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GST Implication on Pre-package and Labelled Food Items

Vide Notification no.6/2022-Central Tax (Rate) dated 13th July, 2022, GST is made applicable when food items supplied are pre-packed and labelled irrespective of the fact whether branded or not.

Before such amendment tax was levied on such goods if they were put up in unit container and:

 

  •  Bearing a registered brand name; or
  • Bearing a brand name on which actionable claim or enforceable right in court of law is available [other than those where any actionable claim or any enforceable right in respect of such brand name has been voluntarily foregone].
  • Thus, for better understanding of GST applicability, we have to understand what is covered/not covered or exempts under “pre-packaged and pre-labelled products” for which we have to take reference of Legal Metrology Act, 2009 and rules made thereunder.
  • In order to be considered a product as “pre-packaged and labelled”, the following two conditions are to be fulfilled:
    1. It shall fall under the definition of “pre-packaged commodity” under Section 2(l) of Legal Metrology Act, 2009.
    2. The package bears the declarations under the provisions of the Legal Metrology Act and the rules made thereunder.
  • As per section 2(l) of Legal Metrology Act, 2009 pre-packaged commodity means a commodity which without the purchaser being present is placed in package of whatever nature, whether sealed or not, so that the product contained therein has a predetermined quantity.

 

Requirement of Declaration:

  • Section 18 of Legal Metrology Act, 2009 said that:

    – No person shall manufacture, pack, sell, import, distribute, deliver, offer, expose or possess for sale any pre-packaged commodity unless such package is in such standard quantities or number and bears thereon such declarations and particulars in such manner as may be prescribed.

    – Any advertisement mentioning the retail sale price of a pre-packaged commodity shall contain a declaration as to the net quantity or number of the commodity contained in the package in such form and manner as may be prescribed.

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  • So, every pre-packaged retail pack should bear declarations required as per rules.
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  • Rule 3 and 26 of Legal Metrology (Packaged Commodities) Rules 2011 provides the following to which Chapter II shall not apply:

    – packages of commodities containing quantity of more than 25 kg or 25 litre excluding cement and fertilizer sold in bags up to 50 kg; and packaged commodities meant for industrial consumers or institutional consumers.

    – the net weight or measure of the commodity is ten grams or ten millilitre or less, if sold by weight or measure;
    *Provided that the declaration in respect of maximum retail price and net quantity shall be declared on packages containing 10g to 20g or 10ml to 20ml.

    – any package containing fast food items packed by restaurant or hotel and the like;

    – agricultural farm produces in packages of above 50 kg.

    – it contains scheduled formulations and non-scheduled formulations covered under the Drugs (Price Control) Order,1995 made under section 3 of the Essential Commodities Act, 1955 (10 of 1955).

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  • As per Rule 6 of Legal Metrology (Packaged Commodities) Rules 2011, certain mandatory declarations have to be made on every package, which are:

    – Name and address of the manufacturer/ Packer/ Importer.

    – Common or generic name of the commodity contained in the package

    – Net quantity in terms of standard unit of weight or measure in number.

    – Month and year of manufacture/ Pack/ Import

    – Retail sale price in the form of Maximum Retail Price (MRP)

    – Consumer Care details.

 

Thus, from above paragraphs we can understand that certain specific goods which are pre-packed up to 25 kgs or 25 litres and having declarations as required to be made are subject to GST.

 

For more clarification refer FAQ issued by CBIC

 

To read more, please click on the download button.

 

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