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  • MSME REGISTRATION IN INDIA: WHAT’S NEW AND WHY IT MATTERS

    ABSTRACT

    This article emphasizes the importance of MSME registration in India for entrepreneurs on the grounds of strategic, financial, and legal advantages it provides. The article describes how Udyam Registration makes it easy to access government programs such as FIRST, CGTMSE, CLCSS, and ASPIRE, which provide funding, subsidy, and technology upgradation. Highlighting the growth of MSME in India, the article further discusses thelatest updates on MSME registration in India for 2025, comprising policy updates and digital enhancements. A theoretical case study illustrates the way timely registration facilitates access to credit for entrepreneurs, ensures protection of legal rights, and enables market credibility.

    INTRODUCTION

    MSME registration(Micro, Small, and Medium Enterprise registration) also known as Udyam Registration/ Udyog Registration in India is crucial for entrepreneurs as it unlocks a range of benefits, including easier access to credit, government subsidies and schemes, and protection against delayed payments. MSME registration also simplifies compliance procedures and offers opportunities for growth and market expansion.

    IMPORTANCE OF MSME IN INDIA

    Here are a few points to highlight the importance of growth of MSME in the India:

    Entrepreneurship: MSME registration enhances inclusivity in the nation by enabling aspiring entrepreneurs to enter different sectors. They encourage healthy rivalry among entrepreneurs, which drives industrial advancement.

    Export: By August 2022, the contribution of MSMEs to India’s exports was noted to be 42.67%. These substantial export volumes promote international trade and aid in the country’s industrial development.

    Employment: As previously mentioned, MSMEs generate jobs in both rural and urban regions of the nation. These business enterprises represent the second largest employment sector in India, following agriculture. By establishing units in rural and underprivileged regions, MSMEs enhance the living conditions of individuals from lower socio-economic and rural backgrounds as well.

    Innovation: MSMEs contribute to the development of new ideas in various processes involved in producing goods and commodities. They offer the essential skills, tools, and technology needed for automation and progress in their industries. It aids in the comprehensive technological advancement of the nation and encourages research and innovation.

    GOVERNMENT MSME SCHEMES AND POLICIES IN INDIA

    FIRST: Acknowledging the vital importance of MSMEs in national development, the central government revealed the initiation of FIRST (Forum for Internet Retailers, Sellers, and Traders). The initiative supports the government’s Digital India campaign and teaches MSMEs about opportunities to attain self-reliance and digital proficiency.  Over 17,200 retail entrepreneurs have signed up for the program, and these MSMEs are making significant strides toward becoming digital and self-sufficient.

    MSME Innovation Scheme:  The growth of MSME in India started as the Indian government introduced the MSME innovation scheme in March 2022 to promote innovation within the sector. Under this program, MSMEs are eligible for reimbursement of expenses related to Intellectual Property Rights applications for innovative concepts and designs. The initiative offers financial and additional resources to MSMEs to promote innovation.

    CGTMSE: The Credit Guarantee Trust Fund for Micro and Small Enterprises program offers financial support of up to ₹2 Crore to startups.

    CLCSS: The Credit Linked Capital Subsidy Scheme offers capital subsidies to MSMEs involved in the khadi, village, and coir industries. The grant enables these companies to obtain technological advancements and improvements.

    ASPIRE: ASPIRE, which stands for A Scheme for the Promotion of Innovation, Rural Industries, and Entrepreneurship, encourages innovation and entrepreneurship in rural and agriculture sectors by creating advanced technology networks.

    THE LATEST UPDATES ON MSME REGISTRATION IN INDIA FOR 2025

    The Ministry of Micro, Small, and Medium Enterprises (MSME) has announced important reforms to MSME registration, set to take effect on April 1, 2025. These changes, detailed in a notification from March 21, 2025, mainly aim to increase the financial thresholds for MSME classification. As a result, a greater number of businesses will be eligible for MSME benefits, which may include financial incentives and government assistance.

    Key Changes and Advantages:

    • Higher Investment and Turnover Limits: The new thresholds for MSME classification will allow businesses to expand without losing their MSME designation.
    • Broader Access to Benefits: More businesses will qualify for financial incentives, easier access to credit, and government support.
    • Simple Registration: The Udyam Registration Portal, launched in 2020, provides a free, paperless, and self-declaration process for MSME registration.
    • Udyam Assist Platform: This platform aims to bring informal micro-enterprises into the formal economy, granting them access to benefits such as Priority Sector Lending.
    • Support for Women and Underrepresented Entrepreneurs: New initiatives are being introduced to offer term loans and financial assistance to first-time entrepreneurs from women, Scheduled Castes, and Scheduled Tribes.
    • Improved Credit Availability: The credit guarantee coverage for micro and small enterprises has been enhanced.

    HYPOTHETICAL CASE STUDY

    Let’s understand the importance of MSME registration in India for entrepreneurs with the help of a simple hypothetical case, Let’s assume that there is a girl named Priya, a young entrepreneur, started her own small tech firm named RisingTech Solutions with an initial investment of ₹8 lakh and a projected estimated turnover of ₹30 lakh.

    The Steps Taken by her during this process were:

    • Firstly she completed the Udyam registration of her firm on Udyam portal portal as a Micro Enterprise.
    • Then her company gets listed on government e-marketplaces (GeM).
    • But then she faces a cash crunch during expansion, so she secures a collateral-free loan under the CGTMSE scheme.
    • When a large client delays payment beyond 45 days, she uses the MSMED Act provisions to demand interest and files a claim via the MSME Facilitation Council.

    The outcome of this whole process was:

    • The client settles the dues with interest, and priya gains better liquidity and trust in future partnerships.
    • Within two years, her firm RisingTech expands to mid-level enterprise status.

    This case highlights the importance of MSME registration in india for entrepreneurs as timely MSME registration opened doors to funding, legal safeguards, and growth opportunities.

    CONCLUSION

    In conclusion, MSME registration is critical in empowering Indian entrepreneurs by providing access to credit, legal cover, and government programs. The process is easy, online, and very advantageous through Udyam Registration. MSME registration in India for entrepreneurs is significant because it opens up growth, funding, and market opportunities. With the latest updates on MSME registration in India for 2025, such as increased thresholds and wider support, more companies can now take advantage. These changes are a testament to the government’s drive for the growth of MSME in India, with registration being a central process for any would-be entrepreneur.

  • Cash Flow Blunders Indian Businesses Need to Steer Clear Of

    In today’s complex business landscape, businesses need to have effective cash flow management to help the business stay afloat. Indian companies and businesses often ignore the importance of effectively managing cash inflow and cash outflow to stay ahead of the curve and keep their business functioning without day-to-day operational hassles.

    Thus, having a cash flow plan is integral for all business and should not be underestimated. This article will help businesses understand cash flow blunders Indian businesses need to steer clear of.

    Role of cash flow in financial management

    Before understanding the cash flow blunders Indian businesses need to steer clear of, we must understand the role and importance of cash flow in financial management. Cash flow has 2 components Cash Inflow and Cash Outflow.

    • Cash Inflow: Money coming in through sales, investment or loans
    • Cash Outflow: Money going out through purchases, interest payment, rent, salaries etc.

    Every Indian Company and business must understand the role of cash flow in financial management and setting up an effective cash flow plan to help in Cash Flow Management. Businesses of all sizes and industries require to take conscious efforts to help establish adequate cash flow plans.

    Common Cash Flow Blunders Indian Businesses Need to Steer Clear of

    Absence of Proper Cash Flow Plan: Indian companies and businesses often think that cash flow will take care of itself. But this is one of the biggest mistakes. Businesses need to take conscious steps to draw up a comprehensive cash flow plans periodically, Monthly or Quarterly. This is done to forecast, plan and predict future cash inflows and cash outflows to pre-emptively take corrective steps to take case of any future problems and avoid last minute surprises. It is better to be safe than sorry and this applies to drawing up a cash flow plan too.

    Ignoring timings of cash inflow and cash outflows:Simply predicting the amount of cash inflows and cash outflows is not enough. Businesses need to keep check of the timings of the cash flows to help in financial management. This becomes a bigger problem in todays time when the payment cycles get extended due to delays. In a situation where you supplier wants payment within 15 days but you will receive payment in 45 days, such a situation is an alarm for disaster. Hence, businesses need to effectively synchronise the timings of their cash inflows and cash outflows.

