Situs of Trademarks and Export Sales under the CST Act: Commentary on Duphar Interfran Ltd. v. State of Maharashtra

1. Introduction

The Bombay High Court’s decision in M/s. Duphar Interfran Ltd. v. State of Maharashtra (Sales Tax Reference No. 9 of 2012, judgment dated 21 November 2025, per Advait M. Sethna J., with M.S. Sonak J. concurring) squarely addresses a long‑standing conceptual problem in Indian indirect tax law: where is the “situs” of an intangible asset such as a trademark, and can its cross‑border assignment qualify as a “sale in the course of export” under Section 5(1) of the Central Sales Tax Act, 1956?

The case concerns the well‑known pharmaceutical trademark “Crocin”, originally owned by an Indian company and assigned to a UK company under a Brand Acquisition Agreement executed in London. The Maharashtra Sales Tax Department treated the assignment as a local sale of “goods” within Maharashtra, taxable at 4% under the Bombay Sales Tax Act, 1959 (“BST Act”). The assessee contended that the transaction was a sale in the course of export within the meaning of Section 5(1) of the Central Sales Tax Act, 1956 (“CST Act”), read with Article 286(1)(b) of the Constitution, and therefore immune from State sales tax.

The judgment is significant because it:

• Explicitly affirms that trademarks (and, by implication, other IP) are “goods” for the purposes of Section 5 CST, not only for Sections 3 and 4.
• Holds that the situs of an intangible asset is the situs of its owner, adopting the principle mobilia sequuntur personam.
• Concludes that the assignment of an Indian‑registered trademark to a foreign owner is a “sale in the course of export” and hence constitutionally immune from State sales tax.

This commentary analyses the decision in depth, explaining the factual background, the legal issues, the court’s reasoning, the precedents relied upon, and the broader implications for sales tax jurisprudence and intellectual property transactions.

2. Background and Factual Matrix

2.1 Parties and Business Context

• Applicant (Assessee): M/s. Duphar Interfran Ltd., an Indian company with its registered office in Mumbai, engaged in the manufacture and marketing of pharmaceuticals and consumer healthcare products.
• Respondent: The State of Maharashtra, represented by the Government Pleader.

Duphar Interfran owned and held the registered trademark “Crocin” under the (then) Trade and Merchandise Marks Act, 1958 (“TM Act 1958”), registered with the Registrar of Trade Marks at Mumbai.

2.2 The Brand Acquisition Agreement

• On 18 January 1996, Duphar Interfran executed a Brand Acquisition Agreement with SKB Play PLC, London (“SKB”), a company incorporated in the UK and engaged in the manufacture and marketing of pharmaceuticals and healthcare products.
• The Agreement:
  • Was executed in London.
  • Contained a specific clause (clause 2.1) for assignment of the trademark “Crocin” to SKB.
  • Provided that it was to be construed in accordance with Indian law.

On 19 January 1996, SKB applied to the Registrar of Trade Marks, Mumbai, to record the assignment and to enter SKB’s name as proprietor of the “Crocin” trademark with effect from 18 January 1996.

