2019 (8) TMI 816 - AAR - GST

Benefit of exemption (NIL rate) from GST - frozen seafood sold in packages to institutional customers, without bearing the brand name - Notification Na 2/2017 (Central Tax Rate / Integrated Tax Rate / Stare Tax Rate) dtd.28th June, 2017 - HELD THAT - It is established that the goods sold by a brand name holder, without any brand name, has comparable goodwill or reputation in connection with the product, service or business with which it is used - even by removing the brand names from packaging of the seafoods, the applicant still enjoys the advantage attached to the brand name ABAD . The mention of name ABAD on the packages, as manufacturer of these goods clearly indicates the connection between the said goods with the applicant in the course of trade as they are already having a registered brand in the name of ABAD which was being displayed on the packages of frozen seafood till now. The customers, by reading the name on the packages as ABAD , would be in a position to identify the said goods as belonging to the reputed brand ABAD even in the absence of the logo of that brand on the goods. As the product has direct connection with brand name holder, the use of name ABAD on packages can be considered as brand name. The scrutiny of surrounding circumstances clearly shows that the package of frozen seafoods, even though without affixing a registered brand on them, will be considered as bearing the brand ABAD . Therefore, visible manifestation of brand name is not compulsory on the package. Even an ordinary name is sufficient. As per S.R.O.No.361/2017, SI.No.20, and the subsequent amendment by Notification No.42/2017 CT (Rate) dtd.14-11-2017, exemption is eligible only for supply of fresh or chilled fish. Frozen fish sold in unit container under brand name is taxable. The main difference between chilling and freezing is that of temperature. Ice crystals are formed while freezing. This is not so in the case of chilling. Supply of frozen seafood in packages by a brand name holder is not eligible for exemption for the mere reason that the supply to a particular category of customers are made without inscription of Brand or Trade Name. M/s.Abad Fisheries Private Limited, the applicant herein, is a registered brand name holder. The company is selling frozen sea food in packed unit containers under the brand name to retail customers and selling the same products to institutional customers without printing brand or trade name in the packet - the supply of frozen seafood in packages to institutional customers contain name of the company and contact details for customers which are statutory requirements. The presence of company name is sufficient to ensure that the product procured belongs to the brand guardian and it cannot be considered as not bearing a brand name.

Summary

Issues:
1. Eligibility for exemption of frozen seafood sold in packages to institutional customers without bearing a brand name under Notification No. 2/2017.

Analysis:
The applicant, engaged in processing and selling frozen seafood in India, sought an advance ruling on the eligibility for exemption under Notification No. 2/2017 for frozen seafood sold in packages to institutional customers without a brand name. The company sells frozen seafood under registered brand names to retail customers and without a brand name to institutional customers. The primary process involves filleting and freezing fish for retail distribution, while the secondary process produces chilled/frozen products for retail and catering traders. The company argued that seafood sold to institutional customers without a brand name is eligible for exemption under Entry 22 of Notification No. 2/2017 Central Tax (Rate) dtd.28-06-2017, as the packaging is for freshness and safety, not brand identity.

The Authority examined the concept of a registered brand name and its significance in establishing goodwill or reputation. Even without brand names on packaging, the applicant benefits from the brand's reputation. The mention of the company's name on packages, such as 'ABAD,' establishes a connection between the goods and the brand, fulfilling the purpose of brand identification. The presence of a brand name, even without a logo, is sufficient for identification. The case of Aditya Birla Retail Limited was cited to support the view that goods with the manufacturer's name and address meet the brand name criteria.

Regarding tax rates, frozen seafood sold in unit containers under registered brand names is taxable at 5%. The distinction between fresh/chilled and frozen fish was highlighted, with frozen fish under a brand name being taxable. The presence of the company's name on packaging for institutional customers, as per statutory requirements, ensures the product belongs to the brand, making it ineligible for exemption under Notification No. 2/2017. The ruling clarified that the supply of frozen seafood to institutional customers without a brand name does not qualify for exemption, as the company's name on packaging establishes brand association and quality assurance for institutional buyers.

In conclusion, the frozen seafood sold in packages to institutional customers without bearing a brand name is not eligible for exemption under Notification No. 2/2017. The presence of the company's name on packaging establishes brand association and quality assurance, making it ineligible for exemption despite the lack of a specific brand or trade name inscription.