ORDER
H.L. Dattu, J.
1. These revision petitions are filed against the orders passed by the Karnataka Appellate Tribunal on October 10, 1995 in S.T.A. Nos. 279 and 280 of 1995. The Tribunal has confirmed the orders passed by the first appellate authority and the assessing authority, who by their orders had concluded that, the petitioner before this Court is the first dealer in the State and that therefore its sales turnover is exigible to tax in view of the proviso to Section 5(3)(a) of the Karnataka Sales Tax Act, 1957 (“the K.S.T. Act”, for short).
2. M/s. Ponds (India) limited, petitioner in these revision petitions, is a limited company and a dealer trading in cosmetics, soaps, shampoos and other toiletries. It has got its manufacturing unit in places like Madras and other places outside the State. It also gets certain items of cosmetics manufactured in Karnataka and effects sales thereof within the State and also effects inter-State sales. In the annual returns filed before the assessing authority for the assessment year 1991-1992, it reported total and taxable turnover at Rs. 8,53,47,143.24 and Rs. 7,45,76,918.96, respectively. For the year 1990-1991, it had declared total and taxable turnover at Rs. 6,84,13,340.23 and Rs. 5,82,79,384.99, respectively. In its books of accounts, the petitioner-company has shown that it received cosmetics, shampoos worth Rs. 6,38,98,221.11 during 1991-1992 and the said articles worth Rs. 6,43,07,478.70 during 1990-91 from its Madras, Pondicherry and Tambaram manufacturing units and offices as stock transfers. Apart from stock receipts, the petitioner also reported purchases of cosmetics worth Rs. 6,91,092.50 during 1990-1991 and Rs. 1,26,23,790.87 during 1991-1992 from M/s. J.B. Advani and Co. (Mysore) Ltd., Bangalore. As against the stock receipts from its head office/branches outside the State and goods got manufactured through M/s. J.B. Advani and Company, it has reported during 1990-1991 sales of cosmetics (excluding tax) at Rs. 4,75,11,362.13, white petroleum jelly at Rs. 20,07,119.72, soaps at Rs. 40,12,321.80, shampoos at Rs. 17,30,006.63 and second sales of dream flower talc and sandal talc at Rs. 1,93,16,108. The petitioner-company from out of their gross turnover of Rs. 8,53,47,143.24 had claimed during 1990-1991 exemption of sales tax on a turnover of Rs. 3,00,86,332.90 comprising of sales tax collected at Rs. 80,73,923.19, second sales of dream flower talc and sandal talc at Rs. 1,95,54,953, stock transfer to other branches at Rs. 6,81.937.50 return of the goods sold at Rs. 17,75,518.54. During assessment year 1991-1992, the petitioner- company claimed exemption on the sales of branded goods manufactured by M/s. Advani and Co., to the extent of Rs. 5,57,807.04 on the ground that they were second sales.
3. The assessing authority while computing the tax liability of the petitioner-company under the Act, has allowed all the exemptions claimed except the claim of second sales of dream flower talc and sandal talc to the extent of Rs. 1,93,16,107.50 in view of proviso to Section 5(3)(a) of the Act and this was done by the assessing authority after issuing proposition notice in form 31-A of the Act, to the petitioner-company. The assessing authority while rejecting the claim for exemption made by the assessee and for passing the best judgment assessment Under Section 12(3) of the Act read with Rule 18(3) of the Rules, in his order, notices the following factual aspects and his conclusion based thereon:
The sum and substance of the dealer-company’s contentions are that M/s. Chesebrough Ponds Inc., is a foreign company which has got trade mark ‘Ponds’ registered in their name in India and that they are not manufacturing and trading in India and that by an arrangement they have given the right to use the trade mark to M/s. Ponds (India) Ltd., free of cost and that since they are not the brand name holders and since the company who have got the trade mark Ponds registered in their name are not dealers under the provisions of the KST Act, 1957 as they are not manufacturing or trading in any of the goods in India, the provisions of Section 5(3)(a) do not apply to the facts of their case. The dealer-company have admitted the fact in no uncertain terms that they are licensed to use the trade mark Ponds by Chesebrough Ponds Inc., U.S.A. In otherwords, Chesebrough Ponds Inc., U.S.A., who have got the marks Ponds registered in India, have ‘assigned’ the said trade marks Ponds on Ponds (India) Ltd., so as to enable the latter to make use of it for the manufacture and sales of talcum powder and other toilet articles. If one studies provisions of third proviso to Section 5(3)(a) of the Act, it is clear that the provisions are applicable not only to the person who holds the trade mark but also to person who is licensed to use the trade mark admitted. M/s. Ponds (India) Ltd., are admittedly licensed