    Overestimating the Revenue and Underestimating the Expenses: Businesses often fail to adequately predict the amount of revenue and expenses. Businesses must remember the basic accounting Prudence Principle which dictates that businesses must account for future losses & expenses and not be over optimistic regarding the future revenue and profits. Basically one must follow a pessimistic and realistic approach in predicting their revenues and expenses to help in cash flow management. Indian companies must always maintain a cash flow buffer.

    Poor Inventory Management: Dead stock and poor inventory management could lead to the end of a businesses. Thus, businesses must correctly estimate the demand and supply of products and avoid maintaining unnecessary stock thereby leading to cash flow management. This heightens the chances of entering into a financial crunch with money being stuck in the form of dead stock especially in the FMCG sector.

    Delayed Invoicing and Collections: This is a very common yet easily avoidable problem faced by Indian companies. Businesses must aim to shorten their payment cycle as much as possible to ensure regular inflow of cash. Delays in invoicing and collections unnecessary put a burden on the business and disrupt their cash flow plan and cash flow management.

    Uncontrolled Credit Sales: A fewcredit sales here and there do not impact the businesses that much, but continuous credit sales in an uncontrollable amount can but hazardous for any businesses. Indian companies must constantly keep a  check on its credit sales and try to minimize them. Even when offering credit sales, businesses must clearly establish the grounds and limitation for payment expressly, preferably through a written agreement.

    Neglecting Tax Obligations: Businesses must not forget their tax obligations as ignoring GST, TDS and other tax obligations can lead to hefty fines and penalties. If businesses are unprepared for such tax obligations, it can disturb their entire cash flow management. This is another major cash flow blunder to avoid in Indian businesses.

    Tips to improve cash flow management in Indian companies

    1. Maintain a contingency/buffer fund to help in cases of uncertain situations or cash flow crunch.
    2. Make sure to make quarterly or monthly cash flow plans.
    3. Minimise credit sales. Even in cases of credit sales, ensure that the terms are in writing.
    4. Ensure that the payment cycle is as short as possible.
    5. Follow Prudence Principle during cash flow management.
    6. Synchronise cash inflow and cash outflows on a business.
    7. Make sure to avoid the problem of dead stock by predicting demand.
    8. Do not forgot tax obligations.

    Why role of cash flow in financial management is important more than ever?

    In a dense and competitive market like India, businesses must pay more importance to cash flow management and formulating an air-tight cash flow plan. This will protect businesses from any future unpleasant surprises and problems.

    More so, all investors, partners, businesses, suppliers look at cash flow statements during onboarding. Hence, it is now more than ever, it is super essential that cash flow blunders to avoid in indian businesses.

    Conclusion

    One of the main signs of a sustainable and thriving businesses is that a business has an effective cash flow plan and cash flow management. It is not difficult to do so, but it for sure requires conscious and consistent steps in the direction starting from preparation of periodical cash flow plans, to predicting demand, to synchronising cash inflows and cash outflows.

    A robust cash flow will help the businesses take on all its challenges, projects, onboard investors, clients, secure loans etc. So whether you are a start-up owner or a big Indian company owner, effectively managing cash flow is the answer to half of your business problems.

  • SECTION 34 OF THE TRADE MARKS ACT, 1999

    Section 34 of the Trade Marks Act, 1999 is arguably one of the most fundamental sections of the trademark law in India. The primary objective of the trademark law is to protect the rights of the genuine prior users and original adopters of the trademark and section 34 is one of the tools to ensure exactly that. This article will delve deep into the intricacies of Section 34 of the Trade Marks Act, 1999, related doctrines and case laws.

    Basis of Section 34 of the Trade Marks Act, 1999

    Section 34 of the Trade Marks Act, 1999 derives its existence from the common law doctrine of ‘Prior Use’. The Prior Use Doctrine aims at safeguarding the rights of prior users of a trademark. Similarly section 34 of the Trade Marks Act, 1999 also aims at protecting the rights of the prior user and adopter of a trademark by prohibiting the registered proprietor of a trademark to interfere with or restrain the use of the identical or similar trademark by its prior user.

    For Example: A lawfully adopts and starts to use the mark ‘Banana’ in relation to Footwear in 1999 and continues to use such a mark in trade without acquiring any trademark registration for the same. Later, in the year 2005, B adopts the mark ‘Banannaa’ in relation to the same set of goods and thereafter also acquires trademark registration for the same. However, after acquiring the trademark registration, B tries to restrain the use of the mark ‘Banana’ by A on account of its trademark registration. In such case, B’s act of trying to restrain the use of the mark ‘Banana’ by A is barred by the provisions of section 34 of the Trade Marks Act, 1999.

    Here, although A did not acquire the registration of its trademark, this does not take away his right as the adopter, originator and prior user of the trademark. This is exactly where the provisions of section 34 of the Trade Marks Act, 1999 comes into play. In the aforementioned illustration, A has the common law rights as the prior user continue to use its mark without interruption for any subsequent user or adopter.

    Understanding Section 34 of theTrade Marks Act, 1999

    Section 34 gives better rights to prior user as compared to a registered proprietor by taking away the registered proprietor’s right to interfere with or try to restrain the use of an identical trademark by a prior user. This basically means that registered proprietor’s rights cannot grant it superiority over a prior user.

    This provision recognises the common law rights of a prior user accumulated overtime due to use the continuous use of its mark in the market and grants it superiority over the statutory rights acquired by someone due to registration.

    • Registration gives Statutory Rights
    • Use gives common law rights

    Generally, when a person who is the original adopter, continuous user and bona fide originator of the mark, gets its trademark registered, such person is awarded with both statutory as well as common law rights arising from its mark. However, section 34 of the Trade Marks Act, 1999 specifically talks about the situation when such statutory and common law right are held by separate person on account of their registration and prior use respectively.

    Essentials of Section 34 of theTrade Marks Act, 1999

    The following are the essential conditions for the applicability of this Section 34 of the Trade Marks Act, 1999:

    • The third party must be using a mark which is identical to the registered mark;
    • Such mark must be use in relation to similar set of goods and services as the registered mark;
    • Such use of the identical mark must be of a prior date of use than the registered mark;
    • Such use by the third party must be continuous and uninterrupted;

    The term “USE” under section 34 of the Trade Marks Act, 1999 means continuous and consistent use for a substantial time period. prior to the date of filing or date of use of the registered mark. Such “USE” shall not be broken or intermittento. Use must be uninterrupted and such that would sufficiently generate recognition of the mark of the prior user in the market and trade circle.

    Prior Use Vs. Registration

    It is very common in trademark cases for there to be a fight between prior use and registration. This dispute was finally and conclusively settled by the Hon’ble Supreme Court in the case of S. Syed Mohideen vs P. Sulochana Bai, https://indiankanoon.org/doc/149416858/, has categorically and vehemently held that prior use is superior than registration. Hon’ble Court also held that the even the registered proprietor cannot interfere with the rights of prior user.

    A similar finding was made by the Hon’ble court in the case of N.R. Dongre And Ors vs Whirlpool Corporation, wherein the Hon’ble Supreme court recognised the trans-border reputation of Whirlpool’s mark and, owing to its prior use, substantial transborder recognition and goodwill, granted Whirlpool protection against trademark squatting and passing off.

    To secure protection under section 34, the prior user must establish bona fide adoption and good faith usage with substantial corroborating evidence.

    Conclusion

    The prior use doctrine, section 34 of the trademark law as well as passing off rights under granted under section 27, all aim to protect the rights of prior user from undue exploitation from later registrants. Indian courts have also time and again clarified its stance on this issue and consistently upheld the rights of prior users, thereby, granting assurance to actual originators and bona fide adopters that their rights remain secured irrespective of trademark registration.

  • Conflict Between the Anti-Dissection Rule and the Law of Dominant Feature in Relation to the Trade Marks Act 1999

    In the Law of IPR, particularly in trademarks, two fundamental principles frequently come into conflict: the Anti-Dissection Rule and the Law of Dominant Feature. The Anti-Dissection Rule states that a trademark cannot be analyzed by breaking it into parts or segments. In contrast, the Law of Dominant Feature asserts that the most prominent part of a mark holds the greatest significance while assessing the degree of resemblance and possibility of confusion.

    This dispute is central to most of the trademark issues dealt with under the Trade Marks Act, 1999 because the courts have to find a middle ground in their assessment of a mark to ensure that it is not treated in a mechanical way with emphasis placed only on its prominent features. In this instance, these approaches are examined from the standpoint of their relationships with trademark jurisprudence.

    Anti-Dissection Rule and The Law of Dominant

    The Anti Dissection Rule in Trademarks

    A trademark should be assessed on how distinctly different it is from other marks and whether it has the potential to create confusion with them.

