Tamil Nadu AAAR upholds 18% GST on food mixes like dosai and idly under CTH 2106

The Tamil Nadu AAAR dismissed an appeal regarding GST classification of food mixes including dosai, idly, and health mixes. The appellant sought classification under HSN 1106 as mere flour mixtures, but the AAAR held these products contain value additions beyond simple flour mixtures and are meant for direct consumption after cooking. The authority classified them under CTH 2106, attracting 18% GST, rejecting the appellant's reliance on a Gujarat AAR decision that was subsequently overturned. The AAAR emphasized that advance ruling provides clarity on tax liability through independent examination of facts.

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Issues Involved:

1. Classification of products under HSN codes.
2. Applicable GST rate for the products.
3. Interpretation of circulars and notifications regarding GST rates.
4. Consideration of previous rulings and their applicability.

Detailed Analysis:

1. Classification of Products under HSN Codes:

The appellant, a manufacturer of various ready-to-cook food products, argued that their products should be classified under HSN codes 0713 and 1106, which pertain to dried leguminous vegetables and their flours. They cited Circular No. 80 dated 31.12.2018, which clarifies that mixtures of flour of ground pulses and cereals fall under HSN 1106. The appellant contended that their products are similar to those described in the circular and should thus be classified under HSN 1106, attracting a lower GST rate.

However, the judgment emphasized that the products contain significant value additions beyond mere flour mixtures, such as spices and other ingredients to enhance taste and appeal. These additions distinguish the products from simple flour mixtures and align them more closely with food preparations not elsewhere specified, as described under HSN 2106.

2. Applicable GST Rate for the Products:

The appellant sought clarification on the applicable GST rate for their products, arguing for a 5% rate based on their classification under HSN 1106. The Lower Authority ruled that the products fall under HSN 2106, attracting an 18% GST rate (9% CGST + 9% SGST).

The judgment upheld this classification, stating that the products are food preparations requiring further cooking, thus fitting the description under HSN 2106. The products are not simple flour mixtures but are enhanced with additional ingredients, making them distinct from the items covered under HSN 1106.

3. Interpretation of Circulars and Notifications Regarding GST Rates:

The appellant relied heavily on Circular No. 80 and other notifications to support their classification under HSN 1106. They argued that their products, being mixtures of flour with minor additives, should fall under the lower GST rate category.

The judgment clarified that while the circular provides guidance, the specific nature and composition of the appellant's products, which include significant value additions, align more with the descriptions under HSN 2106. The products are intended for human consumption after further cooking, fitting the criteria for food preparations not elsewhere specified.

4. Consideration of Previous Rulings and Their Applicability:

The appellant referenced previous rulings, including those from the Gujarat Authority for Advance Ruling, which classified similar products under HSN 1106. However, the judgment noted that these rulings are specific to the applicants who sought them and are not universally applicable.

The judgment also highlighted that the Gujarat Appellate Authority had subsequently classified similar instant mixes under HSN 2106, supporting the Lower Authority's decision in this case.

Conclusion:

The judgment concluded that the appellant's products, being enhanced mixtures requiring further cooking, are correctly classified under HSN 2106. This classification attracts an 18% GST rate. The appeal was dismissed, upholding the Lower Authority's ruling.

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