Institutional consumption governs GST exemption for frozen chicken; distributor routing does not change tax treatment, but non-institutional supplies remain taxable.

Frozen chicken supplied for consumption by a qualifying institutional consumer is treated as outside the "pre-packaged and labelled" category under the Legal Metrology framework, so the GST exemption applies where the statutory declarations and compliance conditions are met. The same exemption also applies when the goods move through a distributor, because the decisive factor is the intended institutional consumption and supporting documentation, not the supply route. Supplies to non-institutional consumers do not fall within that exclusion and remain taxable as pre-packaged and labelled goods at 5% GST.

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Issues: (i) Whether frozen chicken supplied directly to institutional consumers is exempt from GST; (ii) whether the same goods supplied through a distributor for onward supply to institutional consumers are exempt from GST; (iii) whether frozen chicken supplied to non-institutional consumers is taxable at 5% GST.

Issue (i): Whether frozen chicken supplied directly to institutional consumers is exempt from GST.

Analysis: The exemption turns on whether the goods are "pre-packaged and labelled" for the purposes of GST. Goods supplied for consumption by institutional consumers fall outside the label/declaration requirement under Rule 3(c) of the Legal Metrology (Packaged Commodities) Rules, 2011, read with the statutory definitions of institutional consumer and the concept of pre-packaged commodity. Where the supply is intended for consumption by a qualifying institution and the Legal Metrology conditions are complied with, the goods are not treated as pre-packaged and labelled for GST purposes.

Conclusion: Yes. The direct supply to institutional consumers is exempt from GST under the relevant exemption notification, subject to compliance with the Legal Metrology law and the supply being for institutional consumption.

Issue (ii): Whether the same goods supplied through a distributor for onward supply to institutional consumers are exempt from GST.

Analysis: The exemption depends on the nature of the ultimate consumer and the intended use, not merely on the channel through which the goods move. If the goods are supplied in a manner that remains covered by the exclusion for institutional consumption, the route of supply through a distributor does not alter the character of the transaction. The decisive factor is that the goods are meant for consumption by a qualifying institutional consumer and the prescribed declarations and documentary trail are satisfied.

Conclusion: Yes. The supply through a distributor is also exempt, provided the goods are ultimately supplied for institutional consumption and the Legal Metrology requirements are met.

Issue (iii): Whether frozen chicken supplied to non-institutional consumers is taxable at 5% GST.

Analysis: The exemption for institutional consumption does not extend to supplies made to non-institutional or non-industrial consumers. In that situation, the goods retain the character of pre-packaged and labelled frozen poultry meat and fall within the taxable entry attracting 5% GST.

Conclusion: Yes. Supplies to non-institutional consumers are taxable at 5% GST.

Final Conclusion: The ruling grants exemption for supplies made for institutional consumption, whether direct or routed through a distributor, but confirms taxability at 5% for supplies made to non-institutional consumers.

Ratio Decidendi: For GST classification, the decisive test is the intended consumption by a qualifying institutional or industrial consumer under the Legal Metrology framework, and not the mere channel of supply; supplies outside that exclusion remain taxable as pre-packaged and labelled goods.

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