Bombay HC: Assignment of “Crocin” Trademark is Export Sale, Not Taxable as Local Sale in Maharashtra

M/s Duphar Interfran Ltd., a Mumbai-based pharma company and registered proprietor of the trademark “Crocin,” entered into a Brand Acquisition Agreement on 18 January 1996 assigning the trademark to SmithKline Beecham (SKB), a UK-incorporated entity. The agreement was executed in London, and SKB immediately applied to the Registrar of Trademarks, for recording its name as the new owner.

The Sales Tax authorities treated the assignment as a local sale within Maharashtra and levied 4% tax under Schedule Entry C-I-26 of the Bombay Sales Tax Act.

The Commissioner’s determination and the subsequent assessment orders were upheld by the Tribunal, leading the applicant to seek a reference before the High Court.

Main Issue: Whether the assignment of the trademark “Crocin” to a UK-based company constitutes a local sale within Maharashtra or a sale in the course of export under Section 5(1) of the Central Sales Tax Act, 1956.

HC’s Decision: The Court held that the sale of an intangible such as a trademark must be understood through the principle mobilia sequuntur personam, movables follow the person. Since “Crocin” was assigned to SKB, whose situs is in the United Kingdom, the trademark’s situs, too, moved with the assignee. Applying this legal fiction, the Court concluded that the assignment resulted in movement of the intangible property outside India, falling within “export” under Section 5(1) CST Act.

The Court noted that registration is neither mandatory for ownership nor determinative of situs, and assignment takes effect upon execution, not upon later entry in the register.

The Court relied on Mahyco Monsanto, CUB Pty Ltd., and Lal Products to reaffirm that the situs of intangible property is the situs of its owner unless legislation states otherwise. Since all rights of the Indian assignor extinguished upon assignment and vested in a foreign entity, the transaction constituted a sale in the course of export, not taxable by Maharashtra.

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