Quick Summary
The Directorate General of Goods and Services Tax Intelligence (DGGI) has issued show-cause notices to more than a dozen food and beverage companies, citing improper GST payment on trademark usage by their franchises and outlets located outside their home states. The notices, sent in early August, demand a total of ₹3,000 crore from the companies, covering the period from July 2017 when GST was introduced. According to DGGI, franchises and outlets operating in states other than where the pare
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FAQ :
The Directorate General of Goods and Services Tax Intelligence (DGGI) has issued the notices.
The DGGI is demanding a total of ₹3,000 crore from the companies.
The notices cite improper GST payment on trademark usage by franchises and outlets located outside their home states.
The notices cover the period from July 2017, when GST was introduced.
Tax authorities argue that brand usage by a franchise or branch in a different state qualifies as a service provided by the head office, which is taxable under GST legislation.
Industry experts warn that this interpretation could significantly increase compliance burdens and create additional tax liabilities for companies, especially if they cannot claim full input tax credit.
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