In re Tamal Kundu (GST AAR West Bengal)
Introduction: A recent case brought before the Authority for Advance Ruling (AAR) in West Bengal involves the taxation of unbranded and non-packaged broken rice generated during the rice manufacturing process. The question at hand is whether this type of rice should be taxed at a 5% GST rate.
Background of the Case: The applicant, Tamal Kundu, is engaged in rice manufacturing. During the rice milling process, fragments of the whole round rice grains are generated, which are commonly known as “broken rice.” The applicant sought clarification regarding the GST rate applicable to the sale of unbranded and non-packaged broken rice, which is primarily used for animal feeding.
Understanding the GST Rate for Broken Rice: To determine the GST rate for broken rice, it’s important to consider the classification of this product. According to the Customs Tariff, broken rice falls under Heading 1006. This category includes various types of rice, including rice in the husk, husked (brown) rice, semi-milled or wholly-milled rice (whether polished or glazed), parboiled rice, and broken rice.
GST Rate and Changes: As of July 18, 2022, the GST rate underwent changes. Prior to this date, GST was applicable to specified goods when they were pre-packaged, labelled, and had a registered brand name. The applicable rate was 5%. However, after July 18, 2022, this provision changed, and GST became applicable to pre-packaged and labelled commodities. In the context of food items like rice, if they are pre-packaged and labelled, they attract a 5% GST rate.
GST Exemption for Non-Pre-Packaged Rice: Notification No. 07/2022-Central Tax (Rate) dated July 13, 2022, introduced an exemption. As of July 18, 2022, the supply of rice, other than pre-packaged and labelled, is exempt from the payment of GST.
Clarification on Pre-Packaged and Labelled Goods: In a press release posted on July 18, 2022, regarding GST applicability on pre-packaged and labelled goods, the following points were clarified:
