GST on Rice and other cereals

In the first list of GST rates for goods, there was a small confusion as cereals at SL.No: 10 was taxable at NIL rate, (other than those put up in their containers and bearing a Registered brand name) , but the rate for unit packed branded cereals was not given. But everybody came to a conclusion that packed cereals would be taxed at 5%. On the meeting held on 3^rd June, 2017 the council fixed the rate at 5%. The following cereals fall under Chapter 10:

1001   Wheat and meslin

1002   Rye

1003   Barley

1004   Oats

1005   Maize (Corn)

1006   Rice

1007   Grain sorghum

1008   Bulk wheat, millet and canary seed, other cereals such as Jawar, Bajara, Ragi

Now, tax on Rice has brought a lot of confusion among the millers in various states. Even the CBEC had advertised in various news papers that rice other than packed rice is not taxable. The advertisement may be general in nature.

Now coming to rates notified by the Council on 28.06.2017, we find that

“All goods put up in unit container and bearing a registered brand name, namely

1001 Wheat and meslin

1002 Rye

1003 Barley

1004 Oats

1005 Maize (Corn)

1006 Rice

1007 Grain sorghum

1008 Bulk wheat, millet and canary seed, other cereals such as Jawar, Bajara, Ragi”

are taxable at 5%, if the following  two conditions are satisfied

1. Put up in their container and

2. Bearing a registered brand name

What is unit container?

It was decided in Shalimar Super Foods case that when not uniform quantities were packed in plastic bags, not sealed and not containing preprinted quantities the same cannot be treated as unit container.

Hence when quantity is preprinted, quantities packed are uniform and packing is sealed, GST is payable on rice.

When pizza was packed in cartons and transported for delivery as per order it was held not as unit container.

When pasta was packed in 10Kg packs and two such packs were packed in a large pack, it was held as unit packing.

Also when pickles  sold in sachets, containing predetermined quantity was held as unit packing.

What is registered brand?

As per the CBEC classification Fro.B-4/2/2001-TRU dated 02-03-2001

“Registered Brand name means a brand name registered under the Trade and Merchandise Mark Act 1958” When the brand is not registered under the said act whether the brand is Indian or Foreign brand, it is not a registered brand.

Now under the new law (ii) 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.

Hence, those rice mills using their company names on the packing are not selling branded rice as long as the company name is not registered under the old/new Trade Marks Act.

To summaries, when  there is no registered brand name even unit packing is not liable to GST. Using a name, like “Nandhini Brand” which is unregistered under the Trade Marks Act, is also not liable to GST. Only those who fulfill both the conditions of Registered Brand and Unit Packing are liable to 5% GST.