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TMI Blog2024 (6) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... f 2010) and the rules made thereunder. Export of processed frozen shrimps in plain pouches/boxes - HELD THAT:- N/N. 6/2022-Central Tax (Rate), and the parallel IGST Notification No. 6/2022-Integrated Tax (Rate), both dated 13.07.2022, stipulates that tax under GST is applicable on 'pre-packaged and labelled' commodities as per the provisions of Legal Metrology Act, 2009, with effect from 18.07.2022 - In the instant case, the ultimate buyer is not present when commodity is placed in package and the commodity is being pre-packed for an unknown ultimate buyer. Therefore, where the quantity involved is 25Kgs or less in respect of specified commodities including shrimps (HSN 0306) which are pre-packed, they would mandatorily get covered within the ambit of Legal Metrology Act, 2009, and the rules made thereunder. Accordingly, GST would be applicable on the supply of pre-packaged and labelled shrimps upto 25 kgs, irrespective of the fact whether it is meant for domestic supplies or for export, as long as they are specified commodities that are pre-packaged. - SMT. D. JAYAPRIYA, I.R.S., AND SMT. A. VALLI, M.SC., MEMBER 1. Any appeal against this Advance Ruling order shall lie be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement of relevant facts', the Applicant states that - 3.1 The Applicant has been engaged in the business of exporting processed shrimps for over three decades. The applicant sources shrimps locally from farmers, which undergo further processing in the factory such as receiving, washing, de-veining, peeling, de-heading, tail removal, sorting, grading and freezing. 3.2 Processing steps performed by the applicant is entirely dependent on the customer's requirements / order. Based on the customer requirement, one or more processing steps can be performed independently to produce the desired results. 3.3 As part of the freezing process, the Applicant uses two different types of freezing methodology to freeze the processed shrimps. a) Individual quick freezing (IQF) b) Block freezing 3.4 Processed raw material are thereby packed immediately as per the buyer's instructions. The Applicant uses the following types of packaging. a) Primary Packaging or inner packing i.e., packaging of inner boxes or pouches. b) Secondary packaging or outer packing i.e., packaging of master carton. 3.5 The primary packaging is based on the freezing technique used by the Applicant for the order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its that legal metrology Act will apply to the commodities packed in India where the ultimate consumer details are not available at the time of sale irrespective of the fact whether the goods are sold in India or exported outside India. 4.6 Further, in the instant case the applicant is pre-packing the products as per the customer requirements ranging from 'A Kg to 2 Kgs in primary packs by printing the customer brand name and other details as provided by the customer for the export sale. 4.7 Further the applicant submit that the clarification released by ministry of finance regarding the GST Levy on pre-packaged and labelled goods vide press release dated 18th July 2022 as follows :- i. If specified commodities are supplied in a package that do not require declaration(s) / Compliances under the legal Metrology Act, 2009 and the rules made thereunder, the same would not be treated as pre-packaged and labelled for the purposes of GST Levy. ii. In the context of food items (such as pulses, cereals like rice, wheat, flour etc), the supply of specified pre-packaged food articles would fall within the purview of the definition of 'pre-packaged commodity under the Legal Metrology ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... package of whatever nature, whether sealed or not, so that the product contained therein has a pre-determined quantify . Furthermore; the Press-release issued by Ministry of Finance regarding the GST levy on pre-packaged and labelled goods on 18th July 2022 stated that If specified commodities are supplied in a package that do not require declaration (s)/ Compliances under the Legal Metrology Act, 2009 and the rules made thereunder, the same would not be treated as pre-packaged and labelled for the purpose of GST levy . It is pertinent to note from the above analysis, GST would be leviable if the following conditions are satisfied : - i) It is pre-packaged and labelled and ii) It is required to bear the declarations under the provisions of the Legal Metrology Act, 2009 (1 of 2010) and rules made thereunder . There is no differentiation about applicability of GST on goods supplied domestically or are being exported. As per Section 18 of the Legal Metrology Act, 2009, No person shall manufacture, pack, sell, import, distribute, deliver, offer, expose or possess for sale any pre-packaged commodity unless such package is in such standard quantities or number and bears thereon such decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Act and considered tire submissions put forth by the Applicant in their application, submissions made in continuation of the personal hearing and the inputs furnished by the Centre and State Tax jurisdictional Officers. 8.2 The Applicant has submitted that they are engaging in the business of exporting processed shrimps. The applicant sources shrimps locally from farmers, which undergo further processing in the factory such as receiving, washing, de-veining, peeling, de-heading, tail removal, sorting, grading and freezing. Processing steps performed by the applicant is entirely dependent on the customer's requirements / order. Based on the customer requirement, one or more processing steps can be performed independently to produce the desired results. 