The Tamil Nadu Authority of Advance Ruling (AAR) has held that the goods and service tax (GST) exemption is not available on frozen meat products packs sold to distributors without mentioning ‘not for retail sale’.

The bench of B.Suseel Kumar and Balakrishna S. has observed that Hotels qualify as an ‘industrial consumer’ as per Rule 2(bb) of the Legal Metrology (Packaged Commodities) Rules, 2011. The declaration ‘Not for Retail Sale’ is reportedly not affixed/printed in the packages, and therefore, such supplies are not exempted from payment of GST. However, on fulfilment of the requisite conditions, if such outward supplies are treated as Nil’ rated, ITC on the inward supply involved in such cases cannot be availed.

The applicant, M/s. Fairmacs Shipstores Private Limited is a company who are wholesale traders in liquor, frozen meat products, food products. They make supplies to hotels, other institutional customers and also to ships, consulates etc.

They have branches at Bangalore, Vizag and Kakinada. The applicant is mainly supplying frozen meat like fish, chicken, etc., and they also make supplies on branch transfer basis from Chennai to their Bangalore branch for which they have a GST registration in Bangalore. They are selling products packed in individual packs of 1Kg, 2Kg, 3Kg etc., to distributors with the marking For Institutional sale only’. 

The applicant has sought the advance ruling on the issue whether hotels qualify as industrial/institutional consumers as per Rule 2bb and 2bc of the Legal Metrology (Packaged Commodities) Rules, 2011?

Yet another issue raised was as supply to institutions is not classified as ‘pre-packaged and labelled’, as per Rule 3(b) of the Legal Metrology (Packaged Commodities) Rules, 2011, the applicant is of the opinion that such supplies are Nil’ rated. Whether the applicant’s understanding that ITC cannot be availed, as such supplies are Nil’ rated, is correct?

The AAR held that inter-branch transfers, since the requirement of affixing/printing the declaration ‘Not for Retail Sale’ is reportedly not made in the packages, such supplies do not fall under the exempted category. Since the mandatory requirement of declaration ‘Not for Retail Sale’ is not available in the packages instant case, and since the status of the distributor as a wholesale dealer is not clear/confirmed, the applicant should charge GST on such supplies to distributors.

Ruling Details

Applicant’s Name: Fairmacs Shipstores

Ruling Date: 07.05.2025

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