TaxTMI 
TaxTMI 
2026 (2) TMI 459
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....a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 1. FACTS AND CONTENTION - AS PER THE APPLICANT 1.1 Applicant Mr. Sharad Patil has submitted that he is planning to manufacture & supply 'Masala Paan' (commonly known as Meetha Paan in India) to various states of India & even outside India to various customers and wishes to have a clarity over tax aspects for which AAR is being sought. According to him, he has chosen this activity due to the main reason that it is a favorite after-meal snack for most Indians & it plays a three-fold role i.e. It's a good breath-freshener, a digestive enhancer, and its sweet flavor is the perfect way to round up a heavy meal. 1.2 Accordingly to Applicant, 1.2.1 Masala Paan or Meetha Paan, made of betel leaves filled with a range of sweet jam-like spreads and crunchy titbits like tutti-frutti, cherries, chopped dates, etc., is a delightful treat to munch on, and a very effective mouth freshener. It is ....
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.... food item that is sold in the well-decorated studio and at weddings, you can find an elaborate counter with experts displaying various styles of paan. With time paan has changed its face, but the medicinal and cultural values associated with it are still strong and will never fade out. 1.3 Production Process: 1.3.1 Ingredients - 4 betel/ paan leaves, 2 tbsp desiccated coconut, 2 tbsp mouth freshener mix, 2 tbsp Tutti Fruiti/raisins/chopped dates, 1 tbsp gulkand 1.4 Method - Step 1 - Wash and dry the betel leaves. Cut their stem. Step 2 - Mix all the ingredients together in a bowl. Step 3 - Lay down all the betel leaves on a flat surface and place a table spoon of the paan filling in the center of each leaf. Step 4 - Wrap the filling with the ends of the leaf and secure with a tooth pick Serve this delicious paan to your family and share the nostalgia of relishing this bite-sized delight on the streets of your city [Perishable in nature, usually consumed immediately, best before 24 hours from preparation] 2. STATEMENT CONTAINING APPLICANT'S INTERPRETATION OF LAW 2.1 The product under consideration in our case is Masala Paa....
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.... 4 Tutti Fruiti 08111010 5% 5 Betel Nuts (Commonly known as Supari-Optional Item, usually not preferred by consumer in Masala Paan) 21069030 5% 6 Gulkand 20060000 12% 7 Fruit Pulp/Syrup/ Puree (Option used in various flavoured Masala Paan such as Mango Masala, Malai Masala, Strawberry Masala etc.) 20079990 12% 8 Catechu (Commonly known as katha) not very significant for majority of Masala Paan types) 14049050 18% 9 Edible Lime Paste (Commonly known as chunna) not very significant for majority of Masala Paan types) 21069099 5% 2.4 In normal course of business, Masala/ Meetha paan consists of above ingredients. Usually depending upon the user/ consumer preferences out of all of above ingredients, other than betel leaf all other ingredients are used while preparing the masala paan in more of less quantities as per consumer's preferences. E.g. Some people may prefer not to have point no 8 & 9 (katha & chuna) at all, other may prefer more quantity of point no 6 (gulkand) or few may choose to have masala paan with flavors of either 7 (Chocolate/ Mango/ Malai/ Strawberry). There can be various permutations and comb....
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....to call them as naturally bundled in usual course of business. 2.7 In Advance Ruling decided by Authority on Advance Ruling-Delhi, in case of M/s. Deepak & Company No: 2/DAAR/2018 dt: 28/03/18, the test of 'when would the supplies be in conjunction with each other in ordinary course of business 'was deliberated at length, in the said order, following indicators were identified: 2.7.1 If large number of customers or service receivers of such bundled services reasonably expect such services to be provided as package could be treated as naturally bundled. (A masala paan eater would always expect a masala paan to be combination of various items from point no 1-9 in the Table attached in Point No 3 of our assessment) 2.7.2 If majority of service providers in particular area of business, provide similar bundled services. For example: bundle of catering on-board and transport by air. (Majority of Paan sellers would include these elements in any of the masala paan in more or less quantities with base element of betel leaf as constant) 2.7.3 The nature of various services in bundled services will also help in determining whether the services are bundled in ordi....
