The 18% Goods and Services Tax (GST) is applicable on parathas, according to the decision of the Gujarat Appellate Authority of Advance Finding (AAAR), which affirmed the ruling of the Authority of Advance Ruling (AAR).
The two-member panel said that parathas cannot be categorized as simple chapati or roti since they are distinct from other foods. Parathas should be included under Chapter Heading 2106, it was further indicated.
Malabar, onion, mixed vegetables, methi, laccha, aloo, mooli, and plain are the eight paratha kinds that the appellant makes. It was claimed that wheat flour, together with aloo, veggies, mooli, onion, and methi, is the main component in all paratha variants.
The parathas are sold by the appellant packaged, and they must be cooked for approximately 3–4 minutes on a medium flame after being placed straight into a flat pan that has been preheated.
Regarding the categorization and GST rates of the many paratha types, the appellant has asked for an advance judgment. In this manner, the Gujarat AAR categorized the parathas under 21069099 HSN and charged 18% GST.
The appellant claimed that the Gujarat AAR made a mistake in stating that parathas cannot be classed under Chapter Heading 1905 since he felt wronged by this decision. Additionally, Heading 1905 exclusively refers to ready-to-eat items, contrary to the GST Tariff and HSN’s explanatory notes in Chapter 19.
Pizza bread, rusk, and toasted bread are all subject to 5% GST, according to the appellant, who also noted that pizza bread covered by Heading 1905 is also subject to a reduced tax rate. Furthermore, toast and pizza bread need to be heated and prepared before eating.
According to the appellant, this demonstrates that things that are ready for consumption are not the only items covered by Heading 1905. Additionally, the appellant claimed that parathas are subject to 5% GST and are comparable to chapati or roti.
The Appellate AAR noted that all paratha varieties share wheat flour as well as other components including water, salt, edible vegetable oil, antioxidants, vegetables, potato, radish, onion, methi, etc. But simply wheat flour and water are used to make chapati or simple roti. As a result, it was determined that the differences between paratha and chapati or roti were due to the components employed.
As the parathas’ color changes and they become edible after being frozen, the Appellate AAR stated that the parathas must be heated for 3–4 minutes to cook them. However, in contrast to roti or chappati or goods belonging within Chapter title 1905, which are prepared to consume and do not need additional processing before eating.
The appellate authority determined that several elements need to be taken into account before the end users could be used to classify the product. Compared to regular chapatis or rotis, parathas are rather unique and are subject to an 18% GST.