Policy

Rawa Idli Mix to attract GST at 18 per cent, rules Karnataka AAR

Shishir Sinha | | | Updated on: Dec 19, 2021

Second ruling in recent times on such products

Now, the Karnataka AAR (KAAR) has stated that Rawa Idli Mix will attract Goods & Services Tax (GST) at the rate of 18 per cent.

This is the second ruling in recent time on food mixes and the third one on food items that are part of the main course. Earlier in June, the Tamil Nadu AAR ruled that there will be 18 per cent GST on branded mixes for dosa, idli, tiffin, health and porridge. In June, the Gujarat AAR held that preserved paratha will attract GST at the rate of 18 per cent.

In the present case, the applicant Bengaluru-based Swastik Masala moved the AAR to seek advance ruling on HSN (Harmonised System of Nomenclature, the heading being used for determining tax rate). The applicant, at present, has classified the product under tariff heading ‘2106-9090’ and a merit classification under ‘HSN 1106’. They argiued that the major raw material for ‘Rawa Idli Mix’ is flour, which is produced by the milling industry

Under this HSN 1106, flour, meal and powder made from peas, beans or lentils have been included. Even if the flour is improved by the addition of small quantities of additives, it will continue to be categorised under same HSN. Such unbranded product will attract GST at the rate of 0 per cent. Branded products will attract a GST of 5 per cent.

After going through hearings and facts presented, the AAR said that chapter 1106 covers products of individual raw material and not mixtures. “Rawa Idli Mix is admittedly a mixture of flour of pulses, cereals, and other ingredients resulting in a different product,” AAR said while making it clear that it cannot be under tariff heading of 1106.

AAR also made it clear that the applicant’s argument on the applicability of 2018 circular on the said product, bringing it at par with ‘Chhatua’ or ‘Sattu’, will not hold true. “The circular is in respect of flour of individual pulses with addition of flour of cereals as additive, but not in respect of mixture of the flours of cereals and pulses. Further it says about addition of very small amounts of additives, but not addition of different flours or cereals resulting in a different of different product,” AAR said while making it clear that this circular will not be applicable here.

Further it mentioned that Rule 3(b) of the general rules for the interpretation of customs tariff specifies that “mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their character, in so far as the criterion is applicable.” In the instant case the said product is admittedly a mixture and does not give the character of either of the constituent flour but altogether a different new product with the different character as ‘Rava Idli Mix’.

Published on December 19, 2021
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