FAQs on applicability of GST on ‘pre-packaged and labelled’ goods

Sr. No.

Questions and Explanation

1.

What change has been made with respect to packaged and labelled commodity with effect from the 18th July, 2022?

Prior to 18.07.2022

GST levied when the specified foods were

1. put in unit container;
2. relates to a brand name (For which an enforceable right is available).

w.e.f. 18.07.2022

GST levied on supply of “Pre-packaged and labelled” commodities.

2.

What is the scope of ‘Pre-packaged and labelled’ for the purpose of GST levy on food items like pulses, cereals, and flours?

Clarification:

Supply of specified commodities having following shall attract GST:

1. It is pre-packaged; &
2. Is placed in a package (whether sealed or not), having pre-determined quantity.

Commodities supplied other than above, would not be treated as pre-packaged and labelled for GST levy.

In reference to food items (such as pulses, cereals like rice, wheat, flour etc) GST shall be levied as per the aforementioned clarification if such pre-packaged and labelled packages are upto 25kgs (or ltr), subject to other exclusions (if any).

3.

What is the scope of this coverage taking into account various exclusion(s) provided under the Legal Metrology Act and the rules made thereunder?

Clarification:

GST would apply on specified goods where the pre-packaged commodity is supplied in packages containing quantity of less than or equal to 25 kilograms.

Example: Supply of pre-packed atta meant for retail sale of 25 Kg shall be liable to GST. However, supply of 30 Kg pack thereof shall be exempt.

4.

Whether GST would apply to a package that contains multiple retail packages.

Clarification

Yes. Multiple retail packages shall attract GST subject to individual quantity discussed in point 3 above.

For example: package containing 10 retail packs of flour of 10 Kg each, are sold in larger pack shall attract GST.

However, an individual package consisting of >25kg would be exempted.

5.

At what stage would GST apply on such supplies, i.e., whether GST would apply on specified goods sold by manufacturer/producer to wholesale dealer who subsequently sells it to a retailer?

Clarification

GST would apply whenever a supply of such goods is made by any person.

Further such person shall be entitled to ITC.

6.

Whether tax is payable if such goods are purchased in packages of up to 25 kg/25liters by a retailer, but the retailer sells it in loose quantities in his shop for any reason?

Clarification

Such loose quantity supply by retailer is not a supply of packaged commodity for the purpose of GST levy.

7.

Whether tax is payable if such packaged commodities are supplied for consumption by industrial consumers or institutional consumers?

Clarification

Such supplies are excluded from GST

8.

‘X’ is a rice miller who sells packages containing 20 kg rice but not making the required declaration under legal metrology Act and the Rules made thereunder (although the said Act and the rules requires him/her to make a declaration), would it still be considered as pre-packaged and labelled and therefore be liable to GST?

Clarification

Yes. And GST would be applicable on such package(s)

9.

Exemption in respect of certain packages

(a) the net weight or measure of the commodity is ten gram or ten milli litre or less, if sold by weight or measure;

(b) any package containing fast food items packed by restaurant or hotel and the like;

(c) it contains scheduled formulations and non-scheduled formulations covered under the Drugs (Price Control) Order,1995 made under section 3 of the Essential Commodities Act, 1955 (10 of 1955)';

(d) agricultural form produces in packages above 50kgs.