TaxTMI 
TaxTMI 
2018 (12) TMI 892
X X X X Extracts X X X X
X X X X Extracts X X X X
....Tax (Rate) No. MGST 1017/C.R. 104/Taxation-1, dated 29 June 2017 (collectively referred to as the 'Rate Notifications') if not, whether on facts and circumstances of the case, the Unleavened Flatbreads be classified: (i) as 'bread' as mentioned under Entry No. 97 of Notification Number 02 Number 2/2017- Integrated Tax (Rate), dated 28 June 2017, Notification Number 2/2017-Central Tax (Rate), dated 28 June 2017 and Notification Number 2/2017-State Tax (Rate) No. MGST1017/ C.R. 103(1)/Taxation-1, dated 29 June 2017 (collectively referred to as the 'Exemption Notifications); or (ii) as Malt extract, food preparations of flour, groats, meal, starch or malt extract not containing coca or containing less than 40% by weight of coca calculated on a totally defatted basis, not elsewhere specified or included [other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers' wares of heading 1905]on a totally defatted basis not elsewhere specified or included (other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers' wares of heading 190....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ication or Exemption Notification as your good office thinks fit 4. "Whether on facts and circumstances of the case, Pancakes supplied be treated as All Goods i.e. Waffles and wafers other than coated with chocolate or containing chocolate; biscuits; Pastries and cakes (other than pizza bread, khakhra, plain chapatti or roti, Waffles and wafers coated with chocolate or containing chocolate, papad, bread) as mentioned under Entry No. 16 of Schedule III of Rate Notifications, If not whether on facts and circumstances of the case, the Pancakes be classified any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit 5. "Whether on facts and circumstances of the case, Pizza Base supplied be treated as 'Pizza Bread' as mentioned under Entry No. 99 of Schedule / of Rate Notifications. If not, whether on facts and circumstances of the case, the Pizza Base be classified any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ional baking processes used for thousands of years. 1.7. The products are manufactured by the Applicant using various ingredients including atta, maida, water, palmolein oil, salt, sugar, baking powder, wheat gluten etc. Upon raw material intake, the ingredients go through various processes including mixing, proofing, dough dividing, baking and cooling. After the cooling process, the bread is packed, the packet is labelled and subsequently stored and transported at -18 Degree Celsius temperature or transported ambient. We have attached herewith the manufacturing process flow as Exhibit 1. Leavened Flatbread information ('Bread Products') 1.8. The Applicant has been engaged in manufacturing and supplying leavened flatbreads including Naan, Kulcha and variants of these type of leavened breads referred to internationally in different countries as Pitta bread, Chalupa, Corn bread, Leavened Flatbreads and Unfolded Leavened FIatbread. 1.9. While manufacturing these leavened flatbreads, the Applicant uses various raw materials such as maida, tandoori atta, atta, water, rice flour, oil, yeast, salt, sugar etc. The bakery process can be defined as a succession of steps that ensu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g mixing, dough dividing, baking on a hot plate on both sides and cooling. After the cooling process, the pancake is packed and labelled and subsequently stored and transported at - 18 Degree Celsius temperature. These products are similar to cakes included in entry number 16 of Schedule III to the Rate Notifications. We have attached herewith the manufacturing process flow as Exhibit 1. Pizza bread information 1.17. The Applicant manufactures and supplies Pizza bread which is also called Pizza base. The products are manufactured by the Applicant using various ingredients including flour, water, sugar, salt, baking powder, yeast, oil etc. Upon raw material intake, the ingredients go through various processes including mixing, proofing, dough dividing, baking and cooling. After the cooling process, the pizza bread is packed and labelled and subsequently stored and transported at- 18 Degree Celsius temperature. We have attached herewith the manufacturing process flow as Exhibit I. Questions before AAR 2.1. The Applicant has approached the Hon'ble authority to determine the classification of • Unleavened Flatbreads such as Plain Chapatti, Tortilla, Torti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fication 01/2017-lntegrated Tax (Rate) dated 28 June 2017, Notification Number 1/2017-CentraI Tax (Rate), dated 28 June 2017 and Notification Number 1/2017-state Tax (Rate) No. MGST1017/ C.R. 104/Taxation-1, dated 29 June 2017 (collectively referred to as the 'Rate Notifications') If not, whether on facts and circumstances of the case, the Flatbreads be classified: (i) as 'bread' as mentioned under Entry No. 97 of Notification Number 02 Number 2/2017 Integrated Tax (Rate), dated 28 June 2017, Notification Number 2/2017-Central Tax (Rate), dated 28 June 2017 and Notification Number 2/2017-State Tax (Rate) No. MGST10171 C.R. 103(1)/Taxation-1, dated 29 June 2017 (collectively referred to as the 'Exemption Notifications'); or (ii) as Malt extract, food preparations of flour, groats, meal, starch or malt extract not containing coca or containing less than 40% by weight of coca calculated on a totally defatted basis, not elsewhere specified or included (other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers' wares of heading 1905] on a totally defatted basis not elsewhere specified or included....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hin cracker, made from mat bean, wheat flour and oil'. (ii) Plain Chapatti: 'an unleavened flatbread, made from whole of flour known as atta salt and water (iii) Roti: 'a flatbread made from stone ground whole meal flour, traditionally known as atta' 1.5. In this regard, we wish to submit that the Applicant follows similar processes while manufacturing unleavened flatbreads. The products are manufactured by the Applicant using various ingredients including atta, maida, water, palmolein oil, salt, sugar, baking powder, wheat gluten etc. Upon raw material intake, the ingredients go through various processes including mixing, proofing, dough dividing, baking and cooling, After the cooling process, the unleavened flatbread is packed and labelled and subsequently stored and transported at -18 Degree Celsius temperature or transported ambient. 1.6. Further, we wish to reiterate the fact that the Applicant uses atta, maida, water, palmolein Oil, salt, sugar, baking powder, wheat gluten etc. while manufacturing the range of unleavened flatbreads. We have attached herewith Exhibit 3 providing the list of ingredients used for each of the unleavened flatbreads the Applica....