    The reason this rule was put in place is that consumers tend to view these emblems as a single entity rather than as individual parts. This principle makes it impossible for companies to have monopolistic control over commonly accepted words, or elements which, in actual fact, when looked at in isolation lack distinctiveness.

    According to the Trade Marks Act, 1999, a court must follow this rule for ascertaining similarity trademarks. Marks must always be regarded as a whole and not as a collection of parts. This is especially important in situations where the name contains some generic or descriptive portions along with some distinctive parts.

    The Law of Dominant Feature in Trademarks

    This approach is in sharp contrast to the previous insights as it specializes in one mark per view. The Law of dominant feature states that the most important or striking part of a trademark is the one that decides the level of distinctiveness and confusion. Courts tend to apply this approach where one part of a mark is so unique that it overshadows the remainder which is largely descriptive or generic.

    For example, where two marks contain one strikingly distinctive word or symbol, the dominant feature rule may determine that mark is identical, regardless of other differences in the marks. In addition to describing a mark, this rule is also vital where a mark includes several words, pictures or symbols, or words which are stylized.

    Clash of Two Principles in Trademark Law

    The controversy on anti-dissecting rule conflict with the law of dominant feature comes into play when court has to decide whether to evaluate the trademark as a whole or concentrate on its focal distinguishing features. This conflict is evident in multiple areas of trademark disputes under the trademark act of 1999.

    1. Composite Marks and Overall Impression

    When Anti-Dissection Rule is applied to marks containing multiple elements, differing results may occur compared to when employing the Dominant Feature Rule. In cases where a trademark has both generic and distinctive components, courts must decide whether the entire mark will be the primary focus or the focal point will be the most dominant portion.

    2. Phonetic and Visual Similarity

    Conceptually, these two branches have issues related to whether particular phonetic or visual similarities should be studied as one unit or through a lens of prominence. The division of the trademark required by the Anti-Dissection Rule takes the entire trademark into account, whereas the Law of Dominant Feature may give some prominence to a particular word or design which lends itself to be comparatively prominent.

    3. Trademark Enforcement and Protection

    Within the context of enforcement, Anti-Dissection Rule or restrictions on Trademarks is more favorable for brand owners and may be supported by the Dominant Feature approach, which brand owners may suggest protects crucial trademark elements from being utilized by competitive merchants. With the application of Anti-Dissection Rule, it is guaranteed that trademarks will not be unfairly fragmented to claim infringement over non-distinctive or non-specific words.

    4. Consumer Perception and Market Realities

    To what extend these principles diverge cannot be examined without a reference to consumers. Anti-Dissection Rule advocates the view that trademarks are put together as a whole, while those applying the Dominant Feature view admit that some features are more fundamental because of their greater prominence used in branding and advertising.

    Striking a Balance Under the Trade Marks Act, 1999

    Indian trademark law tends to deviate from principles with the attempt to balance both thorough consideration and important highlights through a case-by-case approach. The Hon’ble courts have time and again held that Rule of Anti-Dissection and Dominant Figure are not Anti-thesis to one another, rather, the two doctrines complement each other by providing a comprehensive judegement of deceptive similarlity. Factors that the courts examine include:

    • The distinctive nature of separable parts.
    • The possibility of confusion among consumers.
    • The primary overall mark impression.
    • The presence of common distinctive elements versus unique descriptive words.

    With regard to balance the protecting mark fairness courts have maintained the need for context ensuring that both principles does not form rigid application. Rather, both rules are applied depending on the nature of trademarks under contention.

    Landmark Cases Addressing This Conflict

    Several notable cases highlight the application of these conflicting principles:

    1. Parle Products (P) Ltd. v. J.P. & Co. – The Supreme Court ruled that marks must be compared as a whole, reinforcing the Anti-Dissection Rule.
    2. M/s South India Beverages Pvt. Ltd. v. General Mills Marketing Inc. – The court focused on the dominant element in a trademark dispute, emphasizing its impact on consumer perception.
    3. ITC Limited v. Nestle India Limited – The Delhi High Court analyzed both the holistic impression and dominant features of competing trademarks before reaching a decision.
    4. The dominant feature theory and the anti-dissection rule—dominated the legal struggle between PhonePe and BharatPe.  Claiming that the main and unique component of its trademark was the shared suffix “Pe,” PhonePe asserted that BharatPe’s usage of it would mislead consumers.  The court disagreed with this point of view, stressing instead that trademarks have to be evaluated overall, as per the anti-dissection rule, which prohibits isolating individual elements of a composite mark to assess similarity. The suffix “Pe,” derived from the Hindi word “पे” meaning “on,” was considered descriptive in nature and lacked inherent distinctiveness.  Rather, the court decided that the real differentiator was the more noticeable aspects, “Phone” and “Bharat” These elements were obviously different in phonetic, visual, and structural identity, so customer confusion was quite rare.  Moreover, the court reiterated that exclusive rights cannot be claimed over a common or descriptive element unless it has acquired distinctiveness or secondary meaning, which “Pe” had not. Consequently, PhonePe’s claims were dismissed, and the judgment underscored the importance of considering trademarks holistically rather than dissecting them into isolated, non-distinctive parts.

    Conclusion

    The interplay between the Anti-Dissection Rule and the Law of Dominant Feature in Indian trademark law under the Trade Marks Act, 1999 illustrates a critical legal challenge. While the Anti-Dissection Rule ensures trademarks are assessed in their entirety, the Law of Dominant Feature recognizes the practical reality that certain elements stand out more prominently in consumer perception.

    A balanced approach that considers both principles allows courts to provide fair rulings while protecting both brand owners and market competition. Addressing this conflict through a nuanced, case-specific analysis ensures that trademark law remains adaptable and effective in fostering brand protection and consumer clarity.

    Author Details: Aditya Krishna Gupta, 3rd year, BA LL.B. , Jiwaji University, Gwalior 

    References

  • Section 18 of the Trademarks Act 1999: Application for Registration

    The Trademark law in India provides a structured process for the registration of trademarks. This is done in order ensure brand protection and legal enforcement against any type of infringement. Under the trademark law the central provisions which govern the trademark registration in India is the Section 18 of the Trademarks Act. 

    This section specifically lays down the procedure and eligibility criteria for filing of a trademark application. It correspondingly clarifies in detail who can apply for a trademark and who cannot along with the necessary formalities, and all the essential aspects to form a valid application.

    General Terms Associated with Section 18:

    Applicant: An Applicant can be a person or an entity like sole proprietors, businesses (Registered Companies), partnerships (like LLPs), trusts, or even government bodies applying for trademark registration.

    Proprietor: Proprietor is the individual or legal person who claims the ownership of a trademark and seeks exclusive rights to it.

    Proposed to be Used: A trademark application can be filed even before the actual use of the said mark. It is done so provided that the applicant has a bona fide intention to use it in the coming future.

    Service Mark: It is a trademark which is used to identify services in order to distinguish them from the goods. For example, a logo of a famous hotel chain is a service mark.

    Goods Mark: It’s a trademark which is used to identify and distinguish products i.e. goods. For example, the “Nike” logo is specifically registered and known for footwear and apparel wear.

    Subsections of Section 18 of The Trademarks Act, 1999

    Section 18 governs the application procedure for registration of a trademarkas per the Trademarks Act 1999. It mainly consists of four vital subsections that outline specifics. These specifics include l who can apply, the requirements of a bona fide intention to use the said trademark, and the procedure involved in registration.

    Section 18(1): Who Can Apply for a Trademark 

    According tothe Section 18(1) of Trademarks Act, any legal person who is claiming to be the proprietor of a trademark can apply to register it for themselves.

    They can be individuals, businesses, and legal entities. Even foreign entities can also apply for registration of a trade mark in India, however, only if they comply with Indian trademark laws. Joint applicants can also file a trademark application for registration of a trade mark together.

    Illustration: A Start-up Founder Applying for a Trademark

    Let’s imagine an entrepreneur, Raj, launching a new brand of organic skincare products under the name “GlowPure.” Even before selling any product, he can file a trademark application under Section 18, claiming proprietorship and expressing an intent to use the mark.

    Section 18(2): The Requirement of Bona Fide Intention

    According to Section 18(2), an application for registration of the trade mark must be filed with a genuine intention to use the trademark in a commercial field. This means an applicant cannot register a trademark just to ‘block’ others from using it. They must be intending to use it for themselves.

