Packaged parathas, unlike chapatis, will attract 18 percent GST after the Gujarat Appellate Authority for Advance Ruling (AAAR) upheld the AAR order regarding the same, based on an application filed by Vadilal Industries.
Meanwhile, chapatis continue to draw 5 percent GST.
The two-member Bench, comprising Milind Torawane and Vivek Ranjan, observed that the parathas and chapatis, or rotis, cannot be treated the same.
Same but different
Vadilal produces eight types of parathas, which include mixed vegetable, Malabar and plain, and the main ingredient is wheat flour. Hence, they should attract the same GST rate as chapatis, the company submitted.
The firm said the other ingredients, such as vegetables including methi or onion, are added only for flavour and taste.
The company then approached AAAR and argued that the AAR had erred while observing that plain chapatis do not need processing before being consumed. Vadilal submitted that chapatis as well as parathas have to heated to ensure they are edible.
It also argued that pizza bread attracts 5 percent GST even though that too needs to be heated and cooked prior to consumption.
Chapatis are mainly made with wheat flour, whereas the packaged parathas sold by the company has ingredients other than wheat flour such as vegetable oil, salt, potato, cauliflower, among others, depending on the type. Other than this, the main distinction the appellate authority made was that the packaged parathas have to be cooked for three to four minutes before consumption, whereas that’s not the case with chapatis. Which is why they believe that the packaged parathas and chapatis have to be treated differently, Ved Jain, former president of Institute of Chartered Accountants of India (ICAI), summed it up.
The appellate authority held that parathas and chapatis are not the same and the former needs to be classified under another heading which attracts 18 percent GST.
Other products
"Some issues may come up with other items where manufacturers add something to their products for taste," Jain said.
This is not the first issue the AAR has looked into. As the GST system classifies items based on HSN codes, many disputes have arisen in the past on the exact placement of food products to determine the tax rates. The other litigations over GST rates have included flavoured milk, idli mix and cheese balls, among other items.
