GST exemption on branded rice in unit containers depends on valid relinquishment of actionable brand rights

The 22.09.2017 amendment widened the GST taxable entry for goods in unit containers to cover not only registered brand names but also brand names carrying an actionable claim or enforceable right. Exemption was available only where that right had been voluntarily foregone in the prescribed manner. On the record of seized invoices, sales registers and stock of packaged rice sold under names such as Aahar Normal, Aahar Gold and Aahar Premium, the authorities were justified in treating the supply as taxable. The plea that the stock was only for internal use was not supported, and the demand with interest and penalty was sustained.

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Issues: Whether rice supplied in unit containers under unregistered brand names, in respect of which actionable claims or enforceable rights had not been voluntarily foregone, was liable to GST under the exemption notification as amended.

Analysis: The demand was sustained on the basis of seized invoices, sales registers and stock of packaged rice showing supply of rice in 25 kg containers bearing the names Aahar Normal, Aahar Gold and Aahar Premium. The amendment brought in by the notification of 22.09.2017 widened the taxable entry from goods bearing only a registered brand name to goods bearing either a registered brand name or a brand name on which an actionable claim or enforceable right in a court of law is available. The exemption could be claimed only where such actionable claim or enforceable right had been voluntarily foregone in the manner prescribed. The record did not support the plea that the seized stock was merely for internal use, and the authorities were justified in relying on the documentary material showing actual taxable supply.

Conclusion: The supply was taxable, and the challenge to the demand, interest and penalty failed.

Final Conclusion: The order confirmed the GST demand on packaged rice sold under brand names where the actionable claim had not been validly relinquished, and the petition was rejected.

Ratio Decidendi: After the 22.09.2017 amendment, goods put up in unit containers are taxable not only when bearing a registered brand name but also when bearing a brand name carrying an actionable claim or enforceable right, unless that right has been voluntarily foregone in the prescribed manner.

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