Tapioca flour from dried root remnants classified as starch manufacturing residue under HSN 2303.10, taxable at 5%

The AAR, Tamil Nadu ruled that tapioca flour made from dried root remnants is classifiable under HSN 2303.10 as "Residues of starch manufacturing" rather than HSN 1106 as claimed by the applicant. The Authority determined that since the product is derived from fibrous waste retained during starch extraction and is used for animal feed rather than human consumption, it constitutes manufacturing residue taxable at 5%. The dealer must register under GST if aggregate turnover exceeds prescribed limits under Section 22 of CGST Act.

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Issues Involved:
1. Classification of goods (Tapioca flour).
2. Applicability of Notifications under the Act.
3. Determination of tax liability.
4. Requirement for trader/dealer registration.

Issue 1: Classification of Goods
The applicant sought classification for Tapioca flour obtained by crushing dried roots and remnants of tapioca roots/tubers. The applicant contended that the product falls under HSN code 1106, which pertains to flour, meal, and powder of dried leguminous vegetables, sago, or roots/tubers of heading 0714, and argued for a 'Nil' tax rate as the product is sold without any brand name. However, the Authority determined that the product is a residue from the starch manufacturing process, not directly prepared from tapioca root tuber. Thus, it is classifiable under HSN 2303.10, "Residues of Starch manufacture and similar residues," taxable at 5%.

Issue 2: Applicability of Notifications
The applicant referenced Notifications No. 02/2017 and 28/2017 to claim tax exemption for unbranded tapioca flour. However, the Authority concluded that these notifications are inapplicable as the product does not fall under the exempted category of HSN 1106 but under HSN 2303.10, which is taxable.

Issue 3: Determination of Tax Liability
The applicant's product, classified under HSN 2303.10, is liable to tax at 2.5% under the CGST Act and 2.5% under the SGST Act, as per SI. No. 104 of Schedule I of Notification No. II(2)/CTR/532(d-4)/2017/G.O.Ms.No.62, CTR, dated 29-6-2017.

Issue 4: Requirement for Trader/Dealer Registration
In terms of Section 22 of the CGST Act, the applicant is required to be registered if their aggregate turnover in a financial year exceeds the prescribed threshold under GST Law.

Ruling:
1. Classification of Goods: The product is classifiable under HSN 2303.10, "Residues of Starch manufacture and similar residues," liable to tax at 2.5% under the CGST Act and 2.5% under the SGST Act.
2. Applicability of Notifications: The referenced notifications are not applicable to the applicant's product.
3. Tax Liability: The product is taxable at 5% (2.5% CGST + 2.5% SGST).
4. Registration Requirement: The applicant is liable to be registered under Section 22 of the GST Act if their turnover exceeds the prescribed threshold.

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