GST Exemption for Institutional Supply of Frozen Chicken
Frozen chicken supplied to institutional consumers is exempt from GST if it meets specific Legal Metrology packaging requirements.
- Ruling
- Advance Ruling No.110/AAR/2023 Dated:08.09.2023
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Institutional supply of frozen chicken is exempt from GST.
- Sales to non-institutional consumers are taxable at 5%.
- Exemption depends on strict compliance with Legal Metrology rules.
In short
Abhitanjali Traders asked the Tamil Nadu Authority for Advance Ruling (AAR) if their frozen chicken, packed in 30kg wholesale bags, qualifies for a GST exemption. The core issue is whether these supplies are considered 'pre-packaged and labelled' goods, which are generally taxable, or if they qualify for an exemption when sold to institutional buyers.
What has changed
How it worked before
Businesses were often uncertain whether bulk-packed goods sold to institutions qualified for the same GST exemptions as those sold to retail consumers, leading to inconsistent tax treatment.
What has changed
The authority ruled that if the chicken is sold to an 'institutional consumer'—someone who uses the product for their own consumption rather than for resale—it is exempt from GST. However, if the same product is sold to a non-institutional consumer, it is taxable at 5%. This means your tax liability now depends entirely on who is buying the product and how they intend to use it.
Who this affects
Wholesale food distributors and suppliers who sell frozen meat or similar packaged goods to hotels, hospitals, or other institutional buyers.
An example
A wholesale supplier sells frozen chicken to a local hospital kitchen. Because the hospital is an institutional consumer using the product for its own meals, the supplier does not need to charge GST. If that same supplier sells the same chicken to a local grocery store, they must charge 5% GST because the store is a non-institutional consumer.
What you should do
Review your customer list to distinguish between institutional and non-institutional buyers. Remember that an Advance Ruling only binds the business that requested it and their specific tax office; it is not a general law that applies to your business automatically. If you are unsure about your specific supply chain, consult a tax professional before changing your tax filing status.
If you do nothing
If you incorrectly claim an exemption for non-institutional sales, you risk a tax demand notice from your local GST officer. You may be required to pay the unpaid tax plus interest and potential penalties. Relying on another company's ruling without verifying your own facts can lead to costly disputes during an audit.
The terms explained
- Institutional consumer
- An entity like a hospital, hotel, or restaurant that buys goods for its own use or service, rather than for resale to the public.
- Pre-packaged and labelled
- Goods that are packed in a container and labelled in advance, which are typically subject to GST unless a specific exemption applies.
- Advance Ruling
- A formal decision from tax authorities on how GST laws apply to a specific business situation, which is only binding for the applicant.
The ruling in detail
Authority for Advance Ruling
Abhitanjali Traders
Advance Ruling No.110/AAR/2023 Dated:08.09.2023 · Tamil Nadu
Questions before the authority
- Whether supply of frozen chicken [HSN 02071200 & HSN 02071400] contained in a wholesale bag of 30 kgs containing 15 small packs of 2 kgs each made to institutional consumers is exempted under Sl.No.9 of Notification No.2/2017-CT (R)?
- Whether supply of frozen chicken [HSN 02071200 & HSN 02071400] contained in a wholesale bag of 30 kgs containing 15 small packs of 2 kgs each made to a distributor who would further supply to institutional consumers is exempted under Sl.No.9 of Notification No.2/2017-CT (R)?
- What is the rate of tax for supply of frozen chicken [HSN 02071200 & HSN 02071400] contained in a wholesale bag of 30 kgs containing 15 small packs of 2 kgs each made to non-institutional consumers?
Facts
The applicant proposes to trade frozen chicken products purchased from a manufacturer, packed in wholesale bags of 30 kg containing 15 smaller 2 kg packs. These packages are labeled for institutional sale and not for retail sale. The applicant intends to supply these goods directly to institutional consumers or to distributors who subsequently supply them to institutional consumers, with a fallback option of selling to non-institutional consumers.
Ruling
| Question | What the authority ruled |
|---|---|
| Supply to institutional consumers | Eligible for exemption under Sl.No.9 of Notification No.2/2017-CT (R) Must adhere to Legal Metrology Act and be for use by the institution, not for commercial/trade purposes |
| Supply to distributor for institutional consumers | Eligible for exemption under Sl.No.9 of Notification No.2/2017-CT (R) Must adhere to Legal Metrology Act and the distributor must be a wholesale dealer |
| Supply to non-institutional consumers | Taxable at 5% under Schedule I of Notification No.01/2017-CT (R) Applicable as per the rate for pre-packaged and labelled goods |
The Authority ruled that supplies to institutional consumers are exempt from GST provided the conditions of the Legal Metrology Act and relevant rules are strictly met. Supplies to distributors for further institutional supply are also exempt, provided the end-user is an institutional consumer. Supplies to non-institutional consumers are taxable at the rate specified in Schedule I of the relevant notification.
Reasoning
The ruling relies on the definition of 'institutional consumer' under Rule 2(bc) of the Packaged Commodities Rules, 2011, and the exclusion provided by Rule 3(c) of the same rules. It concludes that if the goods are supplied to an institutional consumer for their own use and not for trade, they fall outside the scope of 'pre-packaged and labelled' goods for GST purposes. Conversely, supplies to non-institutional consumers do not meet these exclusion criteria and are therefore subject to GST at 5% under Notification No.01/2017-CT (R). The Authority emphasized that the exemption is conditional upon strict compliance with the Legal Metrology Act.
Provisions relied on
- Section 98(4) of the CGST Act, 2017
- Section 98(4) of the TNGST Act, 2017
- Section 103(1) of the CGST Act, 2017
- Notification No.2/2017-CT (R)
- Notification No.01/2017-CT (R)
- Legal Metrology Act, 2009
- Legal Metrology (Packaged Commodities) Rules, 2011
For the practitioner
This ruling clarifies that **institutional supply** of frozen chicken can be exempt from GST if it strictly satisfies the criteria for institutional consumers under the Legal Metrology Rules. It confirms that sales to non-institutional buyers are **taxable at 5%**. Practitioners should note that the exemption is highly fact-specific and depends on the end-use and the nature of the buyer.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/110_abitanjali_traders.pdf
Legibility of the scan, as read: high.
Prepared 13-10-2026.
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