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TMI Blog2024 (4) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... y also be obtained from dough based on the flour of any cereal - Rule 4 of GRI provided that goods which cannot be classified in accordance with the Rules I to III shall be classified under the Heading appropriate to the goods to which they are akin. It cannot be doubted that the products of the petitioner would be in category of Chapter Heading 1905, and therefore, by applying the fourth GRI which provides that goods which cannot be classified in accordance with the above rules shall be classified under the Heading appropriate to the goods to which they are most akin should be applied to see whether the goods should fall under the Chapter Heading 1905 or not. It is also relevant to take note of the fact that Chapter Heading 21 particularly, Entry HSN 2106 prescribes food preparation not elsewhere specified or included and the petitioner product or not akin to any of the products which are mentioned in Chapter Heading 2106. In view thereof, the petitioner s product are to be included in Chapter Heading 1905. The two Rate Notification mentioned above would provide that similar products such as Khakhra, plain chapati or Roti are exigible for 5% tax as per 99A of the Schedule I or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are exigible for 18% GST as per Rate Notifications issued by the Central / State Goods and Service Tax Act, 2017. 2. The petitioner has also further prayed for a writ of mandamus commanding the respondents to classify the petitioner s products under Tariff item No. 1905 9090 of the First Schedule to Customs Tariff Act, 1975, as Indian flat breads are covered by expression bread under Heading 1905 of the said schedule, and further, it has been prayed that the petitioner s product should be declared to be covered under Entry 99A of Notification No. 1 of 2017-Central Tax (Rate) dated 20.06.2017 and Entry 99A of Notification No. G.O (P) No. 62/2017-Taxes dated 30.06.2017 of the State Government to attract a standard rate of 5% GST (2.5% central tax and 2.5 % State tax). FACTS Brief Facts of the case for the purposes of the present writ petition are that; 3. The petitioner is a company engaged in manufacture and supply of foods products; Classic Malabar Parota and Whole Wheat Malabar Parota. The petitioner filed an application for Advance Ruling under Section 97 of the CGST / SGST Act for the classification and rate of tax on these two products. The petitioner sought advance ruling seek ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and other bakers wares, whether or not containing cocoa; communion wafers, empty cachets of a kind suitable for pharmaceutical use, sealing wafers, rice paper and similar products. 8. Considering the said entry, the appellate authority has been of the view that contents of the subheading 1905 would cover products of bakery and all these items covered therein which are in ready-to-eat form. Whereas, Whole wheat Malabar Parota or Classic Malabar Parota manufactured by the petitioner is neither a bakery product nor ready for human consumption as it needs to be heated or further processed for human consumption. 9. In view of the Common parlance test applied by the appellate authority, it has been of the opinion that the bread cannot be equated with Parotas, and the same cannot be classified as bread . The AAAR therefore, held that the impugned products of the petitioner cannot be classified under Entry 1905 as the products covered under the heading are generally completely prepared and cooked and do not require any further processing for consumption. 10. It has been further held that in order to arrive at the appropriate classification of the impugned products or the general princip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued notification G.O (P) No. 62/2017-Taxes dated 30.06.2017 prescribing the rates of tax for different supply of goods and services. The rate notification has various schedules specifying different GST rates as applicable on the products listed in the schedule. 14. The rate notifications and explanations at the end, which make them aligned to the First Schedule of the Customs Tariff Act, 1975 and the General Rules for Interpretation of the First Schedule. The First Schedule to the Customs Tariff Act and the First Schedule to the Excise Tariff Act are based on Harmonized System of Nomenclature ( HSN ) of World Trade Organisation (WTO) which is duly accepted in General Agreement on Tariffs and Trade ( GATT ). India being member of WTO and signatory to GATT, has duly adopted the HSN as First Schedule to Customs Tariff Act and First Schedule to Excise Tariff Act. The Explanatory notes issued by the World Customs Organization under the aegis of WTO are used to understand the classification and scope for entries under HSN. The classification of goods needs to be determined as per the First Schedule to Customs Tariff Act r/w General Rules for Interpretation, Explanatory notes and appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further provides that the most common ingredients to the products of this Heading are cereal flour, leavens and salt but they may also have other ingredients such as gluten, starch, milk, sugar, fats, improvers etc. like yeast, sour dough, baking soda which facilitate fermentation and improves characteristics and appearance of the products. 