Legal meteorology and GST
- July 28, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Legal meteorology and GST
Subject : Economy
Section: Fiscal Policy
Context:
From July 18, a 5% Goods and Services Tax (GST) has been levied on several food items and grains that are sold in a pre-packed, labelled form even if they are not branded.
Details:
- Earlier GST levy was limited to branded food items packed in unit containers.
- The 47th meeting of the GST Council recommended a revision of the scope of this exemption.
- Changes:
- 5% Goods and Services Tax (GST) levied on several food items and grains that are sold in a pre-packed, labelled form even if they are not branded.
- It would also apply to a package that contains multiple retail package say 10 packages of 10 Kg each, are sold in a larger pack
- Single packages of unbranded pre-packed and labelled food items like cereals, pulses and flour weighing in excess of 25 kg will be exempt from 5 per cent GST levy.
- It is imposed only to curb rampant evasion of tax — branded items being sold pre-packaged and escaping the tax.
- Loose, unbranded and unlabelled goods will continue to remain exempted from GST.
Concept:
Scope of ‘pre- packaged and labelled’ for the purpose of GST levy:
Pre-packaged and labelled food items (such as pulses, cereal like rice, wheat, flour etc), would fall within the purview of the definition of ‘pre-packaged commodity’ under the Legal Metrology Act, 2009, if such packages contain a quantity up to 25 kilogram (or 25 litres).
- ‘Pre-packaged and labelled food items’ means a pre-packaged commodity, where the package in which the commodity is pre-packed, or a labelled is required to bear the declarations under the provisions of the Legal Metrology Act and the rules under it.
- However, if such specified commodities are supplied in a package that does not require declaration(s)/compliance(s) under the Legal Metrology Act, 2009, the same would not be treated as pre-packaged and labelled for the purposes of GST levy.
- GST would apply whenever a supply of such goods is made by any person, i.e. manufacturer supplying to distributor, or distributor/dealer supplying to retailer, or retailer supplying to individual consumer.
- However, if for any reason, the retailer supplies the item in loose quantity from such a package, such supply by the retailer is not a supply of packaged commodities for the purpose of GST levy.
- Further, the manufacturer/wholesaler/retailer would be entitled to input tax credit on GST charged by his supplier in accordance with the Input Tax Credit provisions in GST.
- A supplier availing threshold exemption or composition scheme would be entitled to exemption or composition rate in the usual manner.
- Supply of packaged commodities for consumption by industrial consumers or institutional consumers is excluded from the purview of the Legal Metrology Act thus, excluded from the purview of GST.
Legal Metrology Act, 2009:
- Department of Consumer Affairs, administers the Legal Metrology Act 2009.
- The act provides for application of legal requirements to measurements and measuring instruments.
- The objective of Legal Metrology is to ensure public guarantee from the point of view of security and accuracy of the weighments and measurements.
- It aims to establish and enforce standards of weights and measures, regulate trade and commerce in weights, measures and other goods which are sold or distributed by weight, measure or number and any other matter that is connected to the same.
- According to the Act, the Central Govt. may appoint a Director of Legal Metrology to perform duties related to inter-state trade and commerce.
- The State Govt. may appoint a Controller of Legal Metrology to perform duties related to intra-state trade and commerce.
- The Legal Metrology (Packaged Commodities), Rules 2011 are primarily intended to ensure that the consumers are able to make informed choices by being informed of essential declarations on the pre-packed commodities.