GST on pre-packaged and labelled rice up to 25 kg applies even for export-linked supplies.

GST applies to pre-packaged and labelled rice up to 25 kg where the package or label must bear declarations under Legal Metrology law. Reading the rate notification with Section 2 of the Legal Metrology Act, 2009 and the packaged commodities rules, the AAR treated such rice as falling within the taxable category. The Ministry of Finance clarification supported that interpretation. The fact that the supplies were made for export, including direct supply to a foreign buyer, on a bill-to-ship-to basis, or to an exporter's factory for onward export, did not alter the taxable character of the supply.

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Issues: Whether GST is leviable on supply of pre-packaged and labelled rice up to 25 kg in the course of export, including supplies made directly to a foreign buyer, on a bill to ship to basis, and to an exporter's factory for subsequent export.

Analysis: The applicable rate notification brought pre-packaged and labelled commodities within the GST net where the package or label is required to bear declarations under the Legal Metrology law. The expression was read in light of Section 2 of the Legal Metrology Act, 2009 and the relevant packaged commodities rules, and the clarification issued by the Ministry of Finance was taken as supporting the view that food items such as rice supplied in packages up to 25 kg, when covered by the Legal Metrology requirements, fall within the taxable category. The fact that the goods are ultimately exported did not change the character of the supply as taxable pre-packaged and labelled goods.

Conclusion: GST is leviable on all three categories of supply of pre-packaged and labelled rice up to 25 kg, including export-linked supplies.

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