2023 (10) TMI 632 - AAR - GST

Exemption from GST or not - sale of unbranded /non packaged Broken Rice generated from manufacturing process - HELD THAT - The product broken rice is classifiable under Chapter Heading 1006. Therefore, the rate of tax on supply of broken rice would be same as in case of supply of rice. In terms of Notification No. 06/2022- Central Tax (Rate) dated 13.07.2022, Rice, pre-packaged and labelled attract tax @ 5% with effect from 18.07.2022. On the other hand, Notification No. 07/2022-Central Tax (Rate) dated 13.07.2022 exempts supply of Rice, other than pre-packaged and labelled with effect from 18.07.2022. Tax is not payable by the applicant on supply of broken rice if the same is supplied other than pre-packaged and labeled as specified in Notification No. 07/2022-Central Tax (Rate) dated 13.07.2022.

Summary

Issues Involved:
The issue involves the classification and taxation of broken rice under the GST Act.

Applicant's Submission:
The applicant, engaged in rice manufacturing, sought an advance ruling on whether the sale of unbranded broken rice should be taxed at 5%. The applicant clarified that the broken rice is neither pre-packaged nor labeled, and thus, no tax is charged on its supply.

Revenue's Submission:
The revenue officer did not provide any view on the matter.

Observations & Findings:
The Authority determined that broken rice falls under Chapter Heading 1006 of the Customs Tariff Act, attracting the same tax rate as rice. Following Notification No. 07/2022-Central Tax (Rate), broken rice is exempt from tax if supplied other than pre-packaged and labeled. The ruling stated that tax is not payable on broken rice if supplied in an unbranded and un-packaged manner.

This judgment clarifies the tax implications of supplying broken rice under the GST Act, emphasizing the importance of pre-packaging and labeling for tax liability.