GST is chargeable on surplus profit transferred by beer manufacturer to brand owner

United Breweries Ltd., In re - [2018] 95 taxmann.com 87 (AAR-Karnataka) 

The assessee entered into an arrangement with contract bottling units (CBU) for using its brand name on beer bottles. The CBU had manufactured the beer using the brand name of assessee and supplied such beer to market. The assessee filed an appeal for Advance Ruling on the issue whether the sale of beer by CBU under its invoicing would be considered as supply of services and Whether GST is payable by the Brand owner on the surplus profit transferred by the CBU to the assessee out of such manufacturing activity? 

The Authority for Advance Ruling held that the CBU is not engaged in supply of service to the assessee. Further, the GST would be payable by the assessee, i.e., brand owner on surplus profit transferred by the CBU. The supply of service to the CBUs is classified under Service Code 999799 and would be taxable at the rate of 18% GST.