Classication of Goods or Service

[HIMANSHU BHUSHAN]

Assignment of trade mark is a supply of goods or service under GST

[KASTURI SETHI]

Pl. peruse this case law. You may get cue from this case laws.

Branding of goods does not amount to manufacture --CESTAT Kolkata in the case of 2017 (7) TMI 715 - CESTAT KOLKATA - SIKA India (P) Ltd. based on the Supreme Court Judgement --1962 (10) TMI 1 - SUPREME COURT pertaining to Central Excise

[Padmanathan KV]

Permanent Transfer of IPR is supply of goods. Pls see entry 452P of Notification No 1/2017 CT-R taxable at 18%

[KASTURI SETHI]

997336 Licensing services for the right to use trademarks and franchises

This service code includes licensing services for the right to use trademarks and to operate franchises

997339 Licensing services for the right to use other intellectual property products.

This service code includes licensing services for the right to use other kinds of intellectual property products, such as architectural and engineering plans, industrial designs etc.

Trade mark is one of the Intellectual Property Rights.

Serial No 17

[(ii) Temporary or permanent transfer or permitting the use or enjoyment of Intellectual Property (IP) right.] at serial No17

Rate of tax is 18% vide NOTIFICATION NO. 11/2017-C.T. (RATE), DATED 28-6-2017

[Padmanathan KV]

According to schedule 2 only:

(c) temporary transfer or permitting the use or enjoyment of any intellectual property right;

is treated as supply of service.

Assignment of trademark seems to be of permanent nature hence not covered under Clause (c) of Sch II in my opinion. Hence, it is suppy of goods.

[Shilpi Jain]

If you have a look at the rate entry in the services rate notification, the following is relevant

Temporary or permanent transfer or permitting the use or enjoyment of Intellectual Property (IP) right.

As mentioned by the experts above, there is also an entry in the goods rate notification.

Though, the manner of classification would be to look at the terms of the contract, identify whether permanent or temporary transfer. In case of permanent transfer it would be goods. However, whether goods or services rate of tax seems to be 18%.

[KASTURI SETHI]

The word, 'assignment' used in the query signifies transfer of right, interest, title etc. It also includes permission to use trade mark, brand name in this scenario. The registration of trade mark with the Govt. office is also a service. So as per dictionary meaning it is activity/service.

[Padmanathan KV]

A. Service Notification entry covers both "temporary and permanent transfer"
B. Goods Notification entry covers only "permanent transfer"
C. Schedule II States Service includes only temporary transfer.

In my opinion, Schedule forms part of the Act (G.P.Singh's Interpretation of Statues) and hence, it overrides Notification in my opinion.

The moot question here seems to be whether assignment is temporary transfer or permanent transfer.

[KASTURI SETHI]

Dear Experts,

It appears to me that the querist is not so eager to know as we are (to spread knowledge).to save the querists from the rigours of litigation. The querist is silent. All of us are making all-out sincere and dedicated efforts to provide fool-proof reply from all angles.

[Shilpi Jain]

Just because permanent transfer is not part of Sch II entry in the present case, would not automatically mean that it is a supply of goods.

Though analysing the jurisprudence on the issue of transfer of IPR it can be considered as a supply of goods in case of permanent transfer.

This is posted only for academic interest.

AI Summary

Classification of trademark assignment as goods or service affects GST treatment; contractual terms and statutory entries determine tax character. Classification of a trade mark assignment under GST hinges on whether the transaction effects a permanent transfer of title (suggesting supply of goods) or constitutes a licence/permission (temporary or permanent) to use the IP right (suggesting supply of services). Service-rate entries cover temporary and permanent transfers or permitting use of IP rights; Schedule provisions treat temporary transfers as services. Contractual terms and the factual nature of the transfer are determinative in resolving the goods-versus-services character.