An appellate authority in Haryana has ruled that pizza toppings should be classified differently and charged with a higher Goods and Services Tax, The Economic Times reported.
In a ruling on March 10, the Haryana Appellate Authority for Advance Ruling said that a GST charge of 18% should be charged on pizza toppings as it is prepared differently from a pizza.
The tax rates on pizzas differ based on how they are prepared and sold, according to The Economic Times. A 5% tax is charged for a pizza sold and eaten within restaurants, while a 12% tax is levied on a pizza base bought separately and a home-delivered pizza is charged 18% GST.
Market experts said that ruling by the AAAR could complicate taxation for pizza brands in the country, according to The Economic Times.
“The authorities have given weightage to the actual ingredients…Under which one would treat them as cheese toppings and classify them accordingly,” said Harpreet Singh, partner at accounting firm KPMG India. “This reiterates the fact that classification under GST is a factor of various principles, viz. end use of product, key constituents, common parlance, etc., and hence a complex process.”
In its ruling, the appellate authority said that pizza toppings are sold as a type of “cheese topping” but contain vegetable fat in a substantial portion of up to 22%, The Economic Times reported.
The authority said the “cheese toppings” would then be classified under “food preparation” instead of “processed cheese” and charged with a higher tax.
Under the GST, the classification of products has been a complex issue. For example, while lassi and milk attract no charges, flavoured lassi is taxed at 12%.