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Sales Tax Practioners' Association of Maharashtra

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Sales Tax Review

August 2007

Roving Eye

  1. 60 years of Independence!

On 15th August, 2007 we as a nation, heartily saluted our tricolours national flag and everyone in his mind was looking back and assessing the benefits of our independence. Of course, in the life of the nation, 60 years milestone is not a long journey. But in the life of an individual who is born after independence, the period of 60 years is very valuable in his life in terms of the social benefits that he has received. Looked from this point of view, the scenario is not heart warming, nay, disturbing to any serious and sentimental person. Anyway, life goes on !

  1. On this memorable day, the Supreme Court Bar Association had organized a function to celebrate ‘Independence Day’ and the Chief Guest was Hon’ble CJI Mr. K. G. Balakrishnan. On this occasion he said, “In a caste and gender sensitive society, the role of the Judiciary has become more meaningful than ever which I may call as “Social Engineering” concerning the common man and the community. This is so because it has continuously strived to protect the fundamental rights of the citizens and has not wavered from its path of upholding the rule of law.”

  2. Echoing his words, Solicitor-General Mr. G. E. Vahanvati said, “India is the only country in Asia where rule of law is firmly entrenched in the society and the credit for this must go to the judiciary, which has always looked after those whose fundamental rights have been violated.”

  3. Therefore, to us as lawyers, while we are proud of the judicial system of which we are a part and parcel, but we are totally dissatisfied with the political system obtaining in our country. And, politicians themselves should provide an answer to this decayed system and bring the same to its original glory, as was the case during pre-independence era.

  4. Whilst on the subject, it will be appropriate to note the views of Mr. Narayana Murthy, Chairman & Chief Mentor of Infosys, who said: “We need modern honest leaders who can benchmark with the best. We need young and energetic politicians, not people who are close to dying”. As regards the achievements of the nation he said, “There are lots of good things that India has achieved; we have produced world-class Scientists, Doctors and Engineers. We have reduced poverty and increased literacy; we have sent rockets to space. However, the job is not fully done, we still have the largest mass of illiterates in the world and the malnutrition levels are really high. There are 150 million Indians who do not have access to drinking water and 750 million who do not have decent sanitation. But today, I would like to focus on what we have achieved rather than what still remains to be done”. Talking about Infosys contribution, he said, “How can I say that myself, you should ask others. However, I will give credit to Infosys for creating the largest corporate governance programme and a very democratic distribution of wealth. My driver has a million dollars of wealth today.”

  1. Designs registered under the Designs Act, 1911

Entry C-39 appended to MVAT Act, 2002 pertains to goods of intangible nature as may be notified, from time to time by the State Government in the Official Gazette. Under Notification No. VAT-1505 / CR-114 / Taxation-1 dated 1st April, 2005, Notification has been issued listing down therein entries at serial No. 1 to 14 pertaining to intangible goods. Entry at serial No. 10 therein pertains to “Designs” registered under the Designs Act, 1911 (Readers may note that the Designs Act, 1911 has been repealed vide section 48 of the Designs Act No. 16 of 2000).

  1. We have come across a decision of the Bombay High Court, under Designs Act (16 of 2000) in Suit No. 2961 of 2006 decided on 27-2-2007, in the case of Marico Ltd. vs. Raj Oils Ltd. (2007) (4) Mh. L.J. (Bom), in which section 2(a) of the Designs Act, 2002 came for the consideration of the Hon’ble Court. U/s 2(a) – “Article” is defined as under: -
    “(a) “article” means any article of manufacture and any substance, artificial, or partly artificial and partly natural; and includes any part of an article capable of being made and sold separately.”

  2. In the above case, the dispute was about the interpretation of the definition “article” as above. On the facts of the case narrated hereafter, the Court held that: – “Merely because a part of the article can be made separately and sold separately, it should not be taken as covered by the phrase unless the part has an identity in the market by itself.”

  3. In this case, the plaintiff – Marico Ltd. claimed a registered design in respect of a ‘stylized bottle cap’ used on their bottle while selling their coconut oil under the brand name Parachute. Since the defendant – Raj Oils Mills Ltd. was using similar designed cap on the bottle of their coconut oil product, the plaintiff sought an injunction against the defendant.

  4. The plaintiff, by a notice of motion, sought an injunction restraining the defendant from infringing or pirating the registered design of the plaintiff and from manufacturing or selling any article embodying the plaintiff’s registered design or applying the plaintiff’s registered design or any imitation thereof to / on / upon the bottle caps of the defendant’s products or any other article. The plaintiff claimed a registered design in respect of a stylized bottle cap used on their bottle while selling their coconut oil under the brand name ‘Parachute’. They had attached their registration certificate along with photographs of their registration to the plaint. The cap in respect of which the design was registered was a plastic cap with a plastic lid on the cap which moves on a plastic hinge which has the contours of a butterfly. As against this, the defendant used a similar cap with a similar movable lid and a hinge in plastic also with a contour of a butterfly. There was, however, a slight difference in the shape of the lid. The lid of the plaintiff’s cap had sharp indentation whereas the lid on the defendant’s cap had curved indentation. The cap which is threaded from inside was admittedly used by both the parties to close their bottles containing coconut oil. It was, in that sense, a part of the bottle.

