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2023 (3) TMI 1256 - AAR - GSTLevy of GST - Supply or not - export of pre-packaged and labelled rice upto 25 Kgs, to foreign buyer - supply of pre-packaged and labelled rice upto 25 Kgs, to exporter on bill to ship to basis i.e., bill to exporter and ship to customs port (Exporter ultimately exports the rice to foreign buyer) - supply of pre-packaged and labelled rice upto 25 Kgs, to the factory of exporter (Exporter will export the rice). HELD THAT - The authorities observations after going through the contents of the matter is that the legislature intention is that the supply of the rice in packets of upto 25 Kg which are duly pre-packaged and labelled as per the Legal Metrology Act, 2009 (1 of 2010) and the rules made thereunder is an taxable event and It's not an exempted/nil rated supply. Besides Ministry of Finance, Govt, of India has clarified the applicability of GST on pre-packaged and labelled goods through FAQs which were uploaded online on 18th July, 2022 w.r.t the notification no. 6/2012-CT(Rate). Though FAQs are not binding on the statutory authorities but they have a persuasive value for any authority while interpreting the legal provisions. From the perusal of the said notification and subsequent clarification on it, it can be said that in the present matter if supplied goods are the pre-packaged and labelled and in the packages of less than or equal to 25 kg in quantity then the same are taxable. Further, the scope of supply under the GST Act, 2017 is an all encompassing event and only goods and services which have been categorically declared as non taxable/exempted/nil rated supplies under the Act are outside the purview of the section 7 of the CGST Act, 2017. Thus, the transactions undertaken by the applicant falls within the purview of the scope of supply and attracts levy of tax as applicable under the CGST/HGST/IGST Act, 2017.
Issues: Eligibility criteria for seeking an advance ruling under the Central Goods and Services Tax Act, 2017 and Haryana Goods and Services Tax Act, 2017. Interpretation of legal provisions regarding the applicability of GST on the supply of pre-packaged and labelled rice up to 25 kgs, both for domestic sale and export.
Eligibility for Seeking an Advance Ruling: The applicant must meet the conditions set forth in the CGST Act, 2017 and HGST Act, 2017 to file an application before the Authority of Advance Ruling. The applicant confirmed that the issue in the application was neither pending nor decided under any provision of the Act, making them eligible for an advance ruling. The case was deemed eligible for consideration based on the provisions of Sections 97(2) and 98(2) of the CGST Act, 2017. Interpretation of Legal Provisions - GST on Pre-packaged Rice: The applicant, engaged in rice manufacturing and supply, sought clarification on the GST applicability on pre-packaged and labelled rice up to 25 kgs, for both domestic and export purposes. The applicant believed that GST would apply to such supplies, regardless of the destination. The Ministry of Finance clarified that certain pre-packaged food items, including rice, fall under the purview of the Legal Metrology Act, 2009, if packaged up to 25 kgs. The applicant also questioned the necessity of GST compliance for exports if the supply is exempted. Comments of the Proper Officer: The Proper Officer asserted that GST at 5% is applicable on pre-packaged and labelled rice up to 25 kgs, as per Notification No. 06/2022. The officer emphasized that the Legal Metrology Act requirements apply to all goods, whether domestically supplied or exported. The officer confirmed that GST is levied on pre-packaged rice supplied to exporters and factories of exporters, irrespective of the destination. Discussion and Finding: After reviewing the facts and legal provisions, the Authority found that the supply of pre-packaged and labelled rice up to 25 kgs is a taxable event under the GST Act, 2017. The Authority considered the legislative intent and Ministry of Finance's clarifications, concluding that such supplies attract GST. The ruling stated that the applicant's transactions fall within the scope of taxable supply, subject to the applicable tax rates. Ruling: The Authority ruled that GST is leviable on the export of pre-packaged and labelled rice up to 25 kgs to foreign buyers, on supplies to exporters on a "bill to ship" basis, and on supplies to the factory of exporters. All three scenarios were deemed taxable under the CGST/HGST/IGST Act, 2017, at a rate of 5%.
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