X X X X Extracts X X X X
X X X X Extracts X X X X
....time to time for interpretation of items of taxable goods. One of the well-known principles of interpretation is that words of everyday use must be construed not in the scientific or technical sense but as understood in the common parlance 1.10. Another test akin to the common parlance test is the "commercial parlance test". According to this test, items in taxing statutes should be judged and analysed on the basis of how these expressions are used in the trade or industry or in the market or, in other words how these are dealt with by the people who deal in them. Though the common parlance or commercial parlance tests are the generally accepted tests, various other tests have been evolved from time to time to interpret items of taxing statutes. One of such tests is "commonsense test" or "commonsense rule of interpretation" On the basis of the above judgments, it can be concluded that either the common parlance or the user test should be applied in interpreting a word not defined by the statute. 1.11. In the present instance, the conditions laid down for applying the common parlance test as described above (i.e. not defined in the statute and having an open market) are sat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y submitted that people use plain chapatti, roti or variants of these type of unleavened flatbreads as the staple underlying carrier in one's meal. It is usually accompanied by protein or vegetables and sauce. 1.17. In the light of above mentioned discussion and given the fact that the Applicant uses similar ingredients and processes as those used for manufacturing Chapatti or Roti, the Applicant strongly believes that the range of unleavened flatbreads manufactured and supplied by them should be classified as 'Plain Chapatti or Roti' and should accordingly be levied to GST. 1.18. Without prejudice to the above mentioned submission, in case the unleavened flatbreads manufactured by the Applicant does not qualify as 'Plain Chapatti or Roti' within the meaning of Rate Notification, we request your good office to provide ruling on its possible alternate classification under below mentioned entry considering the facts and circumstances of the case. (i) Entry No. 97 of Exemption Notification, which stands for Bread (branded or otherwise), except when served for consumption and pizza bread; or (ii) Entry No. 13 of Schedule III of Rate Notification, which stands for Malt extra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n issued under Integrated Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017. 2.2. The Schedule Entry No. 97 of the above mentioned notification provides the exemption on supply of Bread (branded or otherwise), except when served for consumption and pizza bread classifiable under Chapter Harmonized System of Nomenclature (HSN) 1905. The said notification does not define the term 'bread' and 'pizza bread'. However, it has mentioned that the tariff item, subheading, heading and chapter shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the first schedule to the Customs Tariff Act, 1975 (51 of 1975). Reference to Customs Tariff Act, 1975 (51 of 1975) It is now pertinent to understand the clarification provided under the Customs Tariff Act, 1975 with respect to Heading 1905. The relevant entry is attached herewith as Exhibit 2. The said chapter 19 does not provide any clarification with respect to these terms in form of chapter notes, heading notes. Thus, the said term 'leavened bread would need to be understood as known in common parlance. Dictionary meaning of the term 'bread' 2.4. The Webster Dictionary....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed in the trade or industry or in the market or, in other words, how these are dealt with by the people who deal in them, provided that there is a market for these types of goods. This principle is well known as classification on the basis of trade parlance. This is an accepted form of construction. It is a well-known principle that if the definition of a particular expression is not given, it must be understood in its popular or common sense viz. in the sense how that expression is used everyday by those who use or deal with those goods. The copy of the judgment is attached as Exhibit 4. 2.9. The Apex Court has laid down as to when the common parlance test can be used. It has provided that the following conditions need to be satisfied to call for common parlance test. These are; • No meaning has been attributed in the statute • There is an open market for such goods The above position has been succinctly encapsulated by the Hon'ble Bombay High Court in the case of Pharm Aromatic Chemicals v MCGM (1997 (95) ELT 203 Bom) = 1994 (2) TMI 320 - BOMBAY HIGH COURT. The Bombay High Court commented'. Various principles or tests have been evolved by the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... as well. Thus, the same should be exempted from GST. Leavened flatbreads not served for consumption 2.15. The Schedule Entry No. 97 of Exemption Notification refer to the breads (branded or otherwise) except when served for consumption. Further, the meaning of the word "served for consumption" is not defined anywhere including under Customs Tariff Act, 1975. Hence, in this case also, one has to place reliance on the common parlance to understand the said phrase. 