In re Chellasamy Nadar Deivarajan (Mahalakshmi Store) (AAR Tamilnadu)
Whether the unbranded mixture of flour of pulses and grams i.e. leguminous vegetables and cereal flours fall under the HSN Code 1106 and 1102 respectively though blending of leguminous flour added with very small quantity of rice flour or maize flour (without adding salt or any masala product) fall under exemption as per the circular no 80 dt. 31-12-2018 and Clarify the GST Rate for Flour Mixture of Grams, pulses, leguminous vegetable with cereal flour/Rice flour and it’s HSN Code?
The applicable rate of tax is dependent on whether the applicant is using a registered brand name which is defined in Notification No. 1/2017-C.T.(Rate) dated 28.06.2017 as the brand name or trade name, that is to say, a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is registered under the Trade Marks Act, 1999. It is seen from the packaging that the applicant is packing in unit containers and affixing `Shri Mappillai Vinayagar Mark’. It is not submitted by the applicant whether this is a mark registered under Trade Marks Act, 1999. The rate of tax will depend on this.
If the products are packed with such a registered Trade Mark in unit containers, the rate of tax will be :
Type I, II, III, IV and V (CTH 11061090)- 2.5% CGST as per Sl.No. 59 of Schedule I of the Notification No. 1/2017-C.T.(Rate) dated 28.06.2017 as amended and 2.5% SGST as per Sl.No. 59 of Schedule I of Notification Ms. No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended
Type VI (CTH 11029090) : 2.5% CGST as per Sl.No. 55 of Schedule I of the Notification No. 1/2017-C.T.(Rate) dated 28.06.2017 as amended and 2.5% SGST as per Sl.No. 55 of Schedule I of Notification Ms. No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended.
If the products are packed without a registered brand name , the rate of tax will be :
Type I, II, III, IV and V (CTH 11061090)- nil CGST as per Sl.No. 78 of Notification No. 2/2017-C.T.(Rate) dated 28.06.2017 as amended and nil SGST as per Sl.No. 78 of Notification No.II(2)/CTR/532(d-5)/2017 vide G.O. (Ms) No. 63 dated 29.06.2017 as amended.
Type VI (CTH 11029090) : nil CGST as per Sl.No. 74 of the Notification No. 2/2017-C.T.(Rate) dated 28.06.2017 as amended and nil SGST as per Sl.No. 74 of Notification No.II(2)/CTR/532(d-5)/2017 vide G.O. (Ms) No. 63 dated 29.06.2017 as amended.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, TAMILNADU
Note : Any appeal against the advance ruling order shall be filed before the Tamil Nadu State Appellate Authority for Advance Ruling, Chennai under Sub-section (1) of Section 100 of CGST ACT/TNGST Act 2017 within 30 days from the date on which the ruling sought to be appealed against is communicated.
At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act.
Shri. Chellasamy Nadar Deivarajan, Proprietor, M/s Mahalakshmi Store 26/6, Chinthamani Road, Near Keeraithurai Bus Stop, Madurai – 625 001. (hereinafter referred to as ‘Applicant’) is registered under GST vide GSTIN No. 33AESPD1764Q 1ZZ. The Applicant has preferred an application seeking Advance Ruling on the following Question:
1) Whether the unbranded mixture of flour of pulses and grams i.e. leguminous vegetables and cereal flours fall under the HSN Code 1106 and 1102 respectively though blending of leguminous flour added with very small quantity of rice flour or maize flour (without adding salt or any masala product) fall under exemption as per the circular no 80 dt. 31-12-2018?
2) Clarify the GST Rate for Flour Mixture of Grams, pulses, leguminous vegetable with cereal flour/Rice flour and it’s HSN Code?
The Applicant has submitted the copy of application in Form GST ARA – 01 and submitted a copy of Challan evidencing payment of application fees of Rs. 5,000/ – each under Sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017.
2.1 The applicant has stated that they manufacture flour of pulses and gram i.e. leguminous vegetables and cereal flour. Their products are sold without having any brand name and claiming exemption after filing disclaimer affidavit which is also mentioned in the packing material. Sometimes meager cereal/rice flour is added to the leguminous flour for preparing dishes. When the dhall, gram, pulses are merely crushed into powder without adding any substances, they are called un branded flour of the dried leguminous vegetables (HSN Code 1106) and are exempted. Similarly, unbranded cereal flours (rice Flour, Wheat flour, maize flour, etc.,) without having any other substances also fall under exemption category under HSN Code 1102.
2.2 For making savories and snacks, the above mentioned different types of flour are needed by mere blending/mixing. i.e. for a kind of specific category of savories, some portion of pea flour and gram flour were mixed. Sometimes minimum percentages of rice flour or maize flour are mixed for the preparation of savories. Here there is no addition of any chemical or salt or masala power. It is only a mere blending of flour of pulses and cereals. Though the different kinds of flour of pulses and grams are mixed with rice flour or maize flour, it is still called as flour of pulses and grams and there would not be emergence of a commercially distinct and separate commodity. But such blending/mixture of flour of pulses and grams does not have any separate HSN Code and specific entry under the GST Act, which leads to wrong interpretation and misconception on the part of the officer’s resultant in to unnecessary levy of tax.
2.3 To avoid such ambiguity, they requested to clarify though some minimum quantity of rice flour and maize flour were added to the gram and peace flour, they would still fall under entry having HSN Code 1106 eligible for exemption. Recently the government has issued circular no.80, dated 31.12.2018 clarifying the product:
Chhatua or Sattu is a mixture of flour of ground pulses and cereals. HSN code 1106 includes the flour, meal and powder made from peas, beans or lentils (dried leguminous vegetables falling under 0713.) Such flour improved by the addition of very small amounts of additives continues to be classified under HSN Code 1106. In unbranded, it attracts Nil GST (S. No. 78) of notification No. 2/2017 – Central Tax (Rate) dated 28.06.2017) and if branded and packed it attracts 5% GST (S.No. 59 of schedule I of notification No. 1/2017 – Central Taxes (rate) dated 28.06.2017)“.
Further the dictionary meaning of (Wikipedia)
“Sattu is flour from the Indian subcontinent consisting of a mixture of ground pulses and cereals. The dry powder is prepared in various ways as a principal or secondary ingredient of dishes.”
3.1 The applicant was heard in person on 24.07.2019. The applicant appeared and gave a written submission. They stated that they have been supplying gram flour, peas flour, corn flour, rice flour separately. Now, they propose to supply a mixture of these flours. They undertook to submit the ratios in which these flour are going to be sold. They have not yet made any supply for the same. They will submit the specific ratio of each ingredients for which the ruling is sought.
3.2 The Superintendent of CGST & Central Excise, Madurai south Range appeared and filed written submissions of the central jurisdiction authority, the Commissioner of CGST& Central Excise, Madurai.
4. The Central Authority has furnished the following comments:
> Unbranded flour of dhall, gram, pulses of dried leguminous vegetables(HSN Code 1106) and unbranded cereal flours(rice flour, maize flour etc)(HSN Code 1102) are figured in the exemption list as per Notification No. 2/2017- C.T.(Rate) dated 28.06.2017. But blending/mixing of these flours for preparing savories has to be considered as “Preparation of flour” and are to be classified under 1901 of HSN
> HSN 1901 is not covered under Notification No. 2/2017-C.T.(Rate), hence the same is taxable and not exempted. The GST rate for the same is levied @ 18%
5.1 The applicant submitted the following categories of proportionate percentage of various kinds of flour of pulses and grams/cereals resulted into mixture of flours:
