Papad comes in all shapes and sizes, but attracts no tax

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The Gujarat bench of the Authority for Advance Ruling (AAR) has held that papad will not attract the Goods and Services Tax (GST). The AAR bench observed that earlier papads used to be handmade and round in shape, according to a report in The Times of India. Today, papad is available in different shapes and sizes. The bench said that as long as the goods are similar in terms of ingredients, manufacturing and use, papad will be classified as HSN 19059040 and won’t attract any GST.

Global Gruh Udyog, a company that manufactured puri papad and unfried papad had sought a ruling from the AAR on the classification for its products, the media report added. Global Gruh Udyog stated that the main ingredients of papad are flour, spices, salt and oil and it is not a cooked food item. It is also not instant food that is fit for human consumption in its existing form. It needs to be fried or roasted to be fit for consumption, the company submitted.

In a different case, AAR-Gujarat had earlier ruled that lassi, a fermented milk product, will not attract GST. The core ingredients of the lassi that was being manufactured and sold were curd, water and spices. As per the GST classification, products curd, lassi and buttermilk come under the exempted category.

However, manufacturers and suppliers of flavoured milk have not been that lucky and continue to pay GST. In the case of Amul, which manufactures and supplies flavoured milk, AAR Gujarat had previously held that a GST rate of 12% would apply under the classification of HSN 22029930.

Fryums attract 18% GST

It is pertinent to note that several months ago in the Sonal Products case, the Gujarat AAR bench had held that fryums were not “papads” and are subject to 18% GST. The ingredients of fryums were flour and other additives. In the past, a few high court rulings had treated fryums as papad and as far as the recent AAR ruling is considered, fryums are also flour, mixed with spices, come in different shapes and sizes and should be classified as papad and subject to nil GST, the media report added.