Important letter sent to Finance Minister, Smt. Nirmala Sitharaman requesting clarification on GST on prepackaged and labelled goods and also to defer the implementation of clauses in Notification No. 6/2022 and 07/2022-CGST (R) dated 13.07.2022 pertaining to prepackaged and labelled goods.
Confederation of All India Traders
“Vyapar Bhawan
925/1, Naiwala, Karol Bagh, New Delhi- 110005.
phone: +91-11-45032664, Telefax: +91-11-45032664′
Email: [email protected] Website: www.cait.in
Ref. No.: 3452/1/50
16th July, 2022
Smt. Nirmala Sitharaman
Hon’ble Minister for Finance
Government of India
New Delhi
Dear Smt. Nirmala Sitharaman Ji,
Subject: Request to issue clarification on GST on prepackaged and labelled goods and also to defer the implementation of clauses in Notification No. 6/2022 and 07/2022-CGST (R) dated 13.07.2022 pertaining to prepackaged and labelled goods to a later date.
Vide Notification No. 6/2022 and 07/2022-CGST (R) dated 13.07.2022 w.e.f. 18.07.2022 many entries in the Exempted list of goods under Notification No.2/2017 and under Schedule I and Schedule II of Notification 11/2017 has brought change in the conditions of exemption i.e. from the concept of unit container and brand name to the concept of pre packaged and labelled commodities as per the Legal Metrology Act, 2009 provisions and where the package is required to bear the declaration under the provisions of the above act.
As per clause (ii) in the Explanation after the Schedule VII 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.’
The declarations under the provisions of the Legal Metrology Act, 2009 (1 of 2010) is covered under section 18.
As per Section 18 of the Legal Metrology Act, 2009 Declarations on pre-packaged commodities.— 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, one needs to now see to the various rules and regulations governing the pre packaged and labelled goods under the Legal Metrology Act, 2009 and Rules therein. The following definitions need to be taken into consideration for arriving at the tax liability:
As per Section 2(1) of the Legal Metrology Act, 2009, “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”.
As per Section 2(f) of the Legal Metrology Act, 2009 “label” means any written, marked, stamped, printed or graphic matter affixed to, or appearing upon any pre-packaged commodity;
Relevant provisions of Legal Metrology (Packaged Commodities) Amendment Rules, 2017:
Rule 3. Application of Chapter.—The provisions of this chapter shall not apply to—
(a) packages of commodities containing quantity of more than 25 kilogram or 25 litre;
(b) cement, fertiliser and agricultural farm produce sold in bags above 50 kilogram; and
(c) packaged commodities meant for industrial consumers or institutional consumers.]
Here as per Rule 2(bb) “industrial consumer” means the consumer who buys packaged commodities directly from the manufacturer or from an importer or from wholesale dealer for use by that industry and the package shall have declaration ‘not for retail sale’;
As per Rule (bc) “institutional consumer” means the institution which buys packaged commodities bearing a declaration ‘not for retail sale’, directly from the manufacturer or from an importer or from wholesale dealer for use by that institution and not for commercial or trade purposes;
As per Rule 6. Declarations to be made on every package.—
(1) Every package shall bear thereon or on label securely affixed thereto, a definite, plain and conspicuous declaration made in accordance with the provisions of chapter as. to the name and address of the manufacturer, or where the manufacturer is not the packer, the name and address of the manufacturer and packer and for any imported package the name and address of the importer shall be mentioned.
Explanation I.—If any name and address of a company is mentioned on the label without any qualifying words ‘manufactured by’ or ‘packed by’, it shall be presumed that such name and address shall be that of the manufacturer and the liability shall be determined accordingly;
Explanation II.—If the brand name and address of the brand owner appear on the label as a marketer, then the brand owner shall be held responsible for any violation of these rules and action as may be required shall be initiated against the deemed manufacturer and in the event of more than one name and address appearing in the label, prosecution shall be launched against the manufacturer indicated on the label, in the first place and not against all of them.
[Explanation III.—In respect of packages containing food articles, the provisions of this clause shall not apply, but the provisions of, and the requirements specified in the Food Safety and Standards Act, 2006 (34 of 2006) and the rules made thereunder shall apply;]
[(aa) The name of the country of origin or manufacture or assembly in case of imported products shall be mentioned on the package;]
The common or generic names of the commodity contained in the package and in case of packages with more than one product, the name and number or quantity of each product shall be mentioned on the package.
The net quantity, in terms of the standard unit of weight or measure, of the commodity contained in the package or where the commodity is packed or sold by number, the number of the commodity contained in the package shall be mentioned.
The month and year in which the commodity is manufactured [* * *] shall be mentioned in the package:
Provided further that nothing in this sub-clause shall apply in case of packages containing seeds which are labelled and certified under the provisions of the Seeds Act, 1966 (54 of 1966) and the rules made thereunder:
Provided also that for packages containing cosmetics products, the provisions of the Drugs and Cosmetics Rules, 1945 shall apply.
[(da) If a package contains a commodity which may become unfit for human consumption after a period of time, the ‘best before or use by the date, month and year’ shall also be mentioned on the label:
Provided that nothing in this clause shall apply if a provision in this regard is made in any other law.
26. Exemption in respect of certain packages.—
Nothing contained in these rules shall apply to any package containing a commodity if-
(a)the net weight or measure of the commodity is ten gram or ten milillitre or less, if sold by weight or measure:
[* * *]
[Provided that the provisions of this clause shall not be applicable for tobacco and tobacco products.]
any package containing fast food items packed by restaurant or hotel and the like;
[(c) it contains scheduled formulations and non-scheduled formulations covered under the Drugs (Price Control) Order, 2013, made under Section 3 of the Essential Commodities Act, 1955 (10 of 1955):
Provided that no exemption shall be applicable to medical devices declared as drugs.]
(d) [* * *]
[(e) any thread which is sold in coil to handloom weavers.]
In our opinion taking into consideration and reading all the legal provisions as stated above together, then the goods if sold in pre-packaged and labelled form then GST @ 5 and 12% as per HSN will be applicable on the same if the provisions of the legal metrology act applies to them. The provision of the Legal Metrology Act 2009 does not apply in cases of
(a) packages of commodities containing quantity of more than 25 kilogram or 25 litre;
(b) cement, fertiliser and agricultural farm produce sold in bags above 50 kilogram; and