to use the trade mark Ponds and therefore, the said provisions of the K.S.T. Act, 1957 apply on all fours to the case of M/s. Ponds (India) Ltd. Moreover, the fact the J.B. Advani & Co. (Mysore) Ltd., Bangalore, have manufactured dream flower talc and sandle talc to the specifications of the dealer-company is not denied. Further, the fact that M/s. J.B. Advani and Co. (Mysore) Ltd., Bangalore, have supplied the said goods only to Ponds (India) Ltd., as per the agreements also not denied. In the circumstances, the dealer-company’s contention that they are only second seller of talcum powder cannot be accepted. However, there is a mistake committed while proposing the taxable turnover in the proposition notice. The tax that is paid under protest at Rs. 2,38,845.40 is included in the claim of second sales at Rs. 1,93,54,953.60 which in turn is included in the gross turnover at Rs. 8,53,47,143.24. Therefore, Rs. 2,38,645 should be deducted from the gross turnover and the actual claim of second sales is only Rs. 1,93,16,308.62. In the circumstances and for the foregoing reasons, the assessment in the case of M/s. Ponds (India) Ltd., is finalised to the best of my judgment Under Section 12(3) of the Karnataka Sales Tax Act, 1957 read with Rule 18(3) of the Karnataka Sales Tax Rules, 1957.
4. The appeal filed by the assessee against the order passed by the assessing authority was rejected by the first appellate authority by his order dated December 31, 1994.
5. The petitioner had carried the matter by way of second appeal before the Karnataka Appellate Tribunal, aggrieved by the orders passed by the first appellate authority; and the Tribunal by its order dated October 10, 1995 has rejected the appeals and has confirmed the orders passed by the authorities under the Act. The correctness or otherwise of these orders is questioned by the petitioner-company in these revision petitions.
6. The view of the authorities under the Act and by the Tribunal appears to be that the petitioner-company is the licensed user of the brand name “Ponds” which is owned by M/s. Chesebrough Ponds, Inc., U.S.A., registered under the Trade and Merchandise Marks Act in India. Dream flower talc and sandal talc in question are got manufactured from M/s. J.B. Advani and Co. (Mysore) Ltd., under the brand name of “Ponds”, and M/s. J.B. Advani and Co., could not have sold the said goods to any customer other than M/s. Ponds (India) Ltd., on whose orders, specifications and supervision, the said goods had been manufactured; and therefore, the petitioner-company is the dealer who should be deemed to be the first seller of those goods in the State of Karnataka in view of the proviso to Section 5(3)(a) of the Act. The authorities under the Act and the Tribunal have taken note of the licence that is issued by the trade mark holder/ proprietor in favour of petitioner-company and also the agreement that was entered into by the user of the trade mark with the manufacturer, viz., M/s. Advani and Co. (Mysore) Ltd.
7. Petitioner has raised nearly nine questions of law for consideration and decision by this Court. However, Sri K.G. Raghavan, learned Counsel for the petitioner at the time of hearing of the petitions, submitted that he would not press for an answer by this Court on the first four questions of law raised in these revision petitions. Omitting those questions of law, the other questions of law raised for consideration and decision of this Court are:
I. Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the appellants are the registered dealers of the trade mark under the Trade and Merchandise Marks Act, 1958 and whether this finding is based on valid materials ?
II. Whether, on the facts and in the circumstances of the case, the Tribunal was right in ignoring the fact that the appellant was only an unregistered licensee with M/s. Chesebrough Ponds Inc., under an agreement for user and that the appellant was not the registered holder of the trade mark ?
III. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in invoking the third proviso to Section 5(3)(a) of the K.S.T. Act, which applies only to goods purchased or manufactured with the name or trade mark registered under the Trade and Merchandise Marks Act, 1958 or any other dealer?
IV. Whether, on the facts and in the circumstances of the case, the Tribunal is right in its conclusion since J.B. Advani and Co., have not manufactured the goods, under a trade mark registered under the Trade and Merchandise Marks Act, of any other dealer and particularly of the appellant ?
V. Whether, on the facts and in the circumstances of the case, the Tribunal is right in ignoring the relevant provisions of Section 5(3) which requires a registration of the trade mark in the name of the appellant and would not make the said provisions applicable to a case where there is a mere user, under the agreement without any registration ?
