In re J K Papad Industries (GST AAR Gujarat)
Question 1: Under which Tariff Heading, the product dealt in by the applicant, i.e. PAPAD of different shapes and sizes are eligible to be classified?
Answer: The product of different shape and sizes manufactured and supplied by applicant is “un-fried FRYUMS” and not “Papad” and is classifiable under Tariff Item 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975.
Question 2: What is the applicable rate of SGST and CGST on supply of such Papad of different shapes and sizes?
Answer: Goods and Services Tax rate of 18% (CGST 9% + GGST 9% or IGST 18%) is applicable to the product ‘Un-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.
Read AAAR Ruling :Advance ruling obtained with misrepresentation of facts is void ab-initio
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING,GUJARAT
M/s. J K Papad Industries, Plot No.268-270, Sarthi Industrial Park, NH No.8, Sanki, Surat, Gujarat- 394315 (herein after referred to as the “applicant” for the sake of brevity) is a partnership firm and registered under GST Act, 2017-24AAOFJ8306Q1ZP filed an application for Advance Ruling under Section 97 of CGST Act, 2017 and Section 97 of the GGST Act, 2017 in FORM GST ARA-01 discharging the fee of Rs.5,000/- each under the CGST Act and the SGST Act.
2. The applicant is engaged in the business of manufacturing and marketing of “Papad” of different shapes and sizes. Papad is crunchy snack that is conceptualised as a product that is raw pellet yet semi-cooked/un-cooked which can be stored for a longer period and needs to be cooked first either by frying or roasting before consuming as and when required.
3. 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. However, with changing of time and considering the different demands of different class of consumers innovations are made in shapes and sizes also and now Papad comes in different shapes and sizes. It does not require any extra effort to do the same i.e. change the shape and size of a Papad. The dough remains the same with minor variations in proportions of ingredient and the dough is moulded in the desired shapes and size may be round, may be square, may be semi-circle, may be hollow circle with bars in between or may be square with bars in between intersecting each other or may be of shape of any instrument, equipment, vehicle, aircraft, animal etc. The shape may vary, the size may vary but the ingredients, the proportion of ingredients, the composition and the recipe remains similar, if not exactly the same.
4. The applicant further submitted that they do not sell the Papad of different shapes and sizes manufactured by it in ready to eat condition. The applicant manufactures Papad of different shape and size, which remains in an un-cooked/semi-cooked form till it reaches the actual consumer. When the consumer desires to consume/eat, the consumer needs to either fry it or bake it before consumption and upon frying/baking, the Papad of different shapes and size sold by the applicant becomes consumable.
In other words, the Papad of different shape and size are not ready and suitable for human consumption till they are fried/baked as deemed fit and as and when deemed fit by the consumer.
5. In view of the above backdrops, the applicant sought Advance Ruling on the following questions :
(i) Under which Tariff Heading, the product dealt in by the applicant, i.e. PAPAD of different shapes and sizes are eligible to be classified?
(ii) What is the applicable rate of SGST and CGST on supply of such Papad of different shapes and sizes?
Applicant’s interpretation of law :
6. The applicant submitted that as per their understanding the product in question i.e. PAPAD of different shapes and sizes in un-cooked condition seems squarely eligible to be classified under Chapter Tariff Heading- 1905.
6.1 Entry at Sr. No. 96 under Notification No.02/2017-Central Tax (Rate) dated 28.06.2017 which exempts the supplies from the levy of tax, reads as under:-
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