No GST Exemption for Pre-Packaged Branded Rice and Wheat Flour Over 25 Kg

In re Eastern Zone Industries Pvt. Ltd (GST AAR Odisha)

An Odisha-based company, M/s. Eastern Zone Industries Pvt. Ltd., sought a ruling from the Authority for Advance Ruling (AAR) on the Goods and Services Tax (GST) liability for pre-packaged rice and wheat flour. The core issue was whether GST applies to packs of these commodities weighing more than 25 kg. The company’s current practice involved paying 5% GST on rice in packages up to 25 kg, whether branded or unbranded, but applying a nil rate for unbranded rice in packs above that weight. The applicant specifically requested clarification on whether GST is applicable on pre-packaged and labelled packs over 25 kg that bear a registered brand name.

The AAR’s decision relied on an interpretation of the relevant GST notifications and the Legal Metrology Act, 2009. The authority traced the evolution of the tax law, noting that initially, under Notification No. 1/2017-Central Tax (Rate), GST was levied on goods “put up in a unit container and bearing a registered brand name.” This was later amended by Notification No. 27/2017 to include brand names with an enforceable right. However, a pivotal change occurred with Notification No. 6/2022-Central Tax (Rate), effective from July 18, 2022, which made GST applicable on goods that are “pre-packaged and labelled.” This amendment rendered the concept of a “registered brand name” irrelevant for determining taxability on these specific commodities.

The AAR determined that the taxability hinges on the definition of “pre-packaged and labelled” goods as per the Legal Metrology Act and its rules. A “pre-packaged commodity” is defined as a product placed in a package with a predetermined quantity before the purchaser is present. However, the Legal Metrology (Packaged Commodities) Rules, 2011 provides a critical exclusion. Rule 3 of these rules states that its provisions, including mandatory declarations, do not apply to packages containing more than 25 kg of a commodity (with exceptions for items like cement and fertilizer). Consequently, a pack of rice or wheat flour weighing over 25 kg is not considered a “pre-packaged and labelled” commodity for the purpose of GST.

Based on this analysis, the AAR ruled that GST is not applicable on pre-packaged and labelled rice and wheat flour when the single package contains a quantity of more than 25 kg. This ruling was supported by clarifications from the Ministry of Finance’s Department of Revenue (TRU) through FAQs, which provided a clear illustration: a 25 kg pack of atta is liable for GST, but a 30 kg pack is exempt. The AAR’s order clarified that the key factor is the package size in relation to the Legal Metrology rules, not the presence of a brand name. The ruling specified that the GST rate on these commodities is applicable as per the tax rate notifications as amended, with the exemption for bulk packages of over 25 kg as determined by the Legal Metrology Act.

M/S Eastern Zone Industries Pvt. Ltd. (herein after referred to as the ‘Applicant’) having principal place of business/registered office/ corresponding address at Plot no. 2273/2505, 2nd Floor, New Industrial Estate, Jagatpur, Cuttack, 754021 bearing GSTIN : 21AADCE4077B1Z8 has filed an application for Advance Ruling under Section 97 of CGST Act, 2017 and Section 97 of the OGST Act, 2017 in FORM GST ARA-01 discharging fee of Rs. 5000/- each under the CGST Act and the SGST Act.

FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, ODISHA

1.0 The Applicant has sought ruling in respect of the following question:

“Classification of the transaction carried out and GST liability on all commodities which are “pre-packaged and labeled or not” with “branded or Non-branded” and where the weight is upto 25 kg or less than 25 kg and more than 25 kg.”

1.1 At the outset, we would like to make it clear that the provisions of both the CGST Act and the OGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the OGST Act.

2.0 Submission of the Applicant

2.1 M/s. Eastern Zone Industries Pvt Ltd. [here-in-after referred to as “the Company/ Applicant”] is a private limited Company, having its registered office at Plot no-2273/ 2505(second floor), New Industrial Estate, Jagatpur, Cuttack, Odisha, 754021, is engaged in manufacturing and trading of agricultural products i.e. Rice and proposed to extend its business to include Wheat flour as well.