8. Sri KG. Raghavan, learned Counsel for the petitioner, would contend that the assessee, who has no statutory right to the trade mark under the Trade and Merchandise Marks Act, 1958 (hereinafter referred to as “the Trade Marks Act”) cannot be assessed to tax under the Act, under the third proviso to Section 5(3)(a) of the K.S.T. Act, as the sales effected by the petitioner are the second or subsequent sales in the State. It is his further contention that the expression “otherwise to use the said name or trade mark” in the context in which it is used therein should be understood to mean that the trade mark user must be registered under the provisions of the Trade and Merchandise Marks Act, as provided in Section 49 of the said Act. In the alternative, the learned Counsel would submit that the words “otherwise to use” take its colour from the preceding words “the dealer who is the brand name or trade mark holder” and that therefore, since the petitioner-company is neither a trade mark holder nor a registered user of the trade mark, the Tribunal and the authorities under the Act were not justified in holding that the petitioner-company is the first dealer in the State and thereby liable to tax under the third proviso to Section 5(3)(a) of the K.S.T. Act. In aid of this submission, the learned Counsel relies on the observations made by the Supreme Court in the case of Assistant Collector of Central Excise, Guntur v. Ramdev Tobacco Company .
The learned Counsel would further contend that the second part of the third proviso to Section 5(3)(a) of the Act is a proviso by itself to the first part of the proviso. If it is understood in that manner he argues, the sales effected by the petitioner-company by no stretch of imagination can be said as first sales and therefore, liable to tax under the Act. In support of this contention, the learned Counsel relies on the observations made by the apex Court in the case of Commissioner of Income-tax, Mysore v. Indo Mercantile Bank Ltd , wherein the court has observed that the proper function of a proviso is that, it qualifies the generality of the main enactment by providing an exception and taking out as it were, from the main enactment, a portion to which, but for the proviso would fall within the main enactment. Ordinarily, it is foreign to the proper function of a proviso to read it as providing something by way of an addendum or dealing with a subject which is foreign to the main enactment.
9. On perusal of the language of Section 5(3)(a) of the Act, it is clear that it opens with a non obstante clause, which controls the operation of the other provisions of the Act and irrespective of other provisions, the section will have overriding effect. This is a legislative device, which is usually employed to give effect to a particular provision over some other provision either in the same enactment or some other enactment, that is to say, to avoid the operation and effect of all contrary provisions to the extent this particular provision operates. Sub-section (3)(a) of Section 5 of the Act has overriding effect on Section 5(1) of the Act, under which the tax under this Act is leviable in the case of sale of any of the goods mentioned in column (2) of the Second Schedule by the first or the earliest of successive dealers in the State, who is liable to pay tax at the rate specified in the corresponding entry of column (3) of the said Schedule, on the taxable turnover of sales of such dealer in each year relating to such goods.
10. Section 5 of the Act provides for levy of tax on transactions of sale or purchase, namely, multi-point, first point of sale, first point of purchase, last point of purchase, as the case may be.
Under Section 5(3)(a), the taxable event attracting the levy is the sale of goods mentioned in the Second Schedule, The levy is on the first or the earliest of successive dealers in the State. The rate at which the tax is imposed is as in the corresponding entry of column (3) of the Second Schedule. The value to which the rate will be applied for computing tax liability is on the taxable turnover of the dealer relating to such goods in each year.
11. Third proviso to Section 5(3)(a) of the Act, which we are directly concerned in these revision petitions reads as under:
Provided also that where any goods liable to tax under this Act are produced or manufactured by a dealer with the brand name or trade mark, of any other dealer and which are not used by the latter as raw materials, component parts or packing materials as defined under the Explanation to Section 5-A, the sale of such goods by the dealer who has produced or manufactured to the dealer who is the brand name or trade mark holder, shall not be deemed to be, but the subsequent sale of such goods by the dealer having the right either as proprietor or otherwise to use the said name or the trade mark, either directly or through another, on his own account or on account of others shall be deemed to be the sale by the first dealer liable to tax under this section.
An analysis of the above proviso is as under:
I. The goods liable to tax under the Act should be produced or manufactured by a dealer other than the registered owner or brand name holder of the trade mark.
II. The goods should have a brand name or a trade mark registered under the provisions of the Trade and Merchandise Marks Act.
III. The manufactured goods are not used by the brand name or trade mark holder as raw materials, component parts or packing materials as defined under Explanation to Section 5-A of the Act.
