In Re : M/s Ahmadnagar District Goat Rearing And Processing Co- Op Federation Ltd.
GST
2018 (5) TMI 1393 – Authority for Advance Ruling – Maharastra – 2018 (13) G. S. T. L. 350 (A. A. R. – GST)
Authority for Advance Ruling – Maharastra – AAR
Dated:- 21-4-2018
GST-ARA-21/2017-18/B- 27
GST
Shri B.V. Borhade, Joint Commissioner Of State Tax and Shri Pankaj Kumar, Joint Commissioner Of Central Tax
PROCEEDINGS
(under clause (xviii) of section 20 of the Integrated Goods and Services Tax Act, 2017 read with section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
The present application has been filed under clause (xviii) of section 20 of the Integrated Goods and Services Tax Act, 2017 [hereinafter referred to as “the IGST Act”] read with section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act”] by M/S A
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as per entry no. 9 of the Notification No. 44/2017-Integrated Tax (Rate) dated 14th November 2017?
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is Specification made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the “GST Act”.
02. FACTS AND CONTENTION – AS PER THE APPLICANT
The submission, as reproduced verbatim, could be seen thus –
“Statement of Relevant facts having bearing on question raised
l) M/S Ahmednagar District Goat Rearing and Processing Co-op Ltd. is engaged in slaughtering & processing of Sheep/Goat meat and supplies these products to Army against tender.
2) A
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duct
0204
Meat of Sheep or Goats
4) Provision relating to Taxability / Exemption under GST Law
The IGST rate schedule as notified by the Government in respect of subject product is as under:-
i. W.e.f. 1st July, 2017 till 14th November, 2017
a. Schedule II of the Notification No 1/2017- Integrated Tax (Rate) dated28th June 2017 deals with the products which are subject to 12% GST and entry No 4 which pertain to sheep/Goat meat respectively are provided below:
Schedule II
S No
Chapter Heading Sub- heading Tariff item
Description of goods
4.
0204
Meat of Sheep or goats, frozen and put up in unit containers
b. A reading of the above-mentioned entries in the above reproduced notification would reveal that if the items mentioned in Tariff Heading 0204 are put up in a 'unit container ', it would be exigible to tax @ 12%.
c. Correspondingly, in exercise of the powers conferred by sub-section (l) of section 6 of the Integrated Goods and Service
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14th November 2017 deals with the products which are subject to 5% GST and entry NO. I which pertain to sheep/Goat meat respectively are provided below:
Schedule 1
S No
Chapter Heading Sub- heading Tariff item
Description of goods
1
0204
All goods (other than fresh or chilled) and put up in container and,-
(a) bearing a registered brand name: or
(b) bearing a brand name on which actionable claim or enforceable right in court of law is available [other than those where any claim or enforceable right in respect of such brand name has been foregone voluntarily], subject conditions as in the ANNEXURE I]”:
b. Hence, the net impact of the above amendment is as follows :-
i. Reduction in rate from 12% to 5% on the subject products.
ii. One additional condition for taxability is imposed i.e. product must be branded.
c. Correspondingly, in exercise of the powers conferred by sub-section (1) of section 6 of the Integrated Goods and Service
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Container”
* On or after 15th November 2017, if the product is “Frozen” and put up in “Unit Container and “Branded”
Annexure B
Statement containing the Applicant Interpretation or Law and Submission on issues on which Advance Ruling is sought
1. Section 9 of the Central Goods and Services Tax Act 2017
“9. (l) Subject to the provisions of sub-section(2) there shall be levied a tax called the central goods and services tax on all intra-state supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 and at such rates, not exceeding twenty per cent per cent., as may be notified by the Government on the recommendations of the Council and collected m such manner as may be prescribed and shall be paid by the taxable person.
Thus, GST is chargeable as a reference to 'value' and at applicable rates. For the purpose of building the point of view, reference made to the [GST rat
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ds, from the whole of the integrated tax leviable thereon. Relevant extract is reproduced below :
Schedule
S No
Chapter Heading Sub- heading Tariff item
Description of goods
10.
