Taxpayer cannot obtain advance ruling in respect of past & completed supply
Fact and Issue of the case
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.
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?
Observation of the Authority
The Authority find that the applicant, M/s USV Private Limited situated in Mumbai, Maharashtra at Arvind Vithal Gandhi Chowk, BSD Marg, Govandi (East), has entered into a Deed of Assignment dated 30th November, 2019 with Novartis AG (‘NAG’), a Switzerland based pharma company wherein NAG has agreed to permanently transfer (sell) the rights of Trade Marks (namely ‘Jalra’ and ‘Jalra M’) which it owns, 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. The said Trademarks related to Indian territory are permanently transferred by NAG to USV with effect from the ‘Effective Date’ as stated in the Deed, and at an agreed consideration. The effective date as per the impugned agreement is 10′1‘ December, 2019 OR receipt of the entire consideration amount by the Assignor (in this case, NAG), whichever is later. The applicant has submitted that they have paid full consideration to NAG in two tranches on 04.12.2019 and 05.12.2019 thru Bank transfer. Thus, as per the agreement the effective date of the permanent transfer of the impugned Trademarks is 10th December, 2019. Further, we find that the supply in this case is undertaken by NAG, Switzerland. In other words the applicant is the recipient of the subject supply.
The first question raised by the applicant is as under:-
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?
From a careful reading of the first question it is seen that the subject supply is undertaken by NAG and not the applicant. Therefore we now reproduce relevant clause (a) of Section 95 of the CGST Act defines ‘advance ruling’ which is as under:-
(a) “Advance ruling” means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 100, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. As per section 95 (a) 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 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.
Authority find that in the subject case, the first condition mentioned above is not satisfied in as much as it is NAG, Switzerland which is undertaking the supply and not the applicant. Further, with respect to the second condition for the supply ‘to be undertaken or proposed to be undertaken’ we observe that the Deed of Assignment is dated 30th November, 2019, and the ‘Effective Date’ as stated in the Deed is 10th December 2019. The application has been filed on 16th January 2020.
Hence we find that, on the date on the filing or the subject application the subject supply was already completed and was neither heir: z undertaken, nor was proposed to be undertaken. In view of the above facts we find that the applicant/application does not satisfy the conditions of Section 95 of the CGST Act, 2017 and is therefore rejected as being not maintainable. Therefore, the second and third questions are not taken up for discussion.
Based on the submissions made by the applicant and hearings conducted, the subject application is rejected as being non-maintainabale as per Section 95 of the CGST Act, 2017 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 supply, which is being undertaken/proposed to be undertaken.