IV. The sale of such taxable goods by the licensed producer or manufacturer to the brand name holder or trade mark holder, by legal fiction, introduced in the proviso, is not to be deemed as first sale in the State. If not for this fiction, it would have been first sale in the State.
V. Subsequent sale of such goods by the dealer having the right either as the proprietor of the brand name or trade mark or by a dealer who is authorised or permitted to use the trade mark or brand, name either directly or through another dealer, either on his account or on account of others is deemed to be the sale by the first dealer liable to tax Under Section 5(3)(a) of the Act. The term “deemed” is used by the Legislature to create a fiction to include what is obviously not a sale by the first dealer to be a sale for the purpose of Section 5(3)(a) of the Act.
12. The illustration appended to the proviso throws some light in understanding the true scope and ambit of the proviso to Section 5(3)(a) of the Act. A perusal of the same would indicate, that, if a registered trade mark holder/brand name holder gets certain goods manufactured by another dealer by using the trade mark or the brand name, the sale made by the producer or manufacturer using the trade mark/brand name of the goods manufactured to the trade mark holder/brand name holder will not be first sale, and the sale by the registered trade mark holder/brand name holder or by any other person on his behalf entitled to use the brand name/trade mark would be construed as the first sale in the State liable to tax under the Act.
13. Sri K.G. Raghavan, learned Counsel appearing for the petitioner, submits that M/s. Chesebrough Ponds Inc., is registered under the provisions of the Trade and Merchandise Marks Act, 1958. Petitioner-M/s. Ponds (India) Ltd., is only a licensee and it is permitted only to use the trade mark. He submits that the petitioner-company is at any rate not the registered user of the brand name or trade mark as required under the Trade Marks Act. The petitioner- company by virtue of the licence granted to it by the trade mark holder, namely, M/s. Chesebrough Ponds Incorporation, has entered into an agreement with M/s. Advani and Company for the exclusive manufacture of cosmetics, such as ponds talc and sandal talc, etc., and the same is sold to the petitioner-company. It is argued by the learned Counsel for the petitioner that sales turnover of M/s. Advani and Company is already taxed under the Act as the first seller in the State and therefore, since petitioner-company is not the registered trade mark user under the Act, the authorities under the Act were not justified in treating the sales effected by it in the State as the first sales by applying the proviso to Section 5(3)(a) of the Act. He argues that the effect of the proviso is that the sale made by any dealer entitled to use the brand name or trade mark alone is treated as the first sale, though such sale was not in fact the first sale of goods.
14. The question for consideration and decision of this Court is:
I. Whether the permitted user of the trade mark/brand name can be fastened with the liability for payment of sales tax as first sale in the State in the facts and circumstances of the case ?
15. To answer this precise issue, we intend to notice certain provisions of the Trade and Merchandise Marks Act.
Section 48 of the Trade and Merchandise Marks Act provides for “registered users”. A person other than the registered proprietor of a trade mark may be registered as the registered user in respect of any or all the goods in respect of which the trade mark is registered, but subject to the provisions of Section 49 of the Act. The said provision came up for consideration before the apex Court in the case of Gujarat Bottling Co. Ltd. v. Coca Cola Company . In the said decision, the court has observed:
Use of a registered trade mark can be permitted to a registered user in accordance with provisions of the Act and for that purpose, the registered proprietor has to enter into an agreement with the proposed registered user. The use of the trade mark can also be permitted de hors the provisions of the Act by grant of licence by the registered proprietor to the proposed user. Such a licence is governed by common law. Such licensing of trade mark is permissible provided (i) the licensing does not result in causing confusion or deception among the public; (ii) it does not destroy the distinctiveness of the trade mark, that is to say, the trade mark, before the public eye, continues to distinguish the goods connected with the proprietor of the mark from those connected with others; and (iii) a connection in the course of trade consistent with the definition of trade mark continues to exist between the goods and the proprietor of the mark. (underlining* is by us)
In Gujarat Bottling case , the Supreme Court has observed that use of a registered trade mark can also be permitted de hors the provisions of the Act by grant of licence by the registered proprietor of the trade mark or by the brand name holder to the proposed user.
