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2018 (12) TMI 892 - AAR - GSTClassification of goods - Rates of GST - Unleavened Flatbreads - Leavened Flatbreads - Corn Chips, Corn Taco and Corn Taco Strips - Pancakes - Pizza Base - Applicability of entry No.99A of Schedule to the Notification No. 1/2017 - IGST Act dated 28/06/2017. Whether Unleavened Flatbreads treated as Khakra, plain chapatti or roti under Entry No. 99A of Schedule or as bread as mentioned under Entry No. 97 or as Malt extract, food preparations of flour, groats, meal, starch or malt extract not containing coca or containing less than 40% by weight of coca calculated on a totally defatted basis or under any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit? - Held that - The food product paratha as is available in hotels and restaurants is plain, folded or stuffed. By applying the common parlance test we understand paratha as different and distinct food commodity from roti, chapatti etc. The product before us is examined from this view point. The product is plain like a chapatti and unstuffed like Gobhi paratha, Laccha paratha. To us, this is nothing but a plain chapatti and paratha is a misnomer for this food product supplied by the applicant. As such we do not find any difficulty in classifying the product as plain chapatti covered by entry 99A of notification no. of 34/2017 - all the products contain similar/ same ingredients, manufacturing process and all the products are used as staple food item in meal we find no difficulty to arrive at a conclusion that the products are covered by entry no. 99A of notification no. 34/2017. Whether Leavened Flatbreads be treated as as bread as mentioned under Entry No. 97 or as Pizza Bread as mentioned under Entry No. 99 of Schedule or as Malt extract, food preparations of flour, groats, meal, starch or malt extract or under any other schedule? - Held that - As per Webster dictionary the term bread has been defined as a usually baked and leavened food made of a mixture whose basic constituent is flour or meal - Pita is a yeast leavened round flatbread baked from wheat flour, sometimes with a pocket. From the ingredients and the manufacturing chart, we find that applicant uses similar/ same ingredients and same manufacturing process as that of bread - As there is no difference in the conventional bread and pita bread with respect to ingredients and manufacturing process, it is held that Pitta bread would squarely fall under entry 97 of the exemption notification. Whether Corn Chips, Corn Taco and Corn Taco Strips be treated as wafer under Entry No. 16 of Schedule III of Rate Notifications or as Malt extract, food preparations of flour, groats, meal, starch or malt extract not containing coca or containing less than 40% by weight of coca calculated on a totally defatted basis or under any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit? - Held that - The term wafer has not been defined under the Act or notification. However, we understand wafer as chips used as a snack. In fact the terms wafers and chips are often used interchangeably. Further from the facts submitted by the applicant that the end consumer fry the chip products which make them crispy similar to the product such as wafers. The Corn chips, Corn taco and corn taco chips are variants of chips eaten as a snack - the term wafers would include impugned products. And therefore these products would be classifiable under chapter 1905 3290 and liable to tax at @ 9% each under CGST and SGST Act. Whether Pancakes supplied be treated as All Goods i.e. Waffles and wafers other than coated with chocolate or containing chocolate; biscuits; Pastries and cakes (other than pizza bread, khakhra, plain chapatti or roti, Waffles and wafers coated with chocolate or containing chocolate, papad, bread) as mentioned under Entry No. 16 of Schedule III of Rate Notifications or classified any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit? - Held that - The pancakes are manufactured by using ingredients like wheat flour, water, sugar, salt, milk, syrup, oil etc. Similarly we find that cake is an item soft sweet food made from a mixture of flour, fat, eggs, sugar, and other ingredients, baked and sometimes iced and decorated - Cake is mentioned under the chapter heading 1905 of customs and tariff Act 1975. The product cake is mentioned in the entry 16 under the head of All Goods i.e. waffles and wafers other than coated with chocolate or containing chocolate, biscuits; Pastries and cakes (other than pizza bread, khakhra, plain chapatti or roti, Waffles and wafers coated with chocolate or containing chocolate, papad, bread - the impugned the product Pancakes is covered under the chapter heading 19059010 under the entry 16 of schedule Ill of GST ACT and liable to tax at appropriate rate. Whether Pizza Base supplied be treated as Pizza Bread as mentioned under Entry No. 99 of Schedule / of Rate Notifications or under