8.3 The applicant further stated that the processed raw material are thereby packed immediately as per the buyer's instructions. The Applicant uses the following types of packaging, i.e., a) Primary Packaging or inner packing i.e., packaging of inner boxes or pouches, and b) Secondary packaging or outer packing i.e., packaging of master carton. The processed products are weighed and packed into food grade polythene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refund of the same, as the case may be. 8.6 Coming back to the issue involving the taxability of the impugned goods in question, we find that in exercise of the powers conferred by sub-section (1) of Section 5 of the Integrated Goods and Services Tax Act, 2017, the Central Government, on the recommendations of the GST Council notified the rates of Integrated Tax that shall be levied on the Inter-State supplies of Goods vide Notification No.1/2017-Integrated Tax (Rate) dated 28.06.2017, as amended, vide Notification No. 6/2022-Integrated Tax (Rate) dated 13,07.2022, it is seen that the supply of Shrimp (Crustaceans), which falls under HSN 0306, other than fresh or chilled, pre-packaged and labelled is taxable at 5% under IGST, vide entry no 2, Schedule I of the principal Notification No. 1/2017-Integrated Tax (Rate) dated 28.06.2017, the extract of which is as follows S. No. Chapter / Heading / Sub-heading / Tariff item Description of Goods (1) (2) (3) 2 0303, 0304, 0305, 0306, 0307, 0308 All goods [other than fresh or chilled], prepackaged and labelled Explanation . - For the purposes of this Schedule,- (ii) the expression 'pre-packaged and labelled' means a 'pre-packa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced as follows : Currently only branded food items attracted tax and revenue from those items had fallen as compared to the Pre-GST Regime. Owing to the reason that even well established brands file affidavit, giving up the rights on brand name, simply to avail GST Exemption. Therefore, the GoM was of the view that that this could be simplified by replacing the term branded with Pre-packaged and labelled and this would be in accordance with the Legal Metrology Act Rules: that in other cases, no rate change was being suggested and such items sold loose and un-labelled would continue to remain exempt and hence majority of consumers buying loose food grains would remain unaffected Hence, it is seen that the intention of the Government behind this amendment is to curtail the avoidance of tax by the tax payers within the legal frame work, on the premise of giving up their right on the brand name as a formality. It is also observed that no rate change was proposed and such items sold loose and un-labelled would continue to remain exempt. 8.10 Further, on perusal of the detailed process flow chart, and the product literature as furnished by the applicant in their additional submissions d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... belled' shall associate with the following features, viz., a. that which comprises a pre-determined quantity as circumscribed under the meaning of pre-packaged commodity vide Section 2 (1) of the Legal Metrology Act, and b. that which, is required to bear the declarations under the provisions of the Legal Metrology Act, 2009 (1 of 2010) and the rules made thereunder. As far as the first condition is concerned, it is seen from the submissions made by the applicant in the application filed as well as in the additional submissions made by them, that the packages conform to a pre-determined quantity. In so far as the second condition is concerned, the applicant has contended that the Pre-packaged and labelled commodities processed exclusively for export have not been excluded from the Legal Metrology Act, 2009 and rules made thereunder. Further the applicant has cited the clarification released by Ministry of Finance regarding the GST Levy on pre-packaged and labelled goods vide press release dated 18th July 2022, wherein it has been clarified that If specified commodities are supplied in a package that do not require declaration's / Compliances under the legal Metrology Act, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... package may be sold by a manufacturer through distributor. These individual packs of 10 Kg each are meant for eventual sale to retail consumer. However, a package of say rice containing 50 Kg (in one individual package) would not be considered a pre-packaged and labelled commodity for the purposes of GST levy, even if rule 24 of Legal Metrology (Packaged Commodities) Rules, 2011, mandates certain declarations to be made on such wholesale package. 8.15 Likewise, in the case of second query relating to processed frozen shrimps packed in individual plain pouch/box, further packed inside a plain master carton (of up to 25 kgs each), we are of the view that even if the specified commodity of 25 Kgs or less is supplied in a pre-packed manner inside a plain pouch/box/master carton, the same also fall within the ambit of 'pre-packaged and labelled' category which is mandated to bear the declarations under the provisions of the Legal Metrology Act, 2009 (1 of 2010) and the rules made thereunder, and thus become liable to tax under GST as in the case of printed packages. Here again, we find that the above opinion gets validated through the FAQs on GST applicability on 'prepackag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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