2019 (3) TMI 930 - AAR - GST

Un-fried Fryums not 'Papad' under GST, ruled for 18% tax rate.

The Authority for Advance Ruling determined that un-fried Fryums, classified under Tariff Item 2106 90 99, are not considered 'Papad' and are subject to a ... Classification of goods - rate of CGST - “Papad and papad pipes” of different shapes, sizes and varieties (commonly known as un-fried Fryums) - sale to intra state and inter-state dealers - N/N. 1/2017 Central Tax (Rate) dated 28.06.2017 - Held that:- What is ‘Papad’ has not been defined or clarified under Customs Tariff Act, 1975, the Central Goods and Services Tax Act, 2017 (‘CGST Act, 2017), the Gujarat Goods and Service Tax Act, 2017 (‘GGST Act, 2017’), Integrated Goods and Services Tax Act, 2017 (IGST Act, 2017 or the Notifications issued under the CGST Act, 2017 / GGST Act, 2017 / IGST Act, 2017 - It is now well settled principle of interpretation of statue that the word not defined in the statute must be construed in its popular sense, meaning ‘that sense which people conversant with the subject matter with which the statue is dealing would attribute to it’. It is to be construed as understood in common language. The Determination Orders under section 80 of the Gujarat Value Added Tax Act, 2003 were not pertaining to classification under First Schedule to the Customs Tariff Act, 1975 and therefore are not applicable in the present case - the ‘Un-fried Fryums’ are not classifiable as ‘Papad’ under Tariff Item 1905 90 40. Appropriate classification of ‘Unfried Fryums’ - Held that:- Heading 2106 is an omnibus heading covering all kind of edible preparations, not elsewhere specified or included. Chapter Note 5 provides an inclusive definition of this heading and covers preparations for use either directly or after processing, for human consumption. Chapter Note 6 pertaining to Tariff Item 2106 90 99 also provides inclusive definition and products mentioned therein are illustrative only - the product ‘Un-fried Fryums’ is appropriately classifiable under Tariff Item 2106 90 99. Goods and Service Tax rate of 18% (CGST 9% + GGST 9% or IGST 18%) is applicable to the product ‘Un-fried Fryums’ as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended, issued under the CGST Act, 2017 and Notification No. 1/2017-State Tax (Rate) dated 30.06.2017, as amended, issued under the GGST Act, 2017 or IGST Act, 2017. Issues Involved:1. Classification of 'Papad and papad pipes' (un-fried Fryums)2. Applicable rate of CGST on these productsDetailed Analysis:Issue 1: Classification of 'Papad and papad pipes' (un-fried Fryums)The applicant sought clarification on the classification of their products, 'Papad and papad pipes' of various shapes and sizes, commonly known as un-fried Fryums. They proposed that these products should be classified under Chapter 19, Heading No. 1905, Sub-heading No. 1905 90 40 (Papad) or 1905 90 90 (Others), and thus be exempt from CGST and SGST.The applicant cited several judgments and orders to support their claim, including:- The Hon’ble Supreme Court's decision in Shivshakti Gold Finger, which held that all varieties of papad, irrespective of shape or size, are entitled to exemption.- The Hon’ble Karnataka High Court’s decision in State of Karnataka Vs. Vasavamba Stores, which also supported the classification of various shapes and sizes of papad under the entry 'Papad' for tax exemption.However, the Authority for Advance Ruling (AAR) examined the common parlance and commercial understanding of the term 'Papad' and referred to previous judgments which clarified that un-fried Fryums are not considered 'Papad.' Specifically:- The Tribunal in T.T.K. Pharma Ltd. Vs. Collector of Central Excise classified Fry Snack Foods called Fryums as 'Namkeen' and not as 'Papad.'- The Supreme Court in Commercial Tax, Indore Vs. T.T.K. Health Care Ltd. concluded that Fryums required further cooking and were not considered 'cooked food.'The AAR concluded that un-fried Fryums do not fall under the classification of 'Papad' as per Tariff Item 1905 90 40. Instead, they should be classified under Tariff Item 2106 90 99, which covers 'Food preparations not elsewhere specified or included.'Issue 2: Applicable rate of CGST on 'Papad and papad pipes' (un-fried Fryums)Given the classification under Tariff Item 2106 90 99, the applicable rate of CGST was determined based on the relevant notifications. According to Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended, 'Food preparations not elsewhere specified or included' fall under Heading 2106, attracting a GST rate of 18% (CGST 9% + SGST 9% or IGST 18%).Ruling:(i) The product 'Un-fried Fryums' manufactured and supplied by the applicant is classifiable under Tariff Item 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975.(ii) Goods and Service Tax rate of 18% (CGST 9% + SGST 9% or IGST 18%) is applicable to the product 'Un-fried Fryums' as per the relevant notifications issued under the CGST Act, 2017, and corresponding State and IGST Acts.