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....e supply shall be determined in the following manner: a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply' Also, a principal supply is defined to mean 'the predominant element of a composite supply to which any other supply forming part of that composite supply is ancillary.' The rate of tax applicable to such Composite supply, as per Section 9 above, shall be determined in respect of the principal supply alone, since the entire supply shall be deemed to be a supply of the principal supply alone. 2.10 In this particular case, identification of principle supply in case of the Composite Supply is of utmost importance. In a normal course of business for any person who wants to eat Masala Paan, the main intention of a recipient would be to eat paan. Other elements are incidental and ancillary to the main product of paan. A masala paan would not lose its character as masala paan with any of the elements from point no 2 to point no 12 are missing but if one excludes the lement of betel leaf, it would immediately loose its status as masala paan, and this will render them with only mixing of som....
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....inct from "Paan Masala" which falls under Chapter 21 and attracts higher rates of duty. 2.13.1 The applicant has also relied on following Advance rulings and judgments 1) M/s. Gujarat Energy Corporation Ltd. Transmission (2025 (9) TMI 1043 - AUTHORITY FOR ADVANCE RULING, GUJARAT) 2) Commissioner v. Wipro Ltd. (2015) 14 SCC 161 (under Central Excise law - relevant principle) 3) Torrent Power Ltd. Vs. Union of India (Special Civil Application No. 5343 Of 2018 HC Gujarat) 3. CONTENTION - AS PER THE JURISDICTIONAL OFFICER: 3.1 As per the application; The proponent Mr. Sharad Patil is willing to start a business activity in which he is planning to exclusively manufacture & supply 'Masala Paan' (commonly known as Meetha Paan in India) to various states of India & even outside India. 3.2 There are various types of Paan in the market such as Sadha Paan, Meetha Paan, Silver Paan, Fire Paan, Rasmalai Paan, Chocolate Paan etc. However, the product under consideration in this case is Masala Paan (Meetha Paan). Thus, this case is exclusively for the Masala paan and doesn't include any other type of paan. Masala Paan or Meetha Paan, made of betel leaves is ....
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....and Masala paan are different from each other. Betel leaf is considered as an agricultural produce. It also has medicinal use. It is used as an antiseptic, digestive aid, and mouth freshener. It is also used in various religious rituals. Thus, being an agricultural produce having medicinal use betel leaf is taxed at Nil rate in GST. 3.4.2 However, Paan can be classified as a type of food product having betel leaf as an ingredient along with other ingredients. Masala paan is not an essential goods or services, rather it is consumed as a luxury item and hence should not be considered for Nil tax rate for GST. 3.4.3 The contention from the proponent that when a person wants to consume the Masala or Meetha Paan, he wants to primarily eat the Betel Leaf, is not acceptable. 3.4.4 Because, every customer has option to have sadha paan or betel leaf. If the primary purpose of customer is to have betel leaf and other items are ancillary or optional, he would rather choose to have sadha paan or a betel leaf, However the customer precisely demands Masala paan. Hence the purpose is to have Masala paan as whole along with all the ingredients as mentioned by the proponent and not mere be....
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.... important for the masala paan. It is not that the masala paan only contains betel leaf and all other ingredients are not necessary. One of the major ingredients of a composite supply is that, one of the supplies is a 'principal supply' and the others are subservient or incidental to it. 3.4.13 The illustration given in the CGST Act, as mentioned above, is that of supply of goods along with freight /insurance where the supply of the goods is the principal supply. Such is not the case here. It cannot be said that the betel leaf is the principal supply here and the other ingredients are incidental or not important. On the other hand, they are equally important to complete the supply. In a supply of goods, the customer agrees to purchase the goods and then agrees to pay for the insurance/freight and it is not that the supply of goods would not be complete without the insurance/freight but it is rather vice versa. The supply of insurance/freight depends on the supply of goods. 3.4.14 In the present case, all the ingredients are equally necessary and it is not that particular one of them is a Principal supply. Therefore, we cannot say that this is a composite supply where the supp....
