KOCHI: The ‘Malabar parota’ will now be less taxing -- on the wallet. In a significant ruling, the Kerala High Court has held that two half-cooked parota products manufactured by Modern Food Enterprises Pvt Ltd and sold in packets are exigible at 5% goods and services tax (GST).
The judgment was passed on a petition moved by Modern Food, challenging an order of the Kerala Authority for Advanced Ruling (AAR), which held that ‘Classic Malabar Parota’ and ‘Whole Wheat Malabar Parota’ are eligible for 18% GST.
AAR had held that the items are neither bakery products nor ready for human consumption, as it needs to be heated or further processed. This, it ruled, does not make them exempt from the 18% bracket, which is applicable only for bread products, as covered under Harmonized System of Nomenclature (HSN) Code, 1905.
The HC, however, ruled these products are akin to bakery goods, are more appropriately classified under Heading 1905, entitling them to a lower GST rate of 5%.
Disposing of the petition, Justice Dinesh Kumar Singh said if key inputs (cereal, flour, starch, etc.,) and preparations are somewhat similar for products, then exclusion of one product from the taxation point of view cannot be justified. The HSN in question is 1905 of chapter 19 which prescribes GST rate for pizza, bread, khakhra, plain chapati or roti. According to rate notification, these are exigible for 5% GST or they can be exempted, too, the court said.