  5. The Court against the above background observed that, the plaintiff in the ordinary course might have been entitled to an injunction on the basis of the registered design of the cap because of similarity of the defendant’s cap with that of the plaintiff. However, under the Designs Act, 2000 it is opened to a defendant to raise, inter alia, the plea that the plaintiff’s design is not registrable as a ground of defence. In fact, under sub-section (3) of section 22, the defendant can raise every ground on which the registration of a design may be cancelled u/s. 19 as a defence.

  6. The defendant therefore contended in this case that the plaintiff’s design in respect of the cap was not registrable under the Designs Act, 2000. Since under the Act, “design” means the features of shape, on configuration etc; applied to an article, a design can only be registered in respect of an article. As such, the defendant contended that the registration of the design obtained by the plaintiff was not valid since the cap could not have been considered to be an “article” as defined in section 2(a), as mentioned hereinabove. They further contended that it was the cap which may be loosely called an article was nonetheless, not an article since it did not stand alone as an article for sale nor it could be described as a part of an article because it was not capable of being sold separately. The Court thereafter noticed the decision cited by the defendant of the House Lords in Ford Motor Co. Ltd.’s Design Applications, reported in (1995) R. P. C. 167.

  7. Thereafter, the Court opined that it is in respectful agreement with the said judgment and also of view that the Indian statute should not be read literally. Merely because a part of the article can be made separately and sold separately, it should not be taken as covered by that phrase unless the part has an identity in the market by itself. Indeed, a part must have an independent life as an article of commerce and not be merely an adjunct of some larger article of which it forms part. The cap involved in the present case cannot be said to have an independent life of an article of commerce. Hence, prima-facie, in my view, the article in question; i.e., the cap in which the plaintiff has a registered design was not an article within the meaning of section 2(a) which was capable of registration. Accordingly, the plaintiff, therefore, does not have a prima-facie right to an injunction to restrain the defendant from using a similar cap.

  8. Readers may find the above judgment useful in future while dealing with cases that may come in dispute under the Designs Act.

  1. Right to Information Act, 2005

The Hon’ble Bombay High Court in Surupsingh Naik vs. State of Maharashtra and Ors. in W.P. No. 1750 of 2007 decided on 23-3-2007 (2007) (4) Mh. L.J. 573 (Bom), considered sections 8, 11 and 19 of the said Act.

  1. In the said petition filed by Surupsingh Naik, the Court briefly noted the following facts:–
    “1. The petitioner is presently a Member of the Legislative Assembly of the State of Maharashtra. Contempt proceedings had been initiated against the petitioner by the Hon'ble Supreme Court, which imposed on him imprisonment of one month, by judgment dated 10th May, 2006. The petitioner on 12th May, 2006 surrendered to the Police Authorities in Mumbai and was taken in custody. On 14th May, 2006 petitioner was shifted to Sir J.J. Hospital, Mumbai on account of suspected heart problems as well as low sugar and blood pressure. According to the petitioner he underwent medical treatment at Sir J.J. Hospital, Mumbai for the period of 21 days and was discharged on 5th June, 2006. Petitioner served the remaining tenure of imprisonment till 11th June, 2006 in jail on which day he was released from custody on completing the period of sentence. The petitioner contends that he is suffering from various diseases such as diabetes, heart problem and also blood pressure from 1998-99 onwards and has been admitted to hospital on various occasions on account of his health problems.”

  2. A private citizen by an application dated May 27, 2006 sought from the respondent; i.e., the PIO of Sir J.J. Hospital, Mumbai, the medical reports of the Petitioner, who refused the same. Thereupon, the private citizen filed First Appeal without success. Thereafter, Second Appeal was filed with success and the State Information Commission directed to Sir J.J. Hospital to give the required information to the private person. Meantime, the said Hospital wrote to the petitioner to put up his say whether the information should be given or not. There was nothing on record to indicate whether the petitioner replied to the said letter.

  3. The Court analysed the legal provisions of the RTI Act, and other relevant Act as under:–

  1. Right to Information Act r/w Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002. The Right to Information Act, is an enactment by Parliament and the provisions contained in the enactment must, therefore, prevail over an exercise in subordinate legislation, if there be a conflict between the two.

  2. U/s of the RTI Act Public Information Officer may disclose personal information in public interest.

  3. The scheme and aim of the Act is to provide for setting out a practical regime of right to information for citizens, to secure access to information under the control of public authorities as also to promote transparency and accountability in the working of every public authority. These objects of the legislature are to make our society more open and public authorities more accountable.

  4. U/s 6(2) of the Act, the applicant is not required to give any reasons for requesting/obtaining the information. Hence, in this case, the contention of the respondent-Hospital as well as the petitioner that information given may be misused really in our opinion would not arise considering the object behind section 6(2) of the Act.

  5. U/ss. 11 and 19(4) opportunity of hearing to the third party before giving information is not an empty formality. Therefore, before any order is passed a third party has to be given notice in order that he may be heard.

  6. After noticing the law and the facts of the case, the High Court opined that for the failure by Respondent No. 2; i.e., the State Information Commission, to give an opportu-nity to the petitioner the impugned order will have to be set-aside and the matter remanded back to the Commission to give an opportunity to the petitioner and thereafter dispose of the matter according to law. Considering the public element and interest involved we direct the Commission to dispose of the matter on remand within 30 days from today; i.e., 23-3-2007.

  1. Accordingly, it is now public knowledge, that the State Commission directed the J.J. Hospital to furnish all medical reports to the private person as per his application.

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