2.2 Presently, the company is paying GST as per below practice taking into consideration the effect of Notification No 06/2022- CT (R), dated 13.07.2022 (effective from 18.07.2022):

i. Rice with brand/non brand upto 25 kg. on which GST is being paid @ 5%.

ii. Rice with no brand above 25 kg. NIL rate of GST is being paid.

2.3 In view of aforesaid facts, the applicant seeks for an advance ruling Whether GST is applicable on the commodity (Rice, Wheat flour (atta)) “pre-packaged and labelled” more than 25 kg (say 26 kg,30 kg & 50kg pack) bearing a registered Brand Name or GST is exempted on the said goods.

2.4 APPLICANT’S INTERPRETATION

As per the applicant’s understanding, if the supplies of Rice and/or Wheat flour qualify to “Pre-packaged & labeled” then rate of GST would be 5% and if it found to be beyond the scope of “Pre-packaged & labeled”, then supply would be exempted.

2.5 Submission of jurisdictional tax authority on Advance Ruling Application 1. The jurisdictional tax authority (Cuttack-II Circle) in respect of advance ruling application of applicant submitted that the Applicant is registered under the GST Act bearing GSTIN: 21AADCE40/3131Z8 under the jurisdiction of CT & GST Circle, Cuttack II, Cuttack. The question raised in the said Advance proceedings under any of the provisions of the Act in respect of the State Tax authorities. In relation to question sought in advance ruling application, they submitted that that GST is applicable on specified food items when they are “pre-packaged and labelled” as defined in Notification No. 06/2022-Central Tax (Rate). As per the Legal Metrology Act and Legal Metrology (Packaged Commodities) Rules, GST is applicable on pre-packaged commodities which are required to make declarations under Rule 6 and 24 of Legal Metrology (Packaged Commodities) Rules. To summarise, GST is applicable on specified goods:

• GST would apply on such specified goods (other than agricultural farm produce) where the pre-packaged commodity is supplied in packages containing quantity of less than or equal to 25 kilogram. (Declaration u/ r 6 is required)
• GST would apply on agricultural farm produce where the pre­packaged commodity is supplied in packages containing quantity of less than or equal to 50 kilogram. (Declaration u/r 6 is required)
• GST would apply on wholesale packages (even if the weight is more than 25 kg) if it does not bear the declaration required u/r 24 of the Legal Metrology (Packaged Commodities) Rules as it fulfills the conditions in the definition of “pre-packaged and labelled”.
• GST would apply to a package having weight more than 25 kg that contains multiple retail packages. For example, a package containing 10 retail packs of flour of 10 Kg each.

3.0 The personal hearings were fixed on 03.06.2025 under due intimation to the applicant, the jurisdictional officer of State & Central GST (intimated through their respective Commissionerates along with a copy of the application and the written submission of the Applicant). The Applicant, through its representatives CA Bibek Kumar Halwai, appeared for personal hearing on dated 03.06.2024. He re-iterated the submissions already furnished in the application filed for advance ruling and requested to decide the issue accordingly. The representative from Revenue was not present on the date of personal hearing.

Discussion & findings

4.0 We have gone through the advance ruling application, question on which advance ruling has been sought and the Applicant’s interpretation of law and/or facts, as the case may be, in respect of the question asked. We observe that, the issue before us is squarely covered under Section 97(2) of the CGST Act, 2017 and therefore we admit the application for consideration.

4.1 On going through advance ruling application, it is observed that in Annexure A (Question on which advance ruling is required), applicant sought advance ruling on the question of “Classification of the transaction carried out and GST liability on all commodities which are “pre-packaged and labelled or not” with “branded or Non-branded” and where the weight is upto 25 kg or less than 25 kg and more than 25 kg”. The question sought by the applicant appears to be not specific and particular to the business of applicant and in nature of vague and generalize question. However, the applicant, in annexure B (Statement of relevant facts) submitted that the applicant seeks for an advance ruling “Whether GST is applicable on the commodity (Rice, Wheat flour (atta)) “pre-packaged and labelled” more than 25 kg (say 26 kg, 30 kg & 50kg pack) bearing a registered Brand Name or GST is exempted on the said goods”.

Accordingly, we find that the relevant question before us to decide is as under; “Whether GST is applicable on the commodity (Rice, Wheat flour (atta)) “pre­packaged and labelled” more than 25 kg (say 26 kg, 30 kg & 50kg pack) bearing a registered Brand Name? or GST is exempted on the said goods?”

