Advance RulingsCase Briefs

Gujarat Authority for Advance Ruling, (GST): Emphasizing that ‘Paratha’ is not ready-to-cook products, the Bench of Sanjay Saxena and Arun Richard (Members) held that GST rate of 18% will be applicable.

Applicant submitted that they were producing ‘Paratha’, a flat and thick piece of unleavened bread eaten like a Roti or Chapati. Several varieties of Paratha were being produced but the principal ingredient was whole wheat flour.

The word ‘Paratha’ is not defined under GST. It is a common eatable used all throughout the country and also in some foreign countries and therefore the dictionary meaning and the common parlance understanding of the product would be relevant for considering the nature of the product and its classification under GST Tariff.

Applicant submitted that Chapter 19 covers ‘Preparations of cereals, flour, starch or milk, pastrycooks’ products’. Though the broad heading of a Chapter is not a determining factor for classification, it is clear from the general description of Chapter 19 that preparations of flour are covered thereunder and Heading 1905 covers various eatables including ‘bread’ and various explanatory notes are given about the scope and coverage of this classification code.

It was also clarified under HSN explanatory notes that heading includes ‘Unleavened bread’; that it is also clarified under part(A) of Explanatory notes that the most common ingredients of the products were cereal flours, leavens and salt, but they may also contain other ingredients.

Therefore, unleavened bread are specifically referred to under Part(A) of the explanatory notes. Prima facie it appears that Heading 1905 is a specific heading for products made from flour and unleavened bread are specifically covered under HSN Code 1905.

Applicant added that unleavened breads like chapatti and paratha fall for classification under HSN Code 1905 and consequently under Tariff item No.1905 of GST Tariff.

Question for Consideration:

i) Whether the product viz. ‘Paratha’ i.e. various varieties of Paratha produced by the applicant merit classification under HSN Code 19059090?

ii) Whether the product, namely, ‘Paratha’ i.e. all varieties of Paratha produced by the applicant are chargeable to 5% GST (i.e. 2.5% SGST and 2.5% CGST) under Sl.No.99A of Schedule-I of Notification No.1/2017- CT(Rate) and Notification No.1/2017-IT(Rate) dated 28-6-17?

Analysis, Law and Decision

Bench stated that the AAR has gone through the samples of ‘packing covers’ submitted by the applicant in respect of their product ‘Paratha’ namely Malabar Paratha, Mixed vegetable Paratha, Onion Paratha, Methi Paratha, Alu Paratha, Laccha paratha and Mooli Paratha and found that they were all sold under the Brand name ‘Vadilal Quick Treat’.

Further, on all the packing covers, cooking instructions were available, hence the parathas supplied by the applicant were not ready to eat preparations or products ready for consumption.

Bench found that applicant’s product was not akin to Khakra and plain chapatti or roti as they did not require any processing before consumption by humans and hence were ready to eat food preparations.

In the instant case, the products of the applicant i.e. ‘parathas’ were to be processed for human consumption i.e. they need to be heated on a pre-heated pan or a griddle for 3-4 minutes as per the cooking instructions in order to make them ready for consumption. 

Therefore, Bench opined that the aforementioned products merit classification at HSN 2106 and as these products are not mentioned in the tariff item they merit classification at HSN 21069099 as “other”.

Adding to the above analysis, AAR stated that GST rate of 5% was applicable subject to:

i) products shall be classified at HSN 1905 or 2106 and

(ii) description shall be khakhra, plain chapatti or roti.

In the issue in hand, AAR found that the first condition of classification is fulfilled as the product ‘paratha’ has been classified under heading 2106.

‘Paratha’ is covered at:

  1. Entry No.453 of Schedule-III of Notification No.01/2017-Central Tax(Rate) dated 28-6-17 for the period from 1-7-17 to 14-11-17 and liable to GST at the rate of 18%(9% SGST + 9% CGST) and
  2. Entry No.23 of Schedule-III of Notification No.01/2017-Central Tax(Rate) dated 28-6-17(as amended by Notification No.41/2017- Central Tax(Rate) dated 14-11-17) with effect from 15-11-17 and liable to GST at the rate of 18%(9% SGST + 9% CGST).

 [Vadilal Industries Ltd., In re., 2021 SCC OnLine Guj AAR-GST 17, decided on 30-6-2021]

Advance RulingsCase Briefs

Authority for Advance Ruling, Madhya Pradesh (AAR): A Division Bench of Virendra Kumar Jain Choubey and Manoj Kumar, Members, examined the classification of Fried Fryums of different shapes, sizes and varieties which are ready to eat and in regard to the HSN Code and GST rate applicable on such goods manufactured.

Applicant through the present application sought correct classification of ‘Papad’ and ‘Papad Fryums’ of different shapes, sizes and varieties (commonly known as Fried Fryums). The applicant is involved in the activity of manufacturing and selling of the said ready-to-eat product.

Further, at the time of the hearing, the applicant reframed the question as follows:

What is the correct classification of Fried fryums of different shapes, sizes and varieties which are ready to eat and What is the HSN Code and GST rate applicable on such goods manufactured?

The officer concerned stated that the Fried Fryums will be classified under Tariff 2016 90.

Decision & Analysis

Bench noted that the main issue is with regard to the classification of Fried Fryums and the GST rate applicable to it.

As the applicant tried to equate Fried Fryums with Papad, it is important to know what ‘Papad’ is:

Papad as such has not been defined under Customs Tariff Act, 1975, GST Act or the Notification issued under the CGST Act, 2017/MGGST Act, 2017.

As per the settled principle of interpretation of statute, word not defined in the statute must be construed in its popular sense, the sense which people conversant with the subject matter with which the statute is dealing would attribute to it.

Observation

Fried Fryums are eatable and used as food articles or eatables and such fried, salted Fryums are found to be commonly known and used as ‘Namkin’ ‘papad’ even after roasting or frying are known and used as ‘Papad’ only.

Whereas, in commercial or trade parlance also, the ‘Fried Fryums’ cannot be said to be known as ‘Papad’.

Hence, Fried Fryums cannot be equated with ‘Papad’.

Authority ruled that Fried Fryums will be classified under Tariff Item No. 2106 90 99 and GST Rate of 18% (CGST 9% or IGST 18%) will be applicable to the said product. [Alisha Foods, In Re., 2019 SCC OnLine MP AAR-GST 91, decided on 28-11-2019]

Advance RulingsCase Briefs

Karnataka Authority of Advance Ruling (Goods and Services Tax):  In the instant application the question was that whether the preparation of “Whole Wheat Parota” and “Malabar Parota”  can attract GST at the rate of 5% under Chapter Heading 1905, the AAR (GST Department) comprising of Ravi Prasad M.P., (Additional Commissioner of Commercial Taxes) and Mashhood- ur- Rehman Farooqui (Joint Commissioner of Central Tax), held that the product “parota” requires further processing for human consumption and is completely different from products like ‘roti’, ‘chapatti’ etc.; furthermore ‘parota’ also falls under the category of ‘food preparations not elsewhere specified or included’, thus the product can be classified under Chapter Heading 2106, upon which 18% GST will be applicable.

The applicant stated that the ‘parota’ is available in ambient and frozen form, with a shelf life of 3-7 days. The ingredients for the product include refined flour, RO purified water, edible vegetable oil, fat and salt. After adding the said ingredients, the product is then subjected to heat on a pan for making it available for consumption. With this description, the applicant contended that the product should be classified under Chapter Heading 1905 under the description of “Khakhra, Plain Chapatti and Roti”.

Perusing the contention and the nature of the product in question, the AAR observed that under Rule 3(c) of the General Rules of Interpretation under the Customs Tariff Act, 1975, where goods are not classifiable under appropriate heading then, the product is to be classified under the heading which occurs last in the numerical order among those headings which equally merit consideration. Since, Heading 2106 occurs last in the numeric order and the impugned product does not fall under any category enumerated in Rule 3(a) and Rule 3(b) General Rules of Interpretation under the Customs Tariff Act, 1975, thus the product ‘parota’ shall fall under Heading 2106 by the virtue of aforementioned Rule 3(c). It was further observed that unlike ‘khakhra’, ‘roti’ and ‘plain chapatti’ which are completely cooked preparations requiring no processing before human consumption and are thus ‘ready to eat food preparations’; the same cannot be said for ‘parota’ which is to be heated before consumption.[ ID Fresh Food (India) Pvt. Ltd., 2020 SCC OnLine Kar AAR-GST 1 , decided on 22-05-2020]