Bombay High Court: Crocin Trademark Sale to UK Firm Is Export, Exempt from Maharashtra Sales Tax
Court overturns Sales Tax Tribunal ruling: says intangible property transfer abroad qualifies as export of goods
Judges stress situs of trademark follows owner; cross-border IP deals must be treated as exports under CST Act
By Our Legal Correspondent
New Delhi: November 28, 2025: In a landmark judgment with wide implications for cross-border intellectual property (IP) transactions, the Bombay High Court has ruled that the sale of the Crocin trademark by an Indian company to a UK-based firm constitutes an export of goods and is therefore exempt from Maharashtra sales tax.
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Background of the Case
The dispute dates to January 18, 1996, when Duphar Interfran Ltd, an Indian pharmaceutical company, entered into a Brand Acquisition Agreement with SKB Plc, London (later part of GlaxoSmithKline). Under the agreement, Duphar sold the rights to the popular pain-relief brand Crocin to the UK company.
In 2010, the Maharashtra Sales Tax Tribunal held that the transaction was taxable at 4% under the Bombay Sales Tax Act, 1959, treating it as a local sale of intangible property. Duphar challenged this ruling, arguing that the transfer was an export of goods under the Central Sales Tax Act (CST), 1956, and therefore exempt.
High Court’s Observations
- The assignment of the Crocin trademark amounted to a sale during export.
- The situs of intangible property follows the situs of its owner (legal principle: mobilia sequuntur personam).
- Since the trademark rights were transferred to a UK-based entity, the transaction was an export outside India.
- The sale could not be taxed as a local sale within Maharashtra under the Bombay Sales Tax Act.
The court emphasised that intangible assets like trademarks are “goods” under the CST Act, and their cross-border transfer qualifies as export.
Why This Matters
- It clarifies that intellectual property transfers across borders are exports, not local sales.
- It protects companies from double taxation and ensures compliance with international trade norms.
- It sets a precedent for similar disputes involving patents, copyrights, and trademarks.
- It strengthens India’s position as a hub for cross-border IP transactions.
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Broader Legal Context
The judgment aligns with earlier Supreme Court rulings that intangible assets can be treated as “goods” under sales tax laws. By applying the principle that the situs of property follows the owner, the court ensured that cross-border transfers are treated as exports, even if the asset itself is intangible.
Legal experts note that this ruling will influence how tax authorities handle brand acquisitions, licensing deals, and IP transfers in the future.
Impact on Businesses
- Pharmaceutical firms: Many Indian pharma companies sell or license brands abroad; this ruling ensures such deals are treated as exports.
- Technology firms: Software and patent transfers to foreign entities will benefit from similar treatment.
- Multinationals: The judgment reassures foreign investors that India respects international trade principles.
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Expert Opinions
- Tax lawyers: Welcomed the ruling, saying it prevents arbitrary taxation of IP deals.
- Industry leaders: Argued that the judgment will encourage more cross-border brand acquisitions.
- Academics: Noted that the case strengthens India’s jurisprudence on intangible property and trade law.
Government’s Role
The ruling also serves as guidance for tax authorities. Officials must now treat cross-border IP transfers as exports, ensuring consistency with the CST Act. This will reduce litigation and improve ease of doing business.
Looking Ahead
- Trademarks, patents, and copyrights are “goods” under CST.
- Their transfer abroad qualifies as export, exempt from local sales tax.
- Tax authorities must respect the situs principle when assessing such transactions.
Legal experts predict that the ruling will reduce uncertainty and encourage more cross-border IP transactions, boosting India’s role in the global knowledge economy.
Conclusion
The Bombay High Court’s ruling that the sale of the Crocin trademark to a UK company constitutes export is a landmark in tax and trade law. By exempting the transaction from Maharashtra sales tax, the court has reinforced the principle that cross-border transfers of intangible assets are exports under the CST Act.
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For businesses, the judgment provides clarity and protection. For India, it strengthens credibility in international trade and intellectual property law.
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