From trademark battle to TDS on payments, here are the key court orders

TDS on payments to ad agencies


Doordarshan, the government telecaster that pays commission to advertising agencies, is bound to deduct tax at source (TDS), the Supreme Court held last week. The regional centre at Thiruvananthapuram did not deduct tax arguing that its agreements with advertising agencies were on a principal-to-principal basis and the amount paid to the agencies for bringing advertisements for telecasting was not a commission. The assessing officer rejected the contention and maintained that the agreement was on the basis of principal-to-agent. The government telecaster moved the Income Tax Appellate Tribunal, which accepted its contention. But the Kerala High Court overruled it and made the telecaster liable to deduct tax at source. That view was upheld by the Supreme Court in the appeal, Prasar Bharati vs Commissioner of Income Tax. Failure to deduct tax under Section 194H would invite the rigour of Section 201 of the Income Tax Act as the assessee would be deemed to be a defaulter. Penal interest would be imposed according to the provision. The Supreme Court listed eight reasons to conclude that the agreements were to pay commission to get more advertisements and such commission was subjected to TDS.


Fine on foreign violator of trademark

A firm which infringes the trademark of another and abstains from court proceedings cannot be permitted to enjoy the benefits of evasion. It must pay compensation, even if it is operating from a foreign country, the Delhi High Court stated last week while passing a decree in favour of the trademark owner. It awarded Rs 1 million with 10 per cent interest in the case, Ferrero Spa vs Ruchi International. Ferrero Spa is claimed to be among the top four manufacturers of confectioneries in the world. Its products with the trademark Ferrero Rocher is available in India. It complained that two firms in India are selling chocolates imitating its trade dress, packaging, colour combination and get-up. One of them settled the dispute, but another continued to import look-alike chocolates manufactured in China and sold in the ‘golden series’ of chocolates. That firm did not appear before the Indian court in the trademark suit. However, the High Court ordered it to pay the amount with interest to Ferrero. Explaining the jurisdiction of the High Court, the judgment stated that in a case of infringement of trademarks it has jurisdiction over a non-resident, provided the owner of the trademark carries on trade is within the court jurisdiction. “The personal amenability of the defendant is irrelevant in a suit for infringement in view of the special enactment of Section 134,” the judgment clarified.


Tender for school bicycles upheld

The Madras High Court has dismissed the petition of Hero Ecotech Ltd challenging the tender for 600,000 bicycles annually provided to school children by the Tamil Nadu government. The bicycle manufacturer alleged there was discrimination in the selection in which the contenders were TI Cycles, Avon Cycles, Hero Cycles and Atlas. Ecotech alleged that it lost the race as its bid was rejected on trivial grounds like the model of the bell which was ding-dong instead of geared ones, and the stickers on the back of the vehicle. They are not technically vital to the running of the bikes, it argued. On the other hand, the government argued that it had followed the transparency in tender rules. If the technical specifications are not followed strictly, it would go against the sanctity of the tender process. Any relaxation made once will open a floodgate of requests for relaxation in respect of their defects. Whether a defect is a minor or major is for the tender inviting authority to decide, the government argued. The court agreed with the government and cited the lab tests of the cycles which listed defects in the sample submitted by Hero. The court stated that it could not step into the shoes of the experts to decide whether they are minor or major defects. Moreover, technical qualifications must be strictly followed.


Diagnostic centres outside ESI net

The Andhra Pradesh High Court has ruled that a medical diagnostic centre is not covered by the Employees State Insurance Act as there is no manufacturing process carried on there and it is not a factory as defined in the Act. The court declared so in the case, Nagarjuna Health Care Centre vs Employees State Insurance Corporation. The court quashed the order of the ESI court, which held that the diagnostic centre with employees was covered by the Act. The court cited its earlier judgments which had, after considering the definition of the manufacturing process, declared that a medical and pathological laboratory is not covered by the definition of a factory. In order to bring such a pathological laboratory within the definition of a factory carrying on the manufacturing process, there should be clear evidence of collecting and drawing blood samples for its further use.


Shopping complex owner not ‘consumer’

The National Consumer Commission has dismissed the appeal of a firm that installed a lift for its five-story commercial complex in Bareilly. The lift was allegedly defective. In its judgment, Selection Point Bazar vs Kinetic Elevators Ltd, the commission stated that the firm procured the lift for the market for enhancing the business by providing facilities to the customers and the public. Therefore, it did not fall in the definition of consumer who can move the consumer forum. According to the definition, those who obtain goods for resale or for any commercial purposes are not consumers entitled to move consumer forums.



Trademark battle over liquor name

Manufacturers of Blacksmith and Goldsmith liquor brands fought for their trademarks in the Delhi High Court last week but the suit was dismissed because the names would not be confused by tipplers. In this case, Jaideep Mohan vs Hub International Industries, the owner of Blacksmith brand wanted to stop the rival distillery from using the brand name Goldsmith alleging that they were similar. It was argued that in similar cases the court had granted the injunction as in the case of Raja Chaudhury/Chacha Chaudhury; 6 Star/5 Star and Lal Qilla/Hara Qilla. On the other hand, the opposite party pointed out that courts have held that Smirnoff and Brisnoff are not deceptive, like Grahalakshmi and Grahshobha. The High Court felt that there was no similarity in Blacksmith and Goldsmith, both sold in the canteens of police forces and paramilitary forces in north India. The High Court cited the cases of Amritdhara/Lakshmandhara and Golden Deer/Double Deer and concluded that there was no need for an injunction.

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