GST applicable at the rate 18% on instant mix flours- GST AAR Gujarat
Source: This article is based upon the advance ruling rendered by the GST Advance Ruling Authority Gujarat in the case of M/s Gajanand Foods Private Limited. The source of the above article is www.gstcouncil.gov.in
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Name of the Applicant: |
Gajanand Foods Private Limited |
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Appeal No.: |
Advance Ruling No. GUJ/GAAR/R/28/2021 |
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Ruling pronounced by: |
GST AAR Gujarat |
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Date of Ruling: |
19-07-2021 |
Brief Facts:
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The applicant is in the business of supplying various instant mix flours under the brand name ‘Gajanand’ namely Handvo, Vada, Gota, Khaman, Dalwada, Dahiwada, Dhokla, Idli, Rava Idli, Dosa, Upma and Gulab Jamun Flour. The applicant submits that the composition and ingredients contained in the different types of flours clearly reveals that it does not contain maize flour or wheat flour; that the products mentioned above are nothing but flours; that the applicant also supplies a small pack of masala necessary to prepare a particular food item from that flour but does not make any difference in the main product as the small pack of masala is placed in the packet of flour for the convenience of the customer. |
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The applicant submits that flour remains flour even after mixing it with some spices and condiments and the basic characteristics of flour does not change; that the customer purchases flour mixed with spices and condiments but it does not purchase a ready to eat product of the shelf; that the applicant could supply spices and condiments in separate sachets and could sell pure flour but for the ease and convenience of customer and to relieve the customer from going through the process of mixing of those spices and condiments with the flour, the applicant does that job and mixes flour with spices and condiments in such proportion to get best taste; |
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The applicant submits that the customer purchases instant flour mixes of the applicant exactly in the similar manner it may purchase other flours from a flour mill; Mere mixing of flour with spices and condiments does not change basic character and form of flour so as to consider it as an entirely different product i.e. the flour remain flour. |
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Mix flour cannot be consumed as it is, but it is required to follow certain cooking procedures before consumption. Hence, the product manufactured and sold by the applicant is not ‘ready to eat’ but can be said as ‘ready to cook’. It can be said that the applicant is selling it in raw form which needs further process of cooking to make it consumable; that as per their understanding, the products in question i.e. flour mix of different types that are in neither cooked nor ready to eat condition seems squarely eligible to be classified under Chapter Tariff Heading- 1106 and thus taxable at the rate of 5% [CGST 2.5% + SGST 2.5%] |
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The applicant referred Circular No. 80/54/2018-GST dated 31.12.2018 issued by CBIC in support of his submission wherein the CBIC ought to clarify the classification of ‘Sattu’. |
Question before Authority:
Under which Chapter, Tariff Heading and HSN, the different varieties of flours i.e. Handvo flour, Vada flour, Gota flour, Khaman flour, Dalwada flour, Dahiwada flour, Dhokla flour, Idli flour, Rava Idli flour, Dosa flour, Upma flour, Gulab Jamun flour manufactured and supplied by the applicant will attract CGST/SGST?
Observations of Authority:
- We note that HSN 2106 covers ‘Food Preparations not elsewhere specified or included’. The Explanatory Notes of HSN for Chapter Heading 2106 provides as follows:
“Provided that they are not covered by any other heading of the Nomenclature, this heading covers:
(A) Preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk etc.), for human consumption.
(B) Preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption. The heading includes preparations consisting of mixtures of chemicals (organic acids, calcium salts etc.) with foodstuffs (flour, sugar, milk powders etc.), for incorporation in food preparations either as ingredients or to improve some of their characteristics (appearance, keeping qualities, etc.) (See the General Explanatory Note to Chapter-38) ……”
- The products of mix flour/ instant mix flours are preparations for use, after processing, such as cooking, carrying out the detailed procedure for cooking as mentioned on the packets of all the said products, then ready for human consumption. The applicant submitted that the products are not ‘in ready to consume form’ but needs to be subjected to further processing and cooking for conversion into ‘ready to eat food’.
- We find that Chapter Heading 2106 is not confined to processed or semi processed food, cooked or semi cooked food, preserved food and ready to eat food. In fact, any product which is a food preparation and which is not elsewhere specified or included in the CTA, 1975, gets covered under HSN 2106.
- Further, the applicant submits that the products are commercially known as Instant Mix Flour. We find no merit to treat the subject goods as flour. Further as these products are not specifically mentioned under any specific Tariff item, we are of the view that the products of Mix Flour/ Instant Mix Flour are appropriately classifiable under HSN 2106.
Ruling by Authority:
- The various Instant Mix/ Ready Mix Flour being supplied by the applicant are classifiable under HSN 2106 and in precise sub-heading 2106 90.
- Notification No. 1/2017- Central Tax (Rate) dated 28-06-2017, as amended, entry at Sr. No. 23 of Schedule- III reads as follows:
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Sr. No. |
Chapter/ Heading/ Sub-heading/ Tariff Item |
Description of Goods |
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23 |
2106 |
Food preparations not elsewhere specified or included [other than roasted gram, sweetmeats, batters including idli/ dosa batter, namkeens, bhujia, mixture, chabena and similar form, khakhra, chutney powder, diabetic foods |
- Thus, ‘Food preparations not elsewhere specified or included’ falling under Chapter Heading 2106 are covered under the aforesaid Entry at Sr. No. 23 of Schedule-III of Notification No. 1/2017- Central Tax, as amended, attracting GST @ 18% (CGST 9% + SGST 9%). Though some of the specific products of Chapter Heading 2106, excluded from this entry are covered under different entries of Schedule-I or Schedule-II, attracting GST @ 5% or 12%, none of the aforesaid products of various Instant Mix/ Ready Mix Flour being supplied by the applicant are the products which have been excluded from the entry at aforesaid Sr. No. 23 of Schedule-III or which have been specifically included in any other entry of other Schedule of Notification No. 1/2017- Central Tax (Rate), as amended or in any of the entries of Notification No. 2/2017- Central Tax (Rate).
- Accordingly, the Instant Mix Flours/ Mix Flours of: (i) Gota (ii) Dakor Gota (iii) Methi Gota (iv) Khaman (v) Dhokla (vi) Idli (vii) Rava Idli (viii) Dosa (ix) Upma (x) Dahiwada (xi) Dalwada (xii) Menduvada (xiii) Handvo and (xiv) Khichu are classifiable under HSN 2106 90 (Others) attracting 18% GST (9% CGST + 9% SGST).
Read complete Ruling: Gajanand Foods Private Limited- GST AAR Gujarat
Disclaimer: The article is based upon the advance ruling rendered by GST AAR Gujarat and is meant only for informative purposes. Readers are advised to act diligently and under consultation of any professional before acting on the basis of above article.
