The Karnataka Authority for Advanced Ruling said that parotas are not in the same category as rotis and were subject to a higher Goods and Services Tax of 18%, Bar and Bench reported on Friday. A lower GST rate of 5% is imposed on rotis.
ID Fresh Food, a company that makes ready-to-eat products, had applied to the GST Authority and said their “Whole Wheat and Malabar Parota” products should be classified under the product description of “khakhara, plain chapati or roti”. The company called for this classification to avail of the 5% GST rate.
According to Entry 99A in Schedule I of GST Notifications that was issued in 2017, a 5% GST rate is applicable when the goods satisfy two conditions – first, their classification should be under the Tariff Headings of either 1905 or 2106; second, they should come under the “khakhara, plain chapati or roti” category.
The Tariff Heading 1905 describes food items as: “Bread, pastry, cakes, biscuits and other bakers’ wares, whether or not containing cocoa, communion wafers, empty cachets of a king suitable for pharmaceutical use, sealing wafers, rice paper and similar products.”
The company said their parota products were similar to a roti because of the manufacturing and production process, and hence it should fall under the description of ‘khakhara, plain chapati or roti’. It also said that the parota product had to be heated in order to be consumed. The company sought a reduced GST rate of 5% under Entry 99A, as opposed to the 18% GST that is applicable.
However, AAR said that the parota product was not like khakhra, plain chapatti or roti. These products are completely cooked and can be consumed without any processing.
“The products covered under the heading 1905 are already prepared or completely cooked products and no further process is required to be done on them for consumption and hence they are ready to use food preparations” AAR said in its ruling. It added that the impugned products need to be heated before eating as opposed to an already cooked food item. The AAR ruled that the products “do no merit classification under 1905”.
Meanwhile, industrialist Anand Mahindra, in a tweet, asked if amid all the challenges the country is facing right now, should the citizens be worrying about an existential crisis for the parota. “In any case, given Indian jugaad skills, I’m pretty sure there will be a new breed of ‘Parotis’ that will challenge any categorisation!”