Applicability of GST on pre-packaged and labeled items

 

Notification No. 6/2022 and 7/2022 have now w.e.f.18-07-2022  made edible items taxable @ 5% or 12% if these items are pre packaged and labeled i.e., items are placed in package, whether sealed or not, carrying  pre determined quantity.

 

 

Edible Items not put up in unit container packages designed to hold pre-determined quantity or bearing  NIL or unregistered brand name against which actionable claim has been foregone by filing an affidavit with Jurisdictional Commissioner and printing of declaration of foregoing actionable claim are exempt.  As a result of this, Rice, Flour, Chenna, Paneer, Curd,  lassi, butter milk natural honey, jaggery, khansari sugar, Rye, Maize, Meat, Fish, Animal Products  etc shall be affected by these changes

 

Now, edible items put up in units container and bearing registered brand name or unregistered brand name on which actionable claim is enforceable were only taxable @ 5%, except tender coconut and namkeen bhujia, mixture chabena taxable @ 12%

 

 

The items must be placed in a package without the purchaser being present to be called pre packaged.

 

Further package or its label must be required to bear declarations under Legal Metrology Act to bring it under taxation net. In other words, if the package is not intended to carry a pre- determined quantity or is not required to bear statutory declarations, then GST shall not be attracted.

 

Now, S.18 of Legal metrology Act-2009 mandates bearing of declaration as per Rules. Rule 6 Read with Rule 3 of Legal Metrology Packaged Commodity Rules 2011 mandates declaration for packages intended for retail sale i.e., sale, distribution or delivery of commodity through retails shops for consumption by an individual or group of individuals barring two exceptions:

 

1. Packages of commodities containing quantities of more than 25 kgs.
2. Packages meant for industrial consumers or institutional consumers like transportation, airways, railways, Hotels, Hospitals or any other service institution who buy packaged commodities directly from the manufacturer for use.

 

Further as per Rule 24 of Legal Metrology Rule 2011 every wholesale package shall bear declarations under Legal Metrology Act and hence GST shall be charged.

Wholesale Packages are packages intended for sale, distribution or delivery to intermediary and is

1. i)Either comprised of number of retail packages and is not intended for sale direct to single consumer or
2. ii)Contain commodities in bulk to enable sale to consumers in smaller quantities.Packages containing ten or more retail packages, duly labeled are also wholesale packages.

 

 

Exclusion:

There is specific exemption from declarations on package or labels affixed thereto under Rule 26 of Metrology Rules for packages containing commodities weighing/ measuring 10 gms/ 10 Mls or less from bearing of declaration.

 

Further, Fast Food Items packed by restaurants, hotels and like are also exempted from declaration. Specified Drug Formulations are also outside purview of declaration requirements. Further agriculture form produced in packages above 50 Kgs also does not warrant declarations.

 

One may note that fast food items and drug formulations though requiring declaration under Legal Metrology are separately taxable. Agricultural Form produced in packages above 50 kgs is separately exempted from GST.

 

Hence, edible items of 10 gms/10 mls or less and more than 25Kgs/25 Litres do not require declaration under Legal Metrology Act and hence it would be outside the definition of pre packed and labeled commodity and hence shall not attract GST.