Case Law Details
In re Seetharamnjaneya Sortex (GST AAR Andhra Pradesh)
The Andhra Pradesh GST Authority for Advance Ruling (AAR) has received an application seeking clarity on the GST leviability for the export of pre-packaged and labelled rice. The applicant presents different scenarios involving foreign buyers, exporters, and supply to the factory of the exporter. The AAR examines the relevant provisions and issues a ruling based on the interpretation of the law.
The AAR refers to the relevant notifications and legal provisions, including Notification No. 06/2022-Central Tax (Rate) and the legal Metrology Act, 2009. The AAR cites the definition of “pre-packaged and labelled” and clarifications provided by the Ministry of Finance. Based on these provisions, the AAR concludes that GST is applicable to the supply of pre-packaged and labelled rice, irrespective of whether it is for domestic sale or export.
The Andhra Pradesh GST AAR rules that GST is leviable on the export of pre-packaged and labelled rice up to 25 kgs, both to foreign buyers and exporters on a “bill to ship to” basis. Additionally, GST is applicable when supplying pre-packaged and labelled rice to the factory of the exporter, who subsequently exports the rice.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH
1. At the outset we would like to make it clear that the provisions of CGST Act, 2017 and APGST Act, 2017 are in parimateria and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the APGST Act.
2. The present application has been filed u/s 97 of the Central Goods & Services Tax Act, 2017 and AP Goods & Services Tax Act, 2017 (hereinafter referred to CGST Act and APGST Act respectively) by M/s. Sri Seetharamnjaneya Sortex (hereinafter referred to as applicant), registered under the AP Goods & Services Tax Ad, 2017.
3. Brief Pads of the case:
3.1 M/s Sri Seetharamnjaneya Sortex (hereinafter referred to as “applicant”) is engaged in the business of manufacturing and supplying of rice. Applicant is having GST Registration number 37ABDFS4641PIZM.
3.2 The applicant stales that they have 3 types of customers to whom sales are executed as under:
A. Customer located abroad (foreign buyer)
(i) The applicant stales that, foreign buyer provides the specification which has to be printed/labelled on the packages of rice, which arc intended for sale to it. Therefore, the applicant procures empty bags from the supplier of packing material and get them printed/ labelled according to the specifications of the foreign buyer. The rice is packed in empty bags having capacity upto 25kg and export them to foreign buyer.
B. Customers located in India who purchase for the purpose of exports on “bill to ship to” basis (Exporter)
(i) The applicant slates that , rice is packed in empty bags which arc received by the applicant from packing material supplier upon instructions from exporter and the pre-packaged rice is dispatched to customs port (bill to ship to basis) as per the instructions of exporter and the exporter ultimately exports the rice to foreign buyer.
C. Customers located in India who purchase rice from us for the purpose of exports (“Exporter”)
(i) The applicant slates that, the supplier of packing material dispatches the printed/labelled empty bags, having capacity upto 25 kgs, to the premises of the applicant on directions of exporter (i.e., on “bill to ship to” basis, bill to exporter and ship to us).
(ii) The applicant states that, rice is packed in empty bags which arc printed and labelled as per the directions of exporter and the pre packaged rice is sent to exporter. Exporter exports the pre packaged rice to foreign buyer.
4. Questions raised before the authority:
The applicant seeks advance ruling on the following:-
1. Whether GST would be leviable on export of pre-packaged and labelled rice upto 25 Kgs, to foreign buyer?
2. Whether GST would be applicable on 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?
3. Whether GST would be applicable on supply of pre-packaged and labelled rice upto 25 Kgs, to the factory of exporter. Exporter will export the rice ?
On Verification of basic information of the applicant, it is observed that the applicant is under Central jurisdiction i.e, Ramachandrapuram Range, Kakinada Division. Accordingly, the application has been forwarded to the jurisdictional officer and a copy marked to the Central Tax authorities to offer their remarks as per Sec. 98(1) of CGST/APGST Act 2017.
In response, remarks are received from the Central jurisdictional officer concerned staling that no proceedings lying pending with the issue, for which the advance ruling sought by the applicant.
5. Applicant’s Interpretation of Law:
The applicant submits the following legal provisions to advance his arguments
5.1 The applicant states that, in view of amendment in Entry 51 of Schedule I of notification No 1/2017-CcnIrai Tax (Rate) dated 28-6-2017, Central Tax (CGST) @ 2.5% and Slate Tax (SGST) @ 2.5% is applicable on supply of pre-packaged and labelled rice with effect from 18th July 2022. (Refer clause (viii) of sub-Para B of Para 1 of Notification No 06/2022-Central Tax (Rate) dated 13th July, 2022).
