18% GST On Instant Idli, Dosa, Khaman; Can't Be Labelled As 'Sattu' - High Court


Mohul Ghosh

Mohul Ghosh

Jun 11, 2024


The Gujarat Appellate Authority for Advance Ruling (GAAAR) has made a significant decision regarding the GST classification of instant mixes such as idli, dosa, and khaman flour. This ruling clarifies that these products cannot be classified as ‘chhatua’ or ‘sattu’ and are thus subject to an 18% GST.

18% GST On Instant Idli, Dosa, Khaman; Can't Be Labelled As 'Sattu' - High Court

Background of the Ruling

Kitchen Express Overseas Ltd’s Appeal

Gujarat-based Kitchen Express Overseas Ltd approached the GAAAR against a ruling by the GST advance authority. The company argued that its seven ‘instant flour mixes’ are ‘ready to cook’ and not ‘ready to eat,’ which should make them eligible for a 5% GST rate akin to ‘sattu’. These mixes include gota, khaman, dalwada, dahi-wada, dhokla, idli, and dosa in powder form.

GAAAR’s Decision

The GAAAR rejected the company’s contention. The ruling emphasized that the ingredients used in ‘instant flour mixes’ are not covered under the same GST rules as those for ‘sattu’. According to the GAAAR, the inclusion of spices and other ingredients in these mixes differentiates them from simpler flour mixes like ‘sattu,’ which are eligible for a 5% GST rate.

Key Points of the Ruling

CBIC Circular and Ingredients

The Central Board of Indirect Taxes and Customs (CBIC) circular specifies the ingredients eligible for the 5% GST rate for ‘sattu’. However, this clarification does not apply to Kitchen Express’s products due to the significant presence of additives like spices and other ingredients.

Classification and Tax Rate

The appellate authority ruled that just because the end consumer must follow certain cooking procedures before consuming the products does not justify a lower GST rate. The GAAAR classified these instant mixes under Chapter Heading (CH) 2106 90 99, which covers ‘ready to cook’ food preparations, thereby subjecting them to an 18% GST rate.

Expert Opinions

Abhishek Jain, Indirect Tax Head & Partner at KPMG, noted that classification disputes are common under GST, often due to differing interpretations of clarifications provided in circulars. Rajat Mohan, Executive Director at Moore Singhi, explained that the significant inclusion of additives in these products distinguishes them from simpler flours, justifying the higher tax rate.

Conclusion

The GAAAR’s ruling has significant implications for the classification of instant flour mixes under GST. By affirming an 18% GST rate for these products, the authority underscores the importance of the ingredients and additives in determining the appropriate tax rate. This decision highlights the complexities and challenges in GST classification disputes.


Mohul Ghosh
Mohul Ghosh
  • 1056 Posts

Subscribe Now!

Get latest news and views related to startups, tech and business

You Might Also Like

Business
Dec. 8, 2022

Beat The Burden Of Medical Inflation With A Health Insurance

As disease rates rise and medical technology develops, treatment costs climb. It’s essential to understand that medical costs are not exclusively associated with hospitals. The cost of prescription drugs, diagnostic procedures, ambulance and operating room fees, consultations with doctors, and other costs are also constantly increasing. All of them could put a big strain on […]

Business
Dec. 8, 2022

3 Biggest Changes Of iOS 16.2 Update That Every iPhone User Should Know!

In its latest update Apple said that it is preparing for the iOS 16.2 update for iPhones across the world. Notably, like the previous release, there are a couple of changes coming for the iPhones.  iOS 16.2 Update Release Date So far, Apple has not announced a release date for iOS 16.2 update. Reportedly, the […]

Business
Dec. 8, 2022

300 Microsoft Employees Create Employee Union, First Time Ever: This Is How Microsoft Reacted

Around 300 workers at Microsoft Corp.’s ZeniMax Studios have commenced the process of forming a union which is said to be the first at the software giant in the US.  Here, Microsoft Corp.’s ZeniMax Studios known for popular video games including Skyrim and Fallout. Forming Union In Microsoft Corp Moreover, the quality assurance employees at […]

Business
Dec. 7, 2022

India Beats China In Air Travel Safety: Ranking Jumps From 102 To 48 In Global Aviation Safety

India’s air safety protocols and executions have improved drastically over the years, as validated by the findings of a specialized agency of the United Nations, the International Civil Aviation Organization or ICAO. The UN watchdog has upgraded India’s ranking in terms of aviation safety to the 48th position, jumping past the rankings of countries like […]

Recent Posts

Related Videos

   

Subscribe Now!

Get latest news and views related to startups, tech and business

who's online