    Case Law: Pfizer Products Inc. v. Rajesh Chopra & Ors. (2006 (32) PTC 301 (Del)

    In context of this case, Pfizer, the American pharma giant, opposed a trademark application on the grounds that the applicant had “no bona fide intention” to use the mark. Delhi High Court held that if an applicant cannot demonstrate a genuine intention to use the trademark, their application may be rejected by the Registrar. To learn more about this case visit Indian case law.

    Illustration: Preventing Trademark Hoarding

    Suppose a company registers the name “ZyloTech” for mobile phones but never launches a product under this name. And now if another business wants to use “ZyloTech” for electronics and can prove the first applicant had no real intention to use the mark, they may challenge the registration.

    Fun Fact: If the owner has not applied the trademark to the goods or services for a continuous period of five years or more, the Registrar has the authority to withdraw the trademark from the Register. Five years from the day the trademark is entered into the Register, the Registrar will compute. 

    As a result, a person or business will forfeit their trademark rights if they do not use their registered trademark for five years after the date of registration.

    Trademark Registration and Past Use Without Usage

    As per theSection 18(2), a trademark applicant must have a “bona fide intention” to use the said mark. Nevertheless, what happens if someone has been associated with a trademark but hasn’t actually used it in commerce and now wants to register it?

    This situation commonly arises when businesses have reserved a brand name, have built recognition through promotions, or have used it sporadically without actual trade. Indian courts have recognized that past association with a mark, even without substantial use, can support registration—provided there is a genuine intent to use it in the near future.

    Case Law: Hardie Trading Ltd. v. Addison Paints & Chemicals Ltd. (2003 (27) PTC 241 (SC))

    In this case, the Supreme Court held that mere non-use of a mark does not automatically disqualify a proprietor from registration, but lack of intent or unjustified delays in use may lead to cancellation.

    Can You Use a Trademark Immediately After Filing?

    If an application is filed today, can the owner start using the trademark right away? Absolutely Yes, a trademark applicant can start using the mark immediately, even before registration is granted. That is because trademark rights in India are based on use, not just registration.

    However, under Section 46, if a trademark is registered but remains unused for five consecutive years, it may be removed from the register due ‘to non-use cancellation’. This means businesses should commence usage as soon as possible to maintain exclusive rights.

    Thus, while a pending application provides some legal standing, full proprietary rights and legal enforcement only arise once the mark is successfully registered.

    Section 18(3): Filing a Trademark Application 

    As per Section 18(3) of the Trade Marks Act, a trademark application must be filed in the prescribed manner, accompanied by:

    • A clear representation of the mark.
    • Details of goods or services the mark will be used for.
    • The applicant’s name and address.
    • A statement declaring whether the mark is already in use or is “proposed to be used.”
    • Payment of the prescribed fee.

    Case Law: Amar Nath Sehgal v. Union of India (2005 (30) PTC 253 (Del))

    This case in particular emphasized the importance of properly filing and maintaining trademark applications in order to ensureit’s legal validity and protection.

    Illustration: Trademark Filing for an E-Commerce Brand

    Take a company named “ShopEase” files a trademark application for its online shopping platform. It provides details about its logo, service category (e-commerce), and business owner details to complete the application correctly.

    Section 18(4): Single or Multiple Class Applications

    Section 18(4) of the Trade Marks Act allows an applicant to file for trademark registration under:

    • A single class, if the trademark applies to one category of goods/services.
    • Multiple classes, if the trademark is intended for different types of goods/services.

    Case Law: Dabur India Ltd. v. Emami Ltd. (2004 (29) PTC 1 (Del)

    In this case, Dabur applied for a trademark in multiple categories, but Emami challenged it, claiming overlapping product lines. The Court clarified the need for clear classification in multi-class applications.

    Illustration: A Fashion Brand Expanding to Accessories

    A fashion brand “TrendWear” initially registers its trademark under Class 25 (clothing). Later, as it starts selling handbags and shoes, it files additional applications under Class 18 (leather goods) and Class 35 (retail services).

    Key Takeaways from Section 18

    • Anyone who claims to be a trademark proprietor can apply for registration of a trademark.
    • A bona fide intention to use the trade mark for which the application for registration has been filed is mandatory.
    • The application for registration must follow prescribed procedures.
    • A trademark can be registered under one or multiple classes.

    Conclusion

    Thus, Section 18 of the Trademarks Act, 1999, ensures a structured and fair trademark application process. By requiring a ‘bona fide intention’ and clear application formalities.It prevents fraudulent filings and ensures genuine proprietors receive their due legal protection. So businesses and individuals seeking trademark registration should accordingly ensure their compliance with the prescribed guidelines as to strengthen their intellectual property rights.

    Author- Apoorva Lamba, 2nd Year LLB. Student of Madhav Mahavidyalaya, Jiwaji University, Gwalior

  • Section 17 of the Trademarks Act & the Anti-Dissection Rule

    Introduction

    The Trademark law in India plays a crucial role in protecting one’s brand identity, and ensuring fair competition a cutthroatmarket. Unsurprisingly, Section 17 of the Trademarks Act 1999 stands up to the task. As it governs the rights conferred on a registered trademark as a whole, which in turn reinforces something called the Anti-Dissection Rule. This principle prevents the selective or piecemeal examination of a composite trademark and ensures that protection is granted to the mark as a whole rather than to its individual elements.

    Common Words Associated with Section 17 explained:

    Composite Mark – It is a mark that includes a combination of elements. These elements can include shapes, words, scents, devices, sounds, and/or colors. The best specimen of a Composite Mark is a logo because a logo usually consists of shapes, words, specific colors&even at times, images.

    Disclaimed Elements – When a trademark includes a common word or phrase, the trademark owner may be required to ‘disclaim’ that part. Itmeaning that they cannot claim exclusive rights over it. This occurs when a portion of the trademark is by nature generic or descriptive and commonly used in the industry.

    Non-Distinctive Elements – Some words, symbols, or phrases are considered ‘too generic’ or commonly used to meet the requirements under trademark protection. These are termed as non-distinctive elements. It is because they do not help consumers uniquely identify a brand. E.g., ‘Fresh’

    Generic Terms – Generic terms are words or phrases that directly name a product or service and are commonly used in the industry. Such terms cannot be trademarked because as belong to the public domain. For example, “Milk” for a dairy brand or “Laptop” for a computer company. Those cannot be registered as trademarks since they are standard product namesfor their specific industries.

    Descriptive Terms – Descriptive terms describe a characteristic, feature, or quality of a product or service. While initially weak as trademarks, they can gain protection if they acquire secondary meaning over time. For example, “Cold & Creamy” for ice cream is descriptive, but if consumers associate it specifically with one brand, it may become protectable. 

    Section 17: Its Subsections and their Applicability:

    Section 17 of the said act deals with those rights which are conferred upon an entity with the registration of a trademark. This is mainly relevant in cases where the mark consists of multiple elements i.e., a composite mark. 

    The key principle here is that the trademark protection extends to the entire composite mark and not to each component separately, unless specifically disclaimed.

    Section 17 mainly consists of these two subsections-

    1. Section 17(1): Exclusive Rights Over Composite Marks

    According toSection 17(1) of the Trademarks Act, 1999, when a trademark is registered as a whole i.e., in its ‘entirety’, then theholderof the said mark gets exclusive rights over the entire mark, and not just different parts of it. What this means is that if a company today trademarks a full brand name, they can protect it from being copied. But they cannot claim ownership over individual words within the name if they are commonly used.

    Illustration: Imagine a bakery named “SweetBite Bakery” that has effectively registered its entire brand name under the trademark law. This would mean:

    • They have exclusive rights over “SweetBite Bakery” as a whole.
    • They cannot stop others from using “Bakery” alone because it is a generic term.
    • But they also cannot claim sole ownership of “Sweet” or “Bite” or “Bakery” separately. That is so because these words are very commonly used in the food industry.

    But, if tomorrow another bakery tries to open under the name of “SweetyBite” or “Sweet Bakes”, then it may possibly cause confusion among customers. Only thencan SweetBite Bakery take any legal action.They may that the new names are too similar to their trademark as a whole, potentially misleading customers.

    Case Law: Parle Products (P) Ltd. v. J.P. & Co. (AIR 1972 SC 1359)

    Similarly in this particular case, Parle Products, a well-knownbrand for their biscuits, had a trademark for “Glucose Biscuits” with distinctive packaging. A competitor then introduced a product with nearly identical name and packaging.

    Thus, Supreme Court ruled that minor differences in individual words or design elements do not matter if the overall mark creates confusion among customers. It emphasized that the composite mark must be considered as a whole while determining trademark infringement. To know more about this case law visit casemine.

