In re Allied Blenders and Distillers Private Limited (GST AAR Maharashtra)
Question :- Whether in the facts and circumstances of the present case, the Contract Bottling Unit is making a taxable supply to the Applicant (i.e. Brand Owner), oi . alternatively, whether the Applicant (i.e. brand owner) is making a taxable supply to the. Contract g Unit? Correspondingly, whether in the facts and circumstances of the present case, the Applicant (i.e. ‘brand Owner) is paying consideration to the Contract Bottling Unit by way of bottling charges, or, alternatively, whether the Contract Bottling Unit is paying consideration to the Applicant by way of brand owner surplus?
Answer:- In view of the discussions made above, the question “Whether the applicant (brand owner) is making a taxable supply to the Contract Bottling Unit” is answered in the negative. The remaining Questions, as discussed above, are not answered begin out of the purview of this Authority.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING,MAHARASHTRA
The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 hereinafter referred to as “the CGST Act and MGST Act respectively”‘ by ALLIED DERS AND DISTILLERS PRIVATE LIMITED, the applicant, seeking an advance respect of the following issue.
When her in the facts and circumstances of the present case, the Contract Bottling unit is making a taxable supply to the Applicant (i.e. Brand Owner), or, alternatively, r the Applicant (i.e. brand owner) is making a taxable supply to the Contract Bottling Unit? Correspondingly, whether in the facts and circumstances of the present case, the Applicant (i.e. Brand Owner) is paying consideration to the Contract Bottling Unit by way of bottling charges, or, alternatively, whether the Contract Bottling Unit is paying consideration to the Applicant by way of brand owner surplus?
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the “GST Act”.
02. FACTS AND CONTENTION – AS PER THE APPLICANT
The submissions, as reproduced verbatim, could be seen thus-
STATEMENT OF THE RELEVANT FACTS HAVING A BEARING ON THE QUESTIONS AS PROVIDED IN ANNEXURE 1
The following are the relevant facts in the context of the present ruling sought:
1. Allied Blenders and Distillers Pvt. Ltd. (“ABD” / “Applicant”) has its GST registered premise at 394/C, Lamington Chambers, Lamington Road, Mumbai – 400 004. The Applicants are d ly registered with the GST department, holding Registration No. 27AAACY3846K1ZX.
2. The Applicant, also known in the industry as a Brand Owner (“BO”), is the holder of various registered brands in relation to Indian Made Foreign Liquor (“IMFL”). As the owner of the said IMFL brands, no one other than the Applicant has the ability to exploit the brands, including by way of sale of IMFL under those brands. At the same time, the State Excise laws mandate that the manufacture and sale of IMFL, as well as the procurement of Extra Neutral Alcohol (“ENA”) required for the manufacture of IMFL, can only be undertaken by parties, who have been duly licensed by the State Excise authorities.
3. In order to the meet the requirements under the State Excise laws, the Applicant approaches various Contracting Bottling Units (“CBUS”) who hold the requisite licences under the State Excise laws to source the ENA and carry out the manufacture and bottling of the IMFL. The Applicant enters into contractual arrangements with the CBUs, under which the CBUs undertake the manufacture of the IMFL for the Applicant, in return for the payment of bottling charges (and certain agreed upon reimbursements, such as taxes and expenses). To enable the manufacturing of IMFL under the Applicant’s brands, the Applicant permits the CBU to affix the labels etc. on the finished products and packaging. Furthermore, in certain States, the sale of alcoholic beverages can only take place through a State-owned corporation; accordingly, the CBUs deliver the goods to the relevant State Corporation or other buyer as per the directions of the Applicant. The sale price for the goods so delivered is typically received by the Applicant from the State Corporation or other buyer.
4. The Applicant enters into the aforesaid contractual arrangements with the CBUs on a strictly non- exclusive basis. In fact, in order to fully exploit its brand, the Applicant simultaneously enters into multiple such arrangements with various CBUs. The Applicant is also at liberty to terminate the arrangement with any CBU. Upon such termination, all the raw materials, packing materials, finished goods, scrap, etc. which are financed by the Applicant are to be handed over to the Applicant, and the CBU is obligated to immediately cease and desist from using the brands of the Applicant associated with the IMFL products which were being manufactured.
The terms and conditions of all such arrangements between the Applicant (as the Brand Owner) and the CBU are the same, and for the purposes of this Application, the Applicant draws reference to sample Agreements for Tie-Up Manufacture of IMFL (“Manufacturing Agreement”) with various CBUs (S.P.Y. Agro Industries Ltd., Unistil Alcoblends Pvt. Ltd., Devicolam Distilleries Ltd. and Hi-Tech Bottling Pvt. Ltd., United Brothers Distilleries Pvt. Ltd., Chandigarh Distillers & /Bottlers Ltd.), which are attached herewith as Exhibit-A. The salient features of the said arrangement are set out below:
