2020 (1) TMI 1122 - AAR - GST

Classification of goods - Rate of CGST and SGST - Namkeen duly packed sealed in printed pouches - sale under the brand name - whether taxable at the rate of 5% or not? - HELD THAT - The impugned goods are more appropriately classifiable under Heading 2106 90, from the details provided by the applicant such as picture of the covering of the package, ingredients of the product etc. - As per current Tariff 12% IGST or (6% CGST 6% SGST) is applicable on 2106 90. Whether their proposed plan to sell the said final product on payment of tax @ 5% is proper/ legal or not? - HELD THAT - In the instant case, the applicant is packing their product in unit containers/retail pouches with the details of the manufacturer on the packaging for supply of Products. Since, namkeens, bhujia mixture, chabena and similar edible products packed in unit containers/ retail pouches are taxed at the rate of 12% GST under the said notification - it is clear that if the applicant voluntarily foregoes the brand name (Name of the manufacturer in this case) used by them subject to conditions as in the Annexure of the said notification, the applicant shall be eligible for reduced rate of from duty under the said notification.

Summary

Issues:
1. Applicable CGST & SGST tax rate on final product "Namkeen" packed in printed pouches.
2. Legality of proposed plan to sell final product at 5% tax rate.

Analysis:
1. The applicant sought clarification on the applicable CGST & SGST tax rate for their final product, "Namkeen," packed in printed pouches. The product was described as ready-to-eat, containing ingredients like Besan, Matar Atta, Rice Atta, etc. The authorities classified the product under Heading 2106 90, subject to 12% IGST or 6% CGST & 6% SGST. The packaging details and ingredients supported this classification.

2. Regarding the legality of selling the final product at a 5% tax rate, the discussion revolved around Notification No. 01/2017-Central Tax (Rate) and subsequent amendments. The notification specified conditions for availing reduced tax rates, particularly concerning brand names. The applicant's name mentioned on the packaging qualified as a brand name with an enforceable right. To sell the product at a reduced rate of 5%, the applicant needed to voluntarily forego the enforceable right to the brand name as per the conditions outlined in the notification.

3. The ruling concluded that the applicable CGST & SGST tax rate for the final product "Namkeen" packed in printed pouches would be 12% GST. Additionally, the proposed plan to sell the product at a 5% tax rate would be legal if the applicant voluntarily relinquished the enforceable right to the brand name as per the conditions specified in the relevant notification.