Processed frozen shrimps in printed pouches/cartons deemed pre-packaged and labelled; GST leviable at 5% under Notification No.06/2022

AAR held that processed frozen shrimps (HSN 0306) packed in printed individual pouches or boxes and placed in a printed master carton up to 25 kg qualify as "pre-packaged and labelled" under the Legal Metrology Act, 2009, and therefore attract GST. The Authority found no differentiation for exports in Notification No.6/2022 or the Act, and thus such supplies are taxable, not exempt or nil-rated, applying the Notification No.06/2022 (CT Rate) and Schedule 1 of Notification 01/2017; GST is leviable at 5% even where the goods are exported.

---

---

ISSUES PRESENTED AND CONSIDERED

1. Whether export of processed frozen shrimps (HSN 0306) packed in individually printed pouches/boxes and placed in printed master cartons (maximum 25 kg each) falls within the expression "pre-packaged and labelled" for GST purposes.

2. Whether such export of processed frozen shrimps, when characterised as "pre-packaged and labelled" (and in packages up to 25 kg), is taxable under the GST law and if so, at what rate and subject to what treatment under IGST/zero-rating provisions.

ISSUE-WISE DETAILED ANALYSIS - Issue 1: Characterisation as "pre-packaged and labelled"

Legal framework: The GST notification amendment defines "pre-packaged and labelled" by reference to "pre-packaged commodity" as defined in section 2(1) of the Legal Metrology Act, 2009, coupled with the requirement that the package or its label be required to bear declarations under the Legal Metrology Act and associated rules. The Legal Metrology definition treats a commodity placed in a package in a predetermined quantity, without the purchaser being present, as pre-packaged.

Precedent treatment: Prior advance rulings and clarifications (including central FAQs/press release) interpreting the Notification identify packages intended for retail sale and packages containing individual retail packs as falling within "pre-packaged and labelled" where Legal Metrology declarations are required; persuasive AARs on similar fact patterns have treated rice and other food items within this ambit.

Interpretation and reasoning: The Court examines factual matrix: inner packages range ~250 g-2 kg, sealed, printed with product details and buyer/brand information, and placed in master cartons up to 25 kg. The inner packages therefore have a predetermined quantity and are required to bear Legal Metrology declarations when the Legal Metrology rules apply. The presence of printed inner packages that are suitable for retail sale makes them "pre-packaged and labelled" irrespective of whether the outer carton is printed. CBIC FAQs reinforce that multiple retail packs sold in a larger pack remain pre-packaged for GST purposes when each individual pack is meant for eventual retail sale.

Ratio versus obiter: Ratio - where commodity is placed in inner packages with predetermined quantity and required Legal Metrology declarations, it qualifies as "pre-packaged and labelled" even when exported and even if contained in a larger master carton. Obiter - commentary on policy motives (curbing evasion) is explanatory and not necessary to the holding.

Conclusion: The export consignments described (inner pouches/boxes printed/labelled, predetermined quantities 250 g-2 kg, packed in master cartons up to 25 kg) satisfy the Legal Metrology definition and the explanation in the notification and therefore constitute "pre-packaged and labelled" commodities for GST purposes.

ISSUE-WISE DETAILED ANALYSIS - Issue 2: GST liability on export of such "pre-packaged and labelled" shrimps (= 25 kg)

Legal framework: Exports are treated as inter-state supplies under IGST law and are ordinarily zero-rated; an exporter may export under bond/LUT without tax and claim refund of unutilised input tax credit or pay IGST and claim refund. Notification amendment (Notification No. 06/2022 CT(R) dated 13.07.2022) brings specified "pre-packaged and labelled" commodities within the taxable entries (Schedule) attracting GST at enumerated rates, with explanation tying the phrase to Legal Metrology Act applicability.

Precedent treatment: AAR decisions on analogous facts (exports of pre-packaged food commodities up to 25 kg) have applied the amended notification to hold GST leviable. CBIC press release and FAQs clarified that where Legal Metrology declarations/compliances are required for packages up to 25 kg, the goods fall within the taxable "pre-packaged and labelled" category.

Interpretation and reasoning: The Court reconciles zero-rating under IGST with the rate notifications by noting that the notification specifically makes supply of certain "pre-packaged and labelled" goods taxable at specified rates. The Legal Metrology Act and rules impose no exemption for export; neither the notification nor the Legal Metrology Act differentiates between domestic sale and export for applicability of declarations. Where the inner package is required to carry Legal Metrology declarations and its quantity is within thresholds (up to 25 kg as per the rules/clarifications), the amended schedule captures such supplies and subjects them to GST at the prescribed rate (here 5% as stated for the relevant entry). The Court finds that this statutory and regulatory framework, together with authoritative clarifications, compels treating the described export supplies as taxable supplies under the rate notification notwithstanding export status.

Ratio versus obiter: Ratio - exports of the specified processed frozen shrimps, when supplied in inner pre-packaged and labelled packs up to 25 kg, are taxable under the amended schedule at the prescribed rate; the availability of zero-rating mechanisms (bond/LUT or IGST with refund) does not negate the applicability of the rate entry. Obiter - discussion of policy aims behind the amendment and hypothetical distinctions between wholesale packages is explanatory.

Conclusion: The export of processed frozen shrimps in individually printed/labelled inner packages (predetermined quantities within the Legal Metrology thresholds) placed in master cartons up to 25 kg is taxable as "pre-packaged and labelled" goods under the notification and attracts GST at the specified rate (5%), subject to the usual IGST/export refund mechanisms available to exporters.

INTERRELATION AND CROSS-REFERENCES

1. Issue 1 is determinative of Issue 2: the characterisation under Legal Metrology (Issue 1) is the legal predicate for application of the amended rate notification (Issue 2).

2. CBIC FAQs and press release are treated as persuasive interpretative aids supporting the construction that Legal Metrology obligations, where triggered for inner retail packs up to 25 kg, bring such supplies within the taxable description irrespective of export destination.

FINAL CONCLUSIONS / RULING POINTS

1. The described exported processed frozen shrimps packaged in printed/labelled inner pouches/boxes (predetermined quantities ~250 g-2 kg) and shipped in printed master cartons (= 25 kg) qualify as "pre-packaged and labelled" commodities under the Legal Metrology Act and the notification explanation.

2. Such exports are taxable under the amended GST rate schedule as "pre-packaged and labelled" goods and attract GST at the applicable rate (5% as per the relevant schedule entry), subject to the IGST export mechanism (export under bond/LUT with ITC refund option or payment of IGST and subsequent refund claim).

---