2021 (9) TMI 567 - AAR - GST

Classification of goods - Paratha - various varieties of Paratha produced by the applicant merit classification under HSN Code 19059090 or not - chargeable to 5% GST under Sl.No.99A of Schedule-I of Notification No.1/2017CT(Rate) and Notification No.1/2017-IT(Rate) dated 28-6-17 - HELD THAT - The varieties of the product Paratha supplied by the applicant falls under Heading 2106 and specifically under Tariff item 21069099. GST rate of 5% is 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, it is found that the first condition of classification is fulfilled as the product paratha has been classified under heading 2106. The description of Paratha is not mentioned in the said entry and also as discussed in aforementioned paragraphs, khakhra, plain chapatti or roti are cooked preparations, do not require any processing for human consumption and hence are ready to eat food preparations whereas the subject products are not only different from the said khakhra, plain chapatti or roti, but are also not like products in common parlance. The composition of paratha (wheat flour 36% to 62%) is different from composition of khakhra/ plain chapatti/roti. Moreover, paratha also requires further processing for human consumption as admitted by the applicant themselves. The impugned product paratha is not Khakhra, plain chapatti or roti. The said Entry No.99A of Schedule I to the Notification No.01/2017-Central Tax(Rate) dated 28-6-17(as amended vide Notification No.34/2017-Central Tax(Rate) dated 13-10-17) is not applicable for Paratha . The product Paratha of the applicant will be covered under (i) 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 (ii) 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 will be liable to GST at the rate of 18%.

Summary

Issues Involved:

1. Classification of 'Paratha' under HSN Code.
2. Applicability of GST rate on 'Paratha'.

Issue-wise Detailed Analysis:

1. Classification of 'Paratha' under HSN Code:

The applicant, M/s. Vadilal Industries Ltd, produces various varieties of Paratha, which they argue should be classified under HSN Code 19059090, similar to chapatti or roti, as they share similar ingredients and cooking methods. The applicant contends that since Paratha is made primarily of wheat flour, it should be classified under Heading 1905, which includes unleavened bread.

However, the Advance Ruling Authority (ARA) examined the product and found that Parathas are not ready-to-eat but require cooking as per the instructions on the packaging. The ARA referred to HSN 1905 and concluded that this heading covers products that are already prepared or cooked and ready for consumption, which does not apply to Paratha as it requires further cooking.

The ARA then considered HSN 2106, which covers food preparations not elsewhere specified or included and includes products that require processing before consumption. Since Paratha needs to be heated before consumption, it falls under HSN 2106. Consequently, the ARA classified Paratha under sub-heading 21069099.

2. Applicability of GST rate on 'Paratha':

The applicant argued that Paratha should be subject to a 5% GST rate under Sl.No.99A of Schedule-I of Notification No.01/2017-CT, which covers 'Khakhra, plain chapatti or roti.' However, the ARA noted that this entry applies to products that are ready-to-eat without any further processing, unlike Paratha, which requires additional cooking.

The ARA concluded that Paratha does not fit the description of 'Khakhra, plain chapatti or roti' and is therefore not covered under the 5% GST rate. Instead, Paratha is classified under Entry No.453 of Schedule-III of Notification No.01/2017-Central Tax(Rate) dated 28-6-17, which covers goods not specified in other schedules, and is subject to an 18% GST rate (9% SGST + 9% CGST).

Ruling:

1. 'Paratha' merits classification at HSN 21069099.
2. 'Paratha' is covered under:
- 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, liable to GST at the rate of 18% (9% SGST + 9% CGST).
- 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, liable to GST at the rate of 18% (9% SGST + 9% CGST).