2.16. The phrase 'Served for consumption' in common parlance indicates 'served in hotels, restaurants, eating houses and meant for immediate consumption. In this regard, the Applicant wishes to submit the fact that it does not serve any of its leavened flatbreads for immediate consumption to its customers. 2.17. In this regard, the Applicant places reliance on the judgement delivered by tribunal in case of East India Hotel on 31 March, 2009. The issue before the said tribunal was whether bread sold from the shop in the shopping arcade of the Five Star Hotel as counter sale is covered by the schedule entry A-4 of the BST Act or as covered by the schedule entry C-II-1 5. The entries A-4 & C-11-15 at the time of d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d or included (other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers' wares of heading 1905]on a totally defatted basis not elsewhere specified or included (other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers' wares of heading 1905); or (iii) Any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit. Applicants interpretation of facts or law with regards to Question No. 3 "Whether on facts and circumstances of the case, Corn Chips, Corn Taco and Corn Taco Strips supplied be treated as Wafers under Entry No. 16 of Schedule III of Rate Notifications If the same is not classifiable as 'wafer', whether on facts and circumstances of the case, the Corn Chips, Corn Taco and Corn Taco Strips be classified (i) as "Malt extract, food preparations of flour, groats, meal, starch or malt extract not containing coca or containing less than 40% by weight of coca calculated on a totally defatted basis, not elsewhere specified or included (other than preparations for infants or young....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rious ingredients including masa flour, water, small quantities of cellulose gum, citric acid, guar gum etc. Upon raw material intake, the ingredients go through various processes including mixing, dough dividing, baking and cooling. After the cooling process, the products are packed and labelled and subsequently stored and transported at -18 Degree Celsius temperature. 3.5 In case of supply of Corn Chips, Corn Taco and Corn Taco Strips, we wish to bring to your kind attention that the process of making such products involves both baking as well as the use of masa flour, water, small quantities of cellulose gum, citric acid, guar gum etc. Further, customers in the foodservice channel and, in some cases, the end consumer fry the products which makes them cripsy similar to products such as wafers, i.e. a thin crisp cracker. 3.6 Hence, it can be concluded that Corn Chips, Corn Taco and Corn Taco Strips are classifiable under entry number 16 of Schedule III of the Rate Notification. Common and Commercial Parlance Theory 3.7 Without prejudice to above submission, we wish to reiterate our submission with respect to common and commercial parlance theory made under applicants i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....interlude between meals. Corn Chips, Corn Taco and Corn Taco Strips are similarly used as snacks that can be enjoyed in between meals. 3.16 It is also worthwhile noting that these products are on sale on online platforms in the same category that wafers like Lays, Kurkure etc. are sold. Hence, it can be inferred that users perceive such products as 'Wafers' and consume them in the same fashion as they consume any other wafers. 3.17 Hence, it is humbly submitted that even on the basis of the end-use based test, Corn Chips, Corn Taco and Corn Taco Strips products manufactured by the Applicant should be classified as wafers under Chapter 1905 32 90 subject to GST accordingly. Contextual interpretation 3.18 Snacks such as Corn Chips, Corn Taco and Corn Taco Strips are seen as an alternative to potato chips, cream wafers, etc. Corn Chips, Corn Taco and Corn Taco Strips are becoming popular amongst consumers with the increasing demand for alternative varieties of wafers and snacking food items. 3.19. Hence, considering the context surrounding such products, it should be concluded that they are similar to wafers falling under Chapter 1905 32 90 subject to tax accordingly. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that the tariff item, sub-heading, heading and chapter shall mean respectively a tariff item, subheading, heading and chapter as specified in the first schedule to the Customs Tariff Act, 1975 (51 of 1 975) Reference to Customs Tariff Act 1975 51 of 1975 It is now pertinent to understand the clarification as provided under the Customs Tariff Act, 1975 to understand the meaning of the term Pancake. However, the said term has not been defined anywhere in Customs Tariff Act, 1975. Thus, it is necessary to refer to meaning of Pancake as known in common parlance as the said term is not defined under Customs Tariff Act, 1975. Dictionary meaning of term 'Pancakes' 4.4 In this connection, we refer to dictionary meaning of the term 'Pancake'. The Webster Dictionary defines it as 'a flat cake made of thin batter and cooked (as on a griddle) on both sides'. Pancakes are generally prepared from starch based batter. 4.5 The products are manufactured by the Applicant using various ingredients including flour, water, sugar, salt, milk, syrup, vegetable oil etc. Upon raw material intake, the ingredients go through various processes including mixing, dough dividing, baking on a hot....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lt, baking powder, yeast, vegetable oil etc. Upon raw material intake, the ingredients go through various processes including mixing, proofing, dough dividing, baking and cooling. After the cooling process, the pizza bread is packed and labelled and subsequently stored and transported at -18 Degree Celsius temperature. Reference to Customs Tariff Act, 1975 (51 of 1975) 5.4 It is now pertinent to understand the clarification as provided under the Customs Tariff Act, 1975 to understand the meaning of the term pizza bread. However, the said term has not been defined anywhere in Customs Tariff Act, 1975. Thus, it is necessary to refer to meaning of pizza bread as known in common parlance as the said term is not defined under Customs Tariff Act, 1975. Common Parlance Theory 5.5 It is humbly submitted that the Applicant manufactures 'pizza bread'. The pizza bread is subsequently used as the bread on which toppings such as cheese and sauce are added by the customer or end consumer. Such bread is commonly known as 'pizza bread' in grocery stores across the country, people purchase 'pizza bread' in order to prepare pizzas at home using their own ingredients for toppings. Custome....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed Flatbread-Unfolded Unleavened Flatbread- Tortilla S. No. Ingredients S. No. Ingredients 1. Maida - High Protein 1. Maida 2. Water 2. Water 3. Glycerine 3. Palmolein Oil 4. Wheat Gluten 4. Glycerine 5. Salt 5. L-Cysterine 6. Sugar 6. Sodium Bi Carbonate 7. Yeast 7. Salt 8. Baking Powder 8. Powerflex 9. Kalonji Seed 9. Dimodaan 10. Hydroxypropyl Methyl Cellulose 10. Sugar 11. Ultrasoft 11. Sodium Acid Pyro Phosphate 12. Calcium Propionate 12. Acecol Gaur Gum 13. Kalonaji Oil 13. Calcium Propionate 14. Fumaric Acid 15. Grindsted Protex Unleavened Flatbread-Chapati Leavened Flatbread-Chalupa S. No. Ingredients S. No. Ingredients 1. Atta 1. Maida 2. Water 2. Sunflower Oil 3. Palmolein Oil 3. Water 4. Wheat Gluten 4. Rice Flour 5. Salt 5. TBB....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Yeast 7. Salt 7. Baking Powder 8. Sugar 8. Kalonji 9. Gluten Gluten FLOW CHART ¯ Raw Material Intake ¯ Raw Materials Storage ¯ Premixing and sieving ¯ Mixing ¯ Dough Dividing ¯ Baking In Oven ¯ Online Cooling for 25 mins @ 15-20 ^oc ¯ Online inspection (Sorting) ¯ Stacking ¯ Packaging & Labeling ¯ Blast Freezing @ -30 to- 35 ^oc ¯ Metal Detection ¯ Packaging ¯ Collation to pallets ¯ Finished Goods Storage @-18 ^oc ¯ Dispatch in frozen vehicle @-18 ^oc PROCESS FLOW DIAGRAM (CORN PRODUCTS) Raw Material Intake Raw Material Storage Premixing and sieving Mixing Dough sheeting Oven Bake Online Cooling @ Ambient temperature Online inspection Stacking Packaging Spriral blast Freezing @ -30 to 35 C Metal Detection CCP Packaging Collation to pallets Finished Goods S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s are ready for consumption and leviable to CGST and MGST at 9% each; f. Corn Chips, Corn Taco, Corn Taco Strips shall be classified under Entry No. 16 of Schedule III of the Rate n leviable to tax at CGST and MGST at 9% each; g. Pancake qualify as cake within the meaning of rate notification classifying the product under Entry No. 16 of Schedule III under Chapter heading 1905; and h. Pizza Bread qualify as Pizza Bread under Entry No. 99 of Schedule l. i. At the outset, the Applicant most respectfully wishes to submit that the letter has been prepared without giving due regards to all the facts of the case and the submissions made by the Company till date. The Applicant has provided a detailed list of ingredients, manufacturing process charts, purchase orders, tax invoices and detailed interpretation about the proposed classification of bakery products to enable your office to arrive at a conclusion with respect to the classification of the bakery products under consideration. After reviewing the letter issued by the learned Nodal Officer, we have observed that their interpretation on the classification of bakery products such as Wafer Product, Pancakes and Pizza Bre....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... expression is not given, it must be understood in its common sense i.e. in the sense how the expression is being used every day by those who use or deal with those goods. Another test which is used by the courts is the user test. According to this test the use to which the goods can be put can also be considered in interpreting an item. The copy of relevant judicial precedence has already been submitted with your office. A copy of the same is again enclosed as Annexure 1. 1.4 By applying Common parlance Test and End User Test, we wish to humbly submit that many types of unleavened flatbreads including plain chapatti, roti and variants of these types of unleavened flatbreads are a staple underlying carrier in one's meal. It is usually accompanied by protein or vegetables and sauce. Considering the same, it is clear that the usage or function of such as Roti Rolls, Paratha, Paratha Rolls, Tortilla Wraps, Tortilla, Wraps, Paratha Wraps are the same or similar to Plain Chapatti or Roti. 1.5 At this juncture, it is also important to note the ruling of the Apex Court of India in the case of M/s. O K Play (India) Limited V. Commissioner of Central Excise, Delhi-III, Gurgaon = 20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ration of Plain Chapatti and Roti are the same as those are used for manufacturing Tortilla, Tortilla Wraps, Wraps, Roti Rolls, Paratha and Paratha Wraps. The essential ingredients shall be taken to mean those ingredients which gives essential and basic character of the product. For the majority of the un leavened flatbreads over 85% of the dough is a combination of flour and water. The Applicant uses additional ingredients for preparation of different types of unleavened flatbreads for improving the texture, softness and increasing the shelf life of unleavened flatbreads. 