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....cise, Service Tax and Sales Tax and their present status in case of your company / related company or sister concern. (7) Copy of Show Cause Notices / Adjudication orders in respect of Central Excise or Service Tax if any issued during Last Five years, in case of your company/ related company or sister concern. (8) Cases of violation of Central Excise / Service Tax if any booked during Last Five years. (9) Whether any proceeding is pending before any authority on said subject matter or otherwise. 3.6 In this regard, it is humbly submitted that the above-mentioned information regarding M/s Sharad Sadashiv Patil is related to Central excise and service tax, hence this office is unable to provide the information. This office has forwarded the requirements to the office of the Commissioner of Central GST, Kolhapur Commissionerate, vide letter of this office no. B-259 dated 26/04/2022 through proper channel. However, no reply, in this regard, is received from office of the Commissioner of Central GST, Kolhapur Commissionerate, as on 31/05/2022. Hence it is requested to kindly permit additional time of 15 days to provide the information. It can be seen that ....
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....y effective mouth freshener. It is enjoyed mostly after dinner, although some people like to have it after lunch too. 5.3 The applicant has explained the making of 'Masala Paan' or 'Meetha Paan' process as under: 5.3.1. Ingredients are usually as below, 4 betel/paan leaves, 2 tbsp desiccated coconut, 2 tbsp mouth freshener mix, 2 tbsp Tutti Fruiti/raisins/chopped dates, 1 tbsp gulkand 5.3.2 Steps involved in making of the paan are as below. Step 1 - Wash and dry the betel leaves. Cut their stem. Step 2 - Mix all the ingredients together in a bowl. Step 3 - Lay down all the betel leaves on a flat surface and place a table spoon of the paan filling in the center of each leaf. Step 4 - Wrap the filling with the ends of the leaf and secure with a tooth pick. Malasla Pann is Perishable in nature, usually consumed immediately, best before 24 hours from preparation. 5.4 We shall now deal with the questions as below. 5.4.1 Question 1. Classification of Tariff Entry for Masala Paan. Question 2. Whether Supply of 'Masala Pan' is a Composite Supply with Principal Supply as Betel Leaf and other components as....
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....te Composite supply are- (i) The supply consists of two or more taxable supplies of goods or services or both or any combination thereof. (ii) Such supplies are naturally bundled. (iii) These supplies are supplied in conjunction with each other in ordinary course of business. (iv) One of these supplies is a principal supply. 5.4.8 Now let us examine whether the product, 'Masala Paan' satisfies the criteria of composite supply. 5.4.9 The concept of bundled service has been explained in the Education Guide issued by CBEC in the year 2012. Though, it is with respect to erstwhile services, it is equally useful in the case of supply of goods also. It is reproduced as below. 'Bundled Service' means bundle of provision of various services wherein element of one service is combined with an element or elements of various provision of any other service or services. An example of 'bundled service' would be air transport services provided by airlines wherein an element of transportation of passenger by air is combined with an element of provision of catering service on board. Each service involves differential treatment as a manner....
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....f item, sub-heading, heading and chapter as specified in the First Schedule to the Custom Tariff Act, 1975 (51 of 1975). (iv) The rules of interpretation of the First Schedule to the Custom Tariff Act, 1975(51 of 1975), including the section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as the case may be, apply to the interpretation of this notification. 5.4.14 From the nature of the impugned product, we proceed to examine the same vis-à-vis heading 2106. We observe that chapter heading 21 essentially covers 'Miscellaneous Edible Preparations'. Obviously, the term 'Miscellaneous' indicates that this particular chapter would contain all such edible products which are not specifically covered elsewhere under the Tariff. The chapter heading further describes various edible preparations such as extracts of coffee, tea yeast, soups broths, sauces etc. under Heading 2101 to 2105. Further, heading 2106 has been given to include all the products which are not included elsewhere. Furthermore, heading 2106 subdivides various edible items like Protein Concentrates, Pan Masala, Sharbat, Supari, Custard Powder etc. under subhea....