2023 (6) TMI 1183 - AAR - GST

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 ... Levy of GST - export of pre-packaged and labelled rice upto 25 Kgs, to foreign buyer, to exporter on “bill to ship to” basis i.e., bill to exporter and ship to customs port and to the factory of exporter - HELD THAT:- Export of goods in its cognate expression means taking goods out of India to a place outside India. Exports under GST are “zero rated supplies” and in this context, as per section 16 of IGST, Act 2017 export of goods or services or both and supply of goods or services for authorized operations to Special Economic zone developer or Special Economic zone units are zero rated supplies. We further find from the detailed submissions put forth by the applicant, that they are of the firm opinion that in view of amendment in entry no. 51 of Schedule I of Notification No. 1/2017-Central Tax (Rate) dated 28.6.2017, CGST and SGST @2.5% each is appliable with effect from 18.7.2022 on export of pre-packaged and labelled rice up to 25Kgs directly to a foreign buyer / to an Exporter on “bill to ship to” basis/ to the factory of exporter. If specified commodities are supplied in a package that do not require declarations / compliances under the Legal Metrology Act, 2009 ( 1 of 2010), and the rules made thereunder, the same would not be treated as pre-packaged and labelled for the purposes of GST levy and that rice supplied in pre-packaged form would fall in the definition of “pre-packaged commodity” under Legal Metrology Act, 2009 and rules made thereunder, if such prepackaged and labelled packages contains a quantity up to 25 Kgs. GST would be applicable on the supply of prepackaged and labelled rice up to 25 Kgs, for both domestic supplies as also for export clearances. Thus, the applicable rate of GST on the supply of pre-packaged and labelled rice up to 25 Kgs, for both domestic sales as also for export clearances is 5% [2.5% CGST + 2.5% SGST] or (5% IGST) as the case may be, in terms of amended entry no. 51 to Schedule-1 to Notification no. 01/2017-CT(Rate) /Integrated tax [Rate) dated 28.6.2017 as amended, with effect from 18.7.2022 - for inte-rstate supply of taxable goods by a registered supplier to a registered recipient/ merchant exporter, for exports the IGST rate of 0.1 % has been stipulated vide Notification no. 41/2017-lntegrated Tax (Rate) dated 23.10.2017, subject to the adherence of the terms conditions as stipulated therein. 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 BuyersThe 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' BasisThe 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 ExporterThe 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.