Differentiating between "roti" and "parota", the Authority for Advance Ruling, Karnataka has held that the latter does not qualify as "completely cooked food" and therefore, GST at the rate of 18% is leviable on the same.
The bench comprised by Dr. Ravi Prasad MP (Additional Commissioner of Commercial Taxes) and Mashhood ur Rehman Farooqui (Joint Commissioner of Central Tax) observed that the parotas prepared by the Petitioner-company, ID Fresh Food (India) Pvt. Ltd., are not "ready to eat" foods and rather require processing before human consumption.
The Petitioner had sought that their products- Whole Wheat parota and Malabar parota be classified under Chapter heading 1905, attracting GST at the rate of 5%.
Chapter heading 1905
The Petitioner had contended that their products merit classification under Tariff Heading 1905 under Chapter 19 in the 2017 GST Notifications.
The said heading comprises of product with the following description- "Bread, pastry, cakes, biscuits and other bakers' wares, whether or not containing cocoa, communion wafers, empty cachets of a king suitable for pharmaceutical use, sealing wafers, rice paper and similar products."
It was submitted that the impugned products are made up of wheat flour, which is the predominant ingredient used in the products classified under Chapter 19.
Declining this argument however, the authority observed,
"The products covered under heading 1905 are already prepared or completely cooked products and no further process is required to be done on them for consumption and hence they are ready to use food preparations. In the instant case the impugned products are admittedly not ready for consumption, but need to be heated before consumption. Thus the impugned products do not merit classification under heading 1905."
In fact the authority noted that the impugned product does not have any specific entry in the Customs Tariff Act, 1985. It was thus held that the impugned product is rightly classified under Chapter Heading 2106, as "food preparations not elsewhere specified or included".
GST rate at 5% not applicable to processed food
The Authority observed that as per Entry 99A to Schedule I of GST Notifications issued in June, 2017 and October, 2017, GST rate of 5% is applicable to the products subject to fulfillment of the following conditions:
(i) they should be classified under heading 1905 or 2106; and
(ii) they must be either khakhra, plain chapati or roti.
In the instant case, the Authority observed, the first condition of classification is fulfilled as the classification of the impugned products has been resolved as 2106. However, as for as the second condition the Authority said that parotas are neither khakhra, plain chaptatti nor roti.
"The products khakhra, plain chaptatti or roti are completely cooked preparations, do not require any processing for human consumption and hence are ready to eat foods preparations, whereas the impugned products are not only different from the said khakhra, plain chaptatti or roti but also are not like products in common parlance as well as in respect of the essential nature of the product. These products also require further processing for human consumption, as admitted by the applicant," the Authority observed.
The petition was accordingly disposed and the impugned product was brought under the 18% GST category.
Click Here To Download Order