Maida Pappad is ‘Snack Pellet’, Applies 5% GST Due to Extrusion Process, rules AAR [Read Order]

The Tamil Nadu Authority for Advance Ruling (AAR) has held that so-called 'Maida Pappad' qualifies as extruded snack pellets, attracting 5% GST instead of the full exemption available for traditional papads.

Madurai-based V K Samy Biscuits had sought clarification on whether their product made from maida (wheat flour), sugar, and oil, then shaped and dried should be classified as papad (exempt under GST) or fall under another category. The company argued its manufacturing involved sheeting and shaping dough rather than extrusion, claiming eligibility for GST exemption under Entry 96 of Notification No.2/2017-CT(Rate).

Your Tax Rights Are at Stake! Understand the Supreme Court’s role - Click here 

The AAR bench carefully examined the production process through submitted photographs and samples. Members observed the final product appeared puffed and bloated resembling baked snacks rather than the thin, flat papads known in common parlance. Critically, the ruling noted that while traditional papads retain moisture (12-16%) and maintain shape when dried, V K Samy's product expanded significantly during drying due to its maida composition.

The authority referenced dictionary definitions and CBIC's Circular No.200/12/2023-GST (August 2023) to determine extrusion occurs when dough is forced through rollers or dies to create specific shapes. Photographic evidence showed the company's dough sheets passing through engraved rollers to form heart and cashew nut shapes, a process the AAR deemed equivalent to industrial extrusion.

This distinction proved decisive. While traditional papads (CTH 1905 90 40) remain GST-exempt, the AAR classified V K Samy's product under CTH 1905 90 30 as "extruded or expanded savoury products."

The authority applied CBIC's clarification that unfried extruded snack pellets attract 5% GST (2.5% CGST + 2.5% SGST) since July 2023, rejecting the company's attempt to equate its product with lentil-based papads.

The bench noted that advance rulings are case-specific, noting material differences in ingredients and processes between the two products.

Members Balakrishna S and B. Suseel Kumar concluded that V K Samy's maida-based, extruded product fundamentally differed from traditional papads in composition, manufacturing process, and physical characteristics. The 5% GST rate for snack pellets manufactured through extrusion thus applied from July 27, 2023 onward.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates