No one to fight for clarifying GST rates on Parathas

Unlike fryums, clarity on the Goods and Services Tax (GST) will continue to elude packed parathas despite contrary rulings by the Authority for Advance Rulings (AAR). This is also creating confusion as the general perception is that all sorts of parathas will face a higher GST.

There is no definition of “paratha” per se in GST law.

Last week, the GST Council clarified that fryums manufactured using the process of extrusion are specifically covered under CTH (Custom Tariff Head) 19059030 and attract GST at the rate of 18 per cent. Though fruyms and paratahas have been in the news in various rulings by the AAR and AAAR (Appellate Authority for Advance Rulings), the Council focused only on the first.

When asked why there was no similar clarification for parathas, a senior Central Board of Indirect Taxes and Customs (CBIC) official told businessline: “We have not received any representation on this issue. Once it is done, then it will go to the fitment committee, and accordingly, suitable clarification can be issued.”

The issue of packed parathas was in the headlines again in September after Gujarat’s AAAR upheld that preserved parathas, which need to be heated before consumption, cannot be similar to roti, chapati, or khakra and will attract GST at the rate of 18 per cent. This was similar to the ruling by Kerala AAR, which held that the Classic Malabar parota and whole Malabar parota attract 18 per cent, but varied from Maharashtra AAR and Karnataka AAAR. While Maharashtra AAR clubbed parota with khakhra, plain chapati, and roti and said it would attract concessional duty, Karanataka AAAR invalidated a previous ruling about the applicability of 18 per cent GST on parotas but did not specify the rate.

In the present matter, taking note of the instructions on the packaging, Gujarat AAAR observed that the process of 3–4 minutes of heating amounts to cooking of the parathas as the colour changes and it becomes ready for consumption. “As compared with roti or chapati or items falling under chapter heading 1905, which are ready to eat and do not require any further processing before consumption, the appellant’s products have to be cooked before the same can be consumed,” the AAAR said and disposed of the appeal by Vaidilal Industries.

Earlier, fryums too faced contrary rulings, and even the Gujarat AAAR itself gave two different rulings in two similar matters. Normally, the word fryum is popularly used for different shapes and sizes, like round, square, semi-circle, hollow circle with bars in between or square with bars in between intersecting each other, or the shape of any instrument, equipment, vehicle, aircraft, or animal type papad. So, the issue was: should it be treated like papad and given the tax exemption?

Then, this issue gained further prominence when a well-known industrialist posed a question on social media asking whether a round papad is exempt from GST and a square papad attracts GST. Responding that CBIC said papad, by whatever name known, is exempt from GST. Also, the exemption is not based on the shape of the papad. Still, the issue remains unresolved on Fryums because of contrary rulings. Then a representation was made, and accordingly, a clarification was issued.

Need to note here is that “Fryums” (of TTK Healthcare Ltd.) is the brand name of a company and not the generic name of papad in different shapes and sizes.

Source from - https://www.thehindubusinessline.com/economy/no-one-to-fight-for-clarifying-gst-rates-on-parathas/article66288581.ece