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No GST on bottling fees paid by liquor brand owner to contract bottling units

March 12, 2019[2019] 103 125 (AAR - MAHARASHTRA)

GST : Applicant (brand owner) of IMFL having entered into contracts with various Contract Bottling Units(CBUs) cannot be said to be making a taxable supply to CBUs as there is no supply of goods or services or both by applicant


• The appellant, holding various registered brands in relation to Indian Made Foreign Liquor(IMFL) approached and contracted with various Contract Bottling Units(CBUs) who hold requisite licenses under State Excise Laws to undertake manufacture of IMFL for applicant, in return for payment of bottling charges (and certain agreed upon reimbursements, such as taxes and expenses).

• The CBUs after manufacturing IMFL, deliver said goods to buyers as per applicant's directions and sale price for said goods is received by applicant. All raw materials, packing materials, finished goods, scrap, etc. used by CBUs are paid for, by applicant.

• Applicant sought an advance ruling on whether CBU is making a taxable supply to applicant, or, alternatively, whether applicant is making a taxable supply to CBU?


• From a perusal of sample agreements submitted by the applicant, it is found that CBU provides manufacturing services to applicant, and is remunerated in form of bottling charges and applicant is not a service provider to CBUs. The applicant is not receiving any consideration for allowing the CBU to use their brand/logo etc. on IMFL. In fact the entire process can be seen as the applicant is contracting with CBUs to get the IMFL manufactured under their brand name. There is no service rendered by the applicant. There is neither any supply of goods nor services flowing from applicant. The applicant actually gets the products manufactured by the CBUs. Hence, there is no supply of goods or services or both by applicant. Thus, it cannot be said that applicant (brand owner) is making a taxable supply to the Contract Bottling Unit.

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