The Central Board of Indirect Taxes and Customs ( CBIC ) has now Notification No. 02/2024 – Central Tax (Rate) on July 12, 2024, in line with the Goods and Services Tax Council ( GST Council ) recommendations to exempt agricultural produce exceeding 25 Kilograms or 25 Litres from GST.
Previously, GST applied to food items that were “pre-packaged and labelled” as defined by the Legal Metrology Act, 2009.
Under its powers conferred by sub-section (1) of Section 9 and sub-section (5) of Section 15 of the CGST Act, it further amends the CGST Rate Notification. In the Explanation after Schedule VII, the following proviso is added:
The term ‘pre-packaged and labelled’ refers to a ‘pre-packaged commodity’ as defined in section 2(l) of the Legal Metrology Act, 2009 (1 of 2010). This definition requires the package or its securely affixed label to bear declarations as per the Legal Metrology Act, 2009 and its rules.
Provided that, despite the Legal Metrology Act, 2009 and its rules, agricultural farm produce in packages exceeding 25 kilograms or 25 liters is not considered ‘pre-packaged and labelled’, the notification clarified.
Similarly, Notification No. 03/2024 – Central Tax (Rate), dated July 12, 2024, issued under sub-section (1) of Section 11 of the CGST Act, amends Notification No. 2/2017-Central Tax (Rate), dated June 28, 2017, adding the same proviso.
At the 47th GST Council Meeting earlier on June 29, 2022, in Chandigarh, chaired by Union Finance Minister Nirmala Sitharaman, a recommendation was made to replace the condition of being “branded” with “pre-packaged and labelled.”
Following this, the CBIC had issued the Notification No. 6/2022-Central Tax (Rate) on July 13, 2022, amending the “brand name” definition to “pre-packaged and labelled” in Notification No.1/2017-Central Tax (Rate), dated June 28, 2017 (“the CGST Rate Notification”), applying GST to such food items when they are “pre-packaged and labelled.”
The CBIC has enacted a significant amendment affecting the agricultural sector. Previously, GST applied to food items that were “pre-packaged and labelled” as defined by the Legal Metrology Act, 2009. Now, agricultural farm produce in packages over 25 kilograms or 25 liters is exempt from GST, regardless of the Legal Metrology Act, 2009 provisions. Similar notifications have been issued under the Integrated Goods and Services Tax Act, 2017 (“the IGST Act”) and the Union Territory Goods and Services Tax Act, 2017 (“the UTGST Act”).
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