LexACC LTD. versus STATE OF KERALA
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[2016] 4 S.C.R. 87 ACC LTD. v. STATE OF KERALA (Civil Appeal Nos. 2678-2679of2010) JULY28,2016 (DIPAK MISRA AND ROHINTON FALi NARIMAN, JJ.) Kera/a General Sales Tax Act, 1963 - s.5(2) - Appellant- assessee entered into agreement with Cochin Cement Ltd. (CCL) in terms of which CCL was to manufacture cement using rmv materials supplied by appellant and such cement was to be marketed by appellant in its own brand name - Plea of appellant that its agreement with CCL was covered .under s.5(2) and sale effected by CCL was first sale whereas appellants sale was second sale, therefore appellant was entitled for exemption - Held: s.5(2) is an expression of the legislative intention that sales at the hands of the brand name holder and trade mark holder would be treated as the-first sale - On perusal of the agreement entered into between the parties, it is not remotely suggestive of the fact that CCL is a brand name holder or trade mark holder - Sale at the hands of the appellant would therefore be treated as the first sale. Cryptom Confectioneries Pvt. Ltd. v. State of Kera/a (2014) 73 VST 498 (SC) - relied on Quinn v. Leathem ( 1901) AC 495; Ambica Quarry Works v. State of Gujarat and others AIR 1987 SC 1073 : 1987 A B c D E (1) SCR 562 - referred to F Case Law Reference (2014) 73 VST 498 (SC) (1901) AC 495 1987 (1) SCR 562 relied on referred to referred to Para6 Para9 Para 9 CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 2678- 2679 of20 l O. From the Judgment and Order dated 31.03.2009 of the High Coul1 ofKerala at Ernakulam in Sales Tax Revision Petition Nos. 76 and 81 of 87 G H 88 SUPREME COURT REPORTS (2016] 4 S.C.R. A 2008 B D E F WITH C. A. NO. 5980-5981 OF 2010. S. Ganesh, Sr. Adv., U. A. Rana, Ms. Mrinal Elkar Mazumdar, Himanshu Mehta, For Mis. Gagrat & Co., Advs. for the Appellant. C. K. Sasi, Jogy Scaria, R. Sathish, P. V. Dinesh, Advs. for the Respondent. The Judgment of the Court was delivered by DIPAK MISRA, J. I. The appellant entered into an agreement on 08.04.1993 with Cochin Cement Limited - a company registered under the Companies Act, 1956. The relevant clauses of the agreement are as follows:- "I. ACC shall sell to Cocem Cement Clinker Ex its Wadi Cement Works on regular basis at the supply rate of 300 T per day so as to enable Cocem to produce Ordinary Portland Cement or any other type of cement as per the marketing need from time to time. The price of clinker will be linked to the price of cement in the Kerala market and will be reviewed every six months on this basis. The formula for such price adjustments will be as detailed in Annexure 'A' attached to and forming pait of this Agreement. For the sake of easier operation of the contract it is agreed that a specific quantify of clinker supplied by ACC for any six months period will have a co-relation with the price at which the cement will be handed over to ACC for sale during the said period of six months. Any shortfall on either side in the matter of supply of clinker from ACC and supply of cement by Cocem would have to be made good at the already agreed rate priot'to finalisation of price for the subsequent period. xxx.xx XX.'\XX 3. Cocem shall entrust to ACC all matters pe1taining to quality assurances in respect of cement produced by Cocem. ACC shall G arrange to depute its personnel to the factory of Cocem with a view to ·ensure that quality of cement produced is as per the internal norms/standard of ACC. Fees lo be paid by Cocem to ACC for this service shall be mutually agreed upon by the pa1ties separately. H ACC LTD. v. STATE OF. KERALA [DIPAK MISRA, J.] 4. Cement produced by Cocem under ACC's brand same shall only be marketed by ACC and shall not complete with cement directly supplied to the Kerala market by ACC. 5. Clinker ground into cement shall be purchased by ACC at a mutually agreed price which will include the cost that ACC may incur in organising marketing and sale of cement manufactured by Cocem. Cocem will sup.ply cement to different parties strictly as per the programme given by ACC. In respect of direct consumers of cement the billing may be done by Cocem directly to the party strictly in accordance with the direction given by ACC. Cement will be branded as 'ACC'. For use of ACC brand name and rendering marketing services Cocem will pay Rs. 75/- per tonne as charges. This charge will remain firm for 5 years and will be subject
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