Cigarette pack, gutaka pouch to soon have new mark to check GST evasion

A cigarette pack or gutaka pouch may soon be marked with a unique identifier in order to check GST evasion. The GST Council has approved a proposal empowering the government to implement the Track and Trace Mechanism for specified evasion-prone commodities, such as tobacco or tobacco-based products. Tobacco products are the fifth largest contributor in total GST contribution, with around 5 per cent share.

The system shall be based on a Unique Identification Marking which shall be affixed on the said goods or the packages thereof. This will provide a legal framework for developing such a system and will help in implementation of mechanism for tracing specified commodities throughout the supply chain. The proposal, as recommended by the Law Committee, said ‘Unique Identification Marking’ includes a digital stamp, digital mark or any other similar marking which is unique, secure and non-removable and will be notified by the government.



The new mechanism is based on the World Health Organisation (WHO) Protocol to eliminate illicit trade in tobacco products. It is proposed that all unit packets may be required to marked with a unique identifier. “The unique identifier may be non-sequential, non-predictable and not-repeatable and may be required in the irremovably printed or affixed, indelible and should be clearly visible,” the proposal said.

Further, the unique identified in the form of tamper proof security feature comprising both visible and invisible elements should enable the authorities and consumers to verify the authenticity. “The requirement may be for both locally manufactured goods as well as the imported goods,” the proposal said. The identifier will have seven key information- the date, place and factory of manufacture, the machine used in manufacturing, the production shift or time of manufacture, the product description, quantity and maximum retail sales price, the intended market of retail sale and any other relevant information.

Relevant persons involved in trade of products, such as manufactures, dealers and wholesalers may be required to record the movement of such products. The data will be transmitted to an independent provider appointed by the government or on government servers. However, the retailers will not be required to have this system.

The date recorded will need to be made available to enforcement authorities. All the manufacturers and importers will be required to enter into a data storage contract for enabling verification of collected information with an independent third party approved by the government. “The cost for implementation of the track and trace system may be recovered from the person engaged in the trade through a fee or charge for the generation of unique identifier,” the proposal said.

It also has a penal provision. Accordingly, violation will lead to a penalty of ₹1 lakh or 10 per cent of tax payable on such goods, whichever is higher. WHO Protocol requires the establishment of a global tracking and tracing system within 5 years of entering into force of the Protocol.

This comprises a national, regional tracking, tracing systems and global information sharing point located in the Convention Secretariat. Other provisions to ensure control of the supply chain cover licensing, due diligence, record keeping, security, and preventive measures, as well as measures in relation to Internet and telecommunication based sales, duty free sales, duty free zone and international transit. Comments.