4. In addition to above, we wish to bring to your notice that many variants of unleavened flatbreads are considered to be the same or similar as Plain Chapatti or Roti because these bakery products act as a near substitute to each other as a carrier for a meal. Thus, the Applicant strongly believes that the same shall be classified as 'Plain Chapatti or Roti' under Entry No, 99A of Rate Notification. Manufacturing process Test 5. The learned Nodal Officer has further mentioned that the manufacturing process of unleavened flatbreads such as Roti Rolls, Paratha and Paratha Rolls are different than Plain Ro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ry in South East Asia 4. Accordingly, the same cannot be classified under Entry No. 97 of Exemption Notification. Hence, the same shall be covered under residual entry 3. Pita Bread and Kulcha 1. Dealer has itself applied tax rate at 2.5% in the invoices raised by him and Kulcha 2. Accordingly, the same cannot be classified under Entry No. 97 of Exemption Notification. Hence, the same shall be covered under residual entry 2.2. In addition to above, while denying exemption under Entry No. 97 of Notification Number 02 Number 2/2017- Integrated Tax (Rate), dated 28 June 2017, Notification Number 2/2017-Central Tax (Rate), dated 28 June 2017 and Notification Number 2/2017-State Tax (Rate) No. MGST 1017/C.R. (103)(1)/Taxation-1, dated 29 June 2017 (collectively referred to as the 'Exemption Notifications'),it was further mentioned that: "food products like Naan, Pita Bread, Kulcha. Leavened Bread can be sewed for consumption. These food products are ready for consumption They are not raw or unfinished form. Ready to serve foods should be construed as a food which is ready to eat. The Schedule Entry No. 97 refers to bread except when served for immediate consumption. Ho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er mould that gives the Chalupa the U shape which is sometimes referred to as a boat shape. The Chalupa gets the crispy texture and is heated up when the customer fries the product. After this the customer can include their own sauce, filling, protein and vegetables in the bread before serving the final product to the end consumer. Thus, the said contention will not hold good factually. 2.8. Additionally, the Applicant follows the same or similar manufacturing processes as those applicable for manufacturing bread. The Applicant strongly believes that all variants of leavened flatbread shall be classified as 'Bread' within the meaning of Entry No. 97 of Exemption Notification. Leavened Flatbread - Naan 2.9. The learned Nodal Officer has further mentioned that "Naan cannot fall under Entry No. 97 of Exemption Notification as it is commonly used as Roti in South Asia region. By applying common parlance test, common man cannot say 'Naan' as a bread. It is used as a Roti, eaten with curry in South Asia. So, in my opinion Naan cannot be held as leavened flatbread and treated as exempted product. In my opinion the food products ie. Naan would be covered under residual entry and t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Kulcha, the learned Nodal Officer has mentioned that the Applicant has himself applied tax rate of 2.5% in the invoices raised by them. However, these products could not be classified under Entry No. 97 of the Exemption Notification. Pita Bread and Kulcha cannot be treated as bread. 2.16. In this regard, we wish to mention that the Applicant has submitted an intimation letter with the Central Tax authorities on 20 July 2017 inti mating that payment of Central Tax, State Tax and Integrated Tax under protest, in the absence of specific schedule entry with respect to product being manufactured and supplied by the Applicant. 2.17. Moreover, the Applicant has discharged GST liability for leavened flatbread to the extent of 2.5% of CGST and MGST on a conservative basis. Leavened flatbreads not served for immediate consumption 2.18. While denying the exemption under Entry No. 97 of Exemption Notification, it was further mentioned that "food products like Naan, Pita Bread, Kulcha, Leavened Bread can be served for consumption. These food products are ready for consumption. They are not raw or unfinished form. Ready to serve foods should be construed as a food which is ready to e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce to above submissions, we wish to further submit the fact that learned Nodal Officer has not provided any submissions with respect to its possible classification as Pizza Bread. Pizza bread is a type of leavened flatbreads and the Applicant uses similar manufacturing processes and ingredients for pizza bread and other variants of leavened flatbreads. In case your office differs With the Applicant's view of exemption, we wish to submit that leavened flatbreads can also be treated at par with pizza Bread after considering manufacturing process test and ingredient test. 9. Request: In the light of above additional submissions, we wish to put forth our contentions below: • Classification of products as per submissions made in the application of advance ruling • Treat this submissions as the statement of responses to the submissions made by the learned Nodal Officer In case classification