4.2 The issue was examined. The question sought in advance ruling application is “Whether GST is applicable on the commodity (Rice, Wheat flour (atta)) “pre­packaged and labelled” more than 25 kg (say 26 kg, 30 kg & 50kg pack) bearing a registered Brand Name or GST is exempted on the said goods.”

4.2.1 Before pronouncing the ruling on the questions raised in the Application, we would like to put forth the taxability on commodities i.e. Rice, wheat flour etc since the inception of GST.

4.2.2 With the introduction of GST w.e.f 1st July 2017, GST @ 5% was made applicable on rice, wheat or meslin flour, when “put up in a container and bearing a registered brand name” vide Sl.No. 51 & 54 of the notification No.1/2017-Central Tax (Rate), dated the 28th day of June, 2017 respectively. The relevant extract of the Notification is as under:

The terms unit container and register brand name has been defined in the Sl. No. (i) & (ii) of the explanation to the above Notification which is reproduced below:

Explanation. – For the purposes of Hi’ cation,-

The phrase “unit container” means a package, whether large or small (for example, tin, can, box, jar, bottle, bag, or carton, drum, barrel, or canister) designed to hold a predetermined quantity or number, which is indicated on such package.

The phrase “registered brand name” means brand name or trade name, that is to say, a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, or so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication of the identity of that person, and which is registered under the Trade Marks Act, 1999.

4.2.3 Thereafter, vide Notification No.27/2017 – Central Tax (Rate) dated: 22.09.2017while amending the principal notification No.1/2017-Central Tax (Rate), dated the 28th day of June, 2017, in place of words “Put up in unit container and bearing a registered brand name” the following words has been substituted:

” put up in unit container and,-

(a) bearing a registered brand name; or

(b) bearing a brand name on which an actionable claim or enforceable right in a court of law is available (other than those where any actionable claim or any enforceable right in respect of such brand name has been voluntarily foregone, subject to the conditions as in the ANNEXUREJ”;

The extract of the relevant Notification is as under:

[TO BE PUBLISHED IN PART II, SECTION 3, SUB-SECTION (1) OF THE GAZETTE OF INDIA, EXTRAORDINARY)

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(Department of Revenue)
Notification No. 27120 I7-Central ‘lax (Rate)

New Delta the 22 nd September, 2017

G.S.R. (E).- In exercise of the powers conferred by sub-section ( I) of section 9 of the Central Goods and Services Tax Act 2017 (12 of 2017), the Central Government_ on the recommendations of the Coursi, hereby nukes the IbIlowing amendments in the notification of the Government of index in the Maniary of Finance (Department of Revenue), No. I /2017-Central Tax (Rate), dated the 28th June. 2017, published it the Gazette of India. Extraordistary, Part II, Section 3, Sub-section (i), vtde number 673(E). dated the 28th June. 2017,
namely:-

In the said notification,-

(A) an Schedule I-2.5%.-

(i) apiarist serial numbers I I. 13. 25, 45. 46. 47. 48. 49, 50, 51, 52. 53, 54, 55, 56, 58 and 59. in column (3), for the %words “put up in izat container and bearing a registered brand name”, the words, brackets and letters “put up in unit container and.-

(a) bearing a registered brand mane; or

(b) bearing a brand name on 1.vhich an actionable claim or enfinveable rig)* in a court of law is available [other than those where any actionable claim or any enforceable right in respect of such brand name has been voluntarily foregone, subject to the conditions as in the ANNEXURE shall be substituted;

(ii) atter S. No. 29 arid the entries relating thereto. the following serial number and the entries shill be inserted. namely:-

(ii) after S. No. .33 and the entries relating thereto, the following serial number and the cranes shall be inserted. namely:-

The above Notification has also changed the definition of the term Brand Name which reads as :

“(ii) (a) The phrase “brand name” means brand name or trade name, that is to say, a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such goods for the purpose of indicating, or so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication of the identity of that person.

