In re USV Private Limited (GST AAR Maharashtra)
Maharashtra AAR: GST Advance Ruling can be sought by supplier only and not by recipient of goods or services
In M/s. USV Pvt. Ltd. [ORDER No.GST-ARA-91/2019-20/B-77 dated October 14, 2021], M/s. USV Pvt. Ltd (“the Applicant”) has sought an advance ruling on mainly two issues. The first issue pertains to whether the activity of transfer of registered trademarks by Novartis AG (“NAG”) to the Applicant is a supply of goods or supply of services under the Central Goods and Services Tax Act, 2017 (“the CGST Act”) if yes then, whether the Applicant is liable to discharge Goods and Services Tax (GST) on the subject transaction under reverse charge mechanism in terms of entry no. 1 of Notification No. 10/2017- Integrated Tax (Rate) dated 28.06.2017.
Factually, the Applicant is a healthcare company in India registered under the GST regime and NAG is a Switzerland-based pharma company that owns rights of Trade Marks across the world including India. The said Trade Marks are registered in the name of NAG under the Indian Trade Marks Act, 1999 and the Trade Marks Rules, 2017 in India. And Vide a Deed of Assignment dated 30th November, 2019, NAG has agreed to permanently transfer the said Trademarks related to Indian Territory to the Applicant at an agreed consideration. And the ‘Effective Date’ as stated in the Deed is December 10, 2019 and the application has been filed on January 16, 2020.
The Hon’ble Maharashtra Authority for Advance Ruling (“the Mah AAR”) pointed out that as per section 95 (a) of the CGST Act there are two conditions to be fulfilled for making an advance ruling application; firstly the question asked should be in relation to supply undertaken by the Applicant and secondly the question should be in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the Applicant.
The Mah AAR rejected the subject application as being non-maintainable as per Section 95 of the CGST Act because the Applicant has firstly raised questions as a recipient of services and secondly the questions are in respect of past and completed supply as on the date of the application and not a supply, which is being undertaken/proposed to be undertaken.
Further, Mah AAR find that in the subject case. the first condition mentioned above is not satisfied as much as NAG which is undertaking the supply and not the Applicant. And with respect to the second condition for the supply to be undertaken or proposed to be undertaken the Mah AAR observed that the Deed of Assignment is dated 30th November 2019, and the Effective Date as stated in the Deed is 10th December 2019 whereas the application has been filed on 16th January 2020.
In view of the above facts, the Mah AAR find that the Applicant’s application does not satisfy the conditions of Section 95 of the CGST Act and is therefore rejected as being not maintainable. Therefore, the second question is not taken up for discussion.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, MAHARASHTRA
PROCEEDINGS
(Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 )
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 M/s. USV Private Limited, the applicant, seeking an advance ruling in respect of the following questions.
1. Whether in facts and circumstances of the case, the activity of transfer of registered trademarks by Novartis AG to the applicant is a ‘supply of goods’ or supply of services’ under the CGST, Act, 2017/IGST Act, 2017?
2. If the activity is held to be a supply of service, whether the applicant is liable to discharge Goods and Service Tax (GST) on the subject transaction under reverse charge mechanism in terms of entry no. 1 of Notification No. 10/2017- Integrated Tax (Rate) dated 28.06.2017? Page 1 of 10
3. In case it is held to be a supply of service and the applicant is liable to discharge GST under reverse charge mechanism, whether the said ‘supply of service’ is classifiable under entry no. 17 (i) of Notification No. 8/2017-Integrated Tax (Rate) dated 28.06.17 (as amended)?
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 any 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, the expression `GST Act’ would mean CGST Act and MGST Act.
2. FACTS AND CONTENTION — AS PER THE APPLICANT
The submissions made by M/s USV Private Limited, the applicant, are as under:-
2.1 The Applicant, is a healthcare company in India, registered under the GST regime and Novartis AG (‘NAG’) is a Switzerland based pharma company which owns rights of Trade Marks (namely ‘Jalra’ and ‘Jalra M’) across the world including India. The said Trade Marks are registered in the name of NAG under the Indian Trade Marks Act, 1999 and the Trade Marks Rules, 2017 in India.
2.2 Vide a Deed of Assignment dated 30th November, 2019, NAG has agreed to permanently transfer (sell) the said Trademarks related to Indian territory to the applicant, with effect from the Effective Date’ as stated in the Deed, and at an agreed consideration. As per para 1.1 of the said Deed of. Assignment, NAG has agreed to sell, grants, assigns, conveys and transfers all the rights relating to subject Trademarks, from the Effective Date for consumption of products bearing the Trade Marks within the Indian territory, forever, for an agreed consideration in USD. The applicant), paid consideration to NAG in two tranches on 04.12.2019 and 05.12.2019 thru Bank transfer.
Based on the GST Act and relevant notification issued thereunder, the applicant wishes to confirm whether the activity of transfer of registered trademarks by NAG to the applicant is a ‘supply of goods’ or ‘supply of services’ under the GST law?
2.4 CLASSIFICATION OF PERMANENT TRANSFER OF REGISTERED TRADEMARKS AS ‘SUPPLY OF GOODS’ OR ‘SUPPLY OF SERVICES.
2.4.1 The term ‘intellectual property right’ has not been defined either under the CGST Act, 2017 or the IGST Act, 2017. However, under the erstwhile Service Tax regime, the term “intellectual property right” was defined and Trademark fell under the ambit / meaning of Intellectual property right’.
2.5 As per Entry 5(c) of schedule II to the CGST Act, 2017 – ‘temporary transfer or permitting the use of enjoyment of any intellectual property right’ is defined as a supply of service. Permanent transfer of intellectual property rights is not covered under the said entry. Also, there is no deeming provision under the Act to deem the permanent transfer of Intellectual Property Rights’ to be a service. As per Entry 1(a) of schedule 11 to the CGST Act, 2017 – ‘any transfer of title in goods is a supply of goods’. The term ‘goods’ has been defined under Section 2 (52) of the CGST Act, 2017 to include every kind of movable property except for the ones excluded. The term ‘movable property’ has not been defined under the GST Acts. Hence, reference should be taken from the definition of the term ‘movable property’ as given in Section 3 (36) of the General Clauses Act, 1897 as property of every description, except immovable property.
2.6 Also, the Courts in a plethora of cases have consistently treated ‘intellectual property rights’ as ‘goods’ under the erstwhile Value Added Tax (VAT) / Central Sales Tax (CST) laws. Some of the case law is as under
> Lai Products Vs Intelligence Officer, 2018 TIOL 2639 HC Kerala VAT
> M/s Merk KGAA Germany Vs The State of Maharashtra 2016-TIOL-02 Tribunal – Mum-VAT
2.7 Accordingly, Intellectual Property Rights’ shall be treated as ‘goods’.
2.8.1 Further, entry no. 17 (i) of Notification No. 8/2017-Integrated Tax (Rate) dated 28.06.17, which ,provides for the IGST rates on services, is as follows-
