KRBL Ltd that sells India Gate packaged rice, the country’s largest selling rice brand, said in an internal communication dated 3 July that their product is exempt from paying goods and services tax (GST) because the company did not get the brand name registered under the Trade Marks Act 1999. “This is to further clarify, declare and certify that ‘India Gate, Indian Farm, Lotus and Unity’ brands are owned by KRBL Ltd but since they are not registered in Class 30 under ‘Trade Marks Act, 1999’ hence ‘NIL’ GST rate is applicable on it,” informed KRBL Ltd.
KRBL’s competitors have been critical of the country’s largest rice brand not paying the 5% GST that is applicable on branded staples, making their products more expensive. This includes the Indian unit of McCormick and Co. which sells Kohinoor packaged rice in India. They have also raised doubts about whether the definition of “registered brand name” has been interpreted correctly by the company to claim the GST exempt status. A KRBL spokesman said the company is following government norms whereas the spokesperson for McCormick in India declined to comment. Similarly LT Foods Ltd, seller of the Daawat brand of rice, also declined to comment over the issue.
The trade mark registration of India Gate brand was last held by Vikram Roller Flour Mills Ltd. and the registration was valid till November 2013, according to the website. It couldn’t be immediately ascertained whether it still owns the brand. Vikram Roller still sells wheat flour under the India Gate brand. Calls to the company’s landline weren’t answered. Although KRBL Ltd has clarified that non registration of their brand wasn’t for lack of trying. The company has applied for trademark registration of the India Gate brand of rice and other staples multiple times since 1999 before the Controller General of Patents Design and Trade Marks, according to the Intellectual Property India website. Its applications were objected to, opposed or refused.
Interestingly, on 30 June, KRBL filed an application with the registrar of Trade Marks seeking cancellation of the name KRBL Ltd from the Trade Marks Registry. In its application, it said that the company was “not using the trademark KRBL Limited in relation to rice”. The company registered the trademark of KRBL Ltd on 24 July 2000 and this is valid till 24 July 2020. Shares of KRBL have gained 3.81% on the BSE since the GST was implemented on 1 July. The exchange’s benchmark Sensex rose 1.45% in the same period. KRBL claims that its flagship India Gate brand dominates the branded rice market in India with a 29.5% share in terms of value, according to a company presentation to investors in December 2016. The company reported net profit of Rs 399 crore on revenue of Rs 3,159 crore in the year ended 31 March. About 48% of the company’s revenue comes from India and the rest from exports. West Asian countries account for about 44% of KRBL’s revenue.
The finance ministry on 5 July clarified that “registered brand name” is a brand name or a trade name “which is registered under the Trade Marks Act, 1999” and should be on “the Register of Trade Marks and remain in force”. Mr. Abhishek Rastogi, a partner at law firm Khaitan & Co., said it is possible for a company to sell the product under a brand name and still claim zero GST. “If the name is not registered under the Trade Marks Act 1999 and not listed with the Trade Marks Registry, the brand will not attract 5% GST,” clarified Mr. Rastogi.
Source: livemint.com (Edited)