Classification of Fried Fryums under GST: Papad vs. Fried Fryums Tariff

The case involved the classification of Fried Fryums under the GST regime. The applicant argued for classification as "Papad" under tariff item 1905 90 40, but the Advance Ruling Authority (ARA) determined that Fried Fryums should be classified under Tariff Item 2106 90 99, attracting an 18% GST rate. The ruling clarified that Fried Fryums are distinct from Papad based on statutory interpretation and judicial precedents, ensuring alignment with legal principles and common understanding.

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Issues Involved:
1. Classification of Fried Fryums.
2. Applicable Harmonized System of Nomenclature (HSN) Code.
3. Applicable Goods and Services Tax (GST) rate.

Detailed Analysis:

1. Classification of Fried Fryums:
The primary issue is the classification of Fried Fryums under the GST regime. The applicant, M/s. Alisha Foods, contends that Fried Fryums should be classified as "Papad" under tariff item 1905 90 40. The applicant argues that Fried Fryums are similar to Papad in commercial parlance and should be treated as such for tax purposes. However, the concerned officer and the Advance Ruling Authority (ARA) disagree with this classification.

2. Applicable Harmonized System of Nomenclature (HSN) Code:
The applicant suggests that Fried Fryums fall under HSN code 1905 90 40, which pertains to Papad. The ARA, however, refers to the Customs Tariff Act, 1975, and relevant notifications to determine the correct classification. The ARA concludes that Fried Fryums do not fit the description of Papad as understood in common parlance and judicial precedents. Instead, the ARA refers to Chapter Note 5 and 6 of Chapter 21, which cover edible preparations not elsewhere specified or included, and concludes that Fried Fryums should be classified under Tariff Item 2106 90 99.

3. Applicable Goods and Services Tax (GST) Rate:
Based on the classification under Tariff Item 2106 90 99, the ARA determines the applicable GST rate. Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended, covers "Food preparations not elsewhere specified or included" under Heading 2106. This includes products like Fried Fryums. Therefore, the applicable GST rate is 18% (CGST 9% + SGST 9% or IGST 18%).

Ruling:
1. The product 'Fried Fryums' manufactured and supplied by M/s. Alisha Foods is classifiable under Tariff Item 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975.
2. The applicable GST rate for 'Fried Fryums' is 18% (CGST 9% + SGST 9% or IGST 18%) as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended.
3. This ruling is valid subject to the provisions under section 103(2) until and unless declared void under Section 104(1) of the GST Act.

Conclusion:
The ARA's decision clarifies that Fried Fryums are not classified as Papad and should be classified under Tariff Item 2106 90 99, attracting an 18% GST rate. The ruling is based on the interpretation of relevant statutes and judicial precedents, ensuring that the classification aligns with common parlance and legal principles.

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