The Appellate Authority for Advance Rulings (AAAR) of Gujarat has ruled that ready-to-eat fryums would attract 18 per cent GST, modifying the earlier ruling of the AAR, which said these would attract the rate under a different classification.
According to a report by the Business Standard, the AAAR observed that ready-to-eat fryums would come under HSN (harmonised system of nomenclatures) 1905, as opposed to the AAR ruling that said they would fall under HSN 2106, which attracts 18 per cent GST. The HSN system determines what GST rate applies on a product.
However, the AAAR did not agree with the petitioner's plea to include fryums under entry 96 of HSN 1905. Entry 96 of HSN 1905 pertains to papad products that require roasting or frying before consumption, and are exempt from GST. The AAAR said that as the petitioner's product was ready to eat, it would fall under entry 16, which attracts 18 per cent GST.
According to the report, earlier in two different cases, the Gujarat AAAR had ruled that fryums would be exempt from GST. “The issue is complicated with different sets of rulings. The latest judgment of Gujarat AAAR contradicts the earlier ruling on the similar issue delivered a few months ago and, hence, the taxation of papad remains ambiguous," Sandeep Sehgal, partner (tax) at AKM Global, told the publication.
Harpreet Singh, partner at KPMG, told the publication that multiple rulings on the same subject with diverse findings, conclusions and without referring to the past precedent could lead to confusion, and called for a central AAR to be established.
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