Ready-to-eat or ready-to-cook. Packed paratha will attract 18% GST, says Gujarat AAR

Preserved Parathas, which needs to be heated before consumption, cannot be similar to roti, chapati or khakra and will attract GST at the rate of 18 per cent, Gujarat’s Authority for Advance Ruling (GAAR) has said.

Disposing an application by Vadilal Industries recently, which wanted parathas to be subjected to 5 per cent GST, as in the case of roti and chappati, the GAAR said that the composition of paratha (wheat flour 36-62 per cent) is different from composition of khakhra/ plain chapati/roti.

Moreover, ‘paratha’ also requires further processing for human consumption as admitted by the applicant themselves.

“Varieties of ‘parathas’ supplied by the applicant are not ‘ready-to-eat food’ preparations or products ‘ready for consumption’, but are products on which some ‘cooking process’ needs to be carried out to make them ‘ready for consumption’ i.e. they need to be heated on a pre-heated pan or a griddle for 3-4 minutes as per the cooking instructions printed on the packing covers of these products. Hence, we find that the impugned product ‘paratha’ is not ‘khakhra, plain chapatti or roti,” it said, while classifying the said product for 18 per cent GST category.

Dictionary meanings

Applicant supplies eight varieties of Paratha – malabar, mixed vegetable, onion, methi, alu, laccha, mooli and plain. The principal ingredient of all the varieties of it is wheat flour, while other ingredients are water, edible vegetable oil, salt, antioxidant, etc.

Parathas are supplied and sold in packed condition. The applicant submitted that paratha is commonly and ordinarily eaten in households with curies, the way chapatti or fulka or roti are consumed with vegetables, pickles, meat, etc.

It argued that the word ‘Paratha’ is not defined under the GST and presented definition/meaning sourced from three dictionaries. In New Oxford Dictionary of English edited by Judy Pearsall and published by Oxford University Press, ‘Paratha’ is explained as “A flat, thick piece of unleavened bread fried on a griddle-origin from Hindi Paratha.”

In New Oxford Advanced Learners’ Dictionary edited by Sally Wehmeier and published by Oxford University Press, it is explained as “A type of South Asian bread made without yeast, usually fried on a griddle.” In Merriam Webster Dictionary, it is described as “An unleavened Indian wheat bread that is usually fried on a griddle.”

It concluded by saying that as preparation, cooking and consumption are similar, so paratha needs to be placed with roti and chapatti which are accepted as unleavened flat bread and chargeable to GST at the rate of 5 per cent.

Category

However, GAAR did not agree with these submissions and held that paratha will be placed in a category, “food preparations not elsewhere specified or included (other than roasted gram, sweetmeats, batters including idli/dosa batter, namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, khakhra, chutney powder, diabetic foods).”

Abhishek Jain, Tax Partner with EY India, said that the ruling is differentiating between roti and parantha and also introducing a criteria of ready-to-cook vs ready-to eat food which may create ambiguity leading to disputes and litigations. “The government may come up with suitable clarifications/ amendment in law to resolve the discrepant situations that may arise due to these rulings,” he said.

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