GST on Export of Pre-packaged and Labelled Rice
The Authority for Advance Ruling (AAR) decided that pre-packaged and labelled rice up to 25 kg is taxable even when intended for export.
- Ruling
- AAR No. 03/AP/GST/2024 dated: 30.01.2024
- 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
- The company asked if GST applies to rice exports in small packages.
- The AAR ruled that GST applies to these goods regardless of destination.
- Taxability depends on the nature of the goods, not the export status.
In short
The company asked the Authority for Advance Ruling (AAR) if they must pay Goods and Services Tax (GST) on pre-packaged and labelled rice bags weighing 25 kg or less when those goods are destined for export. The authority decided that because these specific goods are taxable under current rules, the intended export does not grant an automatic exemption at the point of supply.
What has changed
How it worked before
Many businesses assumed that because the final destination of the goods was outside India, the supply would be treated as an export and therefore exempt from GST.
What has changed
The authority confirmed that the tax is triggered by the nature of the product itself, specifically its classification as 'pre-packaged and labelled' under the Legal Metrology Act. This means the supplier must pay GST when they sell the rice, even if the buyer later exports it.
Who this affects
Rice millers and food suppliers who sell pre-packaged and labelled rice in quantities of 25 kg or less to exporters or foreign buyers.
An example
A rice miller sells 20 kg bags of labelled rice to an exporter who plans to ship them to Dubai. The miller asks if they can skip charging GST because the rice is leaving the country. Based on this ruling, the miller must charge GST on that sale because the product itself is taxable, regardless of where it ends up.
What you should do
An advance ruling only applies to the business that requested it and its specific tax officer. If you are in a similar position, you cannot rely on this ruling as a legal shield; you should consult with your tax advisor to determine your specific liability.
If you do nothing
If you assume this ruling applies to you and stop paying GST, your local tax officer may disagree with your interpretation. You could face demands for unpaid tax, interest, and penalties. Always seek professional advice tailored to your specific business operations.
The terms explained
- Pre-packaged and labelled
- Goods placed in a package without the purchaser present, which bear a label indicating the contents and weight as defined by the Legal Metrology Act.
- Advance Ruling
- A formal decision provided by tax authorities to a specific business regarding how tax laws apply to their particular transaction.
- Bill to ship to
- A transaction where the invoice is sent to one party, but the goods are delivered directly to a different location or entity.
The ruling in detail
Authority for Advance Ruling
M/s. Sarala Foods Private Limited
AAR No. 03/AP/GST/2024 dated: 30.01.2024 · Andhra Pradesh
Questions before the authority
- Whether GST would be leviable on export of pre-packaged and labelled rice Up to 25 Kgs, to foreign buyer?
- Whether GST would be applicable on supply of pre-packaged and labelled Rice up to 25 Kgs, to exporter on "bill to ship to" basis i.e., bill to exporter and ship to customs port. Exporter ultimately exports the rice to foreign buyer?
- Whether GST would be applicable on supply of pre-packaged and labelled rice up to 25 Kgs, to the factory of exporter. Exporter will export the rice?
Facts
The applicant is engaged in the business of manufacturing and supplying rice in pre-packaged and labelled bags of up to 25 kg. They supply this rice to foreign buyers directly, to exporters on a 'bill to ship to' basis for export, and to exporters' factories for subsequent export. The applicant sought a ruling on whether these supplies are subject to GST despite being intended for export.
Ruling
| Question | What the authority ruled |
|---|---|
| Export of pre-packaged and labelled rice up to 25 Kgs to foreign buyer | Yes, Affirmative. None |
| Supply to exporter on 'bill to ship to' basis for export | Yes, Affirmative. None |
| Supply to factory of exporter for subsequent export | Yes, Affirmative. None |
The Authority ruled that GST is applicable on all three types of supplies described by the applicant. It held that the supply of pre-packaged and labelled rice up to 25 kg attracts GST regardless of whether the goods are intended for domestic sale or export. The ruling confirms that the **taxability is determined by the nature of the goods** rather than the ultimate destination of the export.
Reasoning
The Authority relied on Notification No. 06/2022-Central Tax (Rate) dated 13th July 2022, which brought pre-packaged and labelled commodities within the GST net. It reasoned that the definition of 'pre-packaged and labelled' under the Legal Metrology Act, 2009, applies to these goods. Consequently, the **tax liability arises at the time of supply** by the applicant, irrespective of the fact that the goods may be exported later by the buyer.
Provisions relied on
- Section 97(2) of CGST/SGST Act, 2017
- Section 98(4) of CGST/SGST Act, 2017
- Notification No. 1/2017-Central Tax (Rate) dated 28-6-2017
- Notification No. 06/2022-Central Tax (Rate) dated 13th July 2022
- Legal Metrology Act, 2009
- Legal Metrology (Packaged Commodities) Rules, 2011
For the practitioner
This ruling clarifies that the **exemption from GST on exports does not extend** to the domestic supply of pre-packaged and labelled food items, even if they are destined for export. It settles that the applicant must discharge GST liability on such supplies. Practitioners should note that this ruling focuses on the classification of the goods as 'pre-packaged and labelled' rather than the export status of the transaction.
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/03_sarala_foods_pvt_ltd.pdf
Legibility of the scan, as read: high.
Prepared 11-10-2026.
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