16. The Act does not expressly prohibit the licensing of trade marks whether registered or unregistered. On the other hand it permits the use of a registered trade mark by third persons under a licence but subject to certain conditions. The provisions relating to registration of a person as a registered user are contained in sections 48 to 52 of the Trade Marks Act. These include elaborate precautions to prevent abuse of the privilege of permitted use granted under the Trade Marks Act. Permitted use only means the use of a trade mark by a person other than the registered proprietor and registered user in relation to goods or services with which he is connected in the course of trade subject to complying with the conditions or limitations specified in the agreement between the registered owner and registered user. Therefore, the use of the trade mark or brand name can be permitted de hors the provisions of the Act by grant of licence by the registered proprietor to the proposed user. In the instant case, it is not in dispute that the registered proprietor of the trade mark, viz., M/s. Chesebrough Ponds Inc., U.S.A., has granted a licence to M/s. Ponds (India) Ltd., the petitioner before this Court to have exclusive right and licence to use its registered trade mark in relation to the licensed products for sale in India. The petitioner has entered into an agreement with M/s. Advani and Co. (Mysore) Ltd., to manufacture Ponds talc and sandal talc by using the trade mark “Ponds” on the finished product manufactured by them in pursuance of the agreement. Some of the clauses in the agreement are relevant for the purpose of the case. Therefore, they are extracted below:
2. Whereas JBA is possessed of necessary skill and technical know-how in the field of manufacturing of cosmetic products and are having their factory located at A13 and 14, Peenya Industries Estate, III Stage, Bangalore 560 056, from where they have been manufacturing cosmetic products in the past. And whereas PIL on the other hand has been engaged in the business of cosmetics, among other things, and is the licensed user of the trade mark “Ponds” (bearing No. 96629, registered in class of goods 3) under the Trade and Merchandise Marks Act, 1958, in respect of Ponds, sandal talc, etc., of M/s. Conopco Inc., U.S.A. (formerly known as Chesebrough Ponds Inc., U.S.A.). JBA has offered and proposed to PIL that they have spare production capacity and that they are in a position to manufacture, sell and supply Ponds, sandal talc as per specifications of PIL. PIL on its part has considered the said offer of JBA and the parties have accordingly arrived at this arrangement under which JBA shall manufacture, sell and supply Ponds, sandal talc as per terms and conditions stipulated hereunder.
3. JBA shall manufacture, sell and supply Ponds, sandal talc as detailed in annexure I of this agreement, from the said premises to PIL as per specifications communicated by PIL to JBA from time to time. PIL on its part has represented and confirmed that the said brand name Ponds belongs to M/s. Conopco Inc., U.S.A. (formerly known as Chesebrough Ponds Inc., U.S.A.) and they are the authorised licensed users of the abovesaid trade mark. PIL has accordingly permitted JBA to use the said trade mark on the finished product manufactured by them in pursuance of this agreement and/or on all container, shoulders, closures, liners and other packing materials used or to be used for packing finished product so manufactured by JBA.
4. It will be the responsibility of JBA to manufacture and produce the said product strictly in accordance with formulations and specifications communicated by PIL. PIL on its part will be entitled to carry out examination, inspection and quality control test of products so produced and manufactured by JBA in order to test their compliance with quality specifications of PIL and PIL will be entitled to reject such finished products which are not in conformity with quality specifications of PIL. JBA, however, will be free to reprocess the rejected finished products and take steps if possible to bring them to total conformity with quality specifications and thereafter they may be accepted by PIL and sold as per this agreement.
5. PIL will be entitled to communicate to JBA the quantity and supply Schedule of the said product and JBA will endeavour to manufacture, sell and supply the finished products accordingly within the reasonable time period from the date of such communication from PIL.
6. The finished products manufactured and produced by JBA under this agreement shall be sold and supplied to PIL on principal to principal basis at prices agreed as mentioned in the Schedule to the agreement. The said price mentioned in the Schedule shall be inclusive of Central excise duties and other Central levies, if any, and sales tax (local or Central as the case may be, as shown separately in the Schedule). Freight and transportation shall be borne by PIL. It is agreed and understood that JBA will sell the finished products under the agreement only at prices indicated in this agreement. PIL will not be liable to pay any additional amounts under any circumstances whatsoever. Any price increase that JBA may seek on account of material cost increases, etc., will have to be negotiated with PIL prior to any price increases and permission has to be obtained from PIL in writing prior to sale of goods. It is understood and agreed that for calculating the price payable by PIL, the basis for calculating the excise duty incidence will be the price charged by JBA to PIL. Any revision in prices shall not affect the above basis of computation.