0204
Meat of Sheep or goats, [other than frozen and put up in unit containers]
5. W.e.f. 15th November, 2017 onwards,
Schedule I of the Notification No 43/2017-lntegrated Tax (Rate) dated 14th November 2017 deals with the products which are subject to 5 % GST and entry No 1 which pertain to sheep/Goat meat are provided below:
Schedule I
S No
Chapter Heading Sub- heading Tariff item
Description of goods
1
0202
All goods (other than fresh or chilled) and put up in container and,-
(a) bearing a registered brand name: or
(b) bearing a brand name on which actionable claim or enforceable right in court of law is available [other than those where any claim or enforceable right in respect of such brand name has been foregone voluntarily], subject conditions as in the ANNEXURE I]”:
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of such brand name has been foregone voluntarily], subject conditions as in the ANNEXURE I/”:
8. Conditions for Taxability:-
A conjoint reading of the extracts of the above-mentioned notifications reveals that GST is chargeable subject to fulfillment of conditions as tabulated below.
* W.e.f. from 1st July, 2017 till 14th November, 2017
* Must be frozen
* Must be packed in unit container
* W.e.f. from 15th November, 2017 onwards
* Must be frozen
* Must be packed in unit container
* Must bear a brand
9. keeping in mind all three conditions extracted from the notifications for the taxability of the products. There is clarity on two conditions i.e. Product is frozen and branded, However Advance Ruling is requested on the Question whether the product is put up in unit container or not.
10. Applicant's point of view
Keeping in mind the facts, definition of unit container given as explanation appended to the IGST notification prescribing rates
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adopted as a standard of measurement and exchange. Therefore, where the term 'unit' is affixed to a container, it would mean a container containing a 'unit' of a particular commodity i.e. a determinate quantity of goods contained therein. It should be designed to contain such determinate quantity of units of goods.
11.2 In this background, let us analyse the meaning & scope of the term 'unit container'.
11.3 The interpretation of the expression 'unit container' has been a vexed issue in the context of Central Excise law as under the excise regime prevailing prior to GST.
Food products put up on a 'unit container' were liable to excise duty. Therefore, in this regard, it is important to study the provisions under the old law and interpretation adopted by the Courts.
11.4 The expression 'unit container' was first used in Tariff Item No 1B in the old Central Excise Tariff as under:
” 1B Prepared or preserved foods put u
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nufacturer. It may be a small container like tin, can, box, jar, bottle or bag in which product is sold by retail or it may be a large container like drum, barrel, cannister in which the product is packed for sale to other manufacturer or dealers. In short 'unit container' means a container, whether large or small, designed to hold a pre -determined quantity or number which the manufacturer wishes to sell whether to a wholesale or retail dealer or to another manufacturer.”
11.7 In this background, in the context of old Central Excise Tariff, reference is placed on the following observations of the Special Bench of the Hon'ble CEGAT while interpreting the term 'unit container' in the case of Collector of Central Excise v. Himachal Pradesh Horticulture Produce Marketing & Processing Corporation Ltd., 1998 (34) E.L.T. 160 (Tribunal) = 1987 (7) TMI 322 – CEGAT, NEW DELHI :
“45. At the basis of this entire system of marketing and consumer satisfa
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special knowledge because they are a matter of common experience. The tariff item and the finance Ministry's instructions are consistent with the general experience and practice as mentioned above.
General experience would certainly show that prepared and preserved foods and the like, as they are ordinarily sold in the market, are packed in containers which contain a specific and clearly marked quality of the goods. The quantity may vary according to the product and the manufacturer. but even them there are many standard quantities common to different manufacturers. such as 100 gms, 500 gms, 1 kg, 100 ml, 200 ml, and 500 ml. Such products are sold in what may appropriately be called “unit containers” which can conveniently contain that particular quantity. It is also a matter of common knowledge and experience that in such cases the container is normally nor returnable, and in many cases not durable.”
11.8 A perusal of the observations of the CEGAT in the above case revea
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he tribunal observed as below:
We hold that there is no difference either in the entry in between 1B of the bold tariff and new tariff 2001.10 or in the issue involved in both the cases. Fallowing the ratio of the decision in the case of M/s. HPMC we hold that clearance in barrels does not amount to sale of the contents as put in a unit container. Accordingly, the goods in question are not classifiable under sub-heading 2001.10 but they are classifiable under sub-heading 2001.90. ”
11.11 Relying on the above case law, the tribunal in the case of held that jerry cans of tomato puree of 35 litre capacity being supplied to manufacturers of tomato ketchup was not a 'unit container'.
11.12 However, in the case of CCE v Simba Chips, 1997 (96) E.L.T. 381 (Tribunal) = 1997 (7) TMI 330 – CEGAT, MUMBAI , the Tribunal held that the fact that packets did not bear indication of the weight of the goods has no significance to determine whether it is a 'unit container' or not so l
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2/3/4/ kg., and carry full particulars of the product i.e., date of the manufacture, name of the manufacturer, trademark, price, etc. If the intention of the legislature was to refer only to the small containers having predetermined capacity, it must have so provided specifically. Therefore, the words 'unit container' have to be Interpreted in such a manner so as to include not only small but also large containers.
* That the sale of pasta products in the big bags knows as LDPE and HDPE cannot be said to be a sale of bulk in loose as these bags contained fixed quantity of the product for sale to the distributor/customers. Similar view was observed in the decision of the Tribunal in the case of Surya Agrooils Ltd. vs. CCE [2005 (188) E.L.T 97 (Tri.- Del.) = 2005 (5) TMI 129 – CESTAT, NEW DELHI ] which was later affirmed by the Hon'ble Supreme Court in 2006 (199) ELT A183 = 2006 (4) TMI 554 – SUPREME COURT .
11.16 Explanation appended to the IGST notification prescribing
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d capacity of 1/2/3/4/ kg., and carry full particulars of the product i.e., date of the manufacture, name of the manufacturer, trademark, price, etc. A big container designed to hold a pre-determined quantity of goods in bulk will also qualify as 'unit container'.
(iii) That the sale of a product in big bags such LDPE and HDPE sacks cannot be said to be a sale of bulk in loose but would be a 'unit container' where these bags contain pre-determined quantity of the product for sale to the distributor/customers. However, where such bags don't contain a pre-determined quantity, the same will not qualify as unit container- For instance in the case of CCE vs. Shalimar Super Foods [2007 (210) ELT 695 (Tri. -Mumbai) = 2006 (11) TMI 56 – CESTAT, MUMBAI , the tribunal held that meat articles packed in loose plastic bags which were not in uniform quantities cannot be held to be a unit container. The bags in this case were not sealed similar to the LDPE bags in the prese
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ach, which were standardized whereas in the present case there is no fixed quantity of mutton in the LDPE bags, it can weigh 7 kg or 6.5 kg i.e. the said HDPE bags cannot be said to be holding a predetermined uniform quantity. In a nutshell, the bags in the present case do not hold a pre-determined quantity of meat, It is clear from the above factual matrix that carcasses packed in the LDPE sacks and HDPE sacks would be in different weight and sizes. Further, we are also given to understand that there is no fixed quantity and size in which these carcasses are dispatched to the Army against tender. The said dispatches are made on the basis of the actual weight of the frozen carcasses. Furthermore, the consideration is charged by Ahmednagar District Goat Rearing and Processing from the Army on the basis of the weight. Therefore, there is no doubt that the said LDPE/ HDPE bags i.e., primary as well as secondary packing do not qualify as unit container.
(iii) Further, the meat in the pres
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product packed in unit container.
ii. Whether the product, i.e. sheep/Goat meat in frozen state and packed as mentioned in the facts stated above sheet shall be liable to be taxed under GST or would it be treated as exempted?