of leavened flatbread is not acceptable to your office, request you to consider the request of treating it as 'Pizza Bread' after giving due regard to the manufacturing test and ingredient test. Should your office require any additional information / documentation i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iduary entry and taxable at 9% in CGST and MGST. Leavened flat bread - Dealer has treated leavened flat bread under Entry No. 97 of CGST Act. Entry No.97 stands for "Bread (branded or otherwise) except when served for consumption and pizza bread." In Leavened flat breads such as Naan, Chalupa, Pita bread, Kalucha, unfold leavened flat breads are also manufactured & sold by the dealer. Chalupa -A chalupa is speciality of south central Mexico. Traditional Chalupas are small, thick, boat shaped fried maza topped only with salra, cheese and shredded lettua. These are filled with various ingredients such as chicken, pork, chopped onion, etc. So in view of the manufacturing process and type of ingredient used in it so the Chalupa could not fall under entry No.97. It would be covered under residuary entry and taxable at 9% in CGST and MGST Act. Naan--A typical 'Naan' recipe involves mixing white flour with salt, a yeast culture and enough yogurt to make smooth, elastic enough. The dough is kneaded for few minutes. Then dough is divided into balls which are flattered and cooked. The 'Naan" can be said to be a 'Leavened Bread as that are made from natural leavened like yeast,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....za Bread -Pizza Bread supplied by' the applicant is covered under entry No. 99 of schedule I. Dealer has rightly clarified the food product ie. Pizza Bread under entry No.99 of schedule I having tax rate @ 2.5% CGST and 2.5 MGST. Hence I reproduce following clarification of various food product. Sr. No. Schedule entry Tax rate 1. Unleavened Flat breads i) Roti, Plain Roti 99 (A) 2.5% CGST 2.5% MGST ii) Paratha, Paratha Rolls, Roti Rolls Residual 9% CGST 9% MGST 2. Leavened Flat breads Residual 9% CGST 9% MGST i) Naan, ii) Chalupa, iii) Pita Bread iv) Kulcha 3. Corn chips, Corn Taco, Corn Taco Strips Entry No. 16 Schedule III 9% CGST 9% MGST 4. Pancake Entry No. 16 Schedule III 9% CGST 9% MGST 5. Pizza Bread Entry No. 99 Schedule I 2.5% CGST 2.5% MGST Additional submissions made by concern officer on 25.07.2018 The dealer has been engaged in manufacturing and supplying of the unleavened flat breads, which include plain chappati, Roti, Paratha Wraps, Tortilla wraps, wraps, Roti Rolls. The dealer also trader in manufacturing of bre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Exemption notification no.2/2017 Dt-28/06/2017 of CGST Act. • Entry no.97 stands for "Bread (branded or otherwise) except when served for consumption and pizza bread." Opinion of Jurisdiction Officer • In Leavened flat breads such as Naan, Chalupa, Pita bread, Kulcha, unfold leavened flat breads are also manufactured & sold by the dealer. A) Chalupa - • A chalupa is speciality of south central Mexico. Traditional Chalupas are small, thick, boat shaped fried masa (maize) topped only with red salra(salad), green salra, chopped onion, cheese and shredded chicken. These are filled with various ingredients such as chicken, pork, chopped onion, etc. So in view of the manufacturing process and type of ingredient used in it, the Chalupa could not fall under Entry no-97 of Exemption notification. It cannot be classified as a bread. • In my opinion this "chalupa 'would be covered under Schedule- Ill entry no,453 i.e. residuary entry and taxable at 9% in CGST and MGST. B) Naan - • A typical 'Naan' recipe involves mixing wheat flour with salt, a yeast culture and enough yogurt to make smooth, elastic enough. The dough is....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... cooling @ambient temperature ¯ Online inspection (sorting) ¯ Stacking ¯ Packaging and labelling ¯ Spiral blast freezing@-30 to 35 ¯ Metal detection ¯ Packaging ¯ Collation to pallets ¯ Finished goods storage @<-18 c ¯ Dispatch in frozen vehicle @.18 0 Opinion of Jurisdiction Officer- Dealer has rightly classified these products. In my opinion the food product like corn chips, Corn Taco & Corn Taco strips also fall under chapter heading 1905, Entry No. 16 schedule III having tax rate @9% CGST & SGST. IV. Pancake - Applicant's interpretation- Dealer has classified Pancake as a cake which is commonly known to everyone and treated the same under Entry no. 16 of Schedule-III of CGST Act. Manufacturing process- (Pan cake) Mixing (Wheat flour+ water+ sugar+ salt+ sodium bicarbonate+ sodium acid pyrophosphate+ citric acid+ calcium propionate+ milk+ sunflower oil+ golden syrup + vanilla flavour + whey powder+ detam) Baking in oven ¯ Online cooling @<24^oc ¯ Online inspection (sorting) ¯ Metal detection ¯ Spiral blast freez....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er of State Tax (NAS-VAT-D-009) Nasik appeared and made written submissions. 