Rotis or parathas:A choice to be made!!
Indians love Parathas and their staple food is roti (chapati). When you go to restaurants the most common thing to order is roti or paratha. Wait but this can't be done anymore. It's not like there is a ban on either of them, but your bill will be different because there are different GST rates on both items.
A recent ruling of Karnataka Authority for Advance Ruling (AAR) on the application of ID foods made an order that Rotis and "parothas" or "Parathas" are not one and the same thing to be in the same category and thus where on roti it is 5% GST, Parathas will be under 12% category. The applicant contended that product whole wheat paratha or Malabar paratha is available in the ambient and frozen form with a shelf life of minimum 3 days and maximum 7 days and included many ingredients and thus must be under chapter heading 1905, under product description of "khakhra, plain chapati or roti" (entry 99A). Applicant pleaded that The Customs Tariff Act, 1975 has 6 sets of rules to classify goods and they classified "Parathas" under residual items list, but as per Mumbai AAR ruling in M/s International foods, "Parathas" and "stuffed bread" are included entry 99A of notification 34/2017 of Central Tax rates. Applicant contended on the basis of rulings of the Supreme Court and other High Courts to include "Parathas" under chapter 1905 only, with GST of 5%.
RULING OF AAR
Karnataka AAR with reference to the Notification No.1/2017 - Central Tax (Rate) dated 28.09.2017, specifically to explanation (iii) and (iv) amended with notification 34/2017, held that impugned product "paratha" does not have any specific entry in the Customs Tariff Act, 1985/ GST Tariff. The products covered under 1905 are already prepared or completely cooked products and no further process is required to be done on them for consumption and hence they are ready to use prepared foods. In the instant case, the impugned product is not ready for consumption but needs to be heated for consumption. As per chapter 21 (Miscellaneous Edible Preparations), AAR held that impugned product does not merit classification under heading 1905. Now, this item will be in classification 2160 90 and thus 18% GST will be applicable now.
After the Karnataka AAR ruling, word's war started on twitter and other social media accounts, where people questioned the idea of bureaucrats, how they came up with this distinction. The serious question here is that ruling held that Parathas needs to be cooked again and thus a higher GST, but when one person goes to a restaurant where they are cooking both roti and paratha at the same time, the question of another heating does not arise and thus in light of this, the said ruling can be said to be arbitrary and without merit.
ABOUT THE AUTHOR:
Swati Tolambia is currently studying law from the School of Law, Mody University of science and technology, Laxman Garh, Sikar (Raj.).
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