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Franchisees are required to take GST registration compulsorily under the Sr. No. (vii) of the Section 24 of CGST Act.

Registration under GST — In the instant case, the applicant has stated that they are partnership firm and have taken a franchisee of “ALOHA” from EXPLORE KNOWLEDGE RESOURCES LLP, Rajkot. Further, they submitted that they sell their product and provide service under the brand name of “ALOHA” to customers. They sell products like books, stationary etc. without having profit margin under the brand name of “ALOHA”. They offer various courses like Mental Arithmetic, English Smart to the students under the brand name of “ALOHA”. All receipts of product sale or services are being taken in the name of their partnership firm “Patrator” and deposit the fees in their partnership firm bank account. At the end of every fifteen days, they pay royalty to their franchisor, KNOWLEDGE RESOURCES LLP, Rajkot based on fees they collect from their customers. They submitted that total yearly receipt of their partnership firms Patrator does not exceeds Rs. 20 lacs in any financial year; however an annual receipt of the franchisor, KNOWLEDGE RESOURCES LLP, Rajkot exceeds Rs. 20 lacs. Accordingly, they sought advance Ruling on the following questions : 1.) Is Patrator required to take GSTIN ? 2.) Is Patrator required to pay tax under GST Act? Held that— According to clauses of the agreement, it is crystal clear that the applicant is only authorized to supply the goods and service under the brand name of “ALOHA” and cannot supply the other goods and service. Hence applicant is supplying the goods and service on behalf of the taxable person i.e. Xplore Knowledge Resources LLP. Accordingly, we rule that applicant covers under the Sr. No. (vii) of the Section 24 of CGST Act, 2017. Therefore, applicant is liable for taking GST registration. Since applicant is liable for GST registration, he is required to pay GST on supply of goods and services. — Patrator, In Re… [2020] 26 TAXLOK.COM 101 (AAR-Gujarat)

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