In re Barkatbhai Noordinbhai Velani (M/s. Alisha Gruh Udyog)
The product ‘fried – different shapes and sizes Papad’ involved in the present case merit classification under Custom Tariff heading (CTH) No. 19059040 of the Customs Tariff Act, 1975 and chargeable to 18% rate of Goods and Services Tax as per Sl. No. 16 of Schedule-III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017 and Notification No. 1/2017-IGST (Rate) dated 28.06.2017.
FULL TEXT OF ORDER OF APPELLATE AUTHORITY OF ADVANCE RULING, GUJARAT
At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (herein after referred to as the ‘CGST Act, 2017’) and the Gujarat Goods and Services Tax Act, 2017 (herein after referred to as the ‘GGST Act, 2017’) are in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act, 2017 would also mean reference to the corresponding similar provisions in the GGST Act, 2017.
2. The present appeal has been filed under Section 100 of the CGST Act, 2017 and the GGST Act, 2017) by Alisha Gruh Udyog (Shri Barkatbhai Noordinbhai Velani) (hereinafter referred to as Appellant) against the Advance Ruling No. GUJ/GAAR/R/66/2020 dated 17.09.2020.
3. The appellant has raised the following question for advance ruling in the application for Advance Ruling filed by it.-
“Whether any tax is payable in respect of sale/ supply of Fryums manufactured by the applicant ? And if answer is in affirmative, the rate of tax thereof “?
4. The appellant has submitted that they are engaged in the business of manufacturing and supply of Fryums and different type of Namkeen/Farsan. Fryums are “Papad” of different shapes and sizes in ready to eat form. Fryums prepared from maida, in un-fried form, is purchased by the appellant from the market as raw material. The same is first fried and various masala powders are applied and packed in small packets for being sold in market. The aforesaid fryums are sold by the applicant in different shapes and sizes such as alphabets, rings, stars etc.
5. The appellant has submitted that it is a settled legal position that Fryums are papad and since Papad is tax free/exempt as per tariff item 19059040, the Fryums manufactured and sold by the applicant would also be exempt from payment of any tax. Entry at S.No. 96 of the Notification No. 02/2017-Central Tax (Rate) dated 28.06.2017 speaks of ‘Papad by whatever name called, except when served for consumption’; that the entry makes no distinction between fried or un-fried papad and even after frying, it still retains its original character of that of a papad; that the term “by whatever name called” would include within its sweep all types of papad known by whatever name in the common parlance and the only category of papad excluded by Entry at Sr.No. 96 is when it is served for consumption; that it is a settled legal position that served for consumption means served in hotel, eating house and meant for consumption at the place itself.
6. The Gujarat Authority for Advance Ruling (herein after referred to as ‘the GAAR’), vide Advance Ruling No. GUJ/GAAR/R/66/2018 dated 17.09.2020, inter-alia observed that ‘Papad’ has not been defined or clarified under the Customs Tariff Act, 1975, the CGST Act, 2017, or the Notifications issued under the CGST Act, 2017/ GGST Act, 2017/ IGST Act, 2017. It is well settled principle of interpretation of statute that the word not defined in the statute must be construed in its popular sense, meaning ‘that sense which people conversant with the subject matter with which the statute is dealing would attribute to it’. It is to be construed as understood in common language. It is also observed that in market, Papad commonly are sold in ready to cook condition and not “fried” or “baked” form whereas appellant’s product are sold in market as fried Fryums in ready to eat and not ready to cook condition. In terms of Gujarati language, it can be said that cooked or fried Fryums are served as “Farsan” and not as “Papad”, whereas cooked or fried Papad is served as only “Papad”. Hence ‘Papad’ even after roasting or frying are known and used as ‘Papad’ only whereas the fried Fryums with masala are known as “Fryums” only. Therefore, in commercial or trade parlance also, the ‘fried Fryums with masala’ cannot be said to be known as ‘Papad’. Both the products are different and have their individual identity. Accordingly, in common parlance test, the appellant’s product i.e. “different shapes and sizes of fried fryums” is not “Papad” but is “Fryums”. The applicant himself has mentioned the fact in their application that they are engaged in the manufacture of fried Fryums with masala. This facts indicate that applicant’s product in market are called as Fryums. Thus, Heading 2106 is an omnibus heading covering all kind of edible preparations, not elsewhere specified or included. Chapter Note 5 provides an inclusive definition of this heading and covers preparations for use either directly or after processing, for human consumption. Chapter Note 6 pertaining to Tariff Item 2106 90 99 also provides inclusive definition and products mentioned therein are illustrative only. In view of the foregoing, the GAAR ruled as follows :-
Question: whether any tax is payable in respect of sale/ supply of Fryums manufactured by the applicant? And if the answer is in affirmative, the rate of tax thereof?
Answer: The product fried Fryums’ manufactured and supplied by applicant is classifiable under Tariff Item 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975. Goods and Services Tax rate of 18% (CGST 9% + GGST 9% or IGST 18%) is applicable to the product ‘fried Fryums’ as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended, issued under the CGST Act, 2017 and Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 or IGST Act, 2017.
7. Aggrieved by the aforesaid advance ruling, the appellant has filed the present appeal.
8. During the course of personal hearing held on 22.01.2021, the appellant reiterated the submissions made in the appeal dated 07.10.2020.
9. The appellant in the ground of appeal has submitted that they are in the business of manufacturing and trading of “Papad” of different shapes and sizes in ready to eat form. The same is first fried and various masala powders are applied and packed in small packet for being sold in the market. The appellant submits that papad whether in ready to cook /un-fried form or ready to eat /fried form remains papad only. Even after frying, it still retains its original character of papad. The Papad, turns out to be a papad when the dough is moulded and given the shape, usually a palm size round or may be smaller or bigger. The advent of technology innovation and different demand of different class of customer Papad comes in different shapes and sizes. The dough remains the same with minor variations in proportion of ingredients and the dough is moulded in the desired shape and size may be round, square, semi circle, hollow circle with bars in between or may be square with bars in between intersecting each other or may be of the shape of any instrument, equipment, vehicle, aircraft, animal, etc. The different shapes and sizes are obtained with the help of a die and there is no difference in either the ingredients used or in the process of manufacture.
10. The appellant has submitted that the principal raw materials for their papad products are rice flour, corn flour, wheat flour, superfine wheat flour, cereal flour, tapioca starch, potato starch, salt, water and flavor as the case maybe. Similar raw-materials including pulses, salt, water etc. are used for making papad.
11. The appellant has submitted that as per their understanding their product in question i.e. Papad of different shapes and sizes papad in ready to eat condition seems squarely eligible to be classified under Chapter Tariff Heading -1905 and covers under Entry number 96 of Notification No.2/2017 -Central Tax (Rate) Dtd.28/06/2017 which exempts the supplies from the levy of tax, reads as under-