any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit? - Held that - The products are manufactured by the Applicant i.e. pizza base using various ingredients including flour, water, sugar, salt, baking powder, yeast, oil etc. After raw material intake, the ingredients go through various processes including mixing, proofing, dough dividing, baking and cooling. As per entry number 99 of Schedule I to the Central Rate Notifications, the product description is pizza bread - The Pizza base is required for manufacture of Pizza. It is not used for any other purpose. The manufacturing process and ingredients are different than bread, chapatti or Roti. It would not be covered under Entry 97 of Rate Notification or Exemption Notification - the impugned product Pizza base IS covered under entry 99 of schedule I of GST Act and would be liable to tax rate at appropriate rate. Ruling - The Unleavened Flatbreads products such as plain chapatti, Tortilla, Tortilla Wraps, roti, Roti rolls , Wraps, Paratha and Paratha wraps are covered under Entry No. 99 A of Schedule 1 and they would be liable to tax @ 5% (2.5 % each for CGST and MGST and 5 % for IGST). The product Leavened Flatbreads stated in application such as Naan, Kulcha and Chalupa are not covered by the expression bread as mentioned under Entry No. 97 of Exemption Notifications but they would be covered under residual entry 453 of schedule Ill of GST ACT and they would be liable for taxes @ 18 %( 9% CGST and 9% MGST ). However Pita Bread is covered by the expression bread as mentioned under Entry No. 97 of Exemption Notifications. The products like Corn Chips, Corn Taco and Corn , Taco Strips would be treated as wafer under Entry No. 16 of Schedule III of Rate Notifications and it would be liable for taxes @ 18 9% CGST and 9% MGST The product Pancakes supplied by the applicant would be treated as All Goods as mentioned under Entry No. 16 of Schedule III of Rate Notifications and it would be liable for taxes @ 18% (9% CGST and 9% MGST ). The product, Pizza Base supplied by the applicant would be treated as Pizza Bread as mentioned under Entry No. 99 of Schedule / of Rate Notifications and it would be liable for taxes @ 18% (9% CGST and 9% MGST ).
Issues Involved:
1. Classification of Unleavened Flatbreads. 2. Classification of Leavened Flatbreads. 3. Classification of Corn Chips, Corn Taco, and Corn Taco Strips. 4. Classification of Pancakes. 5. Classification of Pizza Base. Issue-wise Detailed Analysis: 1. Classification of Unleavened Flatbreads: The applicant sought to classify unleavened flatbreads such as Plain Chapatti, Tortilla, Tortilla Wraps, Wraps, Roti Rolls, Roti, Chapatti, Paratha, and Paratha Wraps under Entry No. 99A of Schedule I of Notification No. 01/2017-Integrated Tax (Rate) dated 28 June 2017. The Authority concluded that these products are covered under Entry No. 99A as "Khakra, plain chapatti or roti" and are liable to tax at 5% (2.5% CGST and 2.5% SGST). 2. Classification of Leavened Flatbreads: The applicant classified leavened flatbreads such as Naan, Kulcha, and Chalupa under Entry No. 97 of Exemption Notifications, claiming them to be "bread." The Authority determined that Naan, Kulcha, and Chalupa are not covered under Entry No. 97 but fall under residual entry 453 of Schedule III, liable to 18% tax (9% CGST and 9% SGST). However, Pita Bread was classified as "bread" under Entry No. 97 of Exemption Notifications. 3. Classification of Corn Chips, Corn Taco, and Corn Taco Strips: The applicant sought to classify these products as "wafers" under Entry No. 16 of Schedule III. The Authority agreed and classified Corn Chips, Corn Taco, and Corn Taco Strips under Entry No. 16 of Schedule III, liable to 18% tax (9% CGST and 9% SGST). 4. Classification of Pancakes: The applicant classified Pancakes under Entry No. 16 of Schedule III, treating them as "cakes." The Authority upheld this classification, stating that Pancakes are similar to cakes and fall under Entry No. 16 of Schedule III, liable to 18% tax (9% CGST and 9% SGST). 5. Classification of Pizza Base: The applicant classified Pizza Base as "Pizza Bread" under Entry No. 99 of Schedule I. The Authority confirmed this classification, stating that Pizza Base is covered under Entry No. 99 of Schedule I, liable to 18% tax (9% CGST and 9% SGST). Conclusion: The Authority for Advance Ruling, Maharashtra, provided a detailed classification for each product based on the ingredients, manufacturing process, and common parlance. The classifications and applicable tax rates were determined as follows: - Unleavened Flatbreads: 5% tax under Entry No. 99A. - Leavened Flatbreads (Naan, Kulcha, Chalupa): 18% tax under residual entry 453. - Pita Bread: Exempt under Entry No. 97. - Corn Chips, Corn Taco, Corn Taco Strips: 18% tax under Entry No. 16. - Pancakes: 18% tax under Entry No. 16. - Pizza Base: 18% tax under Entry No. 99.
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