Karnataka ARR refuses GST reduction for parota

South India

In a bad news to parota lovers, the Karntaka Authority for Advanced Ruling has refused to grant their favourite dish the status of rotis, plain chapathis for the purpose reduced Goods and Services Tax (GST) rate.

ID Fresh Food, which produce the read to eat whole wheat and Malabar parota, had sought reduction of GST from 18% to 5% claiming that the product merited classification under the Tariff Heading "1905 90 90", in which rotis are included.

According to Bar & Bench, the decisive factor in the AAR's findings was that the parota product was not like khakhra/ chapatti/ roti, as these latter products are completely cooked preparations that do not need processing for human consumption whereas parota had to be heated on a pan or tawa to make it fit for human consumption.

ID Fresh Food further argued that their parota products were, in sum and substance, like a roti, given the similar manufacturing/ production process involved. Hence, it was contended that their product would fall under the description of “Khakhra, plain chapatti or roti.”

Thus, the company sought to avail the reduced GST rate of 5% GST rate under Entry 99A, rather than the 18% GST otherwise applicable.

The AAR ruled that "parotas" cannot be lumped in the same category as rotis for tax purposes or to claim the reduced 5% GST that can be availed when it comes to the sale of rotis, plain chapattis and Khakhras.

As per Entry 99A to Schedule I of GST Notifications issued in 2017, a reduced 5% GST rate can be availed on the sale of goods, if two conditions are satisfied, i.e. they should be classified under the Tariff Headings of either 1905 or 2106; they must be either "Khakhra, plain chapatti or roti" (with inputs from Bar & Bench)

Image Credit: Tax Scan

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