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2023 (12) TMI 724 - AAR - GSTClassification of goods - frozen chicken - Poultry Meat Not Cut in pieces - to be classified under HSN Code 02071200 or not - Poultry Meat Cuts and Offal - to be classified under HSN Code 02071400 or not? - N/N. 2/2017-CT (Rate) dated 28.06.2017 - HELD THAT - If the packaged commodities viz. the impugned products containing quantity of more than 25 kg are meant for institutional consumers, then the same would be exempted under SI.No. 9 of Notification No. 2/2017-CT (Rate) dated 28.06.2017 as amended - From the plain reading of the definition of 'institutional consumers', it means that the packaged commodities, firstly, should bear a declaration not for retail sale', secondly, it is meant exclusively for use by that institution; and thirdly, it is not for commercial or trade purposes. It is found that a declaration that 'packed exclusively for institutional sale, not for retail sale' will be affixed on the bag. Hence the first condition is met. It is also found that the proposed sale is being made by the wholesale dealer/trader, in this case, the Applicant. Coming to the last condition, it is found that such sale proposed to be made by the Applicant, should also establish that it is not for commercial or trade purposes even though it is meant for use by that institution. As per the facts submitted by the Applicant, they intend to supply to institutional consumers such as The Indian Army, Ministry of Defence, The Park Hotel, Chennai etc. - for supplies to be made to institutional consumers, it is found that the exemption from GST as claimed by the Applicant would be available if and only if it fulfills all the conditions envisaged under Rule 2(bc) of the Packaged Commodities Rules 2011 for Institutional Consumer . As regards the supply of the impugned products to a distributor who would further supply to institutional consumers, Rule 3(c) of the Chapter II of the Packaged Commodities Rules, states that 'packaged commodities meant for industrial consumers or institutional consumers'. Thus the condition given in the said rule is that the end user should be industrial consumers or institutional consumers. The Applicant has stated that the impugned frozen chicken is pre-packaged and labelled. Accordingly, adhering to other provisions of Legal Metrological Act, 2009, the rate of duty for the impugned frozen chicken is of 2.5% -CGST, 2.5% - SGST, in ease of intra-state supply, and 5% IGST in case of supply to inter-state, is payable.
Issues Involved:
1. GST applicability on supply of frozen chicken to institutional consumers. 2. GST applicability on supply of frozen chicken to a distributor for further supply to institutional consumers. 3. GST applicability on supply of frozen chicken to non-institutional consumers. Summary: Issue 1: GST Applicability on Supply to Institutional Consumers The Applicant proposes to supply frozen chicken (HSN 02071200 and HSN 02071400) in wholesale bags of 30 kgs containing 15 small packs of 2 kgs each to institutional consumers like the Indian Army and Ministry of Defence. The supply is exempt from GST under SI. No. 9 of Notification No. 2/2017-CT (Rate) dated 28.06.2017 as amended, provided the commodity is for use by the institution and not for commercial or trade purposes. The packaged commodities must adhere to the Legal Metrology Act, 2009, and the Legal Metrology (Packaged Commodities) Rules, 2011. Issue 2: GST Applicability on Supply to a Distributor for Further Supply to Institutional Consumers The proposed supply of frozen chicken to a distributor, who will then supply to institutional consumers, is also eligible for GST exemption under the same notification, provided the end user is an institutional consumer and the distributor is a wholesale dealer. The supply must meet the conditions of the Legal Metrology Act, 2009, and the Legal Metrology (Packaged Commodities) Rules, 2011. Issue 3: GST Applicability on Supply to Non-Institutional Consumers For supplies made to non-institutional consumers, GST is applicable as per Sl. No. 1 of Schedule I to Notification No. 01/2017-CT (Rate) dated 28.06.2017 as amended. The rate of GST is 5% (2.5% CGST and 2.5% SGST for intra-state supply, and 5% IGST for inter-state supply). The frozen chicken is considered "pre-packaged and labelled" as per the Legal Metrology Act, 2009, and the related rules. Ruling: (a) Supply to institutional consumers like the Indian Army and Ministry of Defence is exempt from GST if the commodity is for institutional use and not for commercial or trade purposes. (b) Supply to a distributor for further supply to institutional consumers is exempt from GST under the same conditions, provided the distributor is a wholesale dealer. (c) Supply to non-institutional consumers is subject to GST at the rate specified in the notification.
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