Bombay HC: Sale Of ‘Crocin’ Trademark To UK Company Is An Export, Not Liable To Maharashtra Sales Tax

Mumbai, Nov 22: In a major decision impacting cross-border intellectual property deals, the Bombay High Court has ruled that the sale of the famous pain-relief brand ‘Crocin’ to a UK company amounts to an export and is therefore not liable to Maharashtra sales tax.

HC Overturns 2010 Sales Tax Tribunal Order

A bench of Justices MS Sonak and Advait Sethna overturned a 2010 Maharashtra Sales Tax Tribunal order that had held the sale taxable at 4% under the Bombay Sales Tax Act, 1959.

Dispute Centres on 1996 Brand Acquisition Agreement

The dispute revolved around the Brand Acquisition Agreement signed on January 18, 1996, by which an Indian company, M/s. Duphar Interfran Ltd, sold the ‘Crocin’ trademark to SKB Play PLC, London.

The question was whether this was a local sale happening inside Maharashtra or a sale “in the course of export” under Section 5(1) of the Central Sales Tax Act (CST Act).

Court Applies ‘Mobilia Sequuntur Personam’ Principle

Duphar’s advocate, Ishaan Patkar, argued that since trademarks are intangible assets, their legal “location” is determined by where the owner is situated. He relied on a key precedent — Mahyco Monsanto v. Union of India — which affirms the principle mobilia sequuntur personam, meaning movable property (including intangibles) follows the person who owns it.

Trademark Legally Deemed to Move to the UK Upon Assignment

The HC accepted the argument. Since the assignee, SKB, was a UK-incorporated company, the trademark was deemed to have moved to the UK as soon as it was assigned. This movement of the asset outside India satisfied the legal requirement of an export under Section 5 of the CST Act.

The court stated that the transfer extinguished all rights of the Indian seller and shifted the trademark’s situs (location) to the UK by legal fiction.

State’s Argument on Mumbai Registration Rejected

Additional government pleader Jyoti Chavan, representing the state government, argued that the trademark was registered in Mumbai and the sale consideration was paid in Indian Rupees — therefore the transaction should be treated as a domestic sale. The Tribunal had relied heavily on the place of registration.

HC Clarifies Registration Does Not Determine Trademark Situs

The HC, however, rejected this view. It clarified that registration does not determine where a trademark exists or is located for purposes of taxation. Registration is not even compulsory for a trademark to exist in law. What matters is the legal situs of the asset, which moves with the owner.

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Court Declares the Deal an Export, Exempt from Maharashtra Tax

Allowing Duphar’s plea, the Court held that the agreement was an export transaction because the trademark, upon assignment, moved to a foreign entity. Since export sales are exempt from state sales tax, Maharashtra had no authority to levy tax on this deal.

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