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PETITIONER: COMMERCIAL TAX OFFICER & ORS.

       Vs.

RESPONDENT: EMKAY INVESTMENTS PVT.LTD.

DATE OF JUDGMENT:       23/02/1996

BENCH: JEEVAN REDDY, B.P. (J) 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:                          O R D E R      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

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    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

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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.