business being with in the State of Kerala , the sale would be an interstate sale . The transfer is not a transfer of right to use , but a transfer of property in goods vesting the complete rights with the transferee and transferor having no subsisting right thereafter .Accordingly S. 3 of the CST Act applies on all forces and the agreement of transfer of the intangible , incorporeal rights , nay, goods ,occasions the movement of the said goods from Kerala to other State where the transferee has their principal places of business . The agreement executed in Gujarat and Puducherry does not make the sale with in that Sate or union Territory , as S.4 of the CST Act provide that sale of goods is deemed to take place in a State only when the goods are with in the State . Other wise any goods could be taken by the seller to another state and delivered to the purchaser making it an inter-state sale. Accordingly dismissing the petition ,sustaining the order of to the extent the transfer of patent right is assessed under the CST Act. [S.4, Art. 286(1) (a),366(29A)(d), ITAct, S.9(1) (i), Kerala Vale added Tax Act , 2003 ]