(b) The phrase “registered brand name” means, –

(A) a brand registered as on the 15th May 2017 under the Trade Marks Act, 1999 irrespective of whether or not the brand is subsequently deregistered;

(B) a brand registered as on the 15th May2017 under the Copyright Act, 1957(14 of 1957;

(C) a brand registered as on the 15th May2017 under any law for the time being in force in any other country.”;

4.2.4 Consequently,Notification No. 6/2022-Central Tax (Rate) dated 13th July 2022 was issued wherein GST was made applicable on such commodities when it is “pre-packaged and labelled”. The relevant extract of the said Notification is as under:

(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;

….

The term “pre-packaged and labeled” has also been defined in the said Notification which reads as:

‘(ii) The expression ‘pre-packaged and labelled’ means a ‘pre-packaged commodity’ as defined in clause (1) 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.’.

4.2.5 Post amendment to the Principal Notification 01/2017-Central Tax (Rate) vide Notification No. 6/2022-Central Tax (Rate) dated 13th July 2022with effect from 18.07.2022, GST is applicable on specified food items when they are “pre-packed and labelled”.

The term “pre-packaged commodity” is defined in Legal Metrology Act (LMA) as follows:

“(I) “pre-packaged commodity” means a commodity which without the purchaser being present is placed in a package of whatever nature, whether sealed or not, so that the product contained therein has a pre­determined quantity;”

Thus, a pre-packaged commodity is a commodity which is:

1. Packed without purchaser being present;

2. May or may not be s

3. Product has a pre-determined quantity

From a plain reading of the definition, it can be said that any goods which have been packed prior to identification of purchaser and which has a pre­determined quantity would be considered as “prepackaged” commodity.

Further Declarations required under LMA, we have to refer Section 18 of LMA which provides as under:

“18. Declarations on pre-packaged commodities. —

— (1) 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 declarations and particulars in such manner as may be prescribed.

(2) Any advertisement mentioning the retail sale price of a pre-packaged commodity shall contain a declaration as to the net quantity or number of the commodity contained in the package in such form and manner as may be prescribed.

Thus, in order to manufacture or sell as pre-packaged commodity, declarations as per Rules prescribed is mandatory. For this, reference may be invited to Legal Metrology (Packaged Commodities) Rules, 2011 (hereinafter referred to as PC Rules) and corresponding Rule 3 of the said Rule which read as:

3. Applicability of the Chapter

The provisions of this Chapter shall not apply to,-

(a) packages of commodities containing quantity of more than 25 kg or 25 litre excluding cement and fertilizer sold in bags up to 50 kg and

(I)) packaged commodities meant for industrial consumers or institutional consumers.

Explanation :- For the purpose of this rule,-

“Institutional consumer” means the institutional consumer like transportation, Airways, Railways, Hotels, Hospitals or any other service institutions who buy packaged commodities directly from the manufacturer for use by that institution.

ii) “Industrial Consumer” means the industrial consumer who buys packaged commodities directly from the manufacturer for use by that industry.

From the above statue, it is clear that, Rule 3 of the Packaged Commodities Rule provides the following to which Chapter II shall not apply:

(a) Packages of commodities containing quantity of more than 25 kilogram or 25 liters,

(b) Cement, fertilizer and agricultural farm produce sold in bags above 50 kilograms,

(c) Packaged commodities meant for industrial consumers or institutional consumers.

4.2.6 Thereafter, Ministry of Finance (DOR) vide Notification No. 01/2025-Central Tax (Rate) dated 16.01.2025 the principal notification No.1/2017-Central Tax (Rate), dated the 28th day of June, 2017 wherein exhaustive definition of “pre-packaged and labelled” has been put in place which is mentioned below.

“(ii) The expression ‘pre-packaged and labelled ‘ means all commodities that are intended for retail sale and containing not more than 25 kg or 25 liter, which are ‘pre-packed’ as defined in clause (D of section 2 of the Legal Metrology Act, 2009 (1of 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.”.

4.2.7 Apart from the above position of law and reference made to other Act and Rule, Ministry of Finance, Department of Revenue (TRU) in its FAQ on GST applicability on ‘Pre-packed and labeled’ goods (vide F.No. 190354/172/2022-TRU dated 17.07.2022) while answering the question on What is the scope of ‘prepackaged and labelled’ for the purpose of GST levy on food items like pulses, cereals, and flours? (sl. No. 02 of the above FAQ) has clarified that,

“For the purposes of GST, the expression ‘pre- packaged and labelled’ means a ‘pre­packaged commodity’ as defined in clause (1) of section 2 of the Legal Metrology Act, 2009, 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 and the rules made thereunder.