2.3 Tax Proceedings

1. Determination of disputed question (advance ruling):
   On 31 August 1998, the Commissioner of Sales Tax, Mumbai, held that:
   • The assignment of the “Crocin” trademark was a local sale within Maharashtra of taxable goods.
   • It was liable to tax at 4% under Schedule Entry C‑I‑26 of the BST Act (which covers intangible/incorporeal goods such as trademarks).
2. Assessment:
   During the pendency of the assessee’s appeal against the determination order, an assessment for 1995‑96 was completed on 11 March 1999 by the Assistant Commissioner of Sales Tax, Worli Division, Mumbai, resulting in an additional demand of ₹99,67,880, primarily due to the 4% tax on the brand acquisition consideration.
3. First appellate authority:
   The Deputy Commissioner of Sales Tax (Appeals‑VII), Mumbai, by order dated 16 February 2000, upheld the assessment and dismissed the assessee’s appeal.
4. Appeals before the Tribunal:
   The assessee appealed both:
   • Against the Commissioner’s determination order (31 August 1998), and
   • Against the assessment appeal order (16 February 2000).
   The Maharashtra Sales Tax Tribunal (5th Bench), by a common judgment dated 26 June 2008 (the “Impugned Judgment”), dismissed both appeals, holding:
   • The Agreement was an agreement to sale of the trademark.
   • The situs of the trademark was where it was registered (in India), therefore the sale was within Maharashtra and taxable under the BST Act.
5. Reference to High Court:
   The Tribunal, by order dated 5 May 2010 in Reference Applications Nos. 186 and 187 of 2008, referred the following question to the Bombay High Court under the BST Act:

   “Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the Brand Acquisition Agreement dated 18/01/1996 in respect of trademark ‘Crocin’ entered into by M/s. Duphar Interfran Ltd. with M/s. SKB Play PLC, London is an agreement to sale and such sale is a sale within the State of Maharashtra liable to tax at 4% in terms of Schedule Entry C‑I‑26 appended to the Bombay Sales Tax Act, 1959?”

3. Issues before the High Court

Though framed as a single question, the Court identified two distinct components:

1. Nature of the Agreement:
   Whether the Brand Acquisition Agreement dated 18 January 1996 in respect of the “Crocin” trademark is an “agreement to sale” (as held by the Tribunal).
   This was not disputed before the High Court; both sides accepted that it was an agreement to sell/assign the trademark.
2. Situs and taxability of the sale:
   Whether such sale:
   • Was a local sale within Maharashtra liable to tax at 4% under Schedule Entry C‑I‑26 of the BST Act; or
   • Was a “sale in the course of export” of goods out of the territory of India under Section 5(1) of the CST Act read with Article 286(1)(b) of the Constitution, and therefore immune from State sales tax.

The assessee initially also invoked Section 4 of the CST Act and Article 286(1)(a) (sale outside the State), but in light of the Bombay High Court’s earlier decision in Mahyco Monsanto Biotech (India) Pvt. Ltd. v. Union Of India, it fairly conceded that protection under Section 4 / Article 286(1)(a) would not be available. The crux thus narrowed to Section 5(1) / Article 286(1)(b).

4. Summary of the Judgment

The Bombay High Court answered the reference in favour of the assessee and against the Revenue, holding that:

1. The Brand Acquisition Agreement dated 18 January 1996 is indeed an agreement to sale with respect to the “Crocin” trademark (first part of the question – accepted and affirmed).
2. However, the resultant sale is not a sale within the State of Maharashtra:
   • The trademark is an intangible/incorporeal property (goods) whose situs follows the situs of its owner (mobilia sequuntur personam).
   • On assignment, the ownership (and therefore the situs) of the trademark moved from an Indian company to a UK company (SKB).
   • This change in situs from India to the UK, occasioned by the sale, constitutes “export of goods out of the territory of India” under Section 5(1) CST.
3. Consequently, the sale is deemed to have taken place in the course of export and is therefore constitutionally immune from State sales tax under Article 286(1)(b).
4. The Tribunal’s approach of fixing the situs of the trademark at the place of registration (India) was rejected as legally untenable.

In the Court’s own words (para 45):

“In light of the foregoing discussion, we hold that the Brand Acquisition Agreement dated 18 January 1996 in respect of trademark ‘Crocin’ entered into between the parties is an Agreement to Sale and such sale is not a sale within the State of Maharashtra, but shall be deemed to have taken place in the course of export of the said trademark ‘Crocin’ outside India, as contemplated under Section 5(1) of the Central Sales Tax Act, 1956.”