The applicant states that, as per explanation (ii) of notification No 1/2017-Central Tax (Rate), The expression ‘pre-packaged and labelled1 means a ‘prepackaged commodity’ as defined in clause (I) of section 2 of the Legal Metrology Act, 2009 (1 of 2010) where, the package in which the commodity is prepacked or a label securely affixed thereto is required to bear the declarations under the provisions of the Legal Metrology Act, 2009 (1 of 2010) and the rules made thereunder.
5.2 The applicant submits the relevant extracts of Notification No 06/2022-Central Tax (Rate) dated 13th July, 2022 has been reproduced below:
In exercise of the powers conferred by sub-section (1) of section 9 and sub-section (5) of section 15 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.1/2017-Central Tax (Rate), dated the 28thJune, 2017, published in the Gazette of India, Extraordinary, Part ll, Section 3, Sub-section (i), vide number G.S.R. 673(E), dated the 28th June, 2017, namely:-
In the said notification,-
A…………………………………
B. in Schedule I – 2.5%,
(i) against S. Nos. 1 and 2, in column (3), for the portion beginning with the words “and put up in” and ending with the words and bracket “as in the ANNEXURE]”, the words “, pre-packaged and labelled” shall be substituted;
(ii) after S. No. 9 and the entries relating thereto, following S. No. and entries shall be inserted, namely: – “9A 0403 Curd, Lassi, Butler milk, pre-packaged and labelled”;
(iii) against S. Nos. 11 and 13, in column (3), for the portion beginning with the words “put up in” and ending with the words and bracket “as in the ANNEXURE]”, the words “, pre-packaged and labelled” shall be substituted;
(iv) against S. No. 16, in column (3), for the portion beginning with the words “and put up in” and ending with the words “as in the ANNEXURE”, the words “, pre-packaged and labelled” shall be substituted;
(v) against S. No. 25, in column (3), for the portion beginning with the words “put up in” and ending with the words and bracket “as in the ANNEXURE]”, the words “, pre-packaged and labelled” shall be substituted;
(vi) against S. No. 26, in column (3), for the portion beginning with the words “put up in” and ending with the words “as in the ANNEXURE”, the words “pre-packaged and labelled” shall be substituted;
(vii) against S. No. 30, in column (3), for the portion beginning with the words “put up in” and ending with the words “as in the ANNEXURE”, the words “, pre-packaged and labelled” shall be substituted;
(viii) against S. Nos. 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 58 and 59, in column (3), for the portion beginning with the words “put up in” and ending with the words and bracket “as in the ANNEXURE]”, the words “, pre-packaged and labelled” shall be substituted;
(ix) after S. No. 91 and the entries relating thereto, following S. No. and entries shall be inserted, namely: –
“91A 1701 or 1702 Jaggery of all types including Cane Jaggery (gur), Palmyra Jaggery, pre-packaged and labelled; Khandsari Sugar, pre-packaged and labelled”;
(x) after S. No. 98 and the entries relating thereto, following S. No. and entries shall be inserted, namely: – “98A. 1904 Puffed rice, commonly known as Muri, flattened or beaten rice, commonly known as Chira, parched rice, commonly known as khoi, parched paddy or rice coated with sugar or gur, commonly known as Murki, pre-packaged and labelled”;
(xi) against S. No. 101A, in column (3), for the portion beginning with the words “other than those put up in” and ending with the words and bracket “as in the ANNEXURE]”, the words “, other than those pre-packaged and labelled” shall be substituted;
………………………………………………………………………………………………………….
G. after the Schedule VII, in the Explanation, for clause (ii) and the entries relating thereto, the following clause shall be substituted, namely:-
‘(ii) The expression ‘pre-packaged and labelled’ means a ‘pre-packaged commodity’ as defined in clause (l) of section 2 of the Legal Metrology Act, 2009 (1 of 2010) where, the package in which the commodity is pre-packed or a label securely affixed thereto is required to bear the declarations under the provisions of the Legal Metrology Act, 2009 (1 of 2010) and the rules made thereunder.’.
5.3 The applicant further submits clarifications given by Ministry of Finance regarding the GST levy on ‘pre-packaged and labelled’ goods vide Press Release dated 18th July 2022.
a) if specified commodities are supplied in a package that do not require declaration (s)/compliance(s) under the legal Metrology Act, 2009 (1 of 2010), and the rules made thereunder, the same would not be treated as pre-packaged and labelled for the purposes of GST levy.
b) 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 Act, 2009, and the rules made thereunder, if such packaged and labelled packages contained a quantity upto 25 kilogram for 25 litre] in terms of rule 3(a) of legal Metrology (packaged commodity) Rules 2011, subject to other exclusions provided in the Act and rules made thereunder.
