Scope of pre-packed and labelled items

Prior to 18th of July, 2022, GST applied on specified goods when they were put up in a unit container and were bearing a registered brand name or were bearing brand name in respect of which an actionable claim or enforceable right in a court of law is available. With effect from the 18th July 2022, this provision undergoes a change and GST has been made applicable on supply of such "pre-packaged and labelled" commodities attracting the provisions of Legal Metrology Act.

For example, items like pulses, cereals like rice, wheat, and flour (aata), etc., earlier attracted GST at the rate of 5% when branded and packed in unit container (as mentioned above). With effect from 18.7.2022, these items would attract GST when "prepackaged and labelled". Additionally, certain other items such as Curd, Lassi, puffed rice etc. when "prepackaged and labelled" would attract GST at the rate of 5% with effect from the 18th July, 2022.

1. Now, doubt has raise what is meaning of pre-packed and what is scope of labelled. So, according to Legal Metrology Act, 2009 "pre-packed commodity" means a commodity which without the purchaser being present is placed in a package of whatever nature, whether sealed or not, so that the product contained therein has a pre-determined quantity.

Scope of labelled items

Package of commodities containing a quantity of more than 25 kg or 25 litres does not require a declaration to be made under rule 6 thereof. Accordingly, GST would apply on such specified goods where the pre-packaged commodity is supplied in packages containing a quantity of less than or equal to 25 kilogram. So, the declaration will be a must if sold in quantity lesser than 25 kg/ltr, even if seller does not want to declare to avoid GST.

Illustration

Supply of pre-packed atta meant for retail sale to the ultimate consumer of 25 Kg shall be liable to GST. However, supply of such a 30 Kg pack thereof shall be exempt from levy of GST

2. Even if several packages intended for retail sale to the ultimate consumer, say 10 packages of 10 Kg each, are sold in a larger pack, then GST would apply to such supply. Such packages may be sold by a manufacturer through a distributor. These individual packs of 10 Kg each are meant for eventual sale to retail consumers.

3. GST applies when such goods are sold in pre-packaged and labelled packs. Therefore, GST would apply when the prepackaged and labelled package is sold by a distributor/ manufacturer to such a retailer. However, if for any reason, the retailer supplies the item in loose quantity from such package, such supply by the retailer is not a supply of packaged commodity for the purpose of GST levy.

Also Read: FAQs on GST applicability on 'pre-packaged and labelled' goods