GST Exemption Allowed as Similar Packaging Does Not Amount to Brand Name Usage

Mere Similarity in Packaging Features Do Not Constitute a ‘Brand Name’; Exemption Allowed Where Enforceable Brand Rights Are Relinquished

The Hon’ble Madras High Court in Narasus Saarathy Enterprises Private Limited v. Additional Commissioner of GST & Central Excise held that mere similarity in packaging, colour schemes, agricultural graphics, abbreviations, or statutory disclosure of the manufacturer’s name does not amount to use of a “brand name” for the purpose of denying GST exemption on food products. The Court observed that generic pictorial depictions and mandatory declarations under the Food Safety and Standards Act and Legal Metrology laws cannot create a trade connection constituting branding. It further held that even if a mark could fall within the broad definition of a brand name, exemption under Notification No. 2/2017–CT (Rate) dated June 28, 2017 remains available where the assessee voluntarily relinquishes actionable claims or enforceable rights through an affidavit under Notification No. 28/2017. The Court also ruled that invocation of extended limitation under Section 74 of the CGST Act was unjustified because the department was already aware of all relevant facts through returns and inspections. Consequently, the demand of tax, interest, and penalty was quashed and the writ petition was allowed.

Facts:

M/s. Narasus Saarathy Enterprises Private Limited (“the Petitioner”) is engaged in manufacture and sale of wheat products such as Atta, Maida, Sooji, and Bran etc in packed unit containers bearing its registered Trade Mark/Brand Name of the petitioner such as Narasu’s, Narasu’s Power, Narasu’s Ulaash, Narasu’s Vetry, Narasu’s Wheel, Narasu’s ‘S’ and Narasu’s Budget etc.

The Additional Commissioner of GST & Central Excise (“the Respondent”) issued a Show Cause Notice under Section 74 of the CGST Act alleging that the Petitioner wrongly claimed exemption by selling “branded goods” as “unbranded goods” based on similarities in packaging, graphics, abbreviations, and corporate name.

The Petitioner contended that, the packaging only contained generic agricultural graphics and statutory declarations, and that the use of corporate name was mandatory under the Food Safety and Standards Act, 2006 and Legal Metrology laws. Further they had filed an affidavit voluntarily foregoing actionable claim over any brand name as required under Notification No. 28/2017 dated September 22, 2017.

The Respondent contended that the similarities in packaging, graphics, colour scheme, abbreviations, and use of “NARASU’S” in the corporate name created a trade connection and thus constituted a “brand name,” making the exemption inapplicable.

The Petitioner’s grievance was that exemption was wrongly denied, and demand of tax, interest, and penalty was raised invoking Section 74 extended limitation without any suppression of facts. Hence, the Petitioner approached the Court challenging the Order-in-Original.

Issue:

Whether the common packaging features, pictorial graphics, and statutory disclosure of manufacturer’s name constitute a “brand name” disentitling the Petitioner from exemption under Notification No. 2/2017–CT (Rate) dated June 28, 2017, and whether the benefit of exemption survives upon voluntary relinquishment of brand rights?

Held:

The Hon’ble Madras High Court in W.P. No. 6069 of 2025 held as under:

• Observed that, a “brand name” must indicate a connection in the course of trade between goods and the person using the mark and mere presence of graphics or packaging similarity is not determinative.
• Noted that, generic pictorial representations (such as farmers and agricultural implements) are descriptive and cannot be monopolized or treated as distinctive trademarks.
• Observed that, mandatory statutory disclosures such as manufacturer’s name under FSSAI and Legal Metrology laws cannot be equated with use of a brand name.
• Noted that, although the pictorial representation may fall within the wide definition of “brand name,” exemption is still available where actionable claim or enforceable right is voluntarily foregone in terms of Annexure-I.
• Observed that, the Petitioner had filed an affidavit relinquishing such rights, and the department itself had earlier returned the affidavit stating no brand name was used.
• Held that, the Petitioner is entitled to exemption under Serial Nos. 73 and 74 of Notification No. 2/2017–CT (Rate) dated June 28, 2017 as amended.
• Observed that, there was no suppression of facts since all details were within the knowledge of the department through returns and inspection and that, invocation of extended limitation under Section 74 was not justified as at best, proceedings could fall under Section 73.
• Directed that, the impugned order confirming demand, interest, and penalty is liable to be quashed and the writ petition is allowed.

Our Comments:

The Court relied on settled principles distinguishing “house mark” and “product mark” as laid down in Astra Pharmaceuticals Pvt. Ltd. v. Collector of Central Excise [1995 (75) ELT 214 (SC)], wherein it was held that mere identification of manufacturer does not establish a trade connection unless it creates a brand association. The present judgment aligns with this reasoning by holding that statutory disclosure of manufacturer’s name does not amount to branding.

Further, the Hon’ble Supreme Court in the case of Nizam Sugar Factory v. CCE [2006 (197) ELT 465 (SC)] reinforces that where facts are already known to the department, extended limitation under suppression cannot be invoked.

It is relevant to refer to the judgment in ITC Limited, Rep by its Constituted Attorney S.Satyanathan Vs. Nestle India Limited [2020 SCC Online Mad 1158], emphasizing distinction between generic/descriptive marks and distinctive marks. Once a mark or the brand has attained certain level of recognition and reputation, the buyers of goods or services may not even look beyond the brand or the mark. If the mark is suggestive, it would require to pass the test of imagination for being protected. The more imagination is required on the customer’s part to get the direct description of the product from the term, the more likely the term is suggestive and not descriptive.

Relevant Extract of the Notification:

Notification No. 28/2017–CT (Rate), dated September 22, 2017

Schedule

Explanation. —For the purposes of this Schedule,-

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