GST applicability on Brand

[Bayyareddy DK]

Sir,

My client is owning registered brand in his individual name and he is not registered under GST Act. He has been using this brand for his partnership business (importer of goods) as partner and as well his retail business in a Pvt ltd company as he is also a director. All imported goods are sold to his Pvt ltd company only. Individual is not charging any fee for branding. Firm and Pvt ltd are registered under GST Act. Is the GST applicable on this transaction for lending brand to his firm and pvt ltd company and vice versa? please advice

[KASTURI SETHI]

Sh.Bayyareddy DK Ji,

Your client's transaction is covered under Schedule-1 of CGST Act. Relevant clause is extracted below :

SCHEDULE-1 (See Section-7)

ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION

2. Supply of goods or services or both between related persons or between distinct persons as specified in Section 25, when made in the course or furtherance of business :

[KASTURI SETHI]

Branding the goods is a service.It establishes a link between manufacturer and product.To allow the use of brand name for goods to another person is supply of service.

[Shilpi Jain]

Agree with Kasturi sir. Please see what could you value this as? Not sure if there would be a market value readily available.

See if you can choose the 2nd proviso to rule 28 by which, in case the full credit is available to the recipient, any value can be charged.

[Ganeshan Kalyani]

I agree with the views of Sri Kasturi SIr. Transaction between related person is subject to GST.

AI Summary

GST Applies to Brand Lending Between Related Entities Under Schedule-1 of CGST Act, Even Without Consideration. A client owns a registered brand under their individual name but is not registered under the GST Act. The brand is used for both a partnership business and a private limited company, both of which are registered under GST. The client does not charge a fee for branding. The forum discusses whether GST applies to the transaction of lending the brand. Respondents agree that this transaction is covered under Schedule-1 of the CGST Act, which treats activities between related persons as supplies subject to GST, even without consideration. They suggest considering the value of the service provided for GST purposes.