GST on pre-packaged food items based on consensus

The GST council in its 47th meeting had recommended to reconsider the approach for the imposition of GST on specified food items like pulses, cereals, flour and other edible products.

Prior to the 18th of July, 2022, GST applied on these goods (pulses, cereals, flour etc) when they were put up in a unit container and were bearing a registered brand name or were bearing a brand name in respect of which an actionable claim or enforceable right in a court of law is available.

With effect from 18th July 2022, only the modalities of imposition of GST on these goods have been changed with no change in coverage of GST except 2-3 items. Now with the recommendation of the GST Council, it has been prescribed that GST on these goods shall apply when supplied in "pre-packaged and labelled" commodities attracting the provisions of the Legal Metrology Act, the sources said.

Items like pulses, cereals like rice, wheat, and flour (aata), etc., earlier attracted GST at the rate of 5 per cent when branded and packed in unit container (as mentioned above). With effect from 18th July 2022, these items would attract GST when "pre-packaged and labelled". Only a few items, namely, Curd, Lassi, puffed rice etc. have been added to the list.

This was a unanimous decision by GST Council. All states were present in the GST Council, when this issue was presented by the Group of Minister on Rate rationalisation, in the 47th meeting held in Chandigarh on 28th Jun, 22. Each and every state, including non-BJP (Punjab, Chhattisgarh, Rajasthan, Tamil Nadu, West Bengal, Andhra Pradesh, Telangana, Kerala) agreed with the decision, the sources added.

The member states of the Group of Ministers, which recommended this change, are West Bengal, Rajasthan, Kerala, Uttar Pradesh, Goa and Bihar. It was headed by the Chief Minister of Karnataka.

Earlier Fitment Committee had also examined this issue over several meetings. Fitment Committee consists of CCT from states of Rajasthan, West Bengal, Tamil Nadu, Bihar, Uttar Pradesh, Karnataka, Maharashtra, Haryana and Gujarat. The Fitment Committee had taking into account that there was rampant misuse of provision relating to branding made its recommendation to the GoM for changing the modalities.

While before 18th July, GST was exempt when goods were not branded (registered) or right on brand was foregone by the supplier. This was misused even by reputed brands, and they were simply issuing letter stating that they had foregone their legal right on the brand.

This led to strong protests from those suppliers who were selling goods under brand and were paying tax. Several references were received from various quarters, suppliers, VIPs to impose GST on all packaged commodities.

This is not a decision of the Central Government. It is a decision taken by the Council in the complete census, the sources said. (ANI)