AAR rules GST applicable on pre-packaged rice up to 25kg for export scenarios under Notification 06/2022

The AAR, Andhra Pradesh ruled that GST is applicable on supply of pre-packaged and labelled rice up to 25 Kgs in all three scenarios: direct export to foreign buyer, supply to exporter on bill-to-ship basis, and supply to exporter's factory for subsequent export. The authority relied on Notification 06/2022 making GST applicable on pre-packaged commodities under Legal Metrology Act, 2009. Since the ultimate buyer was unknown and commodities were pre-packed for resale, GST applies regardless of whether goods are for domestic sale or export.

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Issues Involved:
1. Whether GST would be leviable on export of pre-packaged and labelled rice up to 25 Kgs to a foreign buyer.
2. Whether GST would be applicable on supply of pre-packaged and labelled rice up to 25 Kgs to an exporter on a "bill to ship to" basis, where the exporter ultimately exports the rice.
3. Whether GST would be applicable on supply of pre-packaged and labelled rice up to 25 Kgs to the factory of an exporter, where the exporter will export the rice.

Summary:

Issue 1: GST on Export of Pre-Packaged and Labelled Rice to Foreign Buyer

The applicant, engaged in manufacturing and supplying rice, exports pre-packaged and labelled rice in quantities up to 25 Kgs to foreign buyers. The foreign buyer provides specifications for the packaging, and the applicant procures and prints the bags accordingly. The rice is then exported in these pre-packaged bags. The ruling confirmed that GST would be leviable on such exports, as per Notification No 06/2022 (CT Rate), dated 18th July 2022, which mandates GST on "pre-packaged and labelled" commodities under the Legal Metrology Act, 2009.

Issue 2: GST on Supply to Exporter on "Bill to Ship to" Basis

The applicant supplies pre-packaged and labelled rice up to 25 Kgs to exporters on a "bill to ship to" basis, where the rice is dispatched to the customs port as per the exporter's instructions, and the exporter ultimately exports the rice. The ruling affirmed that GST would be applicable on such supplies, adhering to the same legal provisions and clarifications issued by the Ministry of Finance regarding the GST levy on pre-packaged and labelled goods.

Issue 3: GST on Supply to Exporter's Factory

The applicant supplies pre-packaged and labelled rice up to 25 Kgs to the factory of an exporter, who then exports the rice. The printed/labelled empty bags are dispatched to the applicant's premises based on the exporter's directions. The ruling confirmed that GST would be applicable on these supplies as well, following the same legal framework and clarifications as mentioned for the other issues.

Ruling:

For all three issues, the Authority for Advance Ruling, Andhra Pradesh, ruled affirmatively, confirming that GST would be applicable on the export and supply of pre-packaged and labelled rice up to 25 Kgs, irrespective of whether the rice is sold domestically or exported.

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