5. Detailed Analysis

5.1 Statutory and Constitutional Framework

5.1.1 Central Sales Tax Act, 1956 – Sections 3, 4, and 5

The Court sets out and relies upon Sections 3, 4 and 5 of the CST Act:

• Section 3 – when a sale or purchase is in the course of inter‑State trade or commerce (movement from one State to another).
• Section 4 – determination of when a sale is inside a State (and, by implication, outside all other States).
• Section 5 – when a sale or purchase is in the course of import into or export out of the territory of India:
  • Under Section 5(1), a sale is in the course of export only if it:
    1. occasions such export, or
    2. is effected by transfer of documents of title to goods after goods have crossed customs frontiers.

In the present case, the Court is focused on whether the assignment of the trademark “occasions such export” of goods out of India within the meaning of Section 5(1).

5.1.2 Constitutional Provisions: Articles 269 and 286

Article 286 constitutionally restricts the taxing powers of States:

• Article 286(1)(a): a State cannot tax a sale that takes place outside the State.
• Article 286(1)(b): a State cannot tax a sale that takes place in the course of import into or export out of the territory of India.

After the Sixth Constitutional Amendment (1956), Article 286’s scheme is implemented by the CST Act (particularly through Sections 3, 4 and 5), in harmony with Article 269.

Crucially, the Court notes (para 31) that:

• Pre‑amendment, “goods” was understood more narrowly, largely as tangible property.
• Post‑amendment (and under the CST Act), “goods” is not confined to material/tangible property; it can include intangibles like trademarks, provided they fall within the statutory definition of “goods”.
• Section 5 therefore applies equally to intangibles, and it would be legally untenable to treat the same term “goods” as including intangibles in Sections 3–4 but as excluding them in Section 5.

This interpretative harmonisation is central: the Court explicitly rejects any bifurcated meaning of “goods” within the CST Act.

5.2 The Nature of Trademarks and Assignments

Several critical features of trademarks, as recognised or reaffirmed by the Court, underpin the result:

• A trademark is an intangible/incorporeal property right – clearly “goods” for sales tax purposes (this is broadly consistent with earlier Supreme Court decisions such as Vikas Sales Corporation, relied on by the Tribunal, though the High Court interprets the consequences differently).
• Registration of a trademark:
  • Is not compulsory for the existence of trademark rights.
  • Does not create the underlying trademark; it confers statutory remedies (infringement action) and evidentiary advantages.
• Trademark rights can exist independently of registration and can be enforced through common law “passing off” remedies.
• An assignment of a trademark:
  • Is a transfer of property in the trademark itself, not merely a grant of a right to use.
  • Vests complete rights in the assignee; the assignor retains no subsisting proprietary interest.
  • Does not depend on subsequent registration of the assignment with the Registrar of Trade Marks for its validity or for transfer of title.

These points are grounded in a cluster of precedents cited by the assessee and accepted by the Court, discussed below.

5.3 Precedents Cited and Their Influence

5.3.1 Mahyco Monsanto Biotech (India) Pvt. Ltd. v. Union Of India

This is the key precedent from a coordinate bench of the Bombay High Court, heavily relied on by the assessee and treated as authoritative by the Court.

In Mahyco Monsanto, the Court dealt with franchise agreements and the taxability of transactions involving intellectual property, and held inter alia:

• Where the transaction is in substance a service (e.g., franchise or licensing of technology), it falls under service tax (Central sphere) rather than sales tax (State sphere).
• On the issue of situs of intangible property, the Court emphatically held:

  “…an intangible asset does not have any physical form or existence in any physical location. The legislature could have, by some appropriate deeming fiction, expressly provided for the situs of an intangible asset… In this legislative vacuum, the internationally accepted principle of mobilia sequuntur personam would apply, i.e., the situs of the owner of an intangible asset would be the closest approximation of the situs of his intangible asset.”

• The Court also noted that where transactions are executed outside Maharashtra (e.g., agreements in Delhi), the situs of such intangible property rights would follow the owner’s location absent contrary legislation.

