GST on Instant Mix
Flours / Classification of Instant Mix
Flours / GST Rate 18% and HSN 2106
Name of the Party: M/s Kitchen Express Overseas Ltd
Name of Ruling
Authority: Gujarat
Appellate Authority for Advance Ruling (GAAAR)
Ruling No.: GUJ/GAAAR/APPEAL/2024/01
Date of Ruling: 21.05.2024
Original Ruling No.: Guj/GAAR/R/32/2021, dated 30.07.2021
Summary of Ruling:
The Gujarat Appellate Authority for Advance Ruling
(GAAAR) upheld the earlier ruling of the Gujarat Authority for Advance Ruling
(GAAR), confirming that various types of instant mix flours manufactured by M/s
Kitchen Express Overseas Ltd are classifiable under HSN 2106 (Food Preparations
Not Elsewhere Specified or Included) and attract 18% GST (9% CGST + 9% SGST).
The appellant had sought classification of its
products under HSN 1106 (Flour, Meal, and Powder of Dried Leguminous
Vegetables, Sago, Roots, Tubers, or Chapter 8 Products) to attract 5% GST.
However, the authorities ruled that since the products contain spices and
additives and require preparation before consumption, they fall under HSN 2106.
Facts of the
Advance Ruling:
- M/s
Kitchen Express Overseas Ltd manufactures and supplies various instant mix
flours, including:
1. Gota Flour
2. Khaman Flour
3. Dalwada Flour
4. Dahiwada Flour
5. Dhokla Flour
6. Idli Flour
7. Dosa Flour
- The
company purchases grains and pulses, processes them through grinding, and mixes
spices and other ingredients before packaging the flour as "Instant
Mix Flour."
- A small
spice packet is also included in the packaging.
- The
company argued that the product is ‘ready to cook’ and not ‘ready to eat’,
and should be classified under HSN 1106, which attracts 5% GST.
- GAAR
ruled that the product falls under HSN 2106 (Food Preparations) and
attracts 18% GST.
- The
appellant filed an appeal before GAAAR, challenging the classification.
Question Raised:
"Under which Chapter, Tariff Heading, and HSN
will the different varieties of flours (Gota Flour, Khaman Flour, Dalwada
Flour, Dahiwada Flour, Dhokla Flour, Idli Flour, and Dosa Flour) attract
CGST/SGST?"
Submission Made by
Applicant:
- The instant
mix flour is made from cereals and pulses and should be classified under
HSN 1106.
- The
product is not "Ready to Eat" but "Ready to Cook",
requiring preparation like boiling, frying, or cooking.
- Similar
products like Sattu or Chhatua (covered under HSN 1106 and attracting 5%
GST) should be treated similarly.
- The major
component is flour, and only minor quantities of spices are added, which does
not change the essential character of the product.
- The
company relied on past VAT-era rulings, which classified such products
under mixed flour categories.
Relevant Sections
and GST Rates Considered:
1. HSN 1106 (Applicant’s Claim – 5%
GST)
o
Covers Flour,
Meal, and Powder of Dried Leguminous Vegetables, Sago, Roots, Tubers, or
Chapter 8 Products.
o
The
appellant argued that their product falls here.
2. HSN 2106 (GAAR & GAAAR Ruling
– 18% GST)
o
Covers "Food
Preparations Not Elsewhere Specified or Included".
o
Includes instant
food mixes that require further processing.
o
Products
containing spices and additives beyond a minimal level are excluded from HSN
1106.
Discussion and
Findings of Ruling Authority:
- The products
contain spices and additives ranging from 5% to 27%, which are not
permissible under HSN 1106.
- The
product is not a simple flour but a food preparation requiring additional
processing.
- The CBIC
Circular No. 80/54/2018-GST (31.12.2018) clarifies that Sattu or Chhatua
(covered under HSN 1106) is different because it contains only minor
additives.
- The presence
of significant quantities of spices makes the product more like instant
food mix rather than plain flour.
- Since
HSN 1106 does not include such food preparations, the correct
classification is HSN 2106 (Food Preparations, not elsewhere specified).
- GAAR’s
ruling was correct, and the products are taxable at 18% GST.
Final Ruling and
Conclusion:
- Appeal
Rejected: GAAAR upheld GAAR’s ruling.
- The
products are classified under HSN 2106 and attract 18% GST (9% CGST + 9%
SGST).
- The
appellant’s argument that flours should be classified under HSN 1106 and
taxed at 5% was not accepted.
- The
presence of spices and additional ingredients changed the nature of the
product, making it a food preparation rather than plain flour.
Disclaimer: All the Information is based on the notification, circular and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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