Exporting Packaged Goods? AAR's Shrimp Ruling Confirms GST applies, Even for Foreign Buyers [Read Order]
The applicant sought a ruling to determine whether these exports were liable for GST following a 2022 notification that changed the tax treatment of pre-packaged goods.
AAR - GST - Taxscan
AAR - GST - Taxscan
The Authority for Advance Ruling (AAR), Andhra Pradesh Bench ruled that the export of pre-packaged and labelled commodities, even to foreign buyers, is subject to the levy of Goods and Services Tax (GST). The ruling confirms that the taxability of such goods is determined by the nature of the packaging and not by their final destination.
The application was filed by Sprint Exports Pvt Ltd, a Visakhapatnam-based company engaged in processing and exporting frozen shrimp. The company procures raw shrimp, processes it, and packages the final product for export. Their packaging involves placing the shrimp in individual printed pouches or boxes, which are then packed into larger printed master cartons, each with a maximum weight of 25 kilograms. The applicant sought a ruling to determine whether these exports were liable for GST following a 2022 notification that changed the tax treatment of pre-packaged goods.
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The company argued that its exports should not attract GST, contending that the Legal Metrology Act, 2009 which defines ‘pre-packaged commodity’ as primarily intended for retail sales within India. They suggested that goods processed and packaged exclusively for export should be excluded from this definition and, consequently, from the GST net introduced by the 2022 notification.
However, the AAR bench meticulously examined the provisions of the GST law and the Legal Metrology Act. It highlighted that the law makes no distinction between goods packaged for domestic sale and those for export. The key factor is whether the commodity is placed in a package of a predetermined quantity without the purchaser being present and requires mandatory declarations under the Legal Metrology rules.
The authority pointed to clarifications issued by the Ministry of Finance and the CBIC in 2022, which stated that if a package requires declarations under the Metrology law, it is considered ‘pre-packaged and labelled’ for GST purposes.
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Significantly, the AAR noted that even the inner pouches, weighing between 250 grams to 2 kilograms, are individually printed and have a predetermined quantity. This, according to the ruling, immediately classifies them as retail packages meant for the ultimate consumer, irrespective of being inside a larger master carton.
therefore, the supply of such packaged shrimp, whether destined for the domestic market or exported, constitutes a taxable event. The ruling affirmed that such exports are subject to a 5% GST rate. In its decision, the AAR concurred with the rationale established in a previous ruling involving Sri Seetharamanjaneya Sortex (2023), which applied the same principle to the export of packaged rice.
The bench, comprising K. Ravi Sankar, Commissioner of State Tax, and B. Lakshmi Narayana, Joint Commissioner of Central Tax, delivered a unanimous ruling. They answered both questions posed by the applicant in the affirmative, confirming that the export of processed frozen shrimp in printed inner packages within printed master cartons of up to 25 kg is indeed subject to GST.
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