Case Law Details
In re Halwa Haweli (GST AAR Kerala)
In the case of In re Halwa Haweli, the Kerala Authority for Advance Rulings (AAR) addressed the classification and tax rate applicable to branded halwa under the GST regime. The applicant, engaged in selling halwa, sought clarification on whether halwa packed and marketed under their brand name could be classified as “Namkeens” under HSN Code 2106 90 and taxed at 12% as per Entry 46 of Schedule II of Notification No. 1/2017 Central Tax (Rate). However, AAR Kerala ruled that halwa falls under the category of sweetmeats, which are listed in Entry 101 of Schedule I of the same notification, and attracts a 5% tax rate. The AAR rejected the applicant’s argument to classify halwa as “Namkeens,” noting that Schedule I specifically includes sweetmeats under HSN 210690. This ruling applies whether the halwa is packed by the applicant or procured from third-party manufacturers. Therefore, branded halwa does not fall under the classification of “Namkeens,” and it is instead subject to the lower tax rate prescribed for sweetmeats. This decision establishes clarity on the tax treatment of traditional sweets like halwa when sold under brand names.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, KERALA
1. In this Ruling, a reference hereinafter to the provisions of the CGST Act, Rules or the notifications issued there under shall include a reference to the corresponding provisions of the KSGST Act, Rules or the notifications issued there under.
2. The questions on which advance ruling is sought are given in page 1 and are not being reproduced.
3. The applicant is engaged in supply of Halwa (Sweetmeat) and wants to sell the halwa prepared by them as well as halwa sourced from elsewhere under their brand name.
4. The contentions of the applicant:
SI. No 101 of Schedule I of notification no.1/2017- Central Tax (Rate), dated 28-06-2017 specifies the sweetmeats falling under HSN 210690. Halwa being a sweetmeat is to be classified under this serial number whether packed in container or not. Entry No. 46 of Schedule II of Notification No. 1/2017 Central Tax (Rate), dated 28-06-2017 relates to Namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form. Halwa being a traditional sweet which is like Mithai, does not fall under the SI No 46 of Schedule II. On a plain reading, it is clear that Halwa whether it is packed or not or whether it is branded or unbranded, is classifiable under Heading 2106 90 99 and taxable at the rate of 5% under Entry No. 101 of Schedule I of notification no.1/2017- Central Tax(Rate), dated 28-06-2017.
5. Personal Hearing:
The applicant was granted an opportunity for a personal hearing on 21/06/2024 Sri. Rijo Tom Mathew, FCA represented for the applicant in personal hearing. In the hearing, he reiterated the contentions in the application.
6. Discussion and Findings:
6.1. We have carefully gone through the application, the statement of facts and the submissions made during the personal hearing. The questions on which advance ruling is being sought fall within the scope of clause (b) & (e) of subsection (2) of section 97 of the CGST Act.
6.2. In this regard, the first issue involved is the classification of packed halwa purchased from an outsourced manufacturer and marketed under the applicant’s brand name. The applicant wants to know whether the same are classifiable as “Namkeens etc..” and are covered by HSN Code 2106 90 and taxable under Entry 46 of Schedule II of Notification No. 1/2017 Central Tax (Rate), dated 28-062017.
6.3. On verification, it is found that Entry No 101 in Schedule I of notification no.1/2017- Central Tax (Rate), dated 28-06-2017 , specifically covers sweetmeats under HSN 2106 90 against 2.5% CGST. The same classification applies when halwa is purchased from a supplier and packed at the applicant’s facility and marketed under applicant’s brand name.
6.4. The HSN code 2106 90 falling under Schedule II covers items such as Namkeens. When sweetmeat is specifically named and covered under Schedule I of Notification No 1/2017 Central Tax (Rate) dated 28-06-2017, we find no reason to classify it under Schedule II irrespective of the fact that the same HSN, viz., 2106 90 appears in both the schedules.
4. In the light of the facts and legal position as stated above, the following ruling is issued:
RULING
Question 1. Whether packed halwa purchased from an outsourced manufacturer and marketed under the applicants brand name are classifiable as “Namkeens etc..” and are covered by HSN Code 2106 90 and taxable under Entry 46 of Schedule II of notification no.1/2017- Central Tax (Rate), dated 28-06-2017 ?
Ruling- No. packed halwa purchased from an outsourced manufacturer and marketed under the applicants brand name are not classifiable as “Namkeens etc..”. They are covered by HSN Code 2106 90 but not taxable under Entry 46 of Schedule II of notification no.1/2017- Central Tax (Rate), dated 28-06-2017 .
Question 2- Whether halwa purchased from a supplier and packed at the applicants facility and marketed under the applicants brand name be classifiable as “Namkeens etc.. and are covered by HSN Code 2106 90 and taxable under Entry 46 of Schedule II of notification no.1/2017- Central Tax (Rate), dated 28-06-2017 7?
Ruling- No. halwa purchased from a supplier and packed at the applicant’s facility and marketed under the applicant’s brand name is not classifiable as “Namkeens etc… They are covered by HSN Code 2106 90 but not taxable under Entry 46 of Schedule II of notification no.1/2017- Central Tax (Rate), dated 28-06-2017 .
