Question
A person who is an individual is taking franchisee of Franki Station A local brand of franki having 7 other franchisee and registered in GST. Now the question is whether a person who is taking fresh franchisee needs to take registration at the first moment? I mean can he take basic exemption of 20 lakhs and then apply for registration? looking after provisions of CGST Act 2017 Section 24(1) (vii) persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise. If not kinldy given an interpretation of the above provision.

Answer

Facts of the Case:
Registration in case of person taking fresh franchise. Whether the basic exemption of 20 lakhs is available or not.

Interpretation:
The business module of franchise is that the franchisee pays certain amount to franchisor. This amount is calculated on various basis as agreed between 2 parties. Some amount may be fixed and some amount may be variable depending upon volume of business.

The franchisor may put certain requirement regarding ambience, decoration etc. as per his brand. Against this the franchisor provide right to use brand name as well as know how about the product. But when we read all the facts together these facts do not create a relationship between principal and agent.

Conclusion:
In this case the supplier is entitled to take fresh threshold limit.

(Reply dt.10/07/2019)