2024 (9) TMI 662 - AAR - GST

Pre-packaged frozen shrimp exports subject to 5% GST under Legal Metrology Act 2009 definition

AAR, Andhra Pradesh ruled that export of pre-packaged and labelled frozen shrimp falls within Legal Metrology Act, 2009 definition of pre-packaged ... Levy of GST - export of Crustaceans (shrimps) which are packed and labelled as per the customer requirements - whether the export of specified pre-packaged and labelled frozen Shrimp meant for export would fall within the meaning of the definition of 'pre-packaged and labelled commodity' under the Legal Metrology Act, 2009, and the rules made there under? - HELD THAT:- As per the provisions of the Legal Metrology Act, 2009 (1 of 2010) and the rules made there under, since the inner packing is printed and is having pre-determined quantity it immediately attains the characteristics of pre-packaged and labelled' category, meant for retail sale, irrespective of the fact whether the outer packaging is printed or not. Under these circumstances, the inner packaging which ranges from 250 grams to 2 kilograms becomes liable to GST, as the same fall within the ambit of 'pre-packaged and labelled' category which is mandated to bear the declarations. In the instant case, the authorities observation after going through the content of the matter is that the supply of shrimps in pouches or boxes of upto 25kg, which duly pre-packaged and labelled as per Legal Metrology Act 2009 and the rule made there under is a taxable event and it is not an exempted / nil rated supply. Besides Ministry of finance Govt of india clarified the applicability of GST on pre packaged and labelled goods through FAQs, which were uploaded online on 18. 07.2022 w.r.t. the notification no 6/2022 (CGST RATE). And also, in this case, the ultimate buyer is not present when commodity is placed in package and the commodity is being pre-packed for an unknown ultimate buyer, who may be indigenous or outside the country. Therefore, where the quantity involved is 25Kgs or less in respect of specified commodities including shrimps (HSN 0306, as per S.No.4 of schedule 1 of notification 01/2017-central tax (rate) dated 28th June 2017) which are pre-packed, they would mandatorily get covered within the ambit of Legal Metrology Act, 2009, and the rules made there under. Accordingly, GST would be applicable on the supply of “pre-packaged and labelled” shrimps, capacity upto 25 kgs, it will be liable for GST @ 5%, irrespective of the fact whether it is for domestic supply or for exported outside the country, as long as they are specified commodities that are pre-packaged. Issues Involved:1. Whether the export of processed frozen shrimps (HSN:0306), packed in individual printed pouch/box, further packed inside a printed master carton (of up to 25 kgs each) containing the design, label, and other particulars provided by the buyer, attracts GST.2. Whether the export of processed frozen shrimps (HSN:0306), packed in individual plain pouch/box, further packed inside a plain master carton (of up to 25 kgs each), attracts GST.Issue-wise Detailed Analysis:1. Export of Processed Frozen Shrimps in Printed Packaging:The applicant, engaged in exporting processed shrimps, sought clarification on whether the export of processed frozen shrimps packed in individual printed pouches/boxes and further packed inside printed master cartons (up to 25 kgs each) attracts GST. The applicant contended that the commodities are classified under sub-heading 0306 and have been discharging tax as per S.No.4 of Schedule 1 of Notification 01/2017-Central Tax (Rate) dated 28th June 2017, up to 12/07/2022. The amendment by Notification No. 06/2022-Central Tax (Rate) dated 13-07-2022 imposed GST at the rate of 5% on 'pre-packaged and labelled' crustaceans.The applicant argued that the Legal Metrology Act, 2009, defines 'pre-packaged commodity' as a commodity pre-packed without the purchaser being present, with a predetermined quantity. They submitted that the Legal Metrology Act applies to commodities packed in India, irrespective of whether they are sold domestically or exported. The applicant referenced clarifications by the Ministry of Finance and previous rulings that GST is applicable on pre-packaged and labelled goods, including exports.The Authority for Advance Ruling (AAR) examined the provisions of the GST Act and the Legal Metrology Act. They noted that the term 'pre-packaged and labelled' means a commodity that requires declarations under the Legal Metrology Act. The AAR concluded that since the inner packaging is printed and has a predetermined quantity, it falls under the 'pre-packaged and labelled' category, making it liable for GST.The AAR referenced FAQs issued by the CBIC, which clarified that GST applies to packages containing multiple retail packages. The AAR affirmed that GST is applicable on the export of processed frozen shrimps packed in individual printed pouches/boxes and further packed inside printed master cartons (up to 25 kgs each).2. Export of Processed Frozen Shrimps in Plain Packaging:The applicant also sought clarification on whether the export of processed frozen shrimps packed in individual plain pouches/boxes and further packed inside plain master cartons (up to 25 kgs each) attracts GST. The AAR noted that the provisions of the Legal Metrology Act apply to commodities with a predetermined quantity, irrespective of whether the outer packaging is printed or plain.The AAR concluded that since the inner packaging has a predetermined quantity, it falls under the 'pre-packaged and labelled' category, making it liable for GST. The AAR affirmed that GST is applicable on the export of processed frozen shrimps packed in individual plain pouches/boxes and further packed inside plain master cartons (up to 25 kgs each).Ruling:1. Whether the export of processed frozen shrimps (HSN:0306), packed in individual printed pouch/box, further packed inside a printed master carton (of up to 25 kgs each) containing the design, label, and other particulars provided by the buyer, attracts GST.- Answer: Affirmative2. Whether the export of processed frozen shrimps (HSN:0306), packed in individual plain pouch/box, further packed inside a plain master carton (of up to 25 kgs each), attracts GST.- Answer: AffirmativeIn conclusion, the AAR ruled that GST is applicable on the export of processed frozen shrimps packed in both printed and plain pouches/boxes, further packed inside master cartons (up to 25 kgs each), as they fall under the 'pre-packaged and labelled' category.