Ready-to-cook food mix in powder form to attract 18% GST in TN

Chennai: As against Krishna Bhavan Foods and Sweets' demand that its products shall be categorised in the list of 49 products that are taxable only 5 per cent, the Tamil Nadu bench of the Authority for Advance Ruling (AAR) ruled that all ready-to-cook mix of food items will attract a GST of 18 per cent.

While the battered form of foods attract a 5 per cent GST, ready-to-cook dosa, idli, porridge mix, etc sold in powdered form are taxable at 18 per cent, ruled the AAR. Hearing Krishna Bhavan Foods' concern, the AAR observed that since the products sold under its brand name are all ready-to-cook mix in the form of powder that will not fall in the category of grains.

"The Dosai Mixes and Idli Mixes are packed and sold as mixes which are to be mixed with water/boiled water/curd to make it as batter and the product sold is a powder and not batter. ... All the 49 products for which the ruling is sought are classifiable under CTH 2106 and the applicable rate is 9 per cent CGST and 9 per cent SGST," the AAR ruled.

AMRG & Associates Senior Partner Rajat Mohan said the AAR held that ready-to-cook products such as dosai mixes, idli mix, sold in the name of brand name are taxable at 18 per cent GST, even though batter for the same is taxable at 5 per cent.

"This kind of legal interpretation by the authority for the advance ruling would lead to an inverted duty structure for the entire industry, forcing them to file tax refunds on a regular basis," Mohan added.

EY Tax Partner Abhishek Jain said such rulings may create an ambiguous situation in the taxing system where the same product when sold in the form of flour attracts a higher tax rate in comparison to when it is sold as a batter.

"The government should come up with suitable clarifications/ amendments in law to resolve such discrepant situations," Jain added.