The Andhra Pradesh Authority of Advance Ruling (AAR) has held that 5% GST is payable on supply of ‘pre-packaged and labelled’ frozen shrimps.
The bench of K. Ravi Sankar (Commissioner of State Tax) and B. Lakshmi Narayana (IRS, Joint Commissioner of Central Tax) has observed that the ultimate buyer is not present when commodity is placed in a package and the commodity is being pre-packed for an unknown ultimate buyer, who may be indigenous or outside the country. Therefore, where the quantity involved is 25Kgs or less in respect of specified commodities including shrimps (HSN 0306, as per S.No.4 of schedule 1 of notification 01/2017-central tax (rate) dated 28th June 2017) which are pre-packed, they would mandatorily get covered within the ambit of Legal Metrology Act, 2009, and the rules made there under.
The AAR opined that GST would be applicable on the supply of “pre-packaged and labelled” shrimps, capacity upto 25 kgs, it will be liable for 5% GST, irrespective of the fact whether it is for domestic supply or for exported outside the country, as long as they are specified commodities that are pre- packaged.
Background
The applicant, M/s Asvini Fisheries Private Limited is engaged in the business of exporting processed shrimps for over three decades. The Applicant sources shrimps locally from farmers, which undergo further processing in the factory such as receiving, washing, de-veining, peeling, de-heading, tail removal, sorting, grading and freezing.
The processing steps performed by the applicant is entirely dependent on the customer’s requirements/ order. Based on the customer requirement, one or more processing steps can be performed independently to produce the desired results.
The processed raw material is thereby packed immediately as per the buyer’s instructions. The Applicant uses the two types of packaging. Firstly primary packaging or inner packing ie. packaging of inner boxes or pouches. Secondly, secondary packaging or outer packing i.e., packaging of master carton.
The primary packaging is based on the technique used by the Applicant for the order. The products are weighed and packed into food grade polythene pouches/boxes. The sealed pouches are further packed into the master cartons, both are as per the specification and requirements of the buyer.
The weight of the individual inner packaging generally ranges from about 250 grams to 2 Kilograms which are further packaged in master cartons with a maximum weight of up to 25 Kilograms.
Issue Of GST On Shrimps Frozen Before AAR
The Applicant sought the advance ruling on the issue whether in the case of export of pre-packaged and labelled processed shrimps by the Applicant, attracts GST, in view of the amendment in tax rate as per Notification No 6/2022 dated 13 July 2022, Central tax (CGST) at 2.5% and State tax (SGST) at 2.5%.
Conclusion
The AAR held that the supply of shrimps in pouches or boxes of upto 25kg, which duly pre-packaged and labelled as per Legal Metrology Act 2009 and the rule made there under is a taxable event and it is not an exempted/nil rated supply. Besides, the Ministry of finance Govt of India clarified the applicability of GST on pre-packaged and labelled goods through FAQs, which were uploaded online on 18.07.2022 w.r.t. the notification no 6/2022 (CGST RATE).
Applicant’s Name: M/s Asvini Fisheries Private Limited
AAR No.10/AP/GST/2024
Dated: 26-06-2024
