The Kerala Authority for Advance Ruling in an application filed by M/s Abad Fisheries Pvt Ltd held that supply of frozen seafood in packages without a brand name to institutional customers who enter into an agreement with the supplier considering the quality offered by the brand, shall not be covered under the exemption notification.
The applicant is engaged in the processing and sale of frozen seafood in India as well as export out of India. The company sells its products through retail outlets and institutional customers. The company is a registered brand name holder and sells frozen seafood in packed unit containers under the brand name of “Seasparkle/ Brillar/ Wildfish/ ABAD” to retail customers. In addition to this, they sell the seafood in packages/ unit containers in frozen form without a brand name to institutional customers.
An advance ruling is sought on the issue that whether the frozen seafood sold in packages to institutional customers, without bearing the brand name, is eligible for exemption under Notification No. 2/2017.
The Applicant submits that the sale of frozen seafood in unit containers to institutional customers are covered by the notification exempting supply of fresh or chilled fish and are not concerned with the branding of the product, has no relevance, since the ultimate consumers are hotels, restaurants and catering houses.
The Bench constituting of Shri S. Anil Kumar and Shri. B.S. Thyagarajababu held that supply of frozen seafood in packages without a brand name to institutional customers who enter into an agreement with the supplier considering the quality offered by the brand, shall not be covered under the exemption notification. In a sale by the applicant to institutional customers were discussed to be under a different setting wherein, institutional customers enter into an agreement with the supplier for the supply of frozen seafood solely for the reason that such company brand acquires distinctiveness and can supply quality products. In such a situation, the argument of the applicant of the absence of inscription of the brand on the packet fails.
Further, it has been held that the exemption under the relevant notification is only available for supply of fresh or chilled fish and not frozen fish. Frozen fish sold in the unit container under the brand name is taxable. The Authority pointed out to the difference between chilling and freezing to be that of temperature. The Hon’ble Authority explained that ice crystals are formed while freezing and it is not so in the case of chilling. While freezing constitutes long term preservation of food products, chilling is just for short term preservation and others.
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