20. Learned counsel for the petitioner has submitted that, if the ingredients and nature of the products covered under Heading 1905 are examined, it would be evident that the petitioner s impugned products have also almost same/similar ingredients and somewhat similar process is employed. Petitioner s impugned products are manufactured from the flour of whole wheat flour dough, water, salt , sugar, milk, solids and yeast or baking soda. Thin round sheets of dough are semi cooked on hot place (Tawa / Skillet) using oil. These are packed and can be consumed after heating them. Impugned products are semi cooked for marketing purposes to retain the optimal shelf life and moisture so that upon pre heating, they remain soft and taste good. The petitioner s products like pappad and pizza base are classifiable under Heading 1905 and not under entry 2106 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liance on judgment of Kayani Co. v. Commissioner of Sales Tax, [AIR 1953 AP 252], where the High court determined, whether double roti, shirmal, parata and chapati etc can be called bread. Hon ble High Court held that the intention of the legislature was to include all kinds of bread which are consumed by the citizens of India, whether prepared in different ways or called by different names and therefore, there is no justification limiting the scope of the term bread to double roti, which is loaf or bread in European country. Learned counsel for the petitioner has also submitted that the advance ruling appellate authority has erred in applying Rule 3(c) of General Rule of Interpretation to hold that no heading/sub-heading covers the description of impugned products. The impugned products being Indian flat breads are covered under breads specified in heading 1905. Explanatory notes to heading 1905 also gives description of products covered thereunder as impugned products. It is also submitted that Rule 3(c) of the General Rules of Interpretation is not applicable since Heading 2106 comes later. Therefore, the impugned products cannot be said to be covered under Heading 2106. Rule 3( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overed by any other heading of the Nomenclature, this heading covers Preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk etc) for human consumption.' If the product is covered elsewhere, this clause will not apply. Further, impugned products are covered under 1905, and therefore, there is no question of bringing the product under residual entry 2106. It is also submitted that the impugned products simply require heating for consumption and are by all means ready-to-use food items. Therefore, the impugned products cannot be considered as 'preparations' and mere heating cannot be considered as 'processing'. The process mentioned in the Explanatory Notes to 2106 is detailed cooking and not mere heating. 29. Note 6 to Chapter 21 specifically provides for inclusion of sweet meats, commonly known as misthans or mithai, namkeens, mixtures, bhujia, chabena under tariff item 2106 90 99, regardless of the ingredients. The impugned products are neither sweetmeats nor are they in the nature of namkeens, bhujia etc, and therefore, they are also not covered by Note 6 to Chapter 21. 30. Learned counsel for the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and pattern has been followed. 34. Rate / Exemption notifications issued are item specific. All items under the HSN may not be notified for exemption under the exemption notification. Even for levy of tax, the specific goods falling under a particular four-digit HSN heading are considered individually and placed in different schedules to those notifications and subjected to different rates of tax or exempted as deemed fit by the competent authorities of Central / State Government. 35. Revenue neutral rate in the Scheme of levy is 18% as envisaged in Entry No. 453 of Schedule -III to the rate notification which reads thus:- S. No. Chapter/ Heading/Sub Heading/ Tariff item Description of Goods (1) (2) (3) 453 Any Chapter Goods which are not specified in Schedule I, II, IV, V or VI 36. Therefore, it is submitted that if the goods which are not specified Schedule I, II, IV , V or VI under any Chapter, it would attract levy of 18% CGST (9% SGST and 9% CGST) unless it is exempted or different rate of tax is provided. Entry 99A of Schedule I to the rate notification provides 5% GST (2.5% SGST and 2.5% CGST) in respect of Chapter / Heading / Sub heading / Tariff item 1905 or 2106 in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Chapter Heading. 41. Learned Special Government Pleader submitted that Entry 97 prescribes Chapter Heading and description of goods in Column Nos.2 and 3. In Column No. 3, Bread as mentioned above has been exempted from payment of the GST. 42. The Parota does not fit within the description of Bread (branded or otherwise). The Parota is not a bread and therefore, it is not entitled for exemption as claimed by the petitioner. Taxing statutes cannot be interpreted on the basis of any presumption or assumption. The exemption notification is required to be interpreted strictly. The burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. There is no ambiguity in the exemption notification, which requires an interpretation by this court as Parota is not a bread (branded or otherwise). 43. Bread and Parota are two different goods in commercial parlance as well as common parlance. Their ingredients, the process employed for preparation and baking methods are different. No one mistakes bread with Parota. Therefore, it is submitted that the claim of the petitioner that the products name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided that goods which cannot be classified in accordance with the Rules I to III shall be classified under the Heading appropriate to the goods to which they are akin. It cannot be doubted that the products of the petitioner would be in category of Chapter Heading 1905, and therefore, by applying the fourth GRI which provides that goods which cannot be classified in accordance with the above rules shall be classified under the Heading appropriate to the goods to which they are most akin should be applied to see whether the goods should fall under the Chapter Heading 1905 or not. 50. It is also relevant to take note of the fact that Chapter Heading 21 particularly, Entry HSN 2106 prescribes food preparation not elsewhere specified or included and the petitioner product or not akin to any of the products which are mentioned in Chapter Heading 2106. In view thereof, I am of the considered opinion that the petitioner s product are to be included in Chapter Heading 1905. 51. Once it is settled that petitioner s product comes within the Chapter / Heading , sub heading and tariff item , HSN 1905, the next question which falls for consideration is that what is rate of tax to which the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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