In the present case, the Division Bench adopts that reasoning and, importantly, extends its logic to CST Section 5 and export transactions. The Court explicitly notes (para 36–38) that:

• For intangibles, situs is not where the property is registered, but where the owner is located.
• On assignment, the owner changes from Duphar Interfran (India) to SKB (UK).
• Therefore, by the principle mobilia sequuntur personam, the trademark’s situs moves to the UK on assignment.

5.3.2 CUB Pty Ltd. v. Union of India (Delhi High Court)

CUB Pty Ltd. is quoted with approval (para 39). The Delhi High Court, interpreting income‑tax provisions on indirect transfers, held:

• The legislature had expressly provided for the situs of certain intangibles (shares) but not for trademarks and other intellectual property.
• Therefore, the principle mobilia sequuntur personam applies to IP:

  “Therefore, the well accepted principle of ‘mobilia sequuntur personam’ would have to be followed. The situs of the owner of an intangible asset would be the closest approximation of the situs of an intangible asset… we would agree… that the situs of the trademarks and intellectual property rights… would not be in India. This is so because the owner thereof was not located in India at the time of the transaction.”

The Bombay High Court transposes this reasoning to the CST context: once SKB, located in the UK, becomes the owner of the “Crocin” trademark, the situs of that trademark is in the UK, not in India.

5.3.3 Lal Products v. Intelligence Officer (Kerala High Court)

In Lal Products, the Kerala High Court:

• Endorsed the principle mobilia sequuntur personam for determining the situs of intangible assets.
• Drew a clear distinction between:
  • A transfer of the right to use a trademark (which may be taxable as a deemed sale of the right to use); and
  • A transfer of the trademark itself by way of assignment, which is a transfer of property in goods (the intangible asset) vesting complete ownership in the transferee.

The Bombay High Court (para 40–41) relies on Lal Products to emphasise that:

• The present case is an assignment of the trademark itself, not a mere grant of use.
• After assignment, Duphar Interfran retains no subsisting proprietary rights in “Crocin”.
• This reinforces the idea that the property itself has “moved” abroad in a legal sense.

5.3.4 Trademark and Registration Cases

The assessee cited several authorities to dismantle the Tribunal’s premise that the situs of a trademark is fixed by its place of registration:

1. Rustom & Hornsby v. Zamindara Engineering Co. (Supreme Court)
   • Held that:
     • An unregistered trademark can be the basis of a passing‑off action (common law remedy); and
     • Registration gives an additional statutory infringement remedy.
   • This shows that trademark rights do not spring from registration; they exist independently of it.
2. In re The Century Spinning & Manufacturing Co. Ltd. (Bombay High Court) and Commissioner of Income Tax v. Finlay Mills Ltd. (Supreme Court)
   • These decisions clarify that:
     • Mere registration does not create a new trademark nor alter an existing one.
     • The property in the trademark is not dependent on registration.
3. Parksons Cartamundi Pvt. Ltd. v. Suresh Kumar Jasraj Burad (Bombay High Court)
   • Held that assignment of trademarks is not dependent on subsequent registration.
   • The assignee acquires title by virtue of the assignment; registration does not postpone or condition acquisition of title.
4. Sun Pharmaceuticals Industries Ltd. v. Cipla Ltd. (Delhi High Court)
   • Interpreting Section 2(b) and Section 45(1) of the TM Act 1958, the Court held that:
     • An assignment in writing does not require registration for completion.
     • The assignee acquires title on assignment, not on its subsequent recordal in the register.
     • Denying the assignee the right to exercise ownership merely due to non‑registration would wreak “havoc” with assignability of trademarks and be contrary to the Act.

The Bombay High Court draws on these cases (paras 42–44) to hold that:

• Registration is not the determinant of ownership or of situs.
• The place of registration (India) does not anchor the situs of the trademark once ownership has passed to a foreign assignee.
• Using the registration‑place theory to deny export character would render Section 5 CST partially nugatory for intangibles and be contrary to trademark law itself.

