9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (8) TMI 838 - AAR - GSTClassification of goods - rate of tax - HSN Code - Supply of various instant flour mixes - Composite supply or mixed supply - Gota Instant mix flour - Khaman Instant mix flour - Dalwada Instant Mix Flour - Dahiwada Instant Mix Flour - Idli Instant Mix Flour - Dhokla Instant Mix Flour - Dhosa Instant Mix Flour - Pizza Instant Mix Flour - Methi Gota Instant Mix Flour - Handvo Instant Mix Flour - instant mix flour for gota/methi gota along with chutney powder/kadhi chutney powder - khaman along with masala pack - HELD THAT - The Classification of goods under GST is based on HSN. The customs Tariff is based on HSN. The general Interpretative Rules are to be sequentially followed as the way to classify the goods. We are to classify within the confines of law and procedure as laid down in GST regime. The Section notes and chapter notes of Custom Tariff are part and parcel of the Custom Tariff Act 1975 which is to say part and parcel of law enacted by the Parliament and therefore we are obliged in GST regime to follow the classification based on HSN as per law. The Explanatory notes to HSN have guidance value to classify goods. As per Rule 1 of the General Rules for the Interpretation of CTA 1975 for legal purposes classification shall be determined according to the terms of the headings and any relative Section of Chapter Notes. Thus the classification of the product is required to be determined in accordance with the terms of the headings. As per Chapter Heading11.06 it covers Flour Meal and Powder of the dried leguminous vegetables of Chapter Heading 07.13 and other specified products. On inspection of the Packets of each product we find that each of the packet is marked Instant Mix - As the products of the applicant contain Spices and additives in different proportions which are not mentioned in the Chapter Heading 11.06 or the relevant Explanatory Notes of HSN. The applicant has referred to CBIC Circular No. 80/54/2018-GST dated 31.12.2018 which has inter-alia clarified the applicability of GST on Chhatua or Sattu . The CBIC has clarified in the Circular that the flour of ground pulses and cereals improved by the addition of very small amounts of additives continues to be classified under HSN Code 1106. On examination of the percentage breakup of the subject products and the composition of the products we find that this is not the case of addition of very small amounts of additives in subject products - the subject Circular is not applicable in present case as the said products are different from Sattu and have spices and additives in varying proportions as cited by the applicant and are in the nature of instant mix. The various products being supplied by the applicant contain Spices and additives apart from flour of dried leguminous vegetables rice and wheat in different proportions. The Spices and additives contained in these products include Sugar Iodised Salt Chili Powder Turmeric powder Sodium Bicarbonate Citric Acid Hydrogenated Vegetable Oil Citric Acid etc. These Spices and additives are other than those substances mentioned in the Explanatory Notes of HSN for Chapter Heading 11.01 and 11.02 which could be added in very small quantities to improve or enrich the flours and the resultant product still remain classified in those Chapter Headings - It is also evident from the recipe submitted by the applicant that the Spices and additives have been added to the flours with a view to their use as food preparations. As such in view of the Explanatory Notes of the HSN these products are excluded from the Chapter Heading 1101 and 1102. The idli mix or dhosa mix are completely different from idli/dhosa batters. Idli/Dhosa batters are in semi- liquid form which can be directly poured on to the frying pans for preparation of idlis and dhosas - Instant mix of idli/dhosa are not idli/dhosa batters and therefore does not get covered under Sl. no. 100A Chapter/Heading/ Subheading / Tariff item 2106 as Roasted gram idli/dosa batter chutney powder. The subject 10 products of Mix Flour/ Instant Mix Flour are preparations for use after processing such as cooking carrying out the detailed procedure for cooking as mentioned on the packets of all the said products then ready for human consumption - Chapter Heading 2106 is not confined to processed or semi processed food cooked or semi cooked food preserved food and ready to eat food. In fact a food preparation which is not elsewhere specified in the HSN gets covered under HSN 2106. On the packets of all the above products-Category Instant Mix has been printed on the packets and the detailed procedure recipe is printed on back side of the packets - there are no merit to treat the subject goods as flour. As these products are not specifically mentioned under any specific Tariff item the products merit classification under the residual entry other at HSN 210690. Though the issue involved in that case was regarding admissibility of Sl. No. 28 of Notification No. 3/2006-Central Excise to the Instant Food Mixes (Gota Mix Khaman Mix Dal Wada Mix etc.) the fact that in the said Sl. No. 28 the description of goods mentioned