The classification of Parathas is always under discussion from the day when Authority for Advance Rulings (AAR) of Karnataka held in the case of ID fresh Foods Pvt Ltd. that Parathas are chargeable at 18%.
The question is whether Parathas whether they can be classified in line with Chapattis/ Rotis or will it be classified differently than chapattis/ Rotis has come to discussion under various advance ruling authorities.
Before discussing about the advance rulings, let us discuss about what Tariff headings, Chapter notes and notifications speaks about these items.
Supplementary notes to the chapter 21 mention that the classification under 2106 inter alia includes preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consumption;
Chapter number 19 is pertaining to ready to eat foods such as baked bread, pastry etc. It does not deal about Parathas, Chappatis/ Rotis in specific while roti’s and chapattis has been classified specifically into this heading under schedule III (applicable rate is 5%) by the notification no 1/2017 – GST (Rate) dated 28.06.2017(as amended from time to time). However, there is no mention about Parathas in the same notification.
Now let us discuss what various advance ruling authorities decided with respect to classification of Parathas.
Recently Appellate Authority for Advance Rulings (AAAR), Gujrat held in the case of Vadilal Industries Ltd that Paratha’s cannot be classified in line with the Chapatti or Roti under heading no 1905 but it is to be classified under heading no 2106. The similar view held by the AAR, Karnataka in the case of ID Fresh Foods (P). Ltd, however the ruling held void by the AAAR, Karnataka as there were already proceedings by DGGI on very same issue that was raised before Authority. However in the case of Signature International Foods India Private Limited (Signature International) it was held the same would be classified under the heading no 1905 and the items included in the advance ruling include plain chapatti, Tortilla, Tortilla Wraps, roti, Roti rolls, Wraps, Paratha and Paratha wraps.
However, the view of Signature international is not upheld by any other advance ruling authorities
The key factors considered by advance ruling authorities in all the other judgements which classified parathas under heading number 2106 are as follows:
1. “The Parathas supplied by the appellant are different from Plain Roti or Chapatti and cannot be treated as or covered under the category of Plain Roti or Chapatti.”
2. “Further the parathas supplied by the appellant will not fall under Chapter heading 1905. The appropriate classification of Parathas would be under Chapter heading 2106 as the subject Parathas require to be cooked before the same can be consumed.”
3. It neither covered under 3(a) or 3(b) of rules of interpretation, therefore rule 3(c) which says that if a specific item is equally classifiable under both the headings then entry which comes last in numerical order prevails.
My opinion – The Advance ruling authorities held that parathas are different from Plain Roti or Chapatti and cannot be treated or covered under the category of plain Roti Or Chapatti and parathas require to be cooked before the same can be consumed. these points cannot be basis for the decisions rather it cannot be viewed that Chapattis or Rotis also needs to be heated for eating and this matter is subject to further litigation, we have wait and watch how Hon’ble high courts are going to interpret the subject matter.
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Interesting case. Thank You