Point of view:
In light of the discussion contained in Para 11.1 to Para 11.10, we are of the view that despatches made by the supplier in LDPE/ HDPE bags i.e. both primary as well as secondary will not be liable to tax under GST. ”
03. CONTENTION – AS PER THE CONCERNED OFFICER
The submission, as reproduced verbatim, could be seen thus-
Submission dt. 14.03.2018
* “Whether the whole (Sheep/Goat) animal carcass in its natural shape in frozen state in different weight and size packed in LDPE bags without mentioning the weight and one or two such LDPE bags further packed in HDPE bags being supplied to Army by applicant against tender shall qualify as product put up in “unit container”.
Officer Comments :- No – the whole (Sheep/Goal)
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as mentioned in query I shall be taxable under GST as per entry no. 4 of schedule II of the Notification no. 1/2017- integrated Tax (Rate) dated 28th June 2017 upto 14th November 2017 and thereafter as per entry no. 1 of schedule I of the Notification No. 43/2017-lntegrated Tax (Rate) dated 14th November 2017 or fall under exemption list as per entry no. 10 of Notification no. 2/2017-lntegrated Tax (Rate) New Delhi dated 28th June 2017 upto 14th November 2017 and thereafter as per entry no. 9 of the Notification No. 44/2017-lntegrated Tax (Rate) dated 14 November 2017 Officer Comments :-Yes -The products as mentioned in query 1 shall be taxable under GST as per entry no. 4 of schedule II of the Notification no. 1/2017 – Integrated Tax (Rate) dated 28th June 2017 upto 14th November 201 7 & thereafter as per entry no. 1 of schedule I of the Notification No. 43/2017-lntegrated Tax (Rate) dated 140' November 2017. It is not fall under exemption list as per entry no 10 of Notification
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bsp; OBSERVATIONS
We have gone through the facts of the case. A perusal of the submission reveals that the questions require us to interpret the words 'unit container' as found in the schedule entries of the Notifications issued under the provisions of the IGST Act. We begin the discussion as under-
Question 1
Whether the whole (Sheep/Goat) animal carcass in its natural shape in frozen state in different weight and size packed in LDPE bags without mentioning the weight and one or two such LDPE bags further packed in HDPE bags being supplied to Army by applicant against tender shall qualify as product put up in “unit container”?
The words 'unit container' have been defined similarly in both the Notification No.1-Integrated Tax (Rate) and Notification No, 2/2017- Integrated Tax (Rate) of the IGST Act as under –
(i) The phrase “unit container” means a package, whether large or small (for example, tin, can, box, jar, bottle, or carton, drum, barrel, or canister) design
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or delivery at Supply Point ASC Sukna as and when ordered by OC Supply Point ASC, Sukna or his authorised representative:-
Item No
Articles/Services to be supplied
Unit
Quantity in Kgs
Basic price per 100 Kgs (In Rs.)
Total value at basic price (In Rs.)
Taxes (CST/VAT) in %
Total value with tax (In Rs.)
(a)
Meat Dressed Chilled/Frozen
Kg
35,000
41,000/-
14350000.00
6
15211000.00
CONTRACT FOR SUPPLY OF MEAT DRESSED CHILLED/FROZEN AT RANGIA AND DELIVERY POINT BARAMA FOR THE PERIOD FROM 01 APR 2017 TO 31 MAR 2018 (BOTH DAYS INCLUSIVE) ON FORTNIGHTLY PAYMENT BASIS
Rates tendered for delivery at Supply Point ASC Rangiya as and when ordered by OC Supply Company ASC, Rangiya or his authorised representative.-
Item No
Articles/Services to be supplied
Unit
Quantity in Kgs
Basic price per 100 Kgs (In Rs.)
Total value at basic price (In Rs.)
Taxes (CST/VAT) in %
Total value with tax (In Rs.)
(a)
Meat Dressed Chilled/Frozen
Kg
18,000
42,600/-
7
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s as sent in these bags.
e. The 'Acceptance of Tender' documents reveal that invoices are raised every fortnight.
The details in these documents could be seen thus –
“6. Taxes and Levies Payable – As declared in BoQ at the time of submission of bid.
