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GST @12% applicable on unbranded pre-packaged namkeens and salted/flavoured potato chips
Date 10 Feb 2023
Written By
Unbranded Pre-Packaged Namkeens and Potato Products to Attract 12% GST, Rules AAR under Schedule-II
The Authority for Advance Ruling (AAR) in Gujarat determined that unbranded pre-packaged namkeens and potato products, like chips and sev, are subject to a 12% Goods and Services Tax (GST) under Schedule-II of the Goods Rate Notification. This ruling applies to products that are pre-packaged and labeled, aligning with the Legal Metrology Act. The applicant, intending to manufacture and supply these products, argued for a 5% GST rate, but the AAR concluded that the products fall under a different classification, attracting a 12% GST. Additionally, dry potato starch powder as a by-product also incurs a 12% GST.

The AAR, Gujarat in the matter of IN RE: M/S. PRAJAPATI KEVAL DINESHBHAI, - 2023 (1) TMI 496 - AUTHORITY FOR ADVANCE RULING, GUJARAT has held that, the supply of un-branded packaged namkeens and potato products such as chips/sev etc., according to pre-determined weights, will attract Goods and Services Tax (“GST”) at 12% as per Sl. No. 46 of Schedule-II of Notification No. 01/2017 – Central Tax (Rate) dated June 28, 2017 (“the Goods Rate Notification”). Further held that, the supply of dry potato starch powder as a bye product has a specific entry and is classified under Sl. No. 18 of Schedule-II of the Goods Rate Notification, attracting GST rate of 12%.

Facts:

M/s Prajapati Keval Dineshbhai (“the Applicant”) is an un-registered person and intended to set-up a manufacturing unit of various unbranded food products like potato chips (various flavours), potato sev, potato chivda, gathiya and other snacks (“the Products”) and supply in packages of pre-determined weight. Further, the Applicant will be producing ‘dry potato starch powder’ as a by-product of manufacture of potato based products.

The Applicant submitted the manufacturing process of all the Products and contended that the Products fall under the category of ‘Namkeens’ and should be classified under Sl. No. 101A of Schedule – I of the Goods Rate Notification and Customs Tariff Heading (“CTH”) 2106 90 99 irrespective of their ingredients and shall be liable to be taxed at 5% GST. Further, the dry potato starch powder shall be classified under Sl. No. 18 of Schedule – II of the Goods Rate Notification and under CTH 1108 13 00 and shall be liable to be taxed at 12% GST.

The Applicant filed this application to the AAR seeking the classification and applicable GST rates on the Products.

Issue:

Whether the unbranded food Products manufactured by the Applicant is to be taxed at 5% GST or at 12% GST?

Held:

The AAR, Gujarat in IN RE: M/S. PRAJAPATI KEVAL DINESHBHAI, - 2023 (1) TMI 496 - AUTHORITY FOR ADVANCE RULING, GUJARAT held as under:

Relevant Provisions:

Sl. No. 46 of Schedule – II of the Goods Rate Notification:

“Schedule II – 6%

S. No.

Chapter / Heading / Subheading / Tariff item

Description of Goods

46.

2106 90

Namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form [other than roasted gram], pre-packaged and labelled”

Sl. No. 18 of the Goods Rate Notification:

“Schedule II – 6%

S. No.

Chapter / Heading / Subheading / Tariff item

Description of Goods

18

1108

Starches; inulin”

 

(Author can be reached at info@a2ztaxcorp.com)

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