5.3.5 Vikas Sales Corporation v. Commissioner Of Commercial Taxes

The Tribunal had relied on the Supreme Court’s decision in Vikas Sales Corporation, which held that REP licences (export replenishment licences) are goods and therefore subject to sales tax. The High Court does not dispute this conclusion – indeed, it implicitly accepts the broad proposition that intangible rights can be goods for sales tax purposes.

What the High Court rejects is the consequence that the Tribunal drew: namely, that because an intangible is registered/recognised in India, its situs is fixed in India for CST purposes. The Court distinguishes Vikas Sales on facts and scope, aligning instead with Mahyco Monsanto and CUB Pty on the situs question.

5.4 The Court’s Legal Reasoning

5.4.1 Agreement to Sale – a Narrow but Important First Step

The first limb of the reference – whether the Brand Acquisition Agreement was an “agreement to sale” – was not seriously contested before the High Court. Counsel for the assessee expressly conceded (para 15) that:

• The Agreement dated 18 January 1996 is an agreement to sale (effectively, an assignment agreement) of the “Crocin” trademark.

This concession allowed the Court to focus entirely on the second limb: whether such sale is to be treated as:

• A taxable local sale within Maharashtra; or
• A sale in the course of export under Section 5(1), CST Act.

5.4.2 Interpreting “Goods” in Section 5 CST

One of the Revenue’s implicit contentions (reflected in para 19) was that, while “goods” may include intangibles in Sections 3 and 4 CST, the concept of export in Section 5 presupposes the physical movement of tangible goods across customs frontiers, and therefore intangible property like trademarks cannot logically be “exported”.

The Court squarely rejects this dichotomy:

• Sections 3, 4 and 5 of the CST Act are part of a single constitutional and statutory scheme implementing Article 286.
• The term “goods” must carry the same meaning throughout, unless the statute clearly provides otherwise; to hold that intangibles are “goods” for Sections 3–4 but not for Section 5 would be an impermissible inconsistent construction.
• Post the Sixth Amendment to Article 286, “goods” is not confined to physical / tangible goods.

To support this unified, contextual reading, the Court cites well‑known interpretative principles (paras 32–35), including:

• Jewish Blind Society Trustees v. Henning, Ratcliffe v. Ratcliffe, Cumberland Court (Brighton) Ltd. v. Taylor, and R. v. Price – all emphasising that words must be interpreted in their statutory context, not in isolation.
• Reserve Bank Of India v. Peerless General Finance & Investment Co. – “that interpretation is best which makes the textual interpretation match the contextual.”
• N.K. Jain v. C.K. Shah and Code Engineers Pvt. Ltd. v. Union of India (Bom HC) – reiterating that words in a statute draw colour from the context and that statutes must be read as a whole.

On this basis, the Court concludes (para 31) that:

• Section 5 does apply to intangible “goods” such as trademarks.
• The expression “export of goods out of the territory of India” can encompass the export of intangible property by reference to a change in situs from an Indian owner to a foreign owner.

5.4.3 Determining the Situs of the Trademark

The core issue is: where was the “Crocin” trademark located (situs) at the moment of sale?

The Revenue (and the Tribunal) argued:

• The place of registration of the trademark (India, with the Registrar at Mumbai) determines its situs.
• Therefore, the sale took place in Maharashtra; no “export” occurred because there was no physical movement of goods across national borders.

