In re Tvl. V.S. Trading Company (Prop. P. Vasudevan) (GST AAAR Tamilnadu)
Tamil Nadu Authority for Appellate Advance Ruling (AAAR) has set aside a previous ruling concerning the Goods and Services Tax (GST) classification of “tapioca flour” traded by Tvl. V.S. Trading Company. The AAAR’s decision mandates a re-examination of the case, emphasizing the necessity of adhering to principles of natural justice and the submission of comprehensive evidence. This case highlights ongoing complexities in classifying by-products and residues within the food processing industry for tax purposes.
Tvl. V.S. Trading Company, located in Salem, operates as a trader of tapioca flour, procuring the product from registered dealers and subsequently selling it both within and outside Tamil Nadu. The company’s suppliers issue bills of supply that classify the product under Tariff Heading 1106, asserting its exemption or NIL-rated status. As a GST-registered entity, the appellant sought an advance ruling on several critical issues: the appropriate classification of tapioca flour and related remnants, the applicability of specific GST exemption notifications, the determination of tax liability for these goods, and the requirement for the trader’s GST registration.
The Authority for Advance Ruling (AAR) initially issued an order on June 20, 2023. This ruling classified the product under HSN 230310 as ‘Residues of starch manufacture and similar residues,’ thereby attracting a 5% GST rate. Consequently, the AAR determined that the exemption notification cited by the appellant was inapplicable, and the company was liable for GST registration as per Section 22 of the GST Act. Tvl. V.S. Trading Company subsequently filed an application for rectification, arguing that the AAR had misinterpreted the manufacturing process of tapioca flour and that the correct classification should be HSN 1106, which would result in a NIL rate of tax. However, the AAR rejected this rectification request in its order dated March 18, 2025.