Clause (1) of section 2 of the Legal Metrology Act reads as below: (1) “pre-packaged commodity” means a commodity which without the purchaser being present is placed in a package of whatever nature, whether sealed or not, so that the product contained therein has a pre- determined quantity.

Thus, supply of such specified commodity having the following two attributes would attract GST:

(i) It is pre-packaged; and

(ii) It is required to bear the declarations under the provisions of the Legal Metrology Act, 2009 (1 of 2010) and the rules made thereunder.

However, if such 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.

In the context of food items (such as pulses, cereals like rice, wheat, flour etc), the supply of specified prepackaged 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 pre-packaged and labelled packages contained a quantity upto 25 kilogram [or 25 liter] in terms of rule 3(a) of Legal Metrology (Packaged Commodities) Rules, 2011, subject to other exclusions provided in the Act and the Rules made thereunder.

Further, in Sl. No. 03 of the above FAQ while answering the question “What is the scope of this coverage taking into account various exclusion(s) provided under the Legal Metrolo Act and the rules made thereunder?” it has been clarified that,

“For such commodities (food items- pulses, cereals, flour, etc.), rule 3 (a) of Chapter-II of Legal Metrology (Packaged Commodities) Rules, 2011, prescribes that package of commodities containing quantity of more than 25 kg or 25 liters do not require a declaration to be made under rule 6 thereof Accordingly, GST would apply on such specified goods where the pre-packaged commodity is supplied in packages containing quantity of less than or equal to 25 kilograms.

Illustration: Supply of pre-packed atta meant for retail sale to ultimate consumer of 25 Kg shall be liable to GST. However, supply of such a 30 Kg pack thereof shall be exempt from levy of GST. Thus, it is clarified that a single package of these items [cereals, pulses, flour etc.] containing a quantity of more than 25 Kg/25 liter would not fall in the category of pre-packaged and labeled commodity for the purposes of GST and would therefore not attract GST.”

4.2.8 In a nutshell, it can be clarified that, with effect from 18th July 2022 (Notification No. 6/2022 -Central Tax (Rate) dated 13.07.2022) the terms Registered Brand Name and Brand Name have been done away with. Hence, the ruling sought by the applicant regarding applicability of GST on commodities [Rice, Wheat Flour (i.e. Atta) “pre-packed and labeled” more than 25KG bearing a registered brand name has no relevance as, the applicability of GST on such commodities [ Rice, Wheat Flour (i.e. Atta) shall be decided by determining whether it is “pre-packed and labeled as per Legal Metrological Act” or not.

4.3 In view of the above, we found that GST rate on the commodity (rice, wheat flour (i.e. atta) is applicable as per tax rate notification 01/2017-CT (Rate) dated 28.06.2017 as amended vide Notification No.27/2017 – Central Tax (Rate) dated: 22.09.2017 Notification No. 06/2022-Central Rate) dated 13.07.2022 and subsequently amended vide Notification No. 01/2025-Central Tax (Rate) dated 16.01.2025. Held accordingly.

5.0 In view of the above, we pass the following order:

RULING

Q.1 Whether GST is applicable on the commodity (Rice, Wheat flour (atta)) “pre­packaged and labelled” more than 25 kg (say 26 kg, 30 kg & 50kg pack) bearing a registered Brand Name or GST is exempted on the said goods?

Ans: GST is applicable on the commodities rice (Ch. Heading 1006) & wheat flour (i.e. atta) (Ch. Heading 1101), as per tax rate notification 01/2017-CT (Rate) dated 28.06.2017 as amended vide Notification No 27/2017-Central Tax (Rate), Notification No. 06/ 2022-Central Tax (Rate) dated 13.07.2022 and subsequently amended vide Notification No. 01/2025-Central Tax (Rate) dated 16.01.2025.

6.0 The Applicant or jurisdictional officer, if aggrieved by the ruling, may appeal to the Odisha State Appellate Authority for advance ruling under Section 100 of the CGST/OGST Act, 2017 within 30 days from the date of receipt of the advance ruling.