Can idli be traded by popular restaurant chain Murugan idlis be viewed as “branded” idlis for tax purposes? Section 2 (9) of the 2006 Act explains “branded” as any good traded under a name or a trade mark registered or pending registration of transfer under the Trade Marks Act. Appropriately, suppliers of unbranded food or drink are subject to charge of a lesser tax rate i.e. 5% as per Section 7 (1) (b) of the Tamil Nadu VAT Act.
Effectually, the Bench of Chief Justice AP Sahi and Justice Senthilkumar Ramamoorthy was judged that the State is thereby treating any dealer holding a trademark from being ineligible to sell “unbranded” goods.
Referring to supplies which concern goods without a brand name, Sankaranarayanan stated that the legislature had clearly proposed for goods sold without a brand name. This cannot be cancelled by an interpretation of the law which will deem that everything has a brand name, he argued.
During the course of submissions today, the Bench orally thought that the provisions of both the Tamil Nadu VAT Act and the Trademarks Act should be understood with specific reference to the goods. In response to this, Senior Advocate Sankaranarayanan expressed his agreement.
In the submission that was made by Special Government Pleader for taxes, Mohammed Shafiq that the law applicable in these cases has been laid down by the Supreme Court of India in the Australian Cookie Man case.
The cases regarding the challenge to Section 2 (9) of the Tamil Nadu VAT Act has, accordingly, been forwarded to be taken up on November 18. Pleadings by all the parties are expected to be completed in the meanwhile, the Court added.