In the Matter of: Sarvasiddhi Agrotech Pvt. Ltd. [WP(C) No. 279/2021]
Forum: High Court of Tripura
Order Delivered on: April 20, 2021
Factual Background: The petitioner is a registered company engaged in supply of Non-Basmati unbranded rice in the State of Tripura. A search was conducted at the godown (warehouse) of the petitioner which resulted in seizure of documents and stock of rice lying in godown having certain brand name. The adjudicating authority issued a show cause notice in which it alleged that petitioner was engaged in manufacturing, packaging and supply of branded rice having different product names in unit containers without payment of GST. The petitioner claimed that the stock lying in the godown was for internal (grading) purpose and not for taxable supply and was meant to be returned due to quality disputes. Demand under Section 74(9) of the Central Goods and Service Tax Act, 2017 (“CGST Act”), penalty under Section 74(1) of the CGST Act and interest under Section 50(1) of the CGST Act was levied considering the invoices and bill of supply produced by the petitioner. The petitioner’s contention was that the brand was not a registered brand and therefore the petitioner was not liable to taxes. The demand was confirmed by both the adjudicating authortiy as well as the first appellate authority and since the Goods and Service Tax Appellate Tribunal is yet to be formed, the petitioner approached the Hon’ble High Court of Tripura.
Judgment: The Hon’ble High Court while admitting the petition held as below:-
1. The invoices and other sale details given by the petitioner were clearly establishing the evidence that the petitioner had supplied rice in packages which carried brand name.
2. The conclusions drawn by the lower authorities were on the basis of assessment of materials and the petitioner’s ground of stock lying in the godown for internal purpose was not backed by any evidence.
3. Lastly, the petitioner’s contention that the brand was not a registered brand and therefore the petitioner had no liability to pay tax also was rightly not accepted as Notification dated September 22, 2017 amended the previous Notification for the original expression of “put up in unit container and bearing a registered brand name“. What is now substituted is that it should be put in unit container and may be bearing a registered brand name or bearing a brand name on which an actionable claim or enforceable right in a court of law is available. The petitioner has not voluntarily forgone the actionable claim or enforceable right in respect of such brand name to claim exemption also.
Analysis: The concept of taxability of registered/unregistered brand name of goods was introduced vide Notification No. 1/2017 dated June 28, 2017 which was again amended vide Notification No. 27/2017 and 28/2017 dated September 22, 2017. With the amendment, the statute brought into its ambit taxability of goods sold in unit containers and bearing a brand name which may be registered or not. In case of unregistered brand name, to claim exemption, the actionable claim has to be forgone in the manner as specified by the amended Notification which was not done by the petitioner in this case and hence the demand made was correct in all means. Thus, it becomes important now that even in case the brand is unregistered, the assessee has to forgo the actionable claim voluntarily by giving an affidavit before the Jurisdictional Commissioner and such other terms and conditions as prescribed in the Notification.