    2. Section 17(2): No Exclusive Rights Over Disclaimed Parts

    Section 17(2) of the Trademarks Act, ensures that no exclusive rights are claimed over ‘disclaimed’ or ‘non-distinctive elements’ of a composite mark. So, if a composite trademark, then contains such terms, the proprietor cannot claim exclusive rights over those. This rightfully prevents trademark owners from monopolizing commonly used words, generic terms, or descriptive elements. As they are used by the other businesses in the industry as well.

    Let’s take an example, say if a brand registers a composite mark like “FreshBites Bakery”. This means it receives exclusive rights over the full namei.e.”FreshBites Bakery”. Meaningit does not receive monopolyover the individual words of “Fresh” or “Bakery’. This is because these are very commonly used in the food industry. Hence, other businesses can use similar terms, like “Healthy Bites” or “Tasty Bakery,” without infringing upon the trademark.

    Case Law: Marico Limited v. Agro Tech Foods Limited (2010 (44) PTC 736 (Del))

    Similarly, in Marico Limited vs Agro Tech Foods Limited, Marico, the owner of the trademark “LOSORB”, sued Agro Tech Foods. Agro Tech Foodswas using the mark “LO-SALT”. The court held that “LO” is a common abbreviation for the term “low” and cannot be monopolized by one party. The protection was limited to the composite mark of “LOSORB”, and the use of “LO-SALT” was thus not considered infringement.

    Therefore, Section 17(2) ensures that businesses cannot unfairly restrict competitors from using descriptive or industry-specific terms while still protecting their brand identity as a whole.

    Proprietors Cannot Claim Exclusive Rights Over Common or Descriptive Parts:

    As we now understand that Section 17 of the Trademarks Act ensures that businesses cannot monopolize generic, descriptive, or commonly used terms that are essential for fair competition. So, if a word is frequently used in an industry or has a general meaning, exclusive rights cannot be claimed over it. Even though it isa part of a registered trademark. Courts have consistently upheld this principle to prevent unfair advantages and to ensure availability of such terms for public use.

    Similar sentiments were expressed in Mr. A.D. Padmasingh Isaac and M/s Aachi Masala Foods (P) Ltd vs Aachi Cargo Channels Private Limited. Madras High Court ruled that the term “Aachi,” meaning “grandmother” in Tamil language, was a commonly used word.Therefore, it could not be monopolized by Aachi Masala Foods despite the plaintiff’ holding a registered trademark. The Court held that common words should remain available for others to use in a descriptive manner.

    Likewise, Bhole Baba Milk Food Industries Ltd V. Parul Food Specialities (P) Ltd, inquired the same principle. Question arose whether the word “Krishna” can be trademarked. The Court observed that “Krishna” is a widely recognized Indian name, similarto “John” in the West. And held since the term was generic and widely used, it did not acquire ‘secondary distinctiveness’. Despite it being a part of a registered trademark.

    So, we can successfully say that these rulings have time and again reaffirmed the aforementioned position.Registration in itself does not automatically grant exclusivity over common words or descriptive elements.That is unless they acquire distinctiveness over time through extensive use. So, if a business seeks exclusive rights over a particular word, it must be proven that the term has gained a unique association with the brand in the minds of consumers, rather than merely being a common or descriptive term.

    Understanding the Anti-Dissection Rule

    The Anti-Dissection Rule is a fundamental principle in the trademark law. According to which composite trademark must be considered in its entirety, rather than being analyzed in isolated parts. The rationale behind this rule is that consumers perceive trademarks as a whole rather than breaking them down into individual components.

    Illustration of the Anti-Dissection Rule in Action

    Illustration 1: ‘KENT RO SYSTEMS’ vs. ‘KENT PURE WATER’

    If ‘KENT RO SYSTEMS’ is a registered trademark, another company cannot register ‘KENT PURE WATER’ by arguing that ‘RO SYSTEMS’ is common.

    The composite mark ‘KENT RO SYSTEMS’ is protected as a whole, meaning that ‘KENT’ alone cannot be monopolized unless separately registered.

    Judicial Interpretation of the Anti-Dissection Rule

    1. K.R. Chinna Krishna Chettiar v. Sri Ambal& Co. (AIR 1970 SC 146)

    The Supreme Court held that a composite mark must be compared as a whole. And not simply by dissecting its individual components. The Court further ruled that likelihood of confusion must be judged from the overall impression that the mark creates on the consumer’s mind.

    2. M/s South India Beverages Pvt. Ltd. v. General Mills Marketing Inc. &Anr. (2014 SCC OnLine Del 1956)

    The Delhi High Court held that when evaluating trademark similarity, the composite mark must be viewed in its entirety.

    The case involved the dispute between ‘HAAGEN DAZS’ (a global ice cream brand) and ‘D’DAZS’ (an Indian brand).

    The Court ruled that since ‘DAZS’ was not a standalone distinctive element, the defendant could not claim exclusive rights over it and confusion must be evaluated based on the whole mark.

    3. Cadila Healthcare Ltd. v. Cadila Pharmaceuticals Ltd. (2001) 5 SCC 73

    The Supreme Court emphasized that the overall structure, phonetic similarity, and idea behind the mark must be considered.

    It rejected the argument that individual words in a mark should be compared in isolation.

    Exceptions to the Anti-Dissection Rule

    While the Anti-Dissection Rule generally applies, there are cases where courts have considered dominant parts of a mark in determining infringement.

    1. The Doctrine of Dominant Feature

    Sometimes, a dominant part of a mark is considered separately if it leaves a lasting impression on the consumer.

    Case Law: M/s Shree Nath Heritage Liquor Pvt. Ltd. v. Allied Blender & Distilleries Pvt. Ltd. (2015 SCC OnLine Bom 2309)

    The dispute was between ‘Officer’s Choice’ and ‘Collector’s Choice’.

    The Bombay High Court held that ‘Choice’ was a common word, but ‘Officer’s’ was the dominant part of the mark.

    Therefore, Collector’s Choice was found to be deceptively similar to Officer’s Choice.

    2. Phonetic & Visual Similarity Overrules Anti-Dissection Rule

    Courts may sometimes give more importance to phonetic or visual similarities, even if only a part of the mark is identical.

    Example: ‘McDowell’s No.1’ vs. ‘McDonald’s’

    Though both contain ‘Mc’, the overall trade dress and product category are different, so they were not considered similar.

    Therefore, Section 17 of the Trademarks Act, 1999 establishes the Anti-Dissection Rule. It ensures that trademarks are protected as a whole rather than in isolated parts. This prevents businesses from monopolizing generic words while ensuring fair competition. However, courts have also developed exceptions, particularly when:

    • A dominant part of the trademark creates confusion.
    • Phonetic or visual similarity outweighs dissection principles.

    For businesses, this means when registering trademarks, choose distinctive elements to avoid mandatory disclaimers under Section 17(2). In case of infringement, focus on overall similarity rather than isolated words. 

    Author – Apoorva Lamba (2nd Year Student Madhav Mahavidyalya, Jiwaji University, Gwalior)

  • GST on Plots, Property and More

    The Goods and Services Tax (GST) 2017, has ushered in substantial changes to the Indian real estate industry today. These changes are impacting land transactions as whole, but also sale of developed plots, completed houses, and townships. Comprehending these implications is important for all developers, investors, and buyers.

    In order to comply with taxation and maximize financial planning as both buyers and sellers it is pertinent to understand the law at hand. Lets learn about the applicability of GST and GST rate on various types of property transactions and latest changes in the law.

    1. Understanding GST Applicability in Real Estate

    When it comes to real estate transactions, the GST rates really depend on the “nature of the sale.” In simpler terms, the law makes a distinction between selling land, selling properties that are still under construction, and selling properties that are ready to move into.

    1.1 GST on Sale of Plots

    The sale of undeveloped land is exempt from GST. This is in accordance to Schedule III of CGST Act, 2017, sale of land is neither supply of goods nor supply of services. So, if a person sells a plot of land without any development, it does not attract GST.

    But this exemption is only for “pure land” transaction. If any services or development activity is done on the land before sale, it may attract GST.

    1.2 GST on Developed Plots

    When land is sold with infrastructural development – roads, drainage, water pipelines, sewage systems, lighting – GST becomes applicable. Government has clarified through various advance rulings that such developments are “supply of services” and are liable to GST.

    GST Rate: GST rate on developed plots is 18% but only on development cost and not on land value itself.

    Recent Clarifications: AAR in multiple cases has held that GST is payable on the portion of the transaction attributable to land development.

