This article discusses about the rate of GST to be charged on ‘Namkeen‘ in different scenarios. Let us assume a case where Assessee is the manufacturer and trader of ‘Namkeen‘ having ingredients of Gram Pulse Flour, Tepary bean Flour, Edible Refined Oil, Moongfali Dana, Pulses, Spices etc. Under the purview of GST, “Namkeen” has been classified into two categories viz. Branded and Non-Branded.
At present, branded Namkeens, bhujias, fruit & vegetable chips, snack foods etc. are charged @ 6 % CGST + 6 % SGST or 12% IGST, whereas, non-branded Namkeens, bhujias, fruit & vegetable chips, snack foods etc. are charged GST @ 5%.
In this context, this Article will answer the following issues:-
1. Whether the assessee with the name duly registered under the Trademarks Act, 1999 can also sell products under Non-Branded category by charging 5% GST ?
2. What is the rate of GST to be charged on sale of “Namkeen” bearing a brand name of some other firm?
3. Whether mere mentioning the name and registered address of manufacturer as per the statutory requirement under FSSAI, can be considered as “not bearing a brand name” for eligibility of lower rate of GST?
Legal Reference:-
At first, “Namkeen” was included in the said notification under 12% GST slab rate vide Entry 46 of Schedule II under Chapter/heading/sub-heading/tariff item 2106 90. The said entry was amended vide Notification No. 34/2017-Central Tax (Rate) dated 13.10.2017 which is extracted hereunder:
“Namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form [other than roasted gram], put up in unit container and,-
(a) bearing a registered brand name; or
(b) bearing a brand name on which an actionable claim or enforceable right in a court of law is available [other than those where any actionable claim or any enforceable right in respect of such brand name has been voluntarily foregone, subject to the conditions as specified in the ANNEXURE]”;
Notification No. 1/2017-Central Tax was also amended vide Notification No. 27/2017-Central Tax (Rate) dated 22.09.2017, which inserted “Annexure” in the said notification and it was further amended vide Notification No. 34/2017-Central Tax (Rate) dated 13.10.2017 which is extracted hereunder:
“ANNEXURE
For foregoing an actionable claim or enforceable right on a brand name,-
(a) the person undertaking packing of such goods in unit containers which bear a brand name shall file an affidavit to that effect with the jurisdictional commissioner of Central tax that he is voluntarily foregoing his actionable claim or enforceable right on such brand name as defined in Explanation (ii)(a); and
(b) the person undertaking packing of such goods in unit containers which bears a brand name shall, on each such unit containers, clearly print in indelible ink, both in English and the local language, that in respect of the brand name as defined in Explanation (ii)(a) printed on the unit containers he has foregone his actionable claim or enforceable right voluntarily.”
“Provided that, if the person having an actionable claim or enforceable right on a brand name and the person undertaking packing of such goods in unit containers are two different persons, then the person having an actionable claim or enforceable right on a brand name shall file an affidavit to that effect with the jurisdictional Commissioner of Central tax of the person undertaking packing of such goods that he is voluntarily foregoing his actionable claim or enforceable right on such brand name as defined in Explanation (ii)(a); and he has authorised the person [undertaking packing of such goods in unit containers bearing said brand name] to print on such unit containers in indelible ink, both in English and the local language, that in respect of such brand name he [the person owning the brand name] is voluntarily foregoing the actionable claim or enforceable right voluntarily on such brand name.”
Thereafter, Entry 101A was inserted vide Notification 34/2017-Central Tax (Rate) dated 13.10.2017, under Schedule I – 2.5% CGST which is extracted hereunder:
“101A – 2106 90 – Namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, other than those put up in unit container and,-
(a) bearing a registered brand name; or
(b) bearing a brand name on which an actionable claim or enforceable right in a court of law is available [other than those where any actionable claim or any enforceable right in respect of such brand name has been voluntarily foregone, subject to the conditions as specified in the ANNEXURE]”
To remove the confusion between two terms viz “Brand Name” and “Registered Brand Name” under GST. The phrase “brand name” and phrase “registered brand name” are defined under Notification No. 27 (supra), which is extracted hereunder:
Explanation (ii)(a) The phrase “brand name” means brand name or trade name, that is to say, a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, or so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication of the identity of that person.
