AAR’s ruling on 18% GST applicable on Whole Wheat Parota & Malabar Parota is void ab initio, rules AAAR [Read Order]

The Karnataka Appellate Authority of Advance Ruling (AAAR) while setting aside the order of Authority of Advance Ruling (AAR) ruled that the ruling on 18% GST applicable on Whole Wheat Parota and Malabar Parota is void ab initio.

The Applicant, ID Fresh Food (India) Pvt. Ltd is a food products company involved in the preparation and supply of a wide range of ready to cook, fresh foods including idli & dosa batter, Parotas, Chapatis, curd, paneer, whole wheat paratha, and Malabar Parota. The Appellant manufactures Parotas using natural ingredients.

The Parotas need to be heated on a pan or Tawa, before consumption, for improved taste and crispiness. In summary, the Parota is in ready to cook conditions. The Parotas have a shelf life ranging from 3-7 days. The Malabar Parotas can be stored in a cool and dry place and have a shelf life of up to 4 days.

The wheat parotas are recommended to be refrigerated for retaining the freshness up to 7 days. These products are not frozen products but only needs to be refrigerated to retain its freshness for its stated shelf life of 7 days.

The Appellant approached the AAR seeking a ruling on the issue of whether the preparation of Whole Wheat paratha and Malabar parotta be classified under Chapter heading 1905, attracting GST at the rate of 5%.

The AAR vide its order ruled that the product parota is classified under Chapter Heading 2106 and is not covered entry No. 994 of Schedule I to the Notification No.1/2017-Central Tax (Rate) dated June 28, 2017, as amended vide Notification No.34/2017-Central Tax (Rate) dated October 13, 2017. so 18% of Goods and Service Tax is applicable.

The appellate authority consisting of Judicial Member, D.P. Nagendra Kumar and Accountant Member, M.S. Srikar ruled that the ruling given by AAR wherein 18% GST applicable on Whole Wheat Parota and Malabar Parota is void ab initio on the grounds that it was vitiated by the process of suppression of material facts.

However, the AAAR abstain from giving any ruling on the issue whether the preparation of Whole Wheat paratha and Malabar parotta be classified under Chapter heading 1905, attracting GST at the rate of 5% as the matter is pending in the proceedings.