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Synopsis

In the matter before the Gujarat Appellate Authority for Advance Ruling (GAAAR), a Coram of Vivek Ranjan, Member (CGST) and Milind Torawane, Member (SGST), in an appeal filed against Gujarat Authority of Advance Ruling's (AAR) order, was of the opinion that the authority decided the matter correctly and appropriately. And that the classification scheme of the tariff read with the explanatory notes taken into account for the order, was correct.

The order said that a Frozen Paratha, since is not a ready for consumption good unlike, Khakhra, roti and chapati, therefore would attract 18% GST rather than the otherwise applicable 5% GST. The Paratha that requires 3-4 minutes of preparation and oil, is therefore different from a roti. The order read, “The parathas supplied by the appellant are different from plain chapati or roti and cannot be treated as or covered under the category of plain chapati or roti and appropriate classification of parathas would be under Chapter heading 2106”.

In the pertinent matter the appellant (Vadilal Industries Ltd) produced eight varieties of Paratha which are Malabar Paratha, Mixed Vegetable Paratha, Onion Paratha, Methi Paratha, Aloo Paratha, Laccha Paratha, Mooli Paratha and Plain Paratha. And stipulated that the principal ingredient of Paratha is wheat flour. Further that the Parathas supplied and sold by them in packed condition are to be placed directly on pre-heated flat pan or griddle for being heated on medium flame for about 3-4 minutes and during this period, is flipped every 30 seconds, till it turns golden brown (as mentioned in the directions).

The questions therefore were:

i). Whether the product 'Paratha' i.e. various varieties of Paratha produced by the applicant merit classification under HSN Code 19059090?

ii). Whether the product, 'Paratha' i.e. all varieties o.f Paratha produced by the applicant are chargeable to 5% GST (i.e. 2.5'% SGST and 2.5% CGST) under Sl.No. 99A of Schedule I of Notification No. 0l/2017-CT (Rate) and Notification No. 0l/2017-lT (Rate) dated 28-6-17?

Here HSN Code is the Harmonized System of Nomenclature, which is a basis for the Customs Tariff Act, 1975, and classification of goods under the GST regime is done in accordance with it.

The appellant had contended that GAAR had erred by not giving any importance to end user test as to how the product is known in the market and the way it is being consumed. Further submitted that a Paratha is similar to roti or chapatti and both are consumed in similar fashion. Therefore, should be seen from the same perspective. Further contended that GAAR also erred in observing that a plain chapatti or roti does not require any processing before consumption as if paratha. chapatti or roti presented in packed condition and bought by consumer. they require to be subjected to heating process for making them edible. And further cited pizza bread, rusk and toasted bread where only 5% GST is applicable, despite the fact that even they require preparations. 

The AAAR thus noted, "As regard the appellant's contention that their product is similar to roti or chapatti, we have gone through the composition of various types of parathas as provided by the appellant and found that they have one common ingredient wheat flour (36% to 62% ) depending upon the type of paratha, and other ingredients are water, edible vegetable oil, salt, anti-oxidant, alu (potato), vegetables, mooli (radish), onion, methi etc. Whereas in common parlance, plain roti or chapatti is basically made only from wheat flour apart from water. From the above, it is clear that on the basis of ingredients used in the appellant's product and roti or chapatti, composition of both are very different from each other".

Case Title: Vadilal Industries Ltd. (Appellant)