05. OBSERVATIONS We have perused the records on file and gone through the facts of the case and the submissions made by the applicant and the department. We find that:- 1. The Applicant, a private limited company, holding the GST registration number (GSTIN') 27AACCH2133E1Z3 with effect from 01 July 2017, is located in Nashik, Maharashtra. The company is engaged in the business of, inter alia, manufacturing, trading and exporting bakery products which includes flatbreads. The Applicant supplies products to customers and distributors in India and in overseas markets including the Middle East, South East Asia, Africa and Australia. Applicant supplies two types of flatbreads like Unleavened and leavened flatbreads to retailers, canteens, airlines, hotels, hospitals, schools, restaurants, wholesalers, distributors and other food service operators located in India and overseas. The details of manufacturing process and ingredients required are in short as thus, A) Unleavened Flatbread includes-- Plain Chapatti and variants of Chapatti flatbreads referred to internationally in different countries as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ooling. After the cooling process, the pancake is packed and labelled and subsequently stored and transported at - 18 Degree Celsius temperature. These products are similar to cakes included in entry number 16 of Schedule III to the Rate Notifications. E) Pizza bread includes -- Pizza bread which is also called Pizza base. The products are manufactured by the Applicant using various ingredients including flour, water, sugar, salt, baking powder, yeast, oil etc. Upon raw material intake, the ingredients go through various processes including mixing, proofing, dough dividing, baking and cooling. After the cooling process, the pizza bread is packed and labelled and subsequently stored and transported at - 18 Degree Celsius temperature. Applicant has approached this authority and has raised questions as above with a request to classify the products. The Central Point of discussion in this application is the applicability of entry No.99A of Schedule to the Notification No. 1/2017 - IGST Act dated 28/06/2017. By virtue of this notification the food products such as Khakara, Plain Chapatti or Roti are liable to GST @ 5%. The Applicant has approached this authority with a prayer t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....etails. We have gone through the details as above and we find that the ingredients used to manufacture these products, the manufacturing process chart, the packaging and the storage of the products are substantially same. We find that the various ingredients used for manufacturing which are common and forming more than 80% by weight are Atta, Maida and water. The other ingredients are palmoleine oil, salt, sugar, backing powder, wheat butane etc. By resorting to this fact, applicant has laid much stress that these products are covered by the scope entry No.99A and squarely covered by the description 'khakara plane chapatti or roti' vide notification no. 34/2017 dated 13/10/2017. Per contra the concerned officer for Revenue submitted that so far as Indian food stuffs like roti, plain roti are concerned it can be classified under Tariff heading 2016 and thus are covered under entry 99A and should be taxed @ 2.5% each under CGST and SGST Act. However, with respect to food stuffs such as paratha, paratha wraps, roti rolls, cannot be classified in the above entry and by applying common parlance test these would be covered under residual entry and taxable@9% each under CGST and SGST A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ducts would be covered under entry99A and taxable @2.5% each. We find that the food product paratha as is available in hotels and restaurants is plain, folded or stuffed. By applying the common parlance test we understand paratha as different and distinct food commodity from roti, chapatti etc. The product before us is examined from this view point. The product is plain like a chapatti and unstuffed like Gobhi paratha, Laccha paratha. To us, this is nothing but a plain chapatti and paratha is a misnomer for this food product supplied by the applicant. As such we do not find any difficulty in classifying the product as plain chapatti covered by entry 99A of notification no. of 34/2017. In the light of above discussion and for the given facts that all the products contain similar/ same ingredients, manufacturing process and all the products are used as staple food item in meal we find no difficulty to arrive at a conclusion that the products are covered by entry no. 99A of notification no. 34/2017 and therefore we feel that there is no need to further deal with sub question (i), (ii) and (iii) of this question. Que 2: "Whether on facts and circumstances of the case, the Leav....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iece and is usually eaten with Indian food. Source: Wikipedia Naan is a leavened oven-baked flatbread found in the cuisines mainly of Middle East, Central Asia and Indian subcontinent. MERRIAM WEBSTER DICTIONARY : a round flat leavened bread especially of the Indian subcontinent THE FREE DICTIONARY BY FARLEX: A flat, leavened bread of northwest India, made of wheat flour and baked in a tandoor. Source: Wikipedia KULCHA: Kulcha is a type of mildly leavened flatbread that originated in the Indian subcontinent. It is a Punjabi variation of naan. Recipe Kulcha is made from maida flour, water, a pinch of salt and a leavening agent (yeast or old kulcha dough), mixed together by hand to make a very tight dough. In order to classify the products under a fiscal statue and in the absence of any such definition we are of the opinion that it would be a normal understanding thereof that would govern the classification of the product under issue. In a situation like one at hand we may refer to the decision of Hon'ble Supreme Court in case of M/s. Ramawatar Budiprasad vs Assistant Sales Tax Officer, Akola reported as 12 STC 286 = 1961 (3) TMI 55 - SUPREME COURT....
