2021 (1) TMI 548 - AAR - GST

AAR Rules Un-fried Fryums Not Papad, GST 18%

In Re: M/s. Jayant Food Products,

In Re: M/s. Jayant Food Products, - 2022 (56) G.S.T.L. 223 (A. A. R. - GST - Guj.) Issues Involved:1. Classification of 'Papad' of different shapes and sizes.2. Determination of the applicable tariff heading and GST rate for 'Papad' of different shapes and sizes.Detailed Analysis:Issue 1: Classification of 'Papad' of different shapes and sizesThe applicant, engaged in the manufacturing and trading of 'Papad' of various shapes and sizes, sought an advance ruling on the classification of their product under GST. The applicant argued that their product should be classified under Chapter Tariff Heading 1905, which covers 'Papad, by whatever name it is known, except when served for consumption,' and thus should attract a NIL rate of tax under the GST regime.The applicant relied on several judicial precedents and argued that 'Papad' remains 'Papad' irrespective of its shape or size. They cited various cases, including the Supreme Court's judgment in the case of Shiv Shakti Gold Finger Vs. Assistant Commissioner, Commercial Tax, Jaipur, where it was held that 'Papad' remains 'Papad' regardless of its shape or ingredients.Findings and Discussion:The Authority for Advance Ruling (AAR) considered the submissions and relevant facts. It noted that the term 'Papad' is not defined under the Customs Tariff Act, 1975, the CGST Act, 2017, the GGST Act, 2017, or the IGST Act, 2017. The AAR emphasized the principle that words not defined in a statute must be construed in their popular sense, meaning the sense which people conversant with the subject matter would attribute to it.The AAR referred to the common parlance test, which is the standard for interpreting terms in taxing statutes. The AAR observed that in common parlance, 'Papad' and 'Fryums' are distinct commodities. 'Papad' is known and sold as 'Papad,' while 'Fryums' are known and sold as 'Fryums.' The AAR also noted that the applicant themselves mentioned that their product is popularly known as 'Fryums' in the market.The AAR referred to the judgment of the Customs, Excise, and Gold Appellate Tribunal (CEGAT) in the case of T.T.K. Pharma Ltd. v. Collector of Central Excise, where 'Fryums' were considered as 'Namkeen' and not 'Papad.' The AAR also referred to the Supreme Court's judgment in the case of Commercial Tax, Indore v. T.T.K. Health Care Ltd., where 'Fryums' were likened to 'seviyan' and not classified as 'Papad.'The AAR concluded that 'Un-fried Fryums' are not classifiable as 'Papad' under Tariff Item 1905 90 40.Issue 2: Determination of the applicable tariff heading and GST rateThe AAR examined the appropriate classification of 'Un-fried Fryums.' Chapter Heading 2106 of the First Schedule to the Customs Tariff Act, 1975, covers 'Food preparations not elsewhere specified or included.' The AAR noted that Chapter Note 5 and 6 of Chapter 21 provide an inclusive definition covering preparations for use either directly or after processing for human consumption.The AAR applied the principle of Ejusdem Generis, which means that general words following specific words should be interpreted in the context of the specific words. The AAR concluded that 'Un-fried Fryums' are appropriately classifiable under Tariff Item 2106 90 99.The AAR referred to Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), which covers 'Food preparations not elsewhere specified or included' and attracts a GST rate of 18% (CGST 9% + GGST 9% or IGST 18%).Ruling: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. The applicable GST rate for 'Un-fried Fryums' is 18% (CGST 9% + GGST 9% or IGST 18%).