2023 (1) TMI 1459 - AAR - GST

Commission agents selling jaggery in gunny bags for transport cannot claim 2.5% CGST rate under Notification 6/2022

In Re: M/s. Prakash and Company,

The Karnataka AAR held that jaggery sold by commission agents in gunny bags or plastic covers for transportation purposes does not qualify for the ... Classification of goods - rate of tax - all types of jaggery are covered under the Notification No. 6/2022-Central Tax (Rate) dated 13-07-2022 or not? - HELD THAT:- The Applicant states that they are selling commission agents of Jaggery; that the jaggery is loosely wrapped and stitched in gunny bags or loosely wrapped in plastic covers for easy transport and to avoid unnecessary wastage in transportation, but not pre packed or labeled. The Applicant states that agriculturist manufacture the jaggery mainly with sugar cane juice by mixing necessary chemicals in minor portion; that the boiled sugar cane juice will be put in approximately 5kg, 10kg and 30kg pots and it will be in the form of lump (jaggery). The weight of none of the lumps are similar to each other; that the jaggery will be brought to APMC Yard wherein it will be examined by APMC Authority. In APMC Yard it will be handed over to the godown of selling commission agent and after bidding, the goods will be given to purchaser and there after weighment is made before the purchaser. The entry 91A says Jaggery of all types including Cane Jaggery (gur), Palmyra Jaggery, pre-packaged and labelled; Khandsari Sugar, pre-packaged and labeled is exigible to CGST at 2.5%. which means all types of jaggery which are prepackaged and labeled is exigible to CGST at 2.5%. Issues involved:- Interpretation of Notification No. 6/2022-Central Tax (Rate) dated 13-07-2022 regarding taxability of jaggery.- Applicability of the notification to different types of jaggery.- Determination of the rate of tax on jaggery.- Exemption of specific types of jaggery from tax under the notification.Analysis:The applicant, a selling agent of jaggery, sought an advance ruling on the taxability of jaggery under Notification No. 6/2022-Central Tax (Rate) dated 13-07-2022. The applicant claimed that the jaggery they deal with, wrapped in loose gunny sheets, should be exempt from tax as it is not pre-packaged or labeled. They argued that only branded jaggery should be taxable. The Authority examined the applicant's submissions and the relevant provisions of the CGST Act and KGST Act.The applicant described the process of jaggery manufacturing and sale, highlighting that the jaggery is not uniform in weight and is transported in wrapped loose gunny sheets. They emphasized that the jaggery they deal with is not pre-packaged, labeled, or weighed. During the personal hearing, the applicant reiterated their stance on the taxability of jaggery based on the notification's wording.The Authority reviewed the notification and found that jaggery of all types, including cane jaggery, palmyra jaggery, pre-packaged, and labeled, is subject to GST at 2.5%. The ruling clarified that all types of jaggery, when pre-packaged and labeled, are taxable at 5% (CGST at 2.5% and SGST at 2.5%). The ruling rendered the first question redundant by affirming the taxability of all pre-packaged and labeled jaggery under the notification.In conclusion, the Authority ruled that all types of jaggery, when pre-packaged and labeled, are covered under the notification and subject to GST at 5%. The ruling provided clarity on the tax treatment of jaggery under the specified notification, settling the applicant's queries regarding the taxability and rate of tax on jaggery.