Section 40 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 40 reaches the person further down the chain: the seller, hirer, shopkeeper or warehouse holder who deals in goods that carry a false geographical indication. The punishment is the same as in section 39, but a seller can escape by proving one of three defences. If your shop or platform has received a complaint, our legal notice drafting team can help you reply with the right proof in hand.
A person who sells, lets for hire, exposes for sale, hires, or has in his possession for sale goods bearing a false geographical indication (or goods that should show an origin indication under section 71 and do not) is punishable with imprisonment of not less than six months but up to three years and fine of not less than fifty thousand rupees but up to two lakh rupees, unless he proves one of three defences. The court may go below the minimum only for adequate and special reasons. It remains an offence tried by a court.
Status after the amending Acts
Section 40 is not on the Tribunals Reforms Act, 2021 list and is not changed by the Jan Vishwas (Amendment of Provisions) Act, 2023. The printed text is therefore the current text. It is an offence with imprisonment and fine, tried by a court, and not a penalty imposed by an adjudicating officer under section 37A.
The acts covered
The section applies to any person who:
- sells, lets for hire or exposes for sale; or
- hires or has in his possession for sale,
goods or things to which any false geographical indication is applied (the term is defined in section 38(3)); or which, being required under section 71 to have applied to them an indication of the country or place in which they were made or produced, or the name and address of the manufacturer or person for whom the goods are manufactured, are without the indications so required.
So there are two routes to the offence: dealing in goods that carry a false indication, and dealing in goods that lack an origin indication that a section 71 notification demands. The second route depends on the Central Government having issued such a notification; the section itself imposes no such duty.
The three defences
The seller is punished "unless he proves":
| Clause | Defence | What must be shown |
|---|---|---|
| (a) | Reasonable precautions and no reason to suspect | That, having taken all reasonable precautions against committing an offence against this section, he had at the time of the alleged offence no reason to suspect the genuineness of the geographical indication or that any offence had been committed in respect of the goods |
| (b) | Information on demand | That, on demand by or on behalf of the prosecutor, he gave all the information in his power about the person from whom he obtained the goods |
| (c) | Innocence | That otherwise he had acted innocently |
The three clauses are separated by "or", so proving any one of them is enough. The burden is on the seller. Clause (b) turns on records: a seller who can name the supplier, show the purchase invoice and answers the prosecutor's demand promptly is in a far better position than one who cannot.
Punishment and proviso
The text is identical in form to section 39: "imprisonment for a term which shall not be less than six months but which may extend to three years and with fine which shall not be less than fifty thousand rupees but which may extend to two lakh rupees."
| Minimum | Maximum | |
|---|---|---|
| Imprisonment | Six months | Three years |
| Fine | Fifty thousand rupees | Two lakh rupees |
"Provided that the court may, for adequate and special reasons to be mentioned in the judgment, impose a sentence of imprisonment for a term of less than six months or a fine of less than fifty thousand rupees."
How it compares with section 39
| Section 39 | Section 40 | |
|---|---|---|
| Who | Maker, applier, tool-holder, falsifier of origin indication, anyone who causes it | Seller, hirer, exhibitor, stockist |
| Defence | One: acted without intent to defraud | Three: precautions, information on demand, or otherwise innocent |
| Punishment | Six months to three years, fifty thousand to two lakh rupees | Same |
| Proviso | Adequate and special reasons | Same |
See the article on section 39 for the maker's side. What happens to the goods after a conviction or an acquittal on a defence is covered in the article on section 46: a court may direct forfeiture even where the seller is acquitted on proof of a section 40 defence.
Example
Bansal Mart stocks cartons labelled with an invented highland-pulses indication, bought from a distributor on invoice. A complaint is made that the cartons are counterfeit. Bansal Mart can rely on clause (a) if it shows its checks on the supplier and no reason to doubt the genuineness of the label, and on clause (b) if, when the prosecutor asked, it gave the distributor's name and address and everything else it knew. Had Bansal Mart refused to say where the cartons came from, clause (b) would be unavailable.
What the section does not say
- It does not say how "reasonable precautions" are to be judged; that is left to the court on the facts.
- It does not say what the prosecutor's demand under clause (b) must look like.
- It does not distinguish between large and small sellers; the same minimums apply.
- It does not provide any money penalty; the adjudication route under section 37A is not stated for this offence.
Practical points
- Keep purchase invoices and supplier details for every branded or indicated product.
- Ask suppliers of indicated goods for proof that they are authorised users or buy from one.
- If a prosecutor asks where you got the goods, answer in writing and keep a copy.
- Remove disputed stock from sale at once; keep it separate and safe.
Need help if goods in your shop are alleged to carry a false indication?
A seller's defence turns on records and on what was said when the prosecutor made a demand. Our legal notice drafting team can prepare a clear reply, collect the supplier trail and, where a rights holder is the one complaining, draft the notice that sets out the facts under section 40.
Key takeaways
- Section 40 punishes selling, hiring, exposing for sale or possessing for sale goods with a false geographical indication, or without a required origin indication.
- Punishment: six months to three years and fifty thousand to two lakh rupees, with a court proviso for adequate and special reasons.
- Three defences: reasonable precautions with no reason to suspect, full information on demand, or otherwise innocent.
- Unchanged by the 2021 and 2023 amending Acts.
Read next
- Section 39: penalty for applying false geographical indications
- Section 41: enhanced penalty on second or subsequent conviction
- Sections 45–46: no offence in certain cases and forfeiture of goods
- Infringement of geographical indication: penalties
Disclaimer: Based on the Geographical Indications of Goods (Registration and Protection) Act, 1999 read with the Tribunals Reforms Act, 2021 and the Jan Vishwas (Amendment of Provisions) Act, 2023, as consulted on 1 October 2026. Forms, fees and procedure are set by the rules made under the Act. This article is general information, not legal advice; check the official text before acting.