GST Ruling: Parota Products Not Eligible for Lower Rate

The authority ruled that the products, Whole Wheat Parota and Malabar Parota, are classified under Chapter Heading 2106 and do not qualify for the 5% GST rate under entry No.99A of Schedule I to Notification No. 1/2017-Central Tax (Rate). The products require further processing before consumption, distinguishing them from items like "Khakhra, plain chapatti or roti." Therefore, the applicant is not entitled to the specified GST rate.

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Issues Involved:
1. Classification of Whole Wheat Parota and Malabar Parota under GST.
2. Applicability of GST rate of 5% under Chapter heading 1905.
3. Applicability of residual entry at Sl.No.453 of Schedule III to Notification No.01/2017-Central Tax (Rate).

Issue-wise Detailed Analysis:

1. Classification of Whole Wheat Parota and Malabar Parota under GST:

The applicant, a food products company, sought an advance ruling on whether their products, Whole Wheat Parota and Malabar Parota, should be classified under Chapter heading 1905, which attracts a GST rate of 5%. The applicant contended that their products, made from refined wheat flour (maida), water, vegetable oil, fat, and salt, merit classification under Chapter heading 1905 as they are akin to "Khakhra, plain chapatti or roti."

2. Applicability of GST rate of 5% under Chapter heading 1905:

The applicant argued that their products should fall under Chapter heading 1905, which includes "Bread, pastry, cakes, biscuits and other baker’s wares," according to the Customs Tariff Act 1975. They relied on general rules of interpretation, judicial precedents, and explanatory notes issued by the World Customs Organisation. The applicant emphasized that their products are made from cereals (wheat flour) covered under Chapter 11 and require heating before consumption, thus fitting under Chapter heading 1905.

However, the authority examined the classification and determined that Chapter 19 covers preparations of flour that are ready for consumption. Since the applicant's products require heating before consumption, they do not fit under Chapter heading 1905. Instead, the authority found that the products are more appropriately classified under heading 2106, which covers "food preparations not elsewhere specified or included."

3. Applicability of residual entry at Sl.No.453 of Schedule III to Notification No.01/2017-Central Tax (Rate):

The applicant argued against classifying their products under the residual entry at Sl.No.453, which is for goods not specified in other schedules. They cited various Supreme Court judgments to support their claim that residual classification should only be used when no other specific entry applies.

The authority concluded that the products do not merit classification under heading 1905 and instead fall under heading 2106. Consequently, the products do not qualify for the GST rate of 5% applicable to "Khakhra, plain chapatti or roti" under entry No.99A of Schedule I to Notification No. 1/2017-Central Tax (Rate). The products are not like "Khakhra, plain chapatti or roti" as they require further processing before consumption.

Ruling:

The product 'parota' is classified under Chapter Heading 2106 and is not covered by entry No.99A of Schedule I to the Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended. The applicant is not entitled to the 5% GST rate under the specified entry.

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