VAT/CST
Chilled
Frozen
–
6%
Payment Terms
7. Bills & Payment, The bills will be presented by your firm every fortnight which will mention the basic cost of Meat Dressed Chilled/Frozen supplied, followed by the details of all levies & taxes paid by you separately. Contract Operating Officer will make 95% payment of the total billed amount including taxes through electronic transfer :-
(a) 95% of Basic Cost. Contract Operating Officer will make the payment after verifying the quantity supplied.
(b) 95% of Taxes and Lewes. 95% payment of the taxes and levies will only be paid by the Contract Operating Officer upon production of tax deposit receipts and certificates from Charte
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is mention of the weight of the two carcasses on the bag in the manner as follows : “8+7.5=15.5 kg”
g. The above manner of marking on the bag indicates that the sum is of two items. Thus, the manner of marking reveals a “number”.
h. The “number” in point (f) is a 'predetermined number' as the concerned persons from the Army are aware that each LDPF bag would carry one carcass and each HDPE bag would carry two carcasses. Thus, the bags are designed to hold a 'predetermined number'.
i. The manner of indicating the weight would satisfy the requirement of the words 'predetermined number indicated on such package'.
In view of all above, we are convinced that the impugned packing would satisfy the requirement of the definition of “unit container” as found in the Notification No.1-Integrated Tax (Rate) and Notification No. 2/2017- Integrated Tax (Rate) issued under the provisions of the IGST Act. In view thereof, the bags being supplied to A
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nition. The facts of the instant case before us being distinct, we wish not to deliberate on the arguments and case laws as put forth by the applicant.
Question 2
Whether the products as mentioned in query 1 shall be taxable under GST as per entry no. 4 of schedule II of the notification no. 1/2017- Integrated Tax (Rate) dated 28th June 2017 upto 14th November 2017 and thereafter as per entry no. 1 of schedule I of the Notification No. 43/2017-lntegrated Tax (Rate) dated 14th November 2017 or fall under exemption list as per entry no 10 of Notification No. 2/2017-lntegrated Tax Rate New Delhi dated 28th June 2017 upto 14th November 2017 and thereafter as per entry no. 9 of the Notification No. 44/2017- Integrated Tax (Rate) dated 14th November 2017?
To answer the above question, we look at the schedule entries as have been contended to be applicable. Let us reproduce the same as under –
Notification
S. No.
Chapter /heading/ Sub-heading / Tariff item
Description of Goods
P
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9
0202, 0203,
0204, 0205,
0206, 0207,
0208, 0209,
0210
All goods [other than fresh or chilled], and put up in unit container and, –
(a) bearing a registered brand name; or
(b) bearing a brand name on which an actionable claim or enforceable right in a court of law is available (other than those where any actionable claim or enforceable right in respect of such brand name has been foregone voluntarily], subject to the conditions as in the ANNEXURE I]
14-11-2017 ONWARDS
NIL
The applicability of each of the entry could be discussed thus –
FOR THE PERIOD 1-7-2017 TO 13-11-2017
1. Schedule entry no. 10 of the Notification No.2-Integrated Tax (Rate) does not cover frozen meat of sheep or goats put up in unit container.
2. Schedule entry 4 of the Notification No.1-Integrated Tax (Rate) covers frozen meat of sheep or goats put up in unit container.
3. &n
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ainer”. Now, the Schedule entry no.1 covers frozen meat of sheep or goats when put up in unit container and bearing a brand name.
3. In view thereof, the impugned product would be covered by the schedule entry 1 of the Notification No.1-Integrated Tax (Rate) from 14-11-2017 onwards.
06. In view Of the deliberations as held hereinabove, we pass the order as follows :
ORDER
(under clause (xviii) of section 20 of the Integrated Goods and Services Tax Act, 2017 read with section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
NO.GST-ARA-21/2017-18/B- 27 Mumbai, dt. 21/04/2018
For reasons as discussed in the body of the order, the questions are answered thus –
Q.1 Whether the whole (Sheep/Goat) animal carcass in its natural shape in frozen state in different weight and size packed in LDPE bags without mentioning the wei
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