The Court rejects this view for multiple reasons:

1. Intangibles lack physical location. As Mahyco Monsanto explained, intangible assets “do not have any physical form or existence in any physical location”. Therefore, concepts derived from tangible goods (e.g., physical location, place where goods are stored) cannot be applied mechanically.
2. Legislative silence on situs of IP. Where the legislature intends to fix the situs of a class of intangibles, it does so expressly (as with shares in certain tax statutes). For trademarks and other IP, there is no statutory deeming provision fixing situs at the place of registration or anywhere else.
3. Hence, common law principle applies: mobilia sequuntur personam.
   In this “legislative vacuum”, both Mahyco Monsanto and CUB Pty hold that the longstanding principle mobilia sequuntur personam (movables follow the person) applies:
   • The situs of an intangible movable property is the situs of its owner.
   • Thus, prior to assignment, the “Crocin” trademark’s situs was India (where Duphar Interfran, the owner, was located).
   • Upon assignment, when SKB (UK) became the owner, the situs shifted to the UK.
4. Registration is not determinative of ownership or situs.
   Invoking the trademark cases discussed earlier (Rustom & Hornsby, Century Spg., Finlay Mills, Parksons Cartamundi, Sun Pharma), the Court stresses:
   • Registration is not constitutive of the trademark right; it is optional and supportive.
   • An assignment in writing passes title even before its recordal with the Registrar of Trade Marks.
   • Therefore, the place of registration (India) cannot logically fix the situs once ownership has passed abroad.

The Court adds (para 43) that accepting the Revenue’s registration‑based situs theory would:

• Ignore the distinct legal concepts of registration, property, and assignment under trademark law; and
• Render the phrase “sale in the course of export” effectively redundant for intangible goods registered in India.

5.4.4 Does the Transaction “Occasion Export” Under Section 5(1)?

Section 5(1) requires that the sale must either:

1. Occasion the export of goods out of the territory of India; or
2. Be effected by transfer of documents of title after the goods cross the customs frontiers.

For intangible property like trademarks, the second limb (documents of title crossing customs frontiers) is conceptually less relevant; the focus is on whether the sale “occasions” export.

In classic CST jurisprudence, a sale is said to “occasion” export when:

• The export is an integral part of the sale; and
• The export is a direct and proximate result of the sale, not merely incidental or subsequent to it.

Applying that logic here:

• The assignment agreement itself is the operative cause of the transfer of ownership from an Indian entity to a UK entity.
• By applying mobilia sequuntur personam, the trademark’s situs moves out of India and into the UK as soon as the assignment takes place.
• This change in situs from India to a foreign jurisdiction is the legal equivalent of the export of intangible goods.

Thus, the Court effectively treats the legal shift in situs – occasioned by the sale – as amounting to “export of goods out of the territory of India” within the meaning of Section 5(1).

5.4.5 Rejection of Revenue’s Ancillary Arguments

The Revenue advanced several factual and contractual pointers to argue that the sale was essentially domestic:

• The assignment clause (2.1) in the Agreement and its alleged performance in India.
• The Agreement’s choice of Indian governing law.
• The consideration being agreed and received in Indian rupees.
• Registration of the trademark in India and filing of the assignment with the Indian Registrar of Trade Marks.

The Court implicitly and explicitly rejects these as determinative of situs or export character:

• Governing law clause – The choice of Indian law to construe the contract has no bearing on the location of the property or on whether the transaction is in the course of export.
• Currency of consideration – Payment in Indian rupees does not dictate the place of sale or the situs of goods; parties are free to agree any currency. What matters under Section 5(1) is whether the sale occasions export, not the currency used.
• Execution location and registration – The Agreement being executed in London and the registration being in India are facts, but neither is conclusive for CST purposes. As the Court emphasises, it is situs of the intangible (following the owner) that controls.

Therefore, the Court holds that the Tribunal’s conclusion – that the sale was a local sale in Maharashtra – is unsustainable in law.

6. Complex Concepts Simplified

6.1 “Goods” and Intangible Property

In everyday language, “goods” usually means physical things (cars, machines, clothes). In tax law, particularly in the CST Act and many sales tax statutes, “goods” is broader and can include:

• Tangible property (movable physical items), and
• Intangible property – rights that have no physical form but are legally recognised and transferable, such as:
  • Trademarks and brand names,
  • Patents, copyrights, designs,
  • Licences, quotas, and similar instruments.