    Case Law: In a ruling by Madhya Pradesh AAR (2020, it was held that any plot sold with infrastructure development is supply of service and liable to GST.

    2. GST on Fully Constructed Houses and Apartments

    The taxation of fully constructed houses depends on whether the completion certificate has been issued at the time of sale.

    2.1 Ready-to-Move-in Houses (No GST)

    If a house or apartment is sold after obtaining the completion certificate from the relevant authority, it is treated as an immovable property.

    Since GST does not apply to the sale of immovable property, no tax is levied on such transactions.

    Example: If a person buys a ready-to-move-in apartment from a builder, no GST is applicable.

    2.2 Under-Construction Properties (GST Applicable)

    The sale of an under-construction property is considered a supply of service and is taxable under GST.

    GST Rate:5% (without Input Tax Credit) for standard under-construction residential properties.

    1% for affordable housing projects.

    If a person books a flat before completion and makes payments in instalments, GST is applicable on each instalment.

    2.3 GST on Joint Development Agreements (JDAs)

    In a Joint Development Agreement or a JDA, a landowner collaborates with a developer to construct residential or commercial properties. JDAs involve different GST implications:

    • Developer’s Obligation: The developer has to pay GST on the sale of constructed units before receiving the completion certificate.
    • Landowner’s Obligation: If the landowner sells a share of developed property before receiving the completion certificate, GST is applicable.

    GST Rate: The sale of under-construction flats by the developer attracts a 5% or 1% GST, depending on the project type.

    Input Tax Credit (ITC): The GST rates on real estate projects do not allow ITC benefits, meaning developers cannot claim credit for GST paid on inputs like cement and steel.

    3. GST on Township Developments and Infrastructure Projects

    Township developments involve multiple aspects, such as residential units, commercial spaces, infrastructure development, and common amenities. The GST applicability varies for each component:

    Residential Units: Under-construction units attract GST at 5% or 1%.

    Common Infrastructure Development: The cost of roads, parks, water supply, and sewage treatment attracts 18% GST on the service portion.

    Commercial Spaces: The sale of under-construction commercial units attracts 12% GST with ITC benefits.

    4. Recent Changes in GST for Real Estate

    4.1 GST Council’s Impact

    As per the 34th meeting of the GST Council in 2019, the GST rates were revised for real estate to provide relief to homebuyers. The revised rates that are 5% and 1% were introduced without ITC to prevent tax evasion and ensure a simplified tax structure.

    4.2 GST Exemptions for Affordable Housing

    The government defines affordable housing as:

    • A unit priced up to ₹45 lakhs.
    • A unit size of up to 60 sq. meters in metropolitan cities.
    • A unit size of up to 90 sq. meters in non-metro cities.

    Such projects benefit from a lower GST rate of 1%, making housing more affordable for middle-class buyers.

    4.3 ITC Restrictions and its Impact

    Developers cannot claim Input Tax Credit (ITC) on building materials if they opt for the new tax rates. Without ITC, developers have to include GST costs in pricing, potentially increasing property rates. Some developers prefer the old 12% GST rate with ITC to reduce input costs.

    5. Practical Challenges and Compliance Issues

    5.1 Lack of Clarity in Developed Plot Taxation

    While developed plots are taxable, there is no standardized formula to separate land value from the development cost. Developers and tax authorities often dispute the taxable portion.

    5.2 Documentation and Compliance

    Buyers and sellers must ensure that invoices clearly distinguish land cost and development cost to avoid unnecessary tax liabilities.

    Thus, the developers must comply with the anti-profiteering measures to prevent price hikes in lieu of tax rate changes.

    Conclusion

    Understanding GST implications on real estate transactions is essential for both buyers and developers. While the sale of raw land and completed properties remains tax-free, transactions involving under-construction properties and developed plots attract GST.

    Key Takeaways

    • Sale of undeveloped plots is exempt from GST.
    • Developed plots attract 18% GST on the development component.
    • Under-construction properties attract 5% GST (1% for affordable housing).
    • Fully constructed houses with a completion certificate are not subject to GST.
    • Township developments have varying GST rates depending on the services included.
    • Recent changes in GST rates have removed ITC benefits for new residential projects.

    By staying informed about tax rate changes, ITC provisions, and compliance requirements, developers and homebuyers can navigate GST laws effectively and make informed real estate decisions.

    Author Details- Apoorva Lamba (2nd Year Student Madhav Mahavidyalya,Jiwaji University,Gwalior)

    References- 

    https://getswipe.in/blog/article/gst-on-sale-of-land-and-plots

    https://elplaw.in/wp-content/uploads/2023/10/Sale-of-Developed-Plot-Recent-GST-Circular-has-foxed-Developers.pdf

    You Might Also Like- 

    https://legalguruindia.com/blog-input-tax-credit-guide/

  • GST on Pharmaceuticals, Ayurveda and Medicines

    The rollout Goods and Services Tax (GST) has shaken up how the pharmaceutical industry in India handles taxes. When GST kicked off on July 1, 2017, and it took the place of several indirect taxes like VAT, Excise Duty, and CST setting up a single tax system under the government’s vision of One Nation, One Tax. GST has had a big effect on pharmaceuticals, changing their prices how they’re distributed, and what companies need to do to ensure compliance. Let’s dive into GST rate on Pharmaceuticals, ayurvedic and medicine.

    Let’s take a look at the GST rates that apply, what’s exempt, how input tax credit (ITC) works, what companies need to do to comply, and what the government policies indicate. Understanding how GST works for medicines matters to everyone from the people who make them, to the shops that sell them, and especially the folks who consume them.

    GST Rates on Medicines

    The GST framework categorizes medicines into different tax slabs. 

    1. The Essentials and Life-Saving Drugs (5% GST)

    Drugs on the National List of Essential Medicines (NLEM) have a 5% GST rate to make them affordable.

    This group covers the necessary medications. It includes medicines for diseases like cancer, diabetes, HIV, malaria, TB, heart diseases, and other such long-term health issues. You’ll find the drugs eligible for this tax rate vide Notification No. 1/2017-Central Tax (Rate), from June 28, 2017.

    2. General Medicines and Formulations (12% GST)

    Most drugs, like antibiotics, pain relievers anti-inflammatory meds, and vitamin supplements, belong to this group. Traditional Indian medical practices like Ayurveda, Unani, Siddha, and even Homeopathy medicines also attract a 12% GST rate vide Notification No. 12/2017-Central Tax (Rate) lists the GST rates for these products.

    3. Over-the-Counter (OTC) Medicines (18% GST)

    Non-prescription drugs dietary add-ons, and health-boosting items come with an 18% GST Rate. This covers energy drinks, protein powders, beauty and dermatological treatments, and lifestyle drugs like weight loss aids.

    For Example: Products like omega-3 pills, Vitamin D and herbal dietary supplements belong to this group.

    4. GST on Medical Devices and Equipment

    5% GST: Devices that save lives such as dialysis machines, pacemakers, and crucial implants.

    12% GST: Common medical gear including syringes surgical gloves, bandages, and nebulizers.

    18% GST: Advanced diagnostic and imaging tools like MRI machines, CT scanners, and X-ray machines.

    GST Exemptions on Medicines

    To keep healthcare affordable, the government has exempted certain medicines and medical supplies from GST. These exclusions include:

    1. Blood and Blood Components 

    Human blood and its components are exempt from GST due to their critical and essential nature.

    Notification No. 9/2017-Central Tax (Rate) exempts blood and related medical products.

    2. COVID-19 Medications and Vaccines

    During COVID-19 in order to support public health initiatives, vaccines and medicines for pandemic control were momentarily GST-exempt.

    Temporary tax relief on COVID-19-related medical supplies like Remdesivir, Tocilizumab, and Amphotericin B was granted as per Notification No. 05/2021-Central Tax (Rate), dated 14th June 2021.

    3. Ayurvedic and Homoeopathic Medicines-Government Schemes

    Often times tax exempted Ayurvedic and homoeopathic medications supplied to government hospitals and fall under varied welfare initiatives. This is in line with government policies where they want to promote traditional Indian medical practices.

    GST on Pharmaceutical Supply Chains

    Manufacturing, distribution, and retailing all fall under GST compliance in the pharmaceutical supply chain. Important elements are:

    1. Input Tax Credit (ITC) in Pharma

    Manufacturers and suppliers can actually get an Input Tax Credit (ITC) on things like raw materials, packaging, and transportation costs. But there are some conditions:

    • You can’t claim ITC for medicines given out as free samples or promotional goodies.
    • Also, any GST paid on expired or damaged stock? Nope, can’t get that back.

