Papad is papad, irrespective of size and shape, rules Gujarat AAR – The Hindu BusinessLine

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GST not to be applicable

Papad appears to be flavour of the season for Gujarat’s Authority of Advance Rulings (GAAR) whose latest ruling said that exemption from Goods & Services (GST) holds for this wafer-like product even if there is change in shape and size.

Also read: ‘Fried/ unfried Fryums not papad; will attract 18 per cent GST’

In the latest matter, Ahmedabad-based Global Gruh Udyog approached GAAR to seek advance ruling about “classification of the goods intended to be produced such as Puripappad and Unfried Papad.” These include Jeera papad, Red Chilli papad, Green Chilli papad, Rice papad, Pauapapad, Udadpapad, Mung papad and Black pepper papad, all produced by same machinery. It also submitted that for both the products, main ingredients include wheat flour, atta, rava, sago starch, papadkhar and oil etc.

Harmonised System of Nomenclature

The applicant contended that his product is papad which is neither cooked food, nor an instant food for human consumption. Consumer needs to fry or roast the product to make it ready for consumption. It was argued that as per rules of interpretation for goods under HSN (Harmonised System of Nomenclature), specific heading will prevail over general heading. The application quoted chapter 19 of HSN classification under GST which has the heading ‘Preparation of cereals, flours, starch or milk, pastry cooks’ products.’ Under the same chapter, HSN 1905 states – ‘Papad’, by whatever name it is known, except when served for consumption.

The applicant concluded: “The classification itself concluded that papads are known by varieties of names and it shall remain papad even if known by any other name.”

Based on hearing and facts, the AAR observed that the said goods are thin and wafer like product and at this stage not ready for consumption. “Traditionally, papad has been prepared manually, in round shape. However, when ingredients and process are similar to ‘papad’, then the product in question is nothing but a kind of ‘papad’ irrespective of their shape and size,” it said while ruling exemption as provided through notification number 02/2017.

Commenting on the ruling, Prateek Bansal, Associate Partner (Tax & Customs) at law firm White and Brief said: “While these rulings are not binding precedents for other assessees or the other States’ AARs, the principles laid down by these rulings and the cited judicial precedents may certainly assist (both businesses and revenue) in the GST classification disputes.”

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