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Cocoa can add a 13 per cent tax on chikki, a famous sugar confectionery. Karnataka’s Authority for Advance Ruling (KAAR) has held that chikkies without cocoa will attract GST at the rate of 5 per cent, but with cocoa, the rate will be 18 per cent.
Bengaluru-based Sirimiri Nutrition Food Products Private Ltd engaged in the manufacture of nutrition food products, intends to manufacture new variety of chikkies. Accordingly, it sought an advance ruling from KAAR on GST for different types of chikkies. These include, with ingredients in brackets, sesame chikkies (sesame seeds, jaggery, butter, and rock salt), chocolate peanut chikkies (peanuts, jaggery, dried coconut, butter, cocoa powder, rock salt, and natural chocolate flavour), Amaranth chikkies (Amaranth seeds, jaggery, butter, and rock salt), crushed peanut chikkies (peanuts, jaggery, butter, rock salt), spirulina chikkies (peanuts, jaggery, butter, spirulina powder, rock salt, and natural cardamom flavour), and dry fruit chikkies (premium almonds, jaggery, peanut, sesame seeds, green pistachios, cashew nuts, butter, rock salt, and other dry fruits).
The applicant submitted that chikkies are to be taxed at 5 per cent GST.
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After going through the submissions made and facts presented, KAAR observed that a common ingredient in all of these products is jaggery, which is an unrefined natural sugar that is produced without adding any chemicals. Thus, jaggery can broadly be termed a form of sugar, KAAR said. Sugar preparations that are marketed in a solid or semi-solid form and are generally suitable for immediate or direct consumption without further processing are collectively referred to as confectioneries. Chikkies, which are jaggery-based preparations meant for direct consumption as snacks, are squarely covered under the term sugar confectioneries.
KAAR’s ruling
KAAR said that all the sugar confectionery that does not contain cocoa are covered under heading 1704. In this case, It was also observed that all products except “Chocolate Peanut Chikkies” do not contain cocoa, and thus the products “Sesame Chikkies, Amaranth Chikkies, Crushed Peanut Chickies, Spirulina Chikkies, and Dry Fruit Chickies” are squarely covered under Sugar Confectionery and thus fall under heading 1704. Items under this heading attract GST at the rate of 5 per cent.
However, the product “Chocolate Peanut Chikkies,” a Sugar Confectionery containing cocoa, is covered under chapter heading 1806. Hence, this will attract GST at the rate of 18 per cent, KAAR said.
It may be noted that AAR rulings are applicable only to the applicant and jurisdictional tax authorities. However, many times, these rulings have become the basis for regulations.
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