(b) The phrase “registered brand name” means,-
(A) a brand registered as on the 15th May 2017 under the Trade Marks Act, 1999. irrespective of whether or not the brand is subsequently deregistered;
(B) a brand registered as on the 15th May2017 under the Copyright Act, 1957(14 of 1957;
(C) a brand registered as on the 15th May2017 under any law for the time being in force in any other country.”;
In view of the above Notifications, Answers to the aforesaid legal issues are as follows:-
1. Whether the assessee with the name duly registered under the Trademarks Act, 1999 can also sell products under Non-Branded category by charging 5% GST ?
It is apparent from the above Notifications, that manufacturers of “Namkeen” under Registered Brand name are liable to GST @ 12% on such sale. Whereas, those manufacturers who sell ‘Namkeen’ under unregistered Brand name by foregoing their actionable claim or enforceable right on such brand name are eligible for lower rate of GST @ 5%. The same can be done by filing an affidavit with the jurisdictional Commissioner of Central Tax that he is voluntarily foregoing his actionable claim or enforceable right on such brand name in terms of Explanation (ii)(a) of the Notification No.28/2017 -Central Tax(Rate) dated 22nd September, 2017 and printing disclaimer on unit container to that effect. Hence, no trademark or registered brand name or registered symbol shall be printed on the retail pouch of the final product i.e. “Namkeen”. Also no such brand name or trademark or symbol shall be printed on the wholesale pack. “Namkeen” in the circumstances after fulfilling the condition of affidavit for disclaimer, use of unregistered brand, name, symbol etc. and use of such disclaimer in the final product, would be covered under schedule I of the Notification No. 01/2017-CT(Rate), dated 28-6-2017 containing list of goods attracting 2.5% rate of Central Tax and Sl. No. 101A of the schedule I (inserted by Notification No. 34/2017-CT(Rate), dated 13-10-2017.
Therefore, the manufacturers can hold their registered brand name while selling ‘Namkeen’ under unregistered brand also, after satisfying all the conditions prescribed in the abovementioned Notifications.
2. What is the rate of GST to be charged on sale of “Namkeen” bearing a brand name of some other firm?
As per Notification No. 08/2003 – CE dt. 1st March, 2003, SSI exemption under Excise & Service Tax was not applicable to specified goods bearing brand name or trade name, whether registered or not, of another person, except few cases.
Explanation (ii) (a) of the said Notification:- “Brand name or Trade name means a brand name or a trade name, whether registered or not, that is to say, a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, or so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication of identity of that person.”
Under GST, the requirement of registration of brand name is prescribed separately as defined under Notification No. 27 (supra). However, SSI exemption is not applicable in case of goods bearing a brand name of another person.
In the case of Commissioner of Central Excise, Trichy vs Grasim Industries Ltd [2005 (183) E.L.T. 123 (SC)] , it was held that even the name of some other company, if it is used for the purpose of indicating a connection between the product and that company would be sufficient to constitute a brand name.
Therefore, if a company is using a brand name of another company or working as a subsidiary of that company, then the goods bearing brand name or trade name of another company would be charged with 6% CGST + 6% SGST or 12% IGST.
3. Whether mere mentioning the name and registered address of manufacturer as per the statutory requirement under FSSAI, can be considered as “not bearing a brand name” for eligibility of lower rate of GST?
Assessee plans to manufacture and sell “Namkeen” duly sealed and packed containing only the details of manufacturer as per the statutory requirements of FSSAI which are as follows:
a. In regard to Section 18 of the Food Safety and Standards Act, 2006, no person shall manufacture, distribute, sell or expose for sale or dispatch or deliver to any agent or broker for the purpose of sale, any packaged food products which are not marked and labelled in the manner as may be specified by regulations.
b. Rule 6 of the Food Safety and Standards (Packaging and Labelling) Regulations, 2011, in turn mandates provision of details of the manufacturer of the product on the food package.
Therefore, in light of aforesaid provisions, it is opined as follows:-
If the Assessee voluntarily foregoes the enforceable right to such brand name (i.e. the expression of ‘details of manufacturer’), in the manner as conditions prescribed in the Annexure under the Amended Notification (supra). However, no trademark or registered brand name or registered symbol should be printed on the package of final product i.e. “Namkeen”. Assessee will be eligible to claim reduction in payment of tax on sale.
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