    2. Impact on Drug Prices

    Now, about drug pricing—GST has replaced a bunch of different taxes, which has made things simpler and helped level the playing field. But there’s still a worry about high GST on active pharmaceutical ingredients (APIs) because that can drive up costs for manufacturers for both international and local markets. This in turn makes the Indian Pharmaceutical Industry less competitive than Chinese Pharmaceutical Industry, where the Government actively incentivizes APIs.

    When it comes to essential medicines, the 5% GST rate really does play a role in keeping them affordable. But, you know, over-the-counter and wellness products? They face steeper taxes, which can really hit consumers.

    3. Ayurvedic and Herbal Medicines

    These types, includes Ayurveda, Siddha and Homeopathic, along with a few more traditional cures are taxed at 12% GST rate. However, if they’re marketed as cosmetics or wellness items, well, that rate bumps up to 18%.

    For instance, take Ayurvedic toothpaste—yep, that one’s got an 18% GST tag. But if you’re looking at herbal cough syrups, those are at 12%!

    Navigating Compliance and Documentation for the Pharma Industry

    1. GST Registration

    If you run a pharma business and your annual turnover is over ₹40 lakh (or ₹20 lakh in some states), then you have got to get GST registered. 

    2. GST Returns

    Alright, so here’s how returns work:

    GSTR-1: This is your monthly return where you detail all your outward supplies.

    GSTR-3B: Think of this as a summary return that covers your tax liability and claims for input tax credit.

    GSTR-9: Its annual and brings together all your transactions throughout the year.

    3. E-Invoicing Requirements

    Now, if your business is raking in more than ₹10 crore, e-invoicing is mandatory for you. This helps with real-time validation of invoices via the GST Network (GSTN). So, don’t skip this!

    4. Anti-Profiteering Measures

    Here’s something important: if there’s a reduction in GST rates, you must pass that on to your consumers. That means lowering the MRP of your medicines. It’s only fair, right?

    Recent GST Updates for the Pharmaceutical Industry

    1. GST Council’s 47th Meeting (2022)

    During this meeting, they decided to cut the GST on certain cancer drugs from 12% to just 5%. Also, orthopaedic implants and assistive devices continue to remain exempt!

    2. GST Rate Rationalization (What’s Coming Up)

    The GST Council is looking into proposals to lower GST on active pharmaceutical ingredients (APIs) and raw materials. The goal? To help reduce manufacturing costs across the board.

    Practical Implications for Businesses and Consumers

    For Pharma Businesses:

    • You really gotta classify your medicines and medical devices accurately. Otherwise, tax disputes can come knocking.
    • Proper invoicing? Super important! It keeps your ITC claims smooth and helps avoid compliance headaches.
    • Don’t forget about e-invoicing and filing your GST returns on time. Falling behind could mean penalties.

    For Consumers:

    • Good news: essential medicines have lower GST, making them more affordable.
    • Always check the GST breakdown on your bills. You want to make sure the right tax is being applied.
    • Keep an eye on MRP reductions when GST rates drop—businesses are required to pass on those savings!

    In a nutshell, GST has really streamlined the taxation process for the pharmaceutical sector. It’s done away with multiple levies and brought in a unified tax structure. While it’s made essential medicines more affordable, yet we see higher tax rates on non-essential items and wellness products. For businesses, staying compliant with GST regulations, keeping invoices in check, and planning taxes wisely are key to avoiding issues. And for consumers? Staying informed about GST rates and exemptions helps you make smarter, cost-effective healthcare choices. Just remember, knowledge is power!

    Author Details- Apoorva Lamba (2nd Year Student Madhav Mahavidyalya,Jiwaji University,Gwalior)

    References–

    https://cleartax.in/s/impact-of-gst-rate-on-pharmaceutical-industry

    https://piceapp.com/blogs/ayurvedic-medicine-gst-rate

    https://razorpay.com/learn/gst-on-medicines/

    You might also like- 

    https://legalguruindia.com/blog-medical-labels/

    https://legalguruindia.com/blog-gst-registration/

  • THE IMPORTANCE OF PATENT SEARCH IN INNOVATION AND TECHNOLOGY

    What is a Patent?

    Patent is a type of Intellectual Property which grants its owner/innovator the exclusive right to use, produce, sell their unique invention for a specified and limited time frame in exchange for disclosing the technicality & functionality behind the invention to the public. However, not all inventions or innovations are patentable. Moreover, we will get to know about patent search in detail. For any invention or innovation to be patentable, it must qualify the following criteria.

    1. Novelty: This means that the product or process must be unique, new or novel. Such product or process should not be previously used by or known to others.
    2. Non-Obviousness: The product or process must be result of an inventive step. This basically means that invention should not be obvious to someone skilled in the field.
    3. Industrial Application: The invention must be capable of being practically used in any industry.

    It is pre-requisite for any invention to meet all three criteria to be granted a patent.

    What is Patent Search?

    Patent search is a self-explanatory terminology.  Patent Search is the comprehensive process of searching/examining the previously registered and filed Patents present in the records of the Patent Register. This is done to find out if there are any similar innovations, filed or registered, which are similar to the proposed patent. This process is basically done to ensure that the invention meets the criteria of Novelty i.e., the invention is unique, new and not previously known to public.

    Patent search plays an important role to ensure that your invention does not infringe upon other patents. Further, the Importance of Patent Search in Innovation and Technology is insurmountable. It helps businesses to streamline their innovation strategy and avoid wastage of resources. More so, patent search helps to avoid unnecessary litigation and to streamline research area and efforts.

    Patent Search is performed by examining the database of sources like the Indian Patent Office (IPO), United States Patent & Trademark Office (USPTO), European Patent Office (EPO), World Intellectual Property Organisation (WIPO), Search Engine Platforms like Google, GMP IPO etc. Apart from this, tracking GMP IPO trends in the market can prove to be extremely beneficial for innovators as this can help them streamline their innovation stratergy.

    Components of Patent Search

    1. Novelty Search: Novelty search is used to determine whether the invention or innovation is novel, unique or new. This is extremely important since novelty is the fundamental criteria for the patentability of an invention. An invention must be not previously known to or used by the public.
    2. Freedom to Operate (FTO) Search: A patent search ensures that no other similar innovation or invention exists and the proposed patent does not infringe upon any other patent. This provides the inventor the freedom to operate in the market without any worries of potentially infringing upon the rights of another patent holder. Patent search also removes the likelihood of unnecessary litigation.
    3. State of the Art Search: A patent search also provides clarity on what are the technological trends and lacunas in a specific industry. This is the importance of Patent Search in innovation and technology as it provides innovators with insights into specific ideas and fields in which innovation-al efforts are required. Further it saves unnecessary research and developmental efforts in fields where similar invention already exists.
    4. Patent Validity Search: As the name suggest, Patent validity search checks whether the invention or innovation has qualified all criteria of patentability. Novelty, Non-obviousness and Industrial Applicability. This basically clarifies whether the invention or innovation can be granted a valid patent.
    5. Patent Landscape Search: A patent search significantly helps build innovation strategy by providing detailed insights into the competitive market. Additionally, keeping a track on the GMP IPO trends help businesses effectively judge the market trends and streamline their Research and Developmental efforts in the same industry.

    Patent Rights in India

    A patent grant a bundle of rights to its owner, such rights are called Patent Rights in India. Patent Rights in India include:

    1. Exclusive Right to Use: Patent Registration grants its innovator the exclusive right to use, manufacture and sell the invention for a period of 20 years from the date of filing. This right also by default includes the right to stop others from using the patent during these 20 years.
    2. Right to Grant Licence: The patent owner has the right to grant licence to others by allowing them to use the patent with certain terms and conditions in exchange of consideration.
    3. Right to Surrender: Other integral Patent Right in India is that of Right to Surrender. The patent owner, at any time, has the right to surrender its patent before the competition of the patent protection duration of 20 years. The term surrender means to allow the use of the Patent by the public.
    4. Right to Sue for Infringement: Any Patent holder’s rights can only be secured by giving them a right to sue others who try to copy or use the patent in an unauthorized manner without the consent of the patent holder.

    These are some of the most important Patent Rights in India.

    Conclusion

    Patent search can prove to be an incredibly beneficial tool to protect patent rights in India. Further, the importance of Patent Search in innovation and technology can also not be ignored. Patent Search incredibly helps businesses to build their innovation strategy thereby saving wastage of resources and incentivizing research and development.

