Telangana High Court Upholds Sales Tax On Blended Coffee Sold By Trademark Holder Beyond First Sale

The Telangana High Court has upheld the levy of sales tax on blended coffee sold by a trademark holder. It held that a dealer marketing goods under its own brand name at a point other than the first sale is liable to tax under the Andhra Pradesh General Sales Tax Act.

A division bench of Justice P. Sam Koshy and Justice Narsing Rao Nandikonda dismissed the tax revision cases filed by Amalgamated Holdings Limited. Relying on an earlier ruling, it found no reason to interfere with the concurrent findings of the sales tax authorities and the Sales Tax Appellate Tribunal.

"A Division Bench of this Court, in the case of M/s. Vicrocil Oil Company v. The State of Andhra Pradesh, by a common order decided on 30.01.2026 has authoritatively held that a dealer who markets goods under a trademark or brand name at a point of sale other than the first point of sale is liable to tax under Section 5AA of the APGST Act, irrespective of whether the trademark is registered or unregistered.", the court ruled.

The company manufactures and markets blended French coffee. For the assessment years 2000-01 and 2001-02, it claimed exemption on the turnover from sales of blended coffee. It contended that the coffee seeds and chicory used to manufacture the product had already suffered tax. According to the company, the subsequent sale of the blended coffee could not be subjected to tax again.

The company also argued that its sales constituted first sales. It maintained that such sales fell outside the scope of the provision invoked by the tax department.

The state tax department, on the other hand, contended that the company marketed the product under its own brand name, "ABC Coffee Day". It argued that the company fell within the ambit of the provision applicable to trademark holders.

As a dealer marketing goods under its own trademark at a point other than the first sale, it was deemed to be the first seller and liable to pay tax after adjustment of the tax already paid at the preceding stage.

Examining the record, the court noted that the company purchased coffee seeds and chicory. It roasted and ground the coffee seeds before blending them with chicory. The final product was then marketed as blended coffee.

The court also noted that the appellate authorities had relied on the earlier decision in Aditya Music v. State of Andhra Pradesh. That judgment held that registration of a trademark is immaterial for attracting liability under the provision and that even an unregistered trademark would suffice.

Relying on its recent decision in Vicrocil Oil Company v. State of Andhra Pradesh, the court held that the tribunal had committed no error in upholding the assessment.

"we are of the considered opinion that the Sales Tax Appellate Tribunal committed no error in confirming the order of the Appellate Deputy Commissioner, dated 30.12.2004, which in turn affirmed the assessment made by the Commercial Tax Officer, Khairatabad Circle.", the court ruled.

Finding no illegality, perversity, or jurisdictional error in the tribunal's order, the court dismissed both revision petitions.

For Petitioner: S. Suribabu, Advocate

For Respondent: Swaroop Oorilla, learned Special Government Pleader