In re Jignesh Kantilal Makadia (GST AAR Gujrat)
Summary: M/s. Jignesh Kantilal Makadia, trade name Amee Industries, engaged in manufacture and supply of Papad Khar, sought an advance ruling on its classification and applicable GST rate. The applicant stated that Papad Khar is a traditional food ingredient used in papad, khichdi, fafda and other food products, and that it had been classified under HSN 2836 at 18% GST but should instead be classified under HSN 2501 as common salt or under HSN 2102 as a prepared food additive/condiment, both at 5% GST, or alternatively be exempt under Notification No. 2/2017-Central Tax (Rate). The applicant described its manufacturing process as involving heated water, sodium chloride, sodium carbonate and sodium bicarbonate, followed by consolidation, cooling, breaking, drying and packaging. The product composition stated by the applicant comprised 70% sodium chloride, 15% sodium carbonate and 15% sodium bicarbonate. The Gujarat Authority for Advance Ruling examined the competing tariff headings, including the relevant Chapter Notes and HSN Notes to Chapters 25, 21 and 28 of the Customs Tariff Act, 1975. It found that Papad Khar was neither common salt nor rock salt under heading 2501 because it was manufactured through mixing and processing beyond the processes contemplated by Chapter 25. It also held that heading 2102, covering active or inactive yeasts and prepared baking powders, did not apply because Papad Khar was materially different from yeast and baking powder in composition, characteristics and use. The Authority found that the sodium carbonate and sodium bicarbonate were the functionally active constituents and concluded that Papad Khar was appropriately classifiable under sub-heading 28362090 of the First Schedule to the Customs Tariff Act, 1975. Referring to Notification No. 09/2025-Central Tax (Rate) dated 17.09.2025, the Authority held that the product fell under Entry No. 35 of Schedule II and attracted GST at 18% (9% CGST + 9% SGST). The Authority further rejected the contention that exemption applicable to papad automatically extended to Papad Khar as an ingredient, holding that raw materials and finished products have separate HSN classifications and rates. The ruling consequently answered all questions against the applicant and held that Papad Khar does not qualify for the claimed GST exemption.
