In re Gajanand Foods pvt. ltd. (GST AAR Gujarat)
The Instant Mix Flours/Mix Flours of: (i)Gota (ii) DakorGota (iii) MethiGota (iv) Khaman (v) Dhokla (vi) Idli (vii) RavaIdli, (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 AAAR order: GST Classification of Flours and Mixes: Gujarat AAAR Decision
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, GUJARAT
A. BRIEF FACTS
The applicant M/s. Gajanand Foods pvt.ltd. supplies varieties of instant mix flours under the brand name of Gajanand-Handvo, Vada, Gota, Khaman, Dalwada, Dahiwada, Dhokla, Idli, RavaIdli, Dosa, Upma and Gulab Jamun Flour. As per the applicant, the above flours fall under HSN 1102. 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(spices) necessary to prepare a particular food item from that flour but that 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; that as per their understanding the above flours fall under HSN 1102 and are taxable at 2.5% CGST + 2.5% SGST.
2. The applicant referred to the various determination orders passed under section 80 of GVAT Act, 2003 i.e. Determination Order No.2010/D/171-177/No.356-359 dated 12-8-10 in Kitchen Overseas ltd., Determination Order No.2010/D/55-62/No.45-48 dated 27-5-11 of Vitagreen products pvt.ltd., and Determination Order No.2013/D/197/2019 in the case of M.T.R. foods pvt.ltd. dated 20-12-13 wherein different varieties of flour i.e. GotaFlour, KhamanFlour, DalwadaFlour, DahiwadaFlour, DhoklaFlour, IdliFlour and Dosa Flour have been considered to be flours and held to be falling under Entry 12 in Schedule I to the GVAT Act under ‘Flour of Cereal and Pulses’; that inspite of there being a change in law i.e. the time when that determination order was passed the GVAT Act was prevailing and currently GST Act is in force but if there is no substantial change in the schedule entries then the classification and interpretation adopted in the earlier law needs to be followed; that the applicant relies upon the decision of the Hon’ble High Court of Gujarat in the case of West Coast Waterbasepvt.ltd. vs. State of Gujarat wherein the said principal has been laid down by the Hon’ble High Court that when there is no material change in the entries, the classification adopted in earlier law should continue to prevail and be accepted; that considering the overall facts and circumstances of the case vis-a-vis the entries in question and the settled law on the subject, the applicant submits that flours as stated above are eligible to be classified under the Tariff Heading No.1102 and liable to GST at 5%(2.5% CGST + 2.5% SGST). The applicant’s question for Advance Ruling is- “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, RavaIdli Flour, Dosa Flour, Upma Flour, Gulab Jamun Flour manufactured and supplied by the applicant will attract CGST/SGST?
3. The applicant has filed amendment application dated 2-9-20 wherein the Question was re-framed as follows:
“The applicant seeks Advance Ruling for classification and determination of rate of tax for following items:
Gota Mix Flour, Dakor Gota Mix Flour, Methi Gota Mix Flour, Khaman Mix Flour, Dhokla Mix Flour, Idli Mix Flour, Rava Idli Mix Flour, Dosa Mix Flour, Upma Mix Flour, Dahiwada Mix Flour, Dalwada Mix Flour, Menduvada Mix Flour, Handvo Mix Flour and Khichu Mix Flour.”
4. The applicant submits that the different varieties of flours, salt and spices mixed together and sold by the applicant are commonly known as Mix Flours which are in ready to cook condition but not in ready to eat condition where the customer can follow the recipe and instructions mentioned on the packing of the respective product. The applicant has submitted the process of manufacture of different varieties of flours as under:
{i} The applicant purchases food grains and pulses from open market.
{ii} Such pulses are sorted and washed and then send to grinding machine.
{iii} Pulses are grinded into flour in grinding machine for e .g. where Grams are purchased it results into gram flour by following grinding process. In certain cases, applicant also purchases grinded flour directly from the vendors.
{iv} After grinding process, certain spices are mixed in flour and such mixed flour is packed in various packings.
{v} Mixed flours of different varieties manufactured (commercially known as ‘Instant Mix Flour’) are sold in open market or through distributors to consumers.
{vi} The consumer of such instant mix flour is required to follow the recipe and instructions stated on the packing for food preparation process before such product can be consumed as eatable.
{vii} Hence, 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’.
5. The applicant further submits that the manufacturing process of all the mix flours is more or less similar with necessary changes in type of flour and composition and proportion of other ingredients and in any case the main ingredient remains flour which may be either rice flour, grams flour, paddy flour etc. The manufacturing process is submitted as follows:
{i} Ready to mix/Instant mix flour contains mainly flours of grains and/ or pulses like bengal gram dal, gram dal, udad dal, chana dal, Moong dal, Paddy, Sago, wheat granule, rice etc. where the content of ‘flour’ is having major weightage. Most of the mixed flour products have ‘flour’ content more than 70-90%.
{ii} Powder of spices like pepper, red chilli, coriander, ajma, sounf, jeera, turmeric, tamarind, iodised salt, sugar, mustard, lemon, condiments, citric acid, sodium bicorbonate, turmeric, cumin, clove, curry leaves, asafoetida, baciliyam, black pepper, tejpatta, curry leaves bundian, fennel seeds, anise seeds, bay leaf, neem leaves(sweet), flavours etc. are added in a very little quantity to make the product tasty and delicious.
{iii} At the processing unit, the applicant is not carrying any process of cooking. The applicant carries out only mixing process, whereby spices, condiments and flavours are mixed with flour of grains, cereals and pulses. Flour of grains, cereals and pulses are used in its basic form.
{iv} Instant mix/Ready to mix flour is packed in sealed packing of 60/200/250/400/500 grams and in 1 kgs and 5 kgs. For convenience of the customer, preparation process/recipe to prepare food from such instant mix flour is printed on the packing.
{v} Instant mix/Ready mix flour is by all means not a processed food, neither cooked food, nor semi-processed food, nor semi cooked food, nor preserved food or not a ready-to-eat food. Instant mixed flour is a flour of grains and pulses mixed with spices, condiments and flavours which needs to be cooked for consumption.
5.1 The applicant provides the details of ingredients used in manufacture of different types and varieties of Instant mix flours:
