GST on Branding / ITC disallowed

[Bayyareddy DK]

Sir/Madam,

A Partnership Firm imports goods into India, affixes brand name and make a Sales to Pvt ltd company which has branches in different states. Firm and Pvt Ltd have common partners/directors. Brandname is registered in one of the directors. Marketing expenses, Advertisement, exhibition expenses are incurred by the Firm itself. Firm make sales only to Pvt company and its branches and not sell outside customers. Now the input tax is disallowed in firm stating the brand name is in personal name. and brand name is also used in Pvt ltd? Is the valid?

AI Summary

Input tax credit scrutiny for related party branding where commercial nexus, licence and consideration for use are in question.
Whether input tax credit is allowable where a partnership firm uses a brand registered in an individual director's name, incurs marketing expenses, and sells exclusively to a related private company; key operative issues are existence of a valid licence or approval to use the brand, payment or consideration to the brand owner, and contractual restrictions or exclusivity. Absence of written contract and only oral approval raises scrutiny of the supply relationship and whether marketing expenses produce an economic benefit to the firm, distinct from separate questions of brand valuation and taxability of use of director-owned intangibles.