Pre-packaged rice up to 25kg attracts 5% GST from July 2022, 0.1% IGST for interstate export supplies

AAR Chhattisgarh ruled that export of pre-packaged and labelled rice up to 25 kg attracts GST at 5% (2.5% CGST + 2.5% SGST) or 5% IGST, effective from 18.7.2022, following amendment to entry 51 of Schedule I of Notification No. 1/2017-Central Tax (Rate). The ruling clarifies that rice supplied in pre-packaged form falls under Legal Metrology Act, 2009 definition if packages contain quantity up to 25 kg. For interstate supply to registered recipients/merchant exporters for exports, IGST rate of 0.1% applies per Notification No. 41/2017-Integrated Tax (Rate) dated 23.10.2017, subject to specified conditions.

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Issues Involved:
1. Whether GST is leviable on export of pre-packaged and labelled rice up to 25Kgs to foreign buyers.
2. Whether GST is applicable on supply of pre-packaged and labelled rice up to 25Kgs to exporters on a "bill to ship to" basis.
3. Whether GST is applicable on supply of pre-packaged and labelled rice up to 25Kgs to the factory of the exporter.

Summary:

Issue 1: GST on Export of Pre-packaged and Labelled Rice up to 25Kgs to Foreign Buyers
The applicant, M/s Satyam Balajee Rice Industries Private Limited, sought an advance ruling on the chargeability of GST on pre-packaged and labelled rice up to 25 kg for export. The Authority for Advance Ruling (AAR) clarified that GST is leviable on the export of pre-packaged and labelled rice up to 25Kgs to foreign buyers at the rate of 5% IGST. This ruling is based on the provisions specified in Notification No. 01/2017-Integrated Tax (Rate) dated 28.6.2017, as amended, effective from 18.7.2022.

Issue 2: GST on Supply to Exporters on "Bill to Ship to" Basis
The applicant also sought clarity on whether GST applies to the supply of pre-packaged and labelled rice up to 25Kgs to exporters on a "bill to ship to" basis. The AAR ruled that GST is indeed applicable at the rate of 5% [2.5% CGST + 2.5% SGST] or 5% IGST, depending on the case. The exporter ultimately exports the rice to the foreign buyer, subject to compliance with the provisions specified in Notification No. 01/2017-CT(Rate)/Integrated Tax (Rate) dated 28.6.2017, as amended, effective from 18.7.2022.

Issue 3: GST on Supply to Factory of Exporter
The third issue was whether GST is applicable on the supply of pre-packaged and labelled rice up to 25Kgs to the factory of the exporter. The AAR confirmed that GST is applicable at the rate of 5% [2.5% CGST + 2.5% SGST] or 5% IGST, as the case may be. The exporter ultimately exports the rice, subject to compliance with the provisions specified in Notification No. 01/2017-CT(Rate)/Integrated Tax (Rate) dated 28.6.2017, as amended, effective from 18.7.2022.

Additional Clarifications:
The AAR also highlighted that for interstate or intrastate supply of taxable goods by a registered supplier to a registered recipient/merchant exporter for exports, the IGST rate of 0.1% or CGST-SGST rate of 0.05% each has been stipulated, subject to adherence to the terms and conditions specified in Notification No. 41/2017-Integrated Tax (Rate) dated 23.10.2017 and Notification No. 40/2017-Central Tax (Rate) dated 23.10.2017, respectively.

Order:
The Authority for Advance Ruling concluded that GST is leviable on the export and supply of pre-packaged and labelled rice up to 25Kgs, subject to the compliance of the specified provisions and notifications.

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