Kitchen Express Overseas Ltd Speaks Out for Lowering the GST Rate
New Delhi: In a recent decision of the Gujarat Appellate Authority for Advance Ruling (GAAAR), it has been held that instant flour mixes for idli, dosa, and khaman cannot be said to be similar to chhatua or sattu and therefore are liable to attract an 18 percent GST. Kitchen Express Overseas Ltd, a Gujarat-based company, had gone to the appellate authority claiming that their product seven ‘instant flour mixes’ should be classified as sattu and should attract 5% tax since the product is ‘ready to cook’ and not ‘ready to eat’.
This case is a Product Range and Classification Dispute
The company that manufactures gota, khaman, dalwada, dahi-wada, dhokla, idli, and dosa through flour mixes in powder form claimed that these products were similar to sattu which has a lower GST rate. The GAAAR did not accept this argument, arguing that the ingredients in the ‘instant flour mixes’ are not same as that present in sattu. As per the CBIC circular, only such ingredients that go into sattu preparation are the ones that can attract 5% GST.
Ingredients and GST Classification
To support their decision the GAAAR noted that because spices and other ingredients are added in the instant mixes they cannot be classified as sattu. This clarification is not relevant in the present case because the products being supplied by the appellant contain spices and other things which are not present in ‘chhatua or sattu’.
It should be noted that the tax rate does not have any influence on the cooking process.
In addition, the appellate authority observed that the fact that end consumers are required to undergo some process in preparing their foods using these instant mixes is not a reason for them to be exempted from paying the 18% GST. The ruling further affirms that the kind of ingredients and the method of preparation that goes into making these mixes puts them in a different category from sattu hence the justification for the higher tax rate. This decision reaffirms the necessity of compliance with the prescribed GST provisions depending on the constituents and categorization of products.
