2018 (5) TMI 1393 - AAR - GST

GST Tax Rates for Frozen Sheep/Goat Carcasses in Unit Containers Clarified by Authority

The packaging used by the applicant, M/S Ahmednagar District Goat Rearing and Processing Co-op Federation Ltd., qualifies as a 'unit container' under GST ... Unit container - predetermined quantity or number indicated on package - taxability of frozen meat contingent on being put up in unit container - branding requirement for post-14-11-2017 taxabilityUnit container - predetermined quantity or number indicated on package - Whether sheep/goat carcasses packed in LDPE (primary) and HDPE (secondary) bags supplied to the Army qualify as goods put up in a unit container - HELD THAT: - The Advance Ruling Authority applied the definition of 'unit container' in the rate/exemption notifications - a package (including a 'bag') designed to hold a predetermined quantity or number which is indicated on the package. The Authority examined the tender and supporting documents and visual evidence showing that each LDPE bag carries one carcass, HDPE bags typically carry two carcasses, bags are numbered, and the weight (aggregate of carcasses) is marked on the HDPE bag (e.g., '8 + 7.5 = 15.5 kg'). Although the LDPE bags were not sealed, the notification definition does not require sealing. The Authority held that the marking and the practice of one carcass per LDPE bag and two per HDPE bag establish that the bags are designed to hold a predetermined number and that such number is indicated on the package. Reliance placed by the applicant on prior excise decisions was found inapposite on facts and on differences in the earlier definitions (which did not require the predetermined quantity/number to be indicated on the package). On these facts, the packaging used by the applicant satisfies the definition of 'unit container'.The packaging used for supply to the Army qualifies as goods put up in a 'unit container'.Taxability of frozen meat contingent on being put up in unit container - branding requirement for post-14-11-2017 taxability - Whether the impugned goods are taxable under the notifications for the periods 1-7-2017 to 13-11-2017 and from 14-11-2017 onwards or fall under the exemption entries - HELD THAT: - Having held that the supplies are put up in 'unit containers', the Authority applied the relevant notification entries. For the period 1-7-2017 to 13-11-2017, Notification No.1/2017 (Schedule II, entry 4) subjects 'Meat of sheep or goats, frozen and put up in unit containers' to 12% IGST; the exemption entry (Notification No.2/2017, entry 10) covers 'Meat of sheep or goats [other than frozen and put up in unit containers]' and thus does not apply. From 14-11-2017 onwards, the amended notifications impose tax at reduced rate subject to an additional branding condition: Schedule I (Notification No.43/2017, entry 1) taxes 'other than fresh or chilled' goods put up in a unit container and bearing a registered/claimable brand at 5%, while the exemption entry (Notification No.44/2017, entry 9) exempts only those put up in unit containers that bear a registered/claimable brand. The Authority found the impugned supplies fall within the taxable entries applicable to their respective periods (1-7-2017 to 13-11-2017: taxable under entry 4; from 14-11-2017 onwards: taxable under entry 1), subject to the branding condition for the later period.For 1-7-2017 to 13-11-2017 the supplies are covered by Schedule II entry 4 (taxable); from 14-11-2017 onwards they are covered by Schedule I entry 1 (taxable subject to branding condition).Final Conclusion: The Authority ruled that the frozen whole sheep/goat carcasses supplied in LDPE/HDPE bags to the Army qualify as goods put up in a 'unit container'; consequently, such supplies are taxable under the cited IGST rate notifications - under Schedule II entry 4 (1-7-2017 to 13-11-2017) and under Schedule I entry 1 (from 14-11-2017 onwards, subject to the branding condition). Issues Involved:1. Whether the whole (Sheep/Goat) animal carcass in its natural shape in frozen state in different weight and size packed in LDPE bags without mentioning the weight and one or two such LDPE bags further packed in HDPE bags being supplied to Army by the applicant against tender shall qualify as product put up in 'unit container'Rs.2. Whether the products as mentioned in query 1 shall be taxable under GST as per specified entries of the relevant notifications or fall under the exemption listRs.Issue-Wise Detailed Analysis:Issue 1: Qualification as 'Unit Container'Facts and Contentions:- The applicant, M/S Ahmednagar District Goat Rearing and Processing Co-op Federation Ltd., supplies frozen sheep/goat carcasses in LDPE bags, which are not sealed and do not have weight mentioned. These LDPE bags are further packed in HDPE bags with the combined weight marked manually.- The term 'unit container' is defined in the notifications as a package designed to hold a predetermined quantity or number, indicated on the package.Applicant's Argument:- The applicant contends that their packaging does not qualify as a 'unit container' because the LDPE bags are not sealed, and the weight is not predetermined or standardized.Authority's Observations:- The definition of 'unit container' includes any package designed to hold a predetermined quantity or number, which is indicated on the package.- The HDPE bags used by the applicant do indicate the weight of the carcasses, thus meeting the requirement of indicating a predetermined quantity.- The term 'unit container' does not specify that the package must be sealed or that the quantity must be standardized in specific units like 1kg, 100ml, etc.- The bags used by the applicant are designed to hold a predetermined number of carcasses, and the weight is indicated on the package, satisfying the definition of 'unit container.'Conclusion:- The authority concluded that the packaging used by the applicant qualifies as a 'unit container' under the GST law.Issue 2: Taxability under GSTRelevant Notifications:- Notification No. 1/2017-Integrated Tax (Rate) dated 28th June 2017 specifies that frozen meat of sheep or goats put up in unit containers is taxable at 12% till 13th November 2017.- Notification No. 43/2017-Integrated Tax (Rate) dated 14th November 2017 reduces the tax rate to 5% for such products if they are branded.- Notification No. 2/2017-Integrated Tax (Rate) dated 28th June 2017 exempts meat of sheep or goats, other than frozen and put up in unit containers, from GST.- Notification No. 44/2017-Integrated Tax (Rate) dated 14th November 2017 continues the exemption for non-branded products.Applicant's Argument:- The applicant argues that their product should be exempt from GST as it does not qualify as a 'unit container.'Authority's Observations:- The authority examined the relevant notifications and concluded that the product supplied by the applicant qualifies as a 'unit container.'- For the period from 1st July 2017 to 13th November 2017, the product is taxable at 12% as per entry no. 4 of Schedule II of Notification No. 1/2017-Integrated Tax (Rate).- From 14th November 2017 onwards, the product is taxable at 5% as per entry no. 1 of Schedule I of Notification No. 43/2017-Integrated Tax (Rate), provided it is branded.Conclusion:- The impugned product is taxable at 12% from 1st July 2017 to 13th November 2017 and at 5% from 14th November 2017 onwards, as it qualifies as a 'unit container' and is branded.Order:- The questions are answered affirmatively, confirming the taxability of the product as per the specified entries in the relevant notifications.