GST Appeal: Pizza Topping Classified as Food Preparation, Not Processed Cheese.

The Appellate Authority upheld the decision of the Authority for Advance Ruling, classifying "Pizza Topping" under Chapter Heading 2106 as "Food Preparations not elsewhere specified or included," attracting an 18% GST rate. The appellant's appeal was dismissed, affirming that the product does not qualify as "processed cheese" under Chapter Heading 0406 due to the substantial presence of vegetable fat, leading to the higher GST rate classification.

---

---

Issues Involved:
1. Classification of the product "Pizza Topping" under the appropriate GST heading.
2. Whether the product qualifies as "processed cheese" under Chapter Heading 0406.
3. Determination of the applicable GST rate for the product.

Detailed Analysis:

Classification of the Product "Pizza Topping"
The primary issue is whether the product "Pizza Topping" should be classified under Chapter Heading 0406 as "cheese" or under Chapter Heading 2106 as "Food Preparations not elsewhere specified or included."

Whether the Product Qualifies as "Processed Cheese" under Chapter Heading 0406
The appellant argued that "Pizza Topping" containing 14.5% Mozzarella cheese and 15% other milk products should be classified as cheese under Chapter Heading 0406, which attracts a GST rate of 12%. The appellant contended that the product maintains its cheesy character even after the addition of other ingredients.

The appellant cited the HSN Explanatory Notes and various judicial precedents to support their claim that the product should be classified as "processed cheese." They argued that the presence of vegetable fat (22%) is for texture and cost reduction and does not alter the essential character of the cheese.

However, the Authority for Advance Ruling (AAR) determined that the product could not be classified under Chapter Heading 0406. The AAR noted that the substantial presence of vegetable fat (22%) disqualifies it from being categorized as "processed cheese" under HSN 0406 30, which only allows the addition of cream, other dairy products, salt, spices, flavoring, coloring, and water.

Determination of the Applicable GST Rate
The AAR classified the product under Chapter Heading 2106 as "Food Preparations not elsewhere specified or included," attracting a GST rate of 18%. The AAR reasoned that the product is an edible preparation for human consumption but does not fit the specific criteria for cheese under Chapter Heading 0406.

The appellant relied on various judicial precedents and international rulings to argue that the product should be classified as cheese. However, the AAR found these precedents inapplicable as the product in question predominantly contains vegetable fat rather than cheese.

Final Decision
The Appellate Authority upheld the AAR's ruling, confirming that the product "Pizza Topping" is correctly classified under Chapter Heading 2106 and not under Chapter Heading 0406. Consequently, the product is subject to an 18% GST rate (IGST @ 18%, CGST @ 9%, and SGST @ 9%).

Conclusion
The Appellate Authority for Advance Ruling, Haryana, upheld the AAR's decision, classifying "Pizza Topping" under Chapter Heading 2106 as "Food Preparations not elsewhere specified or included," subject to an 18% GST rate. The appeal filed by the appellant was dismissed.

---