Modern Food Enterprises Pvt. Ltd. Vs Union of India (Kerala High Court)
The Kerala High Court recently made a significant ruling regarding the classification of Malabar Parota for GST purposes. In the case of Modern Food Enterprises Pvt. Ltd. Vs Union of India, the court deliberated whether Malabar Parota should be treated as bread and taxed accordingly. This article provides an in-depth analysis of the court’s decision and its implications.
The petitioner, a dealer under the CGST / SGST Act, challenged an order by the appellate authority regarding the classification and tax rate of their products, Classic Malabar Parota, and Whole Wheat Malabar Parota. The contention centered around whether these products should be classified as ‘bread’ under Tariff item No.1905 9090, attracting a standard GST rate of 5%, or taxed at 18% as per the appellate authority’s order.
The appellate authority considered various factors, including the description under Chapter Heading 1905 and the common parlance test. It concluded that Malabar Parota does not qualify as ‘bread’ under this heading as it requires further processing before consumption. Instead, it classified the products under Entry 2106 90, subjecting them to 18% GST.
The petitioner argued that their products fit within the definition of bread and should be exempted or taxed at a lower rate. They emphasized similarities in ingredients and preparation methods with items classified under Chapter Heading 1905.
