Clipped from: https://economictimes.indiatimes.com
A firm wanted parotas to be classified under the product description of ‘Khakhara, or roti’.
MUMBAI: A non-finicky eater couldn’t care less if he or she is having rotis or parotas for dinner. After all, they are a kind of Indian bread, typically dunked into gravy or even savoured with grilled or fried food such as kebabs.
But, in the realm of Goods and Service Tax (GST), there can be a huge chasm. In a recent GST ruling, Authority for Advance Rulings (Karnataka bench) distinguished between the two, holding that parotas would be subject to a higher GST rate of 18%. AAR differed from the view of the applicant, a private food manufacturing company based in Whitefield, that parotas should be classified under the product description of ‘Khakhara, plain chapati or roti’ (or to be more technical, under heading 1905). Owing to Entry 99A, of Schedule 1 to GST notifications, rotis are subject to a lower rate of 5%.
ID Fresh Food, which was engaged in preparation and supply of a wide range of ready-to-cook meals and fresh foods, such as idli and dosa batter, parotas, curd and paneer, had approached AAR to seek a ruling on the GST rate applicable to whole-wheat parotas and Malabar parotas. Pratik Jain, partner and leader, indirect tax, PwC India, said: “AAR has not appreciated that the term ‘roti’ is generic and can cover different types of Indian breads.”
In its order, AAR states: The products under heading 1905 (rotis) are already prepared or completely cooked products, they are ready-to-use food preparations. On the other hand, parotas need to be heated before consumption. On this ground, AAR held that parotas do not merit classification under heading 1905 and are not covered by Entry 99A.
Jain added: “The ruling has concluded based on nomenclature of the product, parota, not appearing in the relevant entry (which uses the term roti), instead of appreciating contents of the product, as envisaged under the relevant tariff heading.” AAR rulings have a persuasive value in similar cases.