The Supreme Court in cases like Vikas Sales Corporation and others has confirmed that such intangible rights can be treated as “goods” for sales tax. The Bombay High Court in Duphar extends that understanding firmly to Section 5 CST and export situations.

6.2 “Situs” of Property

“Situs” means the legal location of property. For:

• Tangible goods, situs is usually where the goods physically are.
• Intangible goods (like trademarks), there is no physical presence, so we need a legal rule to decide where they are “located” for tax purposes.

In the absence of a special statutory rule, courts apply the old principle mobilia sequuntur personam:

• “Movables follow the person” – the situs of movable property (especially intangibles) is deemed to be the place where the owner resides or is based.

Thus, if an Indian company owns an Indian‑registered trademark, its situs is in India. If that trademark is assigned to a company in the UK, the situs shifts to the UK at the moment of assignment.

6.3 “Sale in the Course of Export”

A sale is said to be “in the course of export” when:

• The export of goods (to a foreign destination) is a necessary and direct consequence of the sale, and
• There is a real and direct link between the sale and export.

For example:

• If an Indian exporter sells goods to a foreign buyer and ships them out of India pursuant to that sale contract, the sale “occasions” export and is covered by Section 5(1).

In Duphar, the concept is adapted to intangible goods:

• The ‘movement’ is not physical but legal: the situs of the trademark shifts from India to the UK.
• This shift is caused directly by the sale/assignment.
• Therefore, the sale “occasions” export of the intangible property and falls within Section 5(1).

6.4 Assignment vs Licence / Right to Use

It is crucial to distinguish:

• Assignment of a trademark:
  • Transfer of ownership of the trademark itself.
  • Assignor loses all proprietary rights; assignee becomes new owner.
  • Treated as a sale of goods (intangible property).
• Licence or right to use a trademark:
  • Assignor (licensor) remains owner; only permits use by licensee.
  • Often characterised as:
    • A service (under service tax/GST), or
    • A deemed sale of the right to use goods (under some pre‑GST sales tax laws).

Duphar involves a full assignment, not a licence, which is why the Court treats it as a sale of intangible goods.

7. Impact and Implications

7.1 Impact on CST / Pre‑GST Sales Tax Litigation

Although CST and State sales tax laws have largely been overtaken by the GST regime for current transactions, the Duphar decision remains highly relevant for:

• Past assessment years (like 1995‑96 in this case) where disputes on CST and State sales tax are still pending or in appeal.
• Transactions involving cross‑border assignments of intangible property such as trademarks, copyrights, designs, or patents.

The key practical effect is:

• Where an Indian entity assigns intangible property (e.g., a trademark) to a non‑resident, and the assignee becomes the owner, there is a strong basis, post‑Duphar, to argue that:
  • The transaction is a sale of “goods” in the course of export under Section 5(1) CST; and
  • By virtue of Article 286(1)(b), it is immune from State sales tax.

This may impact:

• Sales tax demands on IP assignments to foreign group companies or acquirers in M&A transactions.
• Advance rulings and determinations (like the one in this case) that treated such assignments as local sales.

7.2 Broader Significance for Indirect Tax under GST

The CST Act no longer governs most current domestic transactions post‑GST. However, Duphar still has interpretive and conceptual value:

• Under the GST framework, IP‑related supplies are often classified as supplies of services (e.g., licensing/use of IPR). Yet, the conceptual understanding of the situs of intangible property may inform debates on:
  • Place of supply for cross‑border IP transactions.
  • Distinguishing between supply of goods and services in complex IP deals.
• The Court’s reasoning reinforces that, in the absence of clear statutory situs rules, courts may revert to general principles like mobilia sequuntur personam.

