The Gujarat Authority of Advance Ruling (AAR) ruled that M/s Patrator liable to take GST registration and pay GST on supply of goods and services.
The Applicant, M/s. Patrator is not having GSTIN filed an application for Advance Ruling and submitted that “Aloha” a business brand is operated by Explore Knowledge Resources LLP, Rajkot. It charges Royalty from its franchisees for using its brand name and sells its product under its brand through its franchisees.
The applicant further submitted that Patrator is a partnership firm, unregistered under the GST Act and one of the franchisees of Explore Knowledge Resources LLP, Rajkot. Further submitted that they sell their products and provide services under the brand name of “Aloha” to customers. They sell products like books, stationary etc. without having a profit margin under the brand name of “Aloha”.
They offer various courses to students of Mental Arithmetic, English Smart under the brand name of “Aloha”. All receipts of product sale or services are being taken in the name of their partnership firm and deposit the fees in their partnership firm bank account. At the end of every fifteen days, they pay royalty to their franchisor based on fees they collect from their customers.
The applicant submitted that total yearly receipt of their partnership firms PATRATOR does not exceed Rs. 20 lakhs in any financial year; however an annual receipt of the franchisor exceeds Rs. 20 lakhs.
The applicant sought the Advance Ruling on the issue whether the Patrator was required to take GSTIN and Is it required to pay tax under GST Act.
The two-member bench of Sanjay Saxena and Mohit Agarwal ruled that in terms of Sr. No. (vii) of Section 24 of CGST Act, 2017, the applicant is liable to take GSTIN and liable to pay GST on supply of goods and services
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