GST Leviable On Export Of Pre-Packaged And Labelled Rice Upto 25 Kgs. To Foreign Buyer: AAR

The Andhra Pradesh Authority of Advance Ruling (AAR) has ruled that GST would be levied on the export of pre-packaged and labelled rice up to 25 kg to foreign buyers.

The bench of K. Ravi Sankar and B. Lakshmi Narayana has observed that the ultimate buyer is not present and the commodity is being pre-packed for an unknown ultimate buyer. The buyer from the applicant is reselling the same to another buyer, be it export or indigenous. The bench agreed with the observation regarding the applicability of GST on “prepackaged and labelled,” irrespective of whether it is for domestic sale or exported outside the country.

The applicant, M/s. Sarala Foods Private Limited, is in the business of manufacturing and supplying rice. The applicant supplied rice to customers in pre-packaged and labelled packages, with a quantity of up to 25 kg.

The applicant stated that the foreign buyer provides the specification, which has to be printed or labelled on the packages of rice that are intended for sale. Therefore, the applicant procures empty bags from the supplier of packing material and gets them printed or labelled according to the specifications of the foreign buyer. The rice is packed in empty bags with a capacity of up to 25kg and exported to foreign buyers.

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

The applicant stated that, in view of the amendment in Entry 51 of Schedule I of notification No. 1/2017-Central Tax (Rate) dated June 28, 2017, 5% GST is applicable to the supply of pre-packaged and labelled rice with effect from July 18, 2022.

The applicant stated that, as per explanation (ii) of notification No. 1/2017-Central Tax (Rate), the expression 'pre-packaged and labelled' means a 'pre-packaged commodity' as defined in clause (I) of Section 2 of the Legal Metrology Act, 2009, where the package in which the commodity is pre-packed or a label securely affixed thereto is required to bear the declarations under the provisions of the Legal Metrology Act, 2009.

The AAR agreed with the observation regarding the applicability of GST on “prepackaged and labelled,” irrespective of whether it is for domestic sale or exported outside the country.

The AAR ruled that GST would be applicable on the supply of pre-packaged and labelled rice up to 25 kg to the exporter on a “bill to ship to” basis, i.e., bill to the exporter and ship to the customs port. The exporter ultimately exports the rice to a foreign buyer.

Case No.: AAR No.03/AP/GST/2024

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