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2021 (1) TMI 366 - AAR - GSTClassification of goods - rate of GST - PAPAD of different shapes and sizes manufactured/ supplied by the applicant - to be classified under Chapter Tariff Heading 1905 or otherwise? - classification of Unfried Fryums - HELD THAT - What is Papad has not been defined or clarified under Customs Tariff Act, 1975, the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act, 2017), the Gujarat Goods and Services Tax Act, 2017, Integrated Goods and Services Tax Act, 2017 or the Notifications issued under the CGST Act, 2017/GGST Act, 2017/IGST Act, 2017 - It is now well settled principle of interpretation of statute that the word not defined in the statute must be construed in its popular sense, meaning that sense which people conversant with the subject matter with which the statute is dealing would attribute to it . It is to be construed as understood in common language. PAPAD is a thing entirely different and distinct from FRYUMS. Therefore, in common parlance or in market, Fryums are not sold as PAPAD instead of PAPAD sold as papad and Fryums are sold as Fryums. Both products are different and have their individual identity. Accordingly, in common parlance test, the applicant s product i.e. different shapes and sizes of Papad is not Papad but is Un-fried Fryums - the Un-fried Fryums are not classifiable as Papad under Tariff Item 1905 90 40. Appropriate classification of Unfried Fryums - HELD THAT - Heading 2106 is an omnibus heading covering all kind of edible preparations, not elsewhere specified or included. Chapter Note 5 provides an inclusive definition of this heading and covers preparations for use either directly or after processing, for human consumption. Chapter Note 6 pertaining to Tariff Item 2106 90 99 also provides inclusive definition and products mentioned therein are illustrative only - the product different shapes and sizes un-fried Fryums is appropriately classifiable under Tariff Item 2106 90 99. Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended vide Notification No. 41/2017-Central Tax (Rate), dated 14-11-2017 issued under the CGST Act, 2017 and corresponding Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 covers Food preparations not elsewhere specified or included other than roasted gram, sweetmeats, batters including idli/dosa batter, namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, khakhra, chutney powder, diabetic foods falling under Heading 2106. Therefore, Goods and Services Tax rate of 18% is applicable to the product Un-fried Fryums as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended, issued under the CGST Act, 2017 and Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 or IGST Act, 2017.
Issues Involved:
1. Classification of "Papad" of different shapes and sizes. 2. Determination of the appropriate tariff heading for the product under CGST and SGST. Issue-Wise Detailed Analysis: 1. Classification of "Papad" of Different Shapes and Sizes: The applicant, engaged in manufacturing and trading "Papad" of various shapes and sizes, sought clarification on its classification under the GST regime. The product in question is not fully cooked or ready to eat and requires frying or baking before consumption. The applicant argued that the product should be classified under Chapter Tariff Heading 1905, which exempts "Papad, by whatever name it is known, except when served for consumption" from GST. They contended that despite different shapes and sizes, the product remains "Papad" and should be classified as such. The applicant referred to several judicial pronouncements to support their argument. For instance, in the case of State of Punjab Vs. Amritsar Beverages Ltd., the Supreme Court emphasized the need for creative interpretation to balance old laws with technological advancements. Similarly, in M/s. J. K. Cotton Spinning and Weaving Mills Ltd. Vs. Union of India, the Supreme Court highlighted the need to interpret words in statutes to include new facts and situations. The applicant also cited various cases from the VAT era, such as State of Karnataka Vs. Vasavamba Stores, where the Karnataka High Court held that "Fryums" in an uncooked/unfried form qualify as "Papad." They further argued that the classification adopted under previous laws should continue under the GST regime unless there is a substantial change in the entry. 2. Determination of the Appropriate Tariff Heading: The Authority for Advance Ruling (AAR) examined whether the product could be classified as "Papad" under Tariff Item 1905 90 40. The AAR referred to the principles of common parlance, which dictate that terms not defined in statutes should be understood in their popular sense. The Supreme Court in Indo International Industries v. Commissioner of Sales Tax, U.P., and other cases, upheld this principle. The AAR observed that "Papad" and "Fryums" are distinct products in common parlance. "Papad" is known and used as "Papad" even after frying or roasting, while "Fryums" are considered "Namkeen." The AAR cited the case of T.T.K. Pharma Ltd. v. Collector of Central Excise, where "Fry Snack Foods called Fryums" were classified as "Namkeen" and not "Papad." The AAR also referred to the Supreme Court's decision in Commercial Tax, Indore v. T.T.K. Health Care Ltd., where "Fryums" were deemed similar to "seviyan" and required further cooking before consumption. The AAR concluded that "Un-fried Fryums" could not be classified as "Papad" under Tariff Item 1905 90 40. Instead, they should be classified under Tariff Item 2106 90 99, which covers food preparations not elsewhere specified or included. This classification attracts a GST rate of 18% (CGST 9% + GGST 9% or IGST 18%). Ruling: The product "Un-fried Fryums" manufactured and supplied by the applicant is classifiable under Tariff Item 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975. The applicable GST rate is 18% (CGST 9% + GGST 9% or IGST 18%) as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended, issued under the CGST Act, 2017, and corresponding notifications under the GGST Act, 2017, or IGST Act, 2017.
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