Crocin Trademark Sale Is an ‘Export’, Not Taxable as Local Sale in Maharashtra: Bombay HC

The Bombay High Court has held that the 1996 sale of the well-known pain-relief brand ‘Crocin’ by Mumbai-based company to a UK-based pharmaceutical company amounted to a sale in the course of export, and therefore could not be taxed as a local sale within Maharashtra. A division bench of Justice M.S. Sonak and Justice Advait M. Sethna set aside the Maharashtra Sales Tax Tribunal’s view that the transfer of the Crocin trademark attracted 4% sales tax under Schedule Entry C-I-26 of the Bombay Sales Tax Act, 1959. The Court was answering a reference arising from a 2010 Tribunal order concerning whether the Brand Acquisition Agreement dated 18 January 1996, executed between Duphar Interfran Ltd. and the UK-based SKB (SmithKline Beecham), amounted to a local taxable sale in Maharashtra or a tax-free export under Section 5(1) of the Central Sales Tax Act, 1956. Trademark as ‘Goods’ and Its Situs: Court Applies International Principle At the heart of the dispute was whether the assignment of a trademark—an intangible asset—could be treated as having been “exported” out of India even though its registration continued to be recorded in India. The Court held in favour of the assessee, relying heavily on the internationally accepted principle of mobilia sequuntur personam (movables follow the person). By this rule, the situs of an intangible asset such as a trademark is deemed to follow the situs of the owner. Since the assignee SKB is located in the United Kingdom, the Court held that the trademark Crocin must be treated as having moved outside India along with the ownership, thereby qualifying as an export. The Court cited its earlier ruling in Mahyco Monsanto v. Union of India and the Delhi High Court’s judgment in CUB Pty Ltd. v. Union of India, which recognised that the situs of intangible property is determined by the location of the owner, not by the place of registration. Assignment Complete Upon Execution, Not Dependent on Indian Registration Rejecting the Maharashtra tax department’s argument that the trademark remained taxable because it was registered in India, the Court clarified that registration is not what creates or transfers ownership in a trademark. The bench referred to multiple precedents, including the Delhi High Court decision in Sun Pharmaceuticals v. Cipla, to reaffirm that a trademark assignment takes effect upon execution of the assignment deed. Registration of assignment with the Registrar of Trademarks is not a condition precedent to the completion of transfer. Post-assignment, all rights of the Indian assignor are extinguished. Thus, merely because the assignee later applied for its name to be entered in the Indian trademark registry did not alter the fact that the sale had already occurred outside India. Revenue Argument Rejected: No Local Sale, No 4% Sales Tax The State of Maharashtra argued that the agreement was executed in India, Consideration was paid in Indian rupees, and the trademark was registered in India, and therefore the transaction was a local sale liable to 4% sales tax. The Court, however, found these contentions legally irrelevant to determining the situs of an intangible asset. The court held that the movement of ‘goods’ for Section 5 purposes includes movement by legal fiction, especially for intangible property such as intellectual property rights. Hence, the assignment amounted to export of goods out of India, placing it squarely within the exemption under Article 286(1)(b) of the Constitution. Tribunal Ruling Overturned; Reference Answered in Favour of the Assessee The High Court decisively ruled the 1996 Brand Acquisition Agreement was indeed an Agreement to Sale. But the sale did not take place within Maharashtra. Instead, it occurred in the course of export outside India. Therefore, the State had no authority to levy sales tax on the transaction. The Court’s ruling answers the reference fully in favour of Duphar Interfran Ltd. This judgment will be useful even under GST Act where the question of “movement” of intangibles arises for determining whether the supply is inter state or intra state or in the course of import or export. Case Details Case Title: M/s. Duphar Interfran Ltd. Versus The State of Maharashtra Case No.: SALES TAX REFERENCE NO. 9 OF 2012 Date: 21 November 2025 Counsel For Petitioner: Ishaan V. Patkar Counsel For Respondent: Jyoti Chavan Click Here To Read Order Read More: SC Upholds 100% Disallowance of Rs. 20.06 Cr Bogus Purchases Under Section 69C

Crocin Trademark Sale Is an ‘Export’, Not Taxable as Local Sale in Maharashtra: Bombay HC

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