Supply Of Prepackaged And Labelled Rice Upto 25 Kgs, To The Factory Of Exporter Attracts 5% GST: Haryana AAR

The Haryana Authority of Advance Ruling (AAR) has held that 5% GST is applicable on supplies of prepackaged and labeled rice up to 25 kg to the factory of the exporter.

The two-member bench of Sunder Lal and Kumud Singh has observed that the legislature's intention is that the supply of rice in packets of up to 25 kg, which are duly pre-packaged and labelled as per the Legal Metrology Act, 2009, and the rules made thereunder, is a taxable event and it’s not an exempted or nil-rated supply.

The applicant is in the business of manufacturing and supplying rice and supplies rice to customers in pre-packaged and labelled packages with a quantity up to 25 kilograms.

The applicant sought an advance ruling on whether GST would be leviable on the export of pre-packaged and labelled rice up to 25 kg to foreign buyers.

Yet another issue raised was whether GST would be applicable on the supply of pre-packaged and labelled rice up to 25 kg to an exporter on a ‘bill to ship to’ basis, i.e., a bill to the exporter and ship to the customs port. The exporter ultimately exports the rice to a foreign buyer.

As per Notification No. 06/2022-Central Tax (Rate) dated July 13, 2022, 5% GST is applicable on the supply of pre-packaged and labelled rice up to 25 kg if two conditions are satisfied. Firstly, it is pre-packaged and labelled. Secondly, it is required to bear the declarations under the provisions of the Legal Metrology Act, 2009.

The AAR held that if supplied goods are prepackaged, labelled, and in packages of less than or equal to 25 kg in quantity, then they are taxable.

Applicant’s Name: D D International Pvt. Ltd.

Date: 09.02.2023

Click Here To Read The Ruling