The Authority for Advance Ruling (AAR), Chhattisgarh bench has held that Goods and Services Tax (GST) at the rate of 5% is applicable on the export of pre-packaged & labelled rice up to 25 Kilograms.
The applicant, Satyam Balajee Rice Industries Private Limited, is engaged in the manufacture and supply of rice.
The applicant used to supply rice in pre-packaged and labelled packages to various types of customers, including foreign buyers and exporters.
The applicant submitted an application seeking advance ruling on the chargeability of GST on pre-packed and labelled rice up to 25 kg for the purpose of export.
The applicant argued that GST would apply to pre-packaged commodities weighing less than or equal to 25 kg, and that pre-packaged and labelled commodities manufactured exclusively for export are not excluded from the Legal Metrology Act, 2009.
The appellant also mentioned that if their contentions are not accepted, the export of pre-packaged rice up to 25 kg should be exempt from GST, thereby exempting them from certain compliance requirements such as issuance of E-way bill and E-invoice and obtaining Letter of Undertaking/Bond for export.
The authority admitted the application for consideration on merits and stated that the issue raised falls under the applicability of a GST Notification and the determination of liability to pay tax on the supply of goods.
It was also mentioned that exports under GST are considered zero-rated supplies.
The AAR referred to the applicant’s arguments regarding the applicability of GST and the amendments in the relevant Notifications.
The members further clarified that the applicable tax rate depends on the classification of the goods and the rates specified in the Schedules appended to the relevant notification, referring to the GST Notification No. 1/2017-Central Tax (Rate) dated 28 June 2017, as amended.
The authority held that the exporter of the rice to foreign buyers will be subject to a 5% Integrated Goods and Services Tax (IGST), provided they comply with the provisions specified in the Notification No. 01/2017-Integrated tax (Rate) dated 28.6.2017, as amended, effective from 18.7.2022.
The authority comprising Smt. Sonal K. Mishra, Joint Commissioner and Shri Shravan Kumar Bansal, Additional Commissioner clarified that GST shall also be levied on the supply of pre-packaged and labeled rice up to 25 kg to exporters on a “bill to ship to” basis.
The applicable tax rate for such transactions will be 5%, i.e., 2.5% Central Goods and Services Tax (CGST) and 2.5% State Goods and Services Tax (SGST) or 5% Integrated Goods and Services Tax (IGST), depending on the circumstances, the authority held.
Moreover, as per its proceedings under Section 98 of the Chhattisgarh Goods and Services Tax (GST) Act, 2017, the authority also held that GST will be imposed on the supply of pre-packaged and labeled rice weighing up to 25 kg to the factories of exporters at a rate of 5%, which comprises 2.5% CGST and 2.5% SGST or 5% IGST, depending on the situation.
The authority also reminded that exporters are required to comply with the provisions specified in Notification No. 01/2017-CT (Rate)/ Integrated tax (Rate) dated 28.6.2017, as amended, effective from 18.7.2022.
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