In a recent ruling by the Kerala Authority for Advance Ruling (AAR), halwa purchased from a supplier, packed at the applicant’s facility, and marketed under a brand name was held not classifiable as “namkeens” under the GST framework.
The ruling made it clear that such halwa, while falling under HSN Code 2106 90, is not taxable under Entry 46 of Schedule II of Notification No. 1/2017 Central Tax (Rate). Instead, it falls under Entry 101 of Schedule I of the same notification, attracting a lower tax rate of 5%.
The ruling came in response to an application by M/s. Halwa Haweli, a business based in Kottayam, Kerala, engaged in the supply of halwa. Represented by their authorized signatory, Sri. Rijo Tom Mathew, FCA, the applicant sought an advance ruling on two key aspects. First, they inquired about the taxability of packed halwa purchased from outsourced manufacturers and marketed under their brand name. Second, they sought clarity on the classification and taxation of halwa purchased from a supplier but packed at their facility and sold under their brand name.
Get a Copy of The Future of Tax and Finance: Upskill with Us, Click here
The applicant submitted that halwa, a traditional Indian sweet, falls under the category of “sweetmeats” as specified in Entry 101 of Schedule I of Notification No. 1/2017 Central Tax (Rate), which attracts a lower tax rate of 5%. They drew attention to the fact that halwa is not akin to “namkeens, bhujia, mixture, chabena, and similar edible preparations” listed under Entry 46 of Schedule II, which attracts a higher tax rate. The applicant further submitted that halwa, whether branded or unbranded, packed or unpacked, should be classified under HSN Code 2106 90 99 as a sweetmeat.
During the personal hearing on June 21, 2024, the applicant reiterated these submissions. After careful consideration of the submissions, the AAR bench comprising Smt. Gayathri P.G., Joint Commissioner of Central Tax, and Shri Abdul Latheef K., Joint Commissioner of State Tax, examined the legal provisions and facts of the case.
Get a Copy of The Future of Tax and Finance: Upskill with Us, Click here
The AAR observed that halwa purchased from outsourced manufacturers or suppliers and marketed under a brand name could not be classified as “namkeens” despite being covered under the same HSN Code 2106 90. Entry 101 of Schedule I, which specifically mentions sweetmeats under this code, takes precedence over Entry 46 of Schedule II. In result , halwa was held taxable at a lower rate of 5% under Schedule I, irrespective of whether it is packed, branded, or sourced externally.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
