The Andhra Pradesh Authority for Advance Ruling ( AAR ) ruled that the export of pre-packaged and labelled frozen shrimp packed in carton boxes of 25 kilograms or less are subject to Goods and Services Tax ( GST ) at 5%.
The instant Application for advance ruling was filed by Asvini Fisheries Private Limited (Asvini), an exporter of processed shrimps conducting business in the industry for close to three decades. Asvini sources local shrimp from farmers that are then put through industrial processes such as receiving, washing, deveining, peeling, de-heading, tail removal, sorting, grading and freezing.
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Following the industrial processes, the shrimp are supplied to customers after packing them as per the requirements of the customer. Once the shrimp are frozen through individual quick freezing or block freezing methods, they are weighed and packed in food-grade polythene pouches or boxes (primary packaging) which are then packed into the master cartons (secondary packaging).
A single completed master carton of shrimp manufactured by the Applicant can weigh upto 25 kilograms.
The questions lying before the AAR was whether the individually printed primary packaging, further loaded into the secondary packaging bearing design, label and other particulars stipulated by the customer attracts GST; alternatively, if neither the primary nor the secondary packaging bear any design element and is made plain instead, would the product still attract GST?
Considering the submissions made by the Applicant, the AAR observed that the shrimp packages supplied by the Applicant qualify as a ‘pre-packaged and labelled commodity’ according to Section 2(1)(l) of the Legal Metrology Act, 2009 as there is a ‘predetermined quantity’ of shrimp in each primary package. Multiple numbers of such retail labelled primary packages are further packed into the wholesale secondary package.
The primary packaging bears printed details of the weight of the packed shrimp among other particulars, which immediately qualifies it for retail sale as per the provisions of Section 2(1) of the Legal Metrology Act, 2009.
In addition, the Andhra Pradesh Authority for Advance Ruling (AAR) comprising members K.Ravi Sankar, Commissioner of State Tax and B. Lakshmi Narayana, IRS, Joint Commissioner of Central Tax ruled that the “the ultimate buyer is not present when commodity is placed in package and the commodity is being pre-packed for an unknown ultimate buyer, who may be indigenous or outside the country”.
In light of the observations, the AAR ruled that the pre-packaged shrimps classified under HSN 0306 as per S.No.4 of Schedule 1 of Notification 01/2017-Central Tax (Rate) dated 28th June 2017 would mandatorily get covered within the ambit of the Legal Metrology Act, 2009 and the The Legal Metrology (Packaged Commodities) Rules, 2011.
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Rule 24 of the The Legal Metrology (Packaged Commodities) Rules, 2011 mandate that every wholesale package shall bear a declaration specifying the manufacturer/importer, details including quantity of goods and the total number of retail packages contained within the wholesale package.
Concludingly, the AAR ruled that GST at 5% would be applicable on the export of “pre-packaged and labelled” shrimps upto 25 kilograms whether for domestic or international supply.
Furthermore, the AAR ruled that even if the shrimps were packed in plain, unlabelled primary and secondary packaging it would still attract GST at 5% taking into account the mandates of Rule 24 of the The Legal Metrology (Packaged Commodities) Rules, 2011
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