As per new Goods and Service Tax Act,2017 , which is going to apply on 1st July 2017 , very surprising provision under the Act is 5% tax liability on the food products those have registered a trade mark under Trade Mark Act ,1999 . the purpose of the provision is to collect more tax those who are enjoying brand goodwill with premium value and collecting huge margin compared to the non – branded goods from the customers.
But the biggest controversy on this issue is one side Government of India trying to promote and secure IPR ( Intellectual Property Rights ) ata Lower level like " MSME's" other side this kind of provisions under the new act at GST clearly killing the I.P.R. of the MSME's . effect of this provisions hits only the small and medium scale Entrepreneurs because big players are already paying the Tax and they don't have any problem about this.
Another side a small and medium scale industry those have registered trademark unnecessary face the stroke of 5 % , the food industry is already on the edge of the cut through competition with the big and Multinational companies they are already paying the tax , they don't have any effect through this provisions because they are already selling their goods with the present tax slab.
MSME's having very small number of the resources, very less turnover they will not survive in the market competition with big industries. this provision of the GST clearly discouraging the MSMEs to protect and develop their IPR's like the trademark.
The Big and MNC's will enjoy only the Intellectual Property Rights in India, that only help to indirectly initiate the Monopoly Business theory where big fish only sharp their Fins through GST where the small and medium just Cut their Fins and just swing in a small Pound like " tadpole " . this provision of the act is only developing a big gap between big and small. Being a trademark and IPR professional, a number of Traders, Manufacturers, and Trade Mark owner contacted us and request to withdraw all their Registered trademarks otherwise they have to out of the game of IPR . Again the provision is it self-conflicted in term " Registered Trade Mark" and " Un-Registered trademark " because the Registration of the Trade Mark Act,1999 approximate procedure time to get final registration is two- three years, is meanwhile of the process time , what this trade marks called " Branded" or " Non-branded " ? this is the biggest question.
The provision on the Registered trademark food product 5% tax is clearly against the motive of the Govt. to promote MSME's IPR ( Intellectual Property Right ) , being the cost conscious market the 5% is very difficult for the small and medium scale industries , in the food industries the business margin of the goods like tea , pulses, rice , wheat and flours etc is only 1-2 % only , in that condition the big players having rich sportswear , big ground like huge marketing network, media etc. but the small one having the local small ground where they can't compete with the bigger one .
In short, the provision 5 % tax on the Registered Trade Mark goods under the provision of GST 2017 is itself killing the sprite of the small and medium scale industries to make capable of fighting with big and MNC's in India though weapon of IPR . One side DIPP ( Department of Industrial Policy and Promotion ) and MSME trying to aware MSME to protect their IPR's as weapons to fight with big competitors another side , they are trying to surrender their small business tools like their registered trade marks.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
