 "GST")
Instant mixes, including idli, dosa and khaman flour, cannot be classified as chhatua or sattu and 18 per cent GST should be levied on them, the Gujarat Appellate Authority for Advance Ruling (GAAAR) has ruled.
Gujarat-based Kitchen Express Overseas Ltd had approached the AAAR against the ruling by the GST advance authority, saying that its seven 'instant flour mixes' are not 'ready to eat' but are required to undergo certain cooking procedures and can be termed 'ready to cook'.
The company sells flour mixes of gota, khaman, dalwada, dahi-wada, dhokla, idli and dosa in powder form and pleaded that it is akin to Sattu and should attract Goods and Services Tax (GST) of 5 per cent.
The GAAAR rejected the appellant's contention, saying that ingredients which go into the making of 'instant flour mixes" are not covered under the relevant GST rules as is the case with Sattu.
According to a CBIC circular, small amounts of ingredients, which are mixed to make Sattu, are specified in the GST rules to be eligible for a 5 per cent tax rate.
"However, the said clarification is not applicable in the present case as the products being supplied by the appellant contain spices and other ingredients, which is not the case with the 'chhatua or sattu'," the GAAAR said.
The appellate authority also said that merely because the end consumer of the instant mix flour is required to follow certain food preparation processes before such products can be consumed is no grounds that 18 per cent GST should not be levied on it.
Abhishek Jain, Indirect Tax Head & Partner, KPMG, said classification disputes are among the most common areas of litigation under the GST.
"Despite the issuance of circulars, differing interpretations of the clarifications provided in these circulars have often elevated the challenges," Jain said.
Moore Singhi Executive Director Rajat Mohan said the Gujarat Appellate Authority for Advance Ruling (AAAR) affirmed the ruling of the Advance Ruling Authority (AAR), classifying various 'Kitchen Express' branded flours, including Khaman and Dhokla, under Chapter Heading (CH) 2106 90 99, thereby subjecting them to an 18 per cent GST rate.
"The determination was predicated on the products' significant inclusion of additives, such as sugar, salt, and spices, distinguishing them from simpler flours classified under chapter 1101, 1102, or 1106, which attract a 5 per cent GST rate," Mohan said.
The AAAR elucidated that CH 2106 90 99 encompasses 'ready to cook' food preparations and dismissed the appellant's analogy to 'sattu,' asserting that the substantial presence of additives in the appellant's products justifies the higher tax rate, Mohan added.
