M& M gets GST notice over brand name use by group companies: Report

The notice pertains to the period from 2017 to 2023.

Mahindra & Mahindra (M&M) has received a goods and services tax (GST) notice over the use of the 'Mahindra' brand name by various group companies, a move that is unlikely to go down well with India Inc, the Economic Times has reported.

The show-cause notice asks M&M why it should not pay GST on the services it provides to its subsidiaries by allowing them to use the flagship brand and logo. The notice is for 2017-2023 period.

A Mahindra spokesperson declined to comment, the report said. Moneycontrol couldn’t verify the report indepedently.

Consumers pay GST, which is then remitted to the government by the businesses selling goods or services. For example, if M&M were to receive a royalty amount of Rs 10 crore from its group companies, a GST of Rs 1.8 crore will be collected at 18 percent. This means M&M would collect Rs 11.8 crore from its subsidiaries and give Rs 1.8 crore to the government.

The notice raises questions about if the GST authorities are widening the interpretation of the law, applying the tax to “related party transactions” even when no consideration is exchanged. This scrutiny follows similar notices issued to several builders in Mumbai earlier this year for brand and trade name use in transactions with subsidiaries and joint ventures.