    Additionally, GMP IPO can also prove to be extremely enriching for innovators as market trends highlights the prospective industries in which innovation and inventions are required. GMP IPO along with other tools like IPO, USPTO, WIPO etc. need to be continuously monitored to ensure an effective Patent Search.

  • Crack the Code: GST on Atta, Flour & Food Grains Explained

    With the rollout of the Goods and Services Tax (GST) in 2017, various Indian industries have experienced significant shifts in the way they are taxed. The essential food products, including atta (wheat flour) and other grains, have experienced these said shifts as well. Although the government has left the essential food staples out of GST, there is still a distinction in what is charged and on what grounds. This difference holds in the case of branded and non-branded, packaged and non-packaged commodities, so it becomes an important factor in determining tax applicability.

    Let’s immerse ourselves in the GST on atta and grains, dissecting concepts such as branded, enforceable rights, and actionable claims, and grasping the legalities in the process.

    GST Applicability on Atta and Grains

    When it comes to GST, food grains and flour are categorized into two main groups based on their branding and packaging:

    1. Non-Branded Items and Unpackaged Products (Exempted)

    Raw food grains like wheat, rice, and pulses, including loose or bulk atta without any branding or branded packaging, are exempt from the usually applicable GST rate of 5%. This exemption is put in place by the government to keep essential food items affordable for everyone.

    According to the Central Government’s Notification No. 2/2017, dated 28/06/2017, unbranded and unpackaged food grains and atta are to be categorized under the exempted list. This means that if atta or food grains are sold without a brand name or packaging, they are not subject to GST.

    Freight Exemption: The transportation of unbranded food grains and atta by rail or road is also exempt from GST. According to Notification No. 12/2017-Central Tax (Rate), dated 28th June 2017, GST is not levied on freight charges related to transporting unbranded food products.

    2. Branded and Packaged Products (5% GST)

    When atta and grains are sold in a unit container and bear a registered or a protected brand name, they attract a 5% GST on atta. This includes products packaged and labeled for retail sale under a ‘legally protected brand.

    For instance, if a company produces branded atta under a protected name, it must collect 5% GST on the sale price of that product. Branded products, even if they are in small retail packets or bags, are classified under this category and thus are subject to GST.

    Case Law: In the case of Naga Limited [AAR-TN 2018], the court ruled that if a supplier relinquishes their enforceable rights over a brand name, they may be eligible for GST exemption, despite using a brand name on their product.

    Packaging Requirements for Non-Branded Atta to Qualify for GST Exemption and be considered non-branded are:

    • The packaging is not to bear any registered trademark or brand name.
    • To carry a disclaimer stating that the brand owner has let go of any enforceable right or actionable claim over the brand name.
    • Not to be sealed in a unit container that suggests branding.
    • If these conditions are met, then the GST exemption applies even if the product is labeled with a name.

    However, file your GST with TMWala with a very reliable process.

    What is an Enforceable Right and Actionable Claim?

    In Atta and grains, the branding and packaging aspect plays a decisive role in determining whether GST is applicable or not. Two key legal concepts govern this distinction:

    1. Enforceable Right

    An enforceable right is the legal right a brand owner has to prevent others from using their brand name. If a business owns a trademark and can legally enforce this trademark against infringement, the brand is protected under the law. Products with such trademarks are not eligible for GST exemption and will be taxed at 5% GST on atta, flour, and food grains.

    For example, brands like “Patanjali” or “Aashirvaad” have enforceable rights over their brand names, and as such, their products are subject to GST on atta.

    2. Actionable Claim

    An actionable claim refers to a claim to a debt or beneficial interest that can be enforced by legal action. So, if a supplier voluntarily forgoes the right to enforce their trademark (e.g., by adding a disclaimer stating they do not hold enforceable rights), GST exemption may be claimed. Example: Many brands in the market label their products as unbranded to avoid GST, even though they use an identifiable name. If they do not legally enforce their brand rights, they are eligible for GST exemption.

    Recent Government Clarifications and Rulings

    1. CBIC Clarification (2017)-The Central Board of Indirect Taxes and Customs (CBIC) clarified that packaged food grains and branded flour attract 5% GST, while loose, unbranded products remain exempt.
    2. Notification No. 1/2017-Central Tax (Rate), dated 28th June 2017-Defined unit container and registered brand name as determining factors for GST levy. Also clarified that businesses renouncing actionable claims over a brand name can avail a tax exemption.
    3. Advance Ruling by Karnataka AAR (2018) – [Sakthi Murugan Flour Mills] confirmed that atta sold under a registered trademark in sealed packs attracts 5% GST.
    4. Exemption of Freight for Non-Branded Grains and Atta-Exemption of tax is placed on the transportation of rice, pulses, flour, and food grains by vessel or rail through Notification No. 12/2017-Central Tax Rate dated 28th June 2017.

    This has been done to reduce the cost of transportation of staple foods in order to make them affordable for consumers.

    Practical Implications for Businesses and Consumers

    For Businesses:

    • An enforceable right is the legal right a brand owner has to prevent others from using their brand name. If a business owns a trademark and can legally enforce this trademark against infringement, the brand is protected under the law. Products with such trademarks are not eligible for GST exemption and will be taxed at 5%. For example, brands like “Patanjali” or “Aashirvaad” have enforceable rights over their brand names, and as such, their products are subject to GST.
    • Documentation and Compliance: Businesses should ensure proper documentation and declarations to avoid disputes regarding GST applicability. For example, when selling non-branded atta, companies must ensure that their packaging follows the GST exemption criteria.
    • Avoiding Disputes: To avoid litigation, businesses should maintain clear documentation and may even consider filing a declaration with the GST authorities when they relinquish enforceable rights over a brand name.
    • For non-branded atta, proper disclaimers must be included on the packaging to maintain GST exemption.

    Link to similar articles: https://legalguruindia.com/blog-role-of-msmes-in-boosting-the-indian-economy/

    For Consumers:

    • Pricing Impact: Understanding that branded and packaged products come with a 5% GST can help consumers make more informed choices when purchasing atta and other grains.
    • Cost-Effective Choices: Loose, unbranded grains and flour are often more affordable because they are not subject to GST, making them an attractive option for cost-conscious consumers.
    • Cost-Effective Choices: Loose, unbranded grains and flour are often more affordable because they are not subject to GST, making them an attractive option for cost-conscious consumers.

    Implications for Small and Local Producers

    Small-scale producers who do not have a registered trademark or a protected brand name can take advantage of the GST exemption by ensuring that their products are unbranded and unpackaged. This provides a cost-effective way for them to sell essential food products without the burden of the tax, which can lower the price for consumers and improve their market competitiveness. However, they must be vigilant in ensuring that their packaging complies with the conditions set out by the government to maintain GST exemption.

    Local and regional brands that are not widely recognized can consider voluntarily relinquishing their enforceable rights over their brand to gain GST exemption, but they should weigh the long-term benefits of branding against short-term tax savings. In such cases, businesses should assess the effect of this decision on their brand’s growth and consumer perception.

    Future Developments and Policy Changes

    While the current structure provides clear guidelines for GST on branded and non-branded atta and food grains, the government may revise these tax policies in the future. Changes could include:

    • Adjusting the GST rate for certain food products to reflect inflation or economic conditions.
    • Further clarifications or exemptions for small producers to ensure the affordability of food grains.
    • Proposals for new tax slabs for specific regional or organic products that are sold in limited areas or based on local sourcing.

    Know more about the new tax slab by reading this article:- https://legalguruindia.com/gst-2-0-for-the-common-man-and-the-economy/

    As such, businesses and consumers must remain agile and responsive to any future changes in the GST framework for food grains and atta. Being proactive and staying informed through government bulletins and updates will allow both groups to take advantage of any changes that benefit them.

    Conclusion: Navigating the GST Maze

    The framework of GST on atta, food grains, and flour aims to balance taxation with affordability, ensuring that essential food items remain accessible to all. While unbranded and unpackaged essentials are exempt from tax, branded and packaged products face a 5% GST. Businesses can navigate this framework by making informed decisions about branding, packaging, and compliance.

    By staying updated on government notifications, rulings, and any new developments, both producers and consumers can optimize their understanding of GST implications and ensure compliance while also making cost-effective choices. Ultimately, the goal is to create a more efficient, transparent, and sustainable taxation system that benefits both businesses and consumers in the long run.

    Need assistance with GST Registration? TMWala provides expert guidance for simple and convenient business registration. Contact us today!

    Author: Apoorva Lamba, 2nd Year LLB. Student of Madhav Mahavidyalaya, Jiwaji University, Gwalior