2019 (10) TMI 870 - AAR - GST

Ruling on GST Rates for Registered and Unregistered Brands in Rice Manufacturing

In Re: M/s. Sri Balaji Rice Mill,

The case involved a rice manufacturer seeking clarification on selling rice under registered and unregistered brands with different GST rates and ... Exemption from GST - de-registration of registered brand to sell goods - As a manufacturer of rice, can the applicant sell Rice under Registered Brand with 5% GST and also in Unregistered Brand with affidavit & disclaimer under GST exempted category? - N/N. 1/2017 - Central Tax (Rate) dated 28.06.2017. As a manufacturer of rice, can the applicant sell Rice under Registered Brand with 5% GST and also in Unregistered Brand with affidavit & disclaimer under GST exempted category? - HELD THAT:- If he is selling the goods in another brand name which is not registered, then he has to file necessary documents and also clearly follow the conditions prescribed for claiming the exemption. The applicant can possess the registered brand name while selling goods in unregistered brand, but to claim exemption he must not sell using the registered brand name. Is it compulsory to de-register the registered brand to sell goods in unregistered brand with nil rate of tax under GST? - HELD THAT:- The manufacturers can hold the registered brand name while selling the rice under unregistered brand after following all the other conditions prescribed. However, if they sell in the registered brand name, they would not be eligible for exemption. Whether sale of rice is exempt, if applicant forgo the actionable claim on brand name after de-registration? - HELD THAT:- When the person de-registered the registered brand name and sells the rice in the unregistered brand name, he shall voluntarily forego his actionable claim or enforceable right on such brand name. Further, he has to file an affidavit to that effect with the jurisdictional Commissioner of Central Tax or State Tax and on each such unit containers, clearly print in indelible ink, both in English and the local language, that in respect of the such brand name he has foregone his actionable claim or enforceable right voluntarily then such sale of rice is exempted from GST. Issues:Classification of goods and services for a rice manufacturer under registered and unregistered brands with different GST rates and exemptions.Analysis:1. The applicant, a rice manufacturer, sought an advance ruling on selling rice under registered and unregistered brands with varying GST rates and exemptions. The applicant sold rice under the registered brand 'KITCHEN KING' and unregistered brand 'SBRM's K KING' with different tax treatments.2. The amendments in Notification No. 27/2017 and Notification No. 28/2017 altered the tax liability based on the brand name. Goods under a registered brand attracted 5% GST, while those under an unregistered brand were exempt, provided the actionable claim on the brand was voluntarily foregone and disclaimers were printed on containers.3. The applicant questioned the necessity of deregistering the brand for selling under an unregistered brand with nil GST. The ruling clarified that selling under a registered brand made the applicant ineligible for exemption. However, possessing the registered brand while selling under an unregistered brand was permissible if exemption conditions were met.4. Regarding the third query, de-registering the brand name and selling under an unregistered brand required the voluntary forfeiture of the actionable claim, filing an affidavit with tax authorities, and printing disclaimers on containers to claim exemption from GST.5. The ruling established that manufacturers selling rice under a registered brand were subject to 5% GST, while those selling under an unregistered brand after relinquishing the actionable claim were exempt from GST. Holding a registered brand while selling under an unregistered brand was allowed, but selling under the registered brand would nullify the exemption.6. Manufacturers selling under a deregistered brand could claim GST exemption by voluntarily waiving their actionable claim, filing affidavits, and printing disclaimers on unit containers. Compliance with these conditions was essential to qualify for the exemption.