Franchisee Fees” and “Royalty” received from franchisee are to classified under SAC 998396 - “Trademarks and franchises” and accordingly, will attract GST @ 18%.

GUJARAT AUTHORITY FOR ADVANCE RULING
GOODS AND SERVICES TAX
A/5, RAJYA KAR BHAVAN, ASHRAM ROAD,
AHMEDABAD – 380 009.

ADVANCE RULING NO. GUJ/GAAR/R/35/2020
(IN APPLICATION NO. Advance Ruling/SGST&CGST/2018/AR/71)
Date: 03.07.2020

Name and address of the applicant :M/s. Tea Post Private Ltd.,
Plot No.21A/B, Opp. Motel The Village, Kalawad Road, Rajkot-380059 (Guj)

GSTIN of the applicant : 24AAFCT5415L1Z8

Date of application :31.12.2018

Clause(s) of Section 97(2) of CGST / GGST Act, 2017, under which the question(s) raised. : a) Classification of any goods or services or both;
b) Applicability of a notification issued under the provisions of CGST Act;
d) Admissibility of input tax credit of tax paid or deemed to have been paid;
g) Whether any particular thing done by the applicant with respect to any goods or services or both amounts to a result in a supply of goods or services or both, within the meaning of that term.

Date of Personal Hearing : 11.06.2020 (through Video Conferencing)

Present for the applicant:CA Samirkumar Chaudhary

B R I E F FA C T S

The applicant is a Tea House Chain under the brand name and style of TEA POST, whereby they sell non-alcoholic beverages, snacks and merchandise items either directly or through outlets owned by them or by third party under the franchise agreement.

2. The applicant enters into a franchise agreement with third parties whereby the applicant gives right to use its trademark, brand name and other proprietary knowledge (Intellectual Property) to the franchisee. Under the franchise agreement, the applicant receives a lump sum Franchisee Fee at the time of entering into the franchise agreement with franchisee to use their trademark, brand name and other proprietary knowledge. The applicant is also entitled for monthly Royalty at a pre-determined rate on gross sales revenue of the franchisee or fixed pre-determined amount, whichever is higher, from the franchisee.

To know more in details find the attachment file