Packaged Frozen Paratha To Attract 18% GST, Rules Gujarat Gujarat Appellate Authority for Advance Ruling


Packaged frozen ‘Paratha’ is not ‘roti or chapatti’ as it requires further cooking before consumption and despite wheat flour being the ‘main thread’ other ingredients are used in making parathas, says an order from the Gujarat Appellate Authority for Advance Ruling. Such parathas, whether called Malabar, Mixed Vegetable, Onion, Methi, Alu, Laccha, Mooli or Plain, contain ingredients such as margarine, salt, emulsifier, oil, potato, peas, cauliflower, coriander powder, bread improver and water, except wheat flour. , which is “very different” from regular roti or chapatti and therefore does not qualify for a 5 percent goods and services tax (GST), the ruling said.

The percentage of wheat flour used by Vadilal Industries, which the AAAR had approached, in the eight types of paratha manufactured and supplied by the company ranges from 36-62 percent while the ingredient for regular roti or chapatti is wheat flour, apart from water. Furthermore, rotis can be consumed directly, but the parathas manufactured by the company must be cooked before consumption, it added.

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Ahmedabad-based Vadilal Industries had approached the AAAR against the June 2021 order of the Gujarat-Authority for Advance Ruling (AAR), noting that parathas sold by the company are not like Khakhra, regular chapatti or roti , which are ready for consumer goods and therefore decided that an 18 percent GST should be levied on such foods.

In a similar ruling, in 2020, in the case of Bengaluru-based ID Fresh Foods, AAR’s Karnataka bank had ruled that ‘frozen parotas’ must be further processed for consumption and therefore be charged 18 percent GST. Also, the Kerala bank of the AAR, ruling in the case of Modern Food Enterprises in 2021, said that frozen ‘parota’ should be classified under the 18 percent GST tax bracket.

“The Parathas supplied by Appellant (Vadilal Industries) are different from ordinary roti or chapatti and cannot be treated as or fall under the category of ordinary roti or chapatti,” AAAR’s Gujarat Bank ruled on Sept. 15, 2022, noting that such items must be charged 18 percent GST.

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KPMG tax partner Abhishek Jain said disputes over the classification of goods have been routine in various tax laws since time immemorial and are a pain point for businesses. In order to understand the correct classification, various principles are evaluated such as substance over form, technical literature of the product, understanding in common parlance, etc.

“While AARs have provided clarity on various classifications and disputes since the beginning of GST, the rulings sometimes differ from one state to another. The need in the present day is to establish a central AAR to settle such conflicts. and ensure uniform applicability across the nation, as is the vision of the GST law,” added Jain.





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One thought on “Packaged Frozen Paratha To Attract 18% GST, Rules Gujarat Gujarat Appellate Authority for Advance Ruling

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