X X X X Extracts X X X X
X X X X Extracts X X X X
....covered under entry no 453 of schedule III of the notification. In spite of ours above finding we agree with the contention of the applicant with regard to exception provided entry no.97 of exemption notification "when served for immediate consumption" means served for immediate consumption. We also agree with the applicant that the product does not use chicken, pork chopped onion etc. while manufacturing or supplying these products. Now we turn to another product - CHALUPA: MERRIAM WEBSTER DICTIONARY Definition of chalupa a fried corn tortilla sometimes shaped like a boat and usually filled with a savory mixture(as of meat, vegetables, or cheese) OXFORD ENGLISH LIVING DICTIONARY: A fried tortilla in the shape of a boat, with a spicy filling Source: Wikipedia CHALUPA: A chalupa (Spanish pronunciation: is a specialty of south-central Mexico, including the states of Puebla, Guerrero, and Oaxaca. Chalupas are made by pressing a thin layer of masa dough around the outside of a small mould, in the process creating a concave container resembling the boat of the same name, and then deep frying the result to produce crisp, shallow corn cups. These are filled w....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The Hon. Bombay High Court in case Commissioner of Sales Tax Vs Aggarwal and Co. (1983 (12) ELT 116) = 1982 (11) TMI 159 - BOMBAY HIGH COURT held that a general term used for any commodity in a fiscal statute covers that commodity in all its forms. As there is no difference in the conventional bread and pita bread with respect to ingredients and manufacturing process, we hold that Pitta bread would squarely fall under entry 97 of the exemption notification. Que: 3. Whether on facts and circumstances of the case, Corn Chips, Corn Taco and Corn Taco Strips supplied be treated as 'wafer' under Entry No. 16 of Schedule III of Rate Notifications If the same is not classifiable as 'wafer', whether on facts and circumstances of the case, the Corn Chips, Corn Taco and Corn Taco Strips be classified. (i) as "Malt ex-tract, food preparations of flour, groats, meal, starch or malt extract not containing coca or containing less than 40% by weight of coca calculated on a totally defatted basis, not elsewhere specified or included (other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers' wares of heading 19....
X X X X Extracts X X X X
X X X X Extracts X X X X
....khakhra, plain chapatti or roti, bread, rusks, toasted bread and similar toasted products BREAD, PASTRY, CAKES, BISCUITS AND OTHER BAKERS' WARES, WHETHER OR NOT CONTAINING COCOA; COMMUNION WAFERS, EMPTY CACHETS OF KIND SUITABLE FOR PHARMACEU TICAL USE, SEALING WAFERS, RICE PAPER AND SIMILAR PRODUCTS 1905 BREAD , PASTRY, CAKES, BISCUITS AND OTHER BAKERS' WARES, WHETHER OR NOT CONTAINING COCOA; COMMUNION WAFERS, EMPTY CACHETS OF A KIND SUITABLE FOR PHARMACEUTICAL USE, SEALING WAFERS, RICE PAPER AND SIMILAR PRODUCTS 19051000 - Crispbread 19052000 - Gingerbread and the like - Sweet biscuits; waffers and wafers: 19053100 -- Sweet biscuits 190532 -- Waffles and wafers : --- Communion wafers : 19053211 ---- Coated with chocolate or containing chocolate 19053219 ---- Other 19053290 --- Other 19054000 - Rusks, toasted bread and similar toasted products 190590 - Other : 19059010 --- Pastries and cakes 19059020 --- Biscuits not elsewhere specified or included 19059030 --- Extruded or expanded products....
X X X X Extracts X X X X
X X X X Extracts X X X X
....975. The product cake is mentioned in the entry 16 under the head of "All Goods "i.e. waffles and wafers other than coated with chocolate or containing chocolate, biscuits; Pastries and cakes (other than pizza bread, khakhra, plain chapatti or roti, Waffles and wafers coated with chocolate or containing chocolate, papad, bread]. Therefore, we are of the view that the impugned the product "Pancakes" is covered under the chapter heading 19059010 under the entry 16 of schedule Ill of GST ACT and liable to tax at appropriate rate. Que 5: "Whether on facts and circumstances of the case, Pizza Base supplied be treated as 'Pizza Bread' as mentioned under Entry No. 99 of Schedule / of Rate Notifications. If not, whether on facts and circumstances of the case, the Pizza Base be classified in any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit The products are manufactured by the Applicant i.e. pizza base using various ingredients including flour, water, sugar, salt, baking powder, yeast, oil etc. After raw material intake, the ingredients go through various processes including mixing, proofing, dough dividing, baking a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fied or included (other than preparations for infants or young children, put up for retail sale and mixes and doughs for the preparation of bakers' wares of heading 1905) under Entry No. 13 of Schedule III of Rate Notification or (iv) Any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit Answer: - The Unleavened Flatbreads products such as plain chapatti, Tortilla, Tortilla Wraps, roti, Roti rolls , Wraps, Paratha and Paratha wraps are covered under Entry No. 99 A of Schedule 1 and they would be liable to tax @ 5% (2.5 % each for CGST and MGST and 5 % for IGST). Question 2:- "Whether on facts and circumstances of the case, the Leavened Flatbreads be treated as 'as 'bread' as mentioned under Entry No. 97 of Exemption Notifications If not, whether on facts and circumstances of the case, the Leavened Flatbreads be classified: (i) Pizza Bread as mentioned under Entry No. 99 of Schedule I ofRate Notifications; or (ii) as Malt extract, food preparations of flour, groats, meal, starch or malt extract not containing coca or containing less than 40% by weight of coca calculated on a totally defatted basis, not elsewhere ....