GST on Pre-Packaged Commodities Over 25kg Now Based on Legal Metrology Act, Not Branding

The AAR, Odisha held that from 18 July 2022, the distinction between Registered Brand Name and Brand Name was removed for GST purposes. Consequently, GST applicability on pre-packaged and labeled commodities like rice and wheat flour exceeding 25 kg is determined solely by compliance with the Legal Metrological Act, not branding. The GST rates applicable to these commodities follow the notifications issued under the Central Tax (Rate) from 2017 to 2025. The applicant's query regarding GST exemption based on branding was declared irrelevant.

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ISSUES:

Whether GST is applicable on commodities (Rice, Wheat flour (atta)) that are "pre-packaged and labelled" and weigh more than 25 kg (e.g., 26 kg, 30 kg, 50 kg packs) bearing a registered brand name.Interpretation and applicability of the terms "pre-packaged and labelled" under GST law and the Legal Metrology Act, 2009, including the impact of package weight on GST liability.Whether the presence of a registered brand name affects GST applicability on such commodities.

RULINGS / HOLDINGS:

GST is applicable on rice (Chapter Heading 1006) and wheat flour (Chapter Heading 1101) as per the tax rate notifications 01/2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 27/2017, Notification No. 06/2022 dated 13.07.2022, and Notification No. 01/2025 dated 16.01.2025.The applicability of GST on these commodities is determined by whether they are "pre-packaged and labelled" as defined under the Legal Metrology Act, 2009, and not solely by the presence of a registered brand name.Packages containing more than 25 kg of such commodities do not qualify as "pre-packaged and labelled" for GST purposes if they do not require declarations under the Legal Metrology (Packaged Commodities) Rules, 2011, and hence are exempt from GST.

RATIONALE:

The legal framework comprises the CGST Act, 2017, OGST Act, 2017, and the Legal Metrology Act, 2009, along with the Legal Metrology (Packaged Commodities) Rules, 2011.Initially, GST @ 5% was levied on rice and wheat flour "put up in unit container and bearing a registered brand name" under Notification No. 1/2017-Central Tax (Rate), later amended to include packages "bearing a brand name on which an actionable claim or enforceable right in a court of law is available."Notification No. 06/2022-Central Tax (Rate) replaced the phrase with "pre-packaged and labelled," defining it as a "pre-packaged commodity" under the Legal Metrology Act where the package or label must bear mandatory declarations.Section 18 of the Legal Metrology Act mandates declarations on pre-packaged commodities, and Rule 3 of the Legal Metrology (Packaged Commodities) Rules excludes packages exceeding 25 kg (or 50 kg for certain agricultural products) from these declaration requirements.Notification No. 01/2025-Central Tax (Rate) clarified that "pre-packaged and labelled" commodities intended for retail sale must not exceed 25 kg or 25 liters to attract GST.Department of Revenue's FAQ (F.No. 190354/172/2022-TRU dated 17.07.2022) confirms that GST applies only where the commodity is pre-packaged and labelled as per Legal Metrology requirements, and packages exceeding 25 kg do not fall within this scope.The term "registered brand name" has been superseded by the broader "pre-packaged and labelled" definition, rendering the brand name criterion irrelevant for GST applicability post 18.07.2022.

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