GST Exemption On Unbranded Broken Rice, 5% GST On Pre-Packaged And Labelled Ones: AAR

The West Bengal Authority of Advance Ruling (AAR) has ruled that 5% GST is applicable on the supply of broken rice if supplied as “pre-packaged and labelled,", whereas no GST shall be payable on unbranded supply.

The bench of Tanisha Dutta and Joyjit Banik has observed that “broken rice” is classifiable under Chapter Heading 1006. Therefore, the rate of tax on the supply of “broken rice” would be the same as in the case of the supply of rice. In terms of Notification No. 06/2022, Central Tax (Rate), dated July 13, 2022, “Rice, pre-packaged, and labelled products attract 5% tax with effect from July 18, 2022."On the other hand, Notification No. 07/2022-Central Tax (Rate) dated July 13, 2022, exempts the supply of “Rice, other than pre-packaged and labelled, with effect from July 18, 2022.

Heading 1006 of the Customs Tariff covers "RICE. Further, note 1(b) of Chapter 10 states that this chapter does not cover grains that have been hulled or otherwise worked. However, rice, husked, milled, polished, glazed, parboiled, or broken remains classified in heading 1006.

The applicant is stated to be engaged in the manufacture of rice. It is submitted by the applicant that fragments of the whole round rice grain are generated in the rice milling process, which is commonly known as broken rice.

The applicant sought an advance ruling on the issue of whether the sale of unbranded or non-packaged broken rice generated from the manufacturing process will be charged a 5% tax.

The AAR held that tax is not payable by the applicant on the supply of “broken rice” if it is supplied “other than pre-packaged and labelled” as specified in Notification No. 07/2022-Central Tax (Rate) dated July 13, 2022.

Applicant’s Name: Tamal Kundu

Date: 13/09/2023

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