In view of the above legal provisions, The applicant submits that, GST would apply on specified goods where the pre packaged commodity is supplied in packages containing quantity of less than or equal to 25Kg. pre-packaged and labelled commodities manufactured exclusively for export have not been excluded from the legal Metrology Act, 2009 (1 of 2010), and rules made thereunder. The applicant further submits that, GSTwould be applicable on the supply of pre-packaged and labelled rice upto 25kgs. Irrespective of the fact that it is for domestic sale or for the purpose of exports.
The applicant further submits that , If advance ruling authority does not agree with contentions/interpretations stated supra, then supply of pre packaged rice upto 25 kg for the purpose of export will become exempt from GST. Hence, following compliances under the GST law would not be required on export of exempt goods
a. Issuance of E-way bill
b. Issuance of E-invoice
c. Obtaining Letter of Undertaking/Bond for export.
Finally the applicant is of the view that GST would be applicable on the transactions done by them in view of the above legal provisions.
6. Personal Hearing:
The proceedings of Virtual Hearing were conducted on 29.03.2023, for which the authorized representative, C.S Suman Bansal , Company Secretary attended and reiterated the submissions already made.
7. Discussion and bindings:
We have examined the issues raised in the application in light of the facts and arguments submitted by the applicant. We have considered the submissions made by the applicant in their application for Advance Ruling We have considered the issues involved from which advance ruling is sought by the applicant and the relevant facts along with arguments made by the applicant and also Their submissions made during the time of the personal hearing.
We invite reference to the Notification no 06/2022 (CT Rate),dated 13th July 2022 wherein, GST has been made applicable on supply of ” pre-packaged and labelled” commodities attracting provisions of legal Metrology Act, 2009. The expression “pre packaged and labelled” means a “pre packaged commodity” as defined in clause (1) of Section 2 of the Iegal Metrology Act, 2009 (1 of 2010) where, the package in which the commodity is pre packed or a label securely affixed thereto is required to bear the declarations under the provisions of the Legal Metrology Act 2009 (1 of 2010) and the rules made thereunder
Notification No 06/2022-Central Tax (Rate) dated 13th July, 2022
1. In the said notification,-
A…………………………………
2. in Schedule I – 2.5%,
(viii) against S. Nos. 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 58 and 59, in column (3), for the portion beginning with the words “put up in” and ending with the words and bracket “as in the ANNEXURE]”, the words “, pre-packaged and labelled” shall be substituted;
G. after the Schedule VII, in the Explanation, for clause (ii) and the entries relating thereto, the following clause shall be substituted, namely:-
‘(ii) The expression ‘pre-packaged and labelled’ means a ‘pre-packaged commodity’ as defined in clause (l) of section 2 of the Legal Metrology Act, 2009 (1 of 2010) where, the package in which the commodity is pre-packed or a label securely affixed thereto is required to bear the declarations under the provisions of the Legal Metrology Act, 2009 (1 of 2010) and the rules made thereunder.’.
2. The applicant also made a reference to the clarifications issued by Ministry of Finance which is stated as under:
Ministry of Finance clarification on doubts/queries regarding the GST levy on pre-packaged and labelled goods vide press release dated 18th July, 2022.
a) if specified commodities are supplied in a package that do not require declaration(s)/compliance(s) under the legal Metrology Act, 2009 (1 of 2010), and the rules made thereunder, the same would not be treated as pre-packaged and labelled for the purposes of GST levy.
b) 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 Act, 2009, and the rules made thereunder, if such packaged and labelled packages contained a quantity upto 25 kilogram for 25 litre] in terms of rule 3(a) of legal Metrology (packaged commodity) Rules 2011, subject to other exclusions provided in the Act and rules made thereunder.
The applicant submits that Notification No. 6 of 2022-CTR dated 13.7.2022 enumerates that “GST applicable on ‘pre-packaged and labelled’ commodities as per the provisions of the Iegal Metrology Act w.e.f.18. 07. 2022”
In the instant case, the ultimate buyer is not present and the commodity is being pre-packed for an unknown ultimate buyer. The buyer from the applicant is re-selling the same to another buyer be it export or indigenous. This advance ruling authority agrees with the observation regarding the applicability of GST on pre-packaged and labelled’ irrespective of the fact that whether the it is for domestic sale or exported outside the country.
Hence, we rule as under
RULING
(Under Section 98 of Central Goods and Services Tax Act, 2017 and the Andhra Pradesh Goods and Services Tax Act, 2017)
Question: Whether GST would be leviable on export of pre-packaged and labelled rice upto 25 Kgs, to foreign buyer?
Answer : affirmative
Question: Whether GST would be applicable on 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?
Answer : affirmative
Question: Whether GST would be applicable on supply of pre-packaged and labelled rice upto 25 Kgs, to the factory of exporter. Exporter will export the rice?
Answer : affirmative