7.3 Implications for Intellectual Property and Commercial Practice

For IP practitioners and commercial lawyers, Duphar reiterates and strengthens several points:

• Free assignability of trademarks: Assignments are valid and effective upon execution, independent of registration; registration is important but not constitutive.
• Cross‑border IP assignments can amount to exports of property for tax and regulatory purposes, even though the IP is “registered” in India.
• Parties structuring cross‑border brand sales, technology transfers, and IP‑driven M&A can:
  • Evaluate the potential for export‑linked tax treatment (for historic CST regimes); and
  • Be mindful that the location of the assignee (ultimate owner) can be legally significant.

7.4 Doctrinal and Policy Implications

Doctrinally, Duphar:

• Consolidates Indian case law (Mahyco Monsanto, CUB Pty, Lal Products) that adopts mobilia sequuntur personam as the default rule for situs of intangible property.
• Demonstrates that constitutional constraints on State taxation (Article 286) apply fully to intangible goods in international commerce.

From a policy perspective, the judgment may prompt:

• Legislatures to consider whether explicit statutory rules on the situs of IP and intangibles are desirable to reduce uncertainty.
• Tax authorities to revisit assessment practices that have implicitly assumed that intangible assets are always “located” where registered or used.

8. Critical Observations

8.1 Conceptualising “Export” of Intangibles

One might question whether it is fully coherent to speak of “export” where there is no physical movement across customs frontiers. However:

• For intangibles, the only meaningful way to capture cross‑border transfer is through a change in legal situs linked to the change in ownership.
• The CST Act and Article 286 refer to “export of goods out of the territory of India”; the Court interprets this phrase contextually (with the benefit of the constitutional amendment and modern commerce) to include exports of intangible property.

In that sense, the judgment is an example of purposive interpretation, ensuring that the protection for export transactions keeps pace with evolving forms of property and trade.

8.2 Potential Tax Planning Concerns

By treating cross‑border assignments of intangibles as exports in appropriate cases, Duphar could, in theory, facilitate tax planning where:

• Entities may assign IP to offshore affiliates to argue that State sales tax is not leviable.

However, two caveats apply:

• The constitutional immunity for “exports of goods” is explicit; it is not a judicial creation. If a transaction genuinely qualifies under Section 5(1), it must enjoy that immunity.
• Tax authorities can still scrutinise whether:
  • The foreign assignee is a genuine, independent owner;
  • The transaction is not a sham; and
  • The structure is not otherwise hit by anti‑avoidance provisions.

8.3 Consistency with Trade Mark Law

The judgment is consistent with:

• The view that trademark rights are primarily commercial assets derived from use and goodwill, not mere entries in a register.
• The legislative scheme that allows trademarks to be traded, assigned, and exploited across borders without any requirement that the owner must remain in the country of registration.

By refusing to tether situs to registration, the Court avoids a clash between tax law and core IP principles.

9. Conclusion

Duphar Interfran Ltd. v. State of Maharashtra is an important and carefully reasoned decision at the intersection of constitutional tax law and intellectual property. The Bombay High Court:

• Affirms that the “Crocin” Brand Acquisition Agreement was indeed a sale (assignment) of the trademark.
• Rejects the Tribunal’s approach that the situs of a trademark is fixed by its place of registration.
• Adopts and applies the principle mobilia sequuntur personam, holding that the situs of the trademark follows its owner.
• Holds that the assignment of the trademark from an Indian owner to a UK owner occasioned the export of intangible goods out of India within the meaning of Section 5(1) of the CST Act.
• Consequently, characterises the transaction as a sale in the course of export, constitutionally protected from State sales tax under Article 286(1)(b).

The decision harmonises the CST Act with modern commercial reality, ensures that constitutional protections for exports extend to intangible property, and aligns tax law with established trademark jurisprudence on assignment and registration. For historic CST and sales tax disputes, and for broader doctrinal clarity on the situs and export of intangible assets, Duphar is a significant and influential precedent.