In re Fairmacs Shipstores Private Limited (GST AAR Tamil Nadu)
GST Ruling on Frozen Meat: Implications for Fairmacs Shipstores, Hotels, and Distributors
A recent ruling by the Tamil Nadu Goods and Services Tax (GST) Advance Ruling Authority (AAR) in the case of Fairmacs Shipstores Private Limited has clarified the applicability of GST on the supply of pre-packaged and labelled frozen meat products, particularly concerning sales to hotels and distributors. The decision, which considered the nuanced definitions under the Legal Metrology Act, 2009, and associated rules, has significant implications for businesses dealing in such commodities.
Fairmacs Shipstores Private Limited, a supplier of frozen meat products like fish and chicken to hotels, institutional customers, and ships, sought clarity on the GST implications of their supplies. The core of the matter revolved around the changes introduced on July 18, 2022, which extended GST applicability to “pre-packaged and labelled” commodities falling under the Legal Metrology Act, 2009.
Understanding “Pre-packaged and Labelled”
Prior to July 18, 2022, GST was generally not levied on packaged but unbranded goods, with branded goods attracting GST unless the brand rights were foregone. The amendment, introduced via Notification No. 06/2022-Central Tax (Rate) and Notification No. 07/2022-Central Tax (Rate), fundamentally altered this. The term “pre-packaged and labelled” was defined by referencing Section 2(l) of the Legal Metrology Act, 2009, which defines a “pre-packaged commodity” as one placed in a package, sealed or not, with a pre-determined quantity, without the purchaser being present. A “label” includes any written, marked, stamped, printed, or graphic matter on the package.
A key distinction was drawn between “chilled” and “frozen” products. While chilled products are refrigerated above zero degrees Celsius, frozen products are hardened and maintained at temperatures significantly below zero, typically for extended shelf life. The AAR noted that frozen meat, often supplied in a pre-packaged mode for longer storage or distant deliveries, falls within the scope of these new GST provisions if it is “pre-packaged and labelled.”
GST Rates and Exemptions
According to Notification No. 01/2017-CT (Rate), as amended, frozen meat of chicken (HSN 0207) and fish (HSN 0304) — specifically “other than fresh or chilled” and “pre-packaged and labelled” — are subject to 5% GST (2.5% CGST and 2.5% SGST for intra-state supply, or 5% IGST for inter-state supply).
Conversely, exemption Notification No. 02/2017-CT (Rate) provides for GST exemption on fresh or chilled meat. Crucially, it also exempts frozen products if they are not “pre-packaged and labelled.” This means that for GST to be applicable, the goods must not only be pre-packaged and labelled but also be required to bear declarations under the Legal Metrology Act, 2009, and its rules.
Exemptions Under Legal Metrology Rules
A significant aspect of the ruling hinged on Rule 3 of the Legal Metrology (Packaged Commodities) Rules, 2011, which specifies cases where the provisions applicable to retail sale packages do not apply. These include:
