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Parota is not Roti or Chaptatti therefore not elgibile for lower GST of 5%. The same to be taxed @ 18%: Says AAR, Karnataka

M/S. ID FRESH FOOD (INDIA) PVT. LTD.

(AAR, Karnataka)

Below is an interesting tweet from Mr. Anand Mahindra on the ruling.

What was the matter?

The Applicant is a food products company involved in preparation & supply of wide range of ready to cook, fresh foods including idli & dosa batter, Parotas, Chapatis, curd, paneer, whole wheat parota and Malabar parota. The instant application pertains to classification of whole-wheat parota & Malabar parota and the question for which advance ruling is sought is as under:

Whether the preparation of Whole Wheat parota and Malabar parota be classified under Chapter heading 1905, attracting GST at the rate of 5%?

Held by AAR, Karmataka

1) Parota to be classified under the heading 2106 and not under heading 1905.

2) Now the second issue to be discussed is the applicability of the benefit of entry No.99A of Schedule I to the Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended vide Notification No. 34/2017-Central Tax (Rate) dated 13.10.2017, which specifies the applicable rate of GST as 5%, in respect of the goods covered under heading 1905 or 2106 and having description as “Khakhra, plain chapatti or roti”

3) It could be seen from the foregoing that the GST rate of 5% is applicable to the products subject to fulfillment of the conditions that (i) they should be classified under heading 1905 or 2106 and (ii) they must be either khakhra, plain chaptatti or roti.

4) In the instant case the first condition of classification is fulfilled as the classification of the impugned products has been resolved as 2106. As for as the second condition is concerned the impugned products are described as “parota” and hence are neither khakhra, plain chaptatti nor roti. Further the products khakhra, plain chaptatti or roti are completely cooked preparations, do not require any processing for human consumption and hence are ready to eat foods preparations, whereas the impugned products are not only different from the said khakhra, plain chaptatti or roti but also are not like products in common parlance as well as in respect of the essential nature of the product. These products also require further processing for human consumption, as admitted by the applicant. Thus the benefit of entry No.99A of Schedule I to the Notification No. 1/2017 -Central Tax (Rate) dated 28.06.2017, as amended vide Notification No.34/2017-Central Tax (Rate) dated 13.10.2017 is not applicable to the instant case and the applicant is not entitled for the same.

5) The product ‘parota’ is not entitled for lower rate of 5% GST as covered under entry No. 99A of Schedule I to the Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended vide Notification No.34/2017-Central Tax (Rate) dated 13.10.2017.

The chapatis / rotis sold in packets by such companies are also semi cooked and have to be cooked further, to make them fit for consumption. Extending the rule, will these products also attract highier rate of GST

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