against Chapter Heading 2106 included Instant Food Mixes such as Pongal mix Vadai mix Pacoda mix Payasam mix Gulab Jamun mix Rava Dosa mix Idli mix Dosa mix Murruku mix and Kesari mix supports our view that various Instant Food Mixes (Instant Mix / Ready Mix Flour) being supplied by the applicant are classifiable under HSN 2106. Applicable rate of GST - HELD THAT - Food preparations not elsewhere specified or included falling under Chapter Heading 2106 are covered under the aforesaid Entry at Sr. No. 23 of Schedule- III of Notification No. 1/2017-Central Tax as amended attracting Goods and Services Tax @ 18% though some of the specific products of Chapter Heading 2106 excluded from this entry are covered under different entries of Schedule-I or Schedule-II attracting Goods and Services Tax @ 5% or 12%. None of the aforesaid 10 products of various Instant Mix / Ready Mix Flour being supplied by the applicant are the products which have been excluded from the entry at aforesaid Sr. No. 23 of Schedule III or which have been specifically included in any other entry of other Schedule of Notification No. 1/2017-Central Tax as amended or in any of the entries of Notification No. 2/2017-Central Tax. The gotas/methi gotas and chutney powder/kadhi chutney powder supply is not naturally bundled and the supply is for a single price. Also the supply of Khaman instant mix flour with masala pack is not naturally bundled and the supply is for a single price. These supplies fall under mixed supply. As per law a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. Thus these mixed supply shall be treated as a supply of Instant Gota Mix OR Instant Methi Gota Mix or instant Khaman mix flour in said matter.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS 1. Classification and Taxation of Instant Mix Flours Relevant Legal Framework and Precedents: The classification of goods under GST is based on the HSN, which is aligned with the Customs Tariff. The General Interpretative Rules of the Customs Tariff Act, 1975, are applicable. The applicant contends that the instant mix flours should be classified under Chapter 11, specifically headings 1101, 1102, or 1106, based on the dominant flour component. Court's Interpretation and Reasoning: The Court examined the composition of the instant mix flours, which include various spices and additives. The Explanatory Notes to HSN for Chapter 11 indicate that flours may remain classified under this chapter if improved by very small quantities of specified substances. However, the addition of spices and other ingredients with a view to their use as food preparations excludes them from Chapter 11. Key Evidence and Findings: The instant mix flours contain significant proportions of spices and additives, ranging from 5% to 33.4%, which are not specified in Chapter 11. The products are labeled as "Instant Mix," indicating their nature as food preparations. Application of Law to Facts: Given the presence of spices and additives, the products do not meet the criteria for classification under Chapter 11. Instead, they are classified under Chapter 21, specifically heading 2106, which covers food preparations not elsewhere specified. Treatment of Competing Arguments: The applicant's reliance on VAT determination orders and prior case laws was dismissed, as GST classification is based on HSN, which differs from the VAT regime. Conclusions: The instant mix flours are classified under HSN 2106, attracting an 18% GST rate. 2. Classification and Taxation of Mixed Supplies Relevant Legal Framework and Precedents: Section 8 of the GST Acts governs the tax liability on composite or mixed supplies. Definitions of "composite supply" and "mixed supply" are crucial in determining the applicable tax rate. Court's Interpretation and Reasoning: The Court determined that the supply of instant mix flours with chutney powder or masala pack constitutes a mixed supply, as they are not naturally bundled and are supplied for a single price. Key Evidence and Findings: The chutney powder and masala pack are supplied alongside the instant mix flours, but they are not integral to the principal supply. Application of Law to Facts: As a mixed supply, the tax rate is determined by the component with the highest rate, which in this case is the instant mix flour. Treatment of Competing Arguments: The applicant's argument that these should be treated as composite supplies was not accepted, as the supplies do not meet the criteria for being naturally bundled. Conclusions: The mixed supply is taxed at the rate applicable to the instant mix flour, which is 18% under HSN 2106. SIGNIFICANT HOLDINGS Core Principles Established: The classification of goods under GST must adhere to the HSN and the General Interpretative Rules. Additives and spices that transform a flour into a food preparation necessitate classification under Chapter 21 rather than Chapter 11. Final Determinations on Each Issue:
Verbatim Quotes of Crucial Legal Reasoning: "We find no merit to treat the subject goods as flour. As these products are not specifically mentioned under any specific Tariff item, the products merit classification under the residual entry 'other' at HSN 210690."
|