17. A bare reading of the clauses in the agreement would show that the petitioner is the registered licensed user of the trade mark “Ponds” (bearing No, 96629, registered in class of goods 3) under the Trade and Merchandise Marks Act, 1958, in respect of Ponds sandal talc, etc., of M/s. Conopco Inc., U.S.A (formerly known as Chesebrough Ponds Inc. U.S.A). Secondly, M/s. J.B. Advani and Co., shall manufacture and supply Ponds sandal talc as per the terms and conditions stipulated under the agreement. Thirdly, it is also evident that the petitioner-company had not only represented but had also confirmed that they are authorised licensed users of the trade mark “Ponds”, which belongs to M/s. Conopco Inc., U.S.A. formerly known as M/s. Chesebrough Ponds Inc., U.S.A. and had permitted M/s. J.B. Advani and Co., to manufacture the finished product with the trade mark in view of the agreement between the parties. Fourthly, it will be the responsibility of the manufacturer to manufacture and produce the product strictly in accordance with the formulations and specifications of petitioner-company and lastly, M/s. J.B. Advani and Co., shall sell and supply the said products only to the petitioner on principal to principal basis at prices agreed as mentioned in the Schedule to the agreement. The covenants in the agreement give a clear indication that the petitioner is the registered licensed user of the trade mark “Ponds” and had made arrangement with M/s. J.B. Advani and Co., to manufacture and supply “Ponds sandal talc” only to the petitioner on principal to principal basis at prices agreed under the agreement. In view of this, it can safely be said that M/s. Advani and Co. (Mysore) Ltd., have manufactured the goods under the brand name “Ponds” and sold them to the registered licensed user of trade mark, i.e., the petitioner and in view of the legal fiction introduced under the proviso to the Act, the said sales are the first sales liable to tax under the Act. The sales made by the petitioner-company subsequently would be the first sales in the State and are liable to tax in view of the deeming provision introduced under the second limb of the proviso to Section 5(3)(a) of the Act.
18. However, Sri K.G. Raghavan, learned Counsel for the petitioner, would submit that the petitioner is not the registered user of the trade mark, but only a licensee to use the trade mark in view of the licence agreement entered by the petitioner with M/s. Chesebrough Ponds Inc., U.S.A. and therefore, the sale of the talcum powder effected by the petitioner needs to be considered as second sale and such sale does not fall under the ambit of the proviso to Section 5(3)(a) of the Act. The submission made by the learned Counsel is difficult to accept, for the reason, that under an agreement with the petitioner-company, M/s. Advani and Co. had produced or manufactured goods liable to tax under the Act with the brand name of “Ponds” for the petitioner-company which is permitted as a user of the trade mark under a licence by the trade mark owner/proprietor.
The sale or supply of the manufactured product to the petitioner-company though a first sale, has to be deemed for the purpose of liability of tax as not a sale in view of the first limb of the proviso to Section 5(3)(a) of the Act. The subsequent sale of such manufactured goods by the petitioner-company having the right to use the trade mark is deemed to be first sale in the State in view of the legal fiction created by the second limb of the proviso.
19. Now coming to the expression “otherwise to use the said name or trade mark” in the second limb of the proviso, it does not control the words “the sale of such goods by brand name or trade mark holder” in the first limb of the proviso. In order to attract the proviso, it is not necessary that subsequent sale of such goods has to be only by the dealer having the right as proprietor of the trade mark or licensed user of the trade mark or brand name registered under the provisions of the Trade Marks Act. Even if the proprietor of the trade mark has permitted the use of the brand name or trade mark by another dealer either by entering into an agreement or by granting a licence, the sale by the licensee for the purpose of proviso to Section 5(3)(a) of the Act would be attracted. In our view, it is not necessary that the other dealer referred to in the proviso need be registered under the provisions of the Trade Marks Act. The expression “otherwise to use the said name or trade mark” in the context in which it is used does not mean that the dealer to whom the manufacturer sells the goods must have been a registered user as envisaged under the provisions of the Trade Marks Act. The word “otherwise” which finds a place in the proviso is wide enough to conceive a situation, where the dealer who purchases the goods from the manufacturer even though not as a proprietor in the true legal sense is all the same beneficiary of the said trade mark or is making use of the same with the consent of the registered owner of the trade mark.
20. In view of the above discussions, we are of the view that the Tribunal and the authorities under the Act are justified in holding that the sale made by the petitioner-company is the first sale in the State and that it is liable to tax under proviso to Section 5(3)(a) of the Act.
